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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
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<S> <C>
Check the appropriate box:
[ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
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American City Business Journals, Inc.
(Name of Registrant as Specified In Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC.
128 S. Tryon Street, Suite 2300
Charlotte, North Carolina 28202
September 28, 1995
TO OUR STOCKHOLDERS:
This letter is to inform you of a proposed merger of American
City Business Journals, Inc. ("ACBJ") with Advance Acquisition Sub.
Inc., a wholly owned subsidiary of Advance Publications, Inc. (the
"Merger"). Under the terms of the Merger, you will be entitled to
receive $28.00 per share (the "Merger Consideration") in cash for each
of your shares of the common stock, par value $.01 per share, of ACBJ
("ACBJ Common Stock"). Details of the Merger and related transactions
and other important information appear in the attached Information
Statement which is first being mailed to stockholders on or about
September 28, 1995. The Merger Agreement is attached as Exhibit A to
the Information Statement.
The Board of Directors has carefully considered the terms and
conditions of the Merger and has obtained the opinion of Lazard Freres &
Co. LLC ("Lazard") that, as of the date of their opinion, the Merger
Consideration to be received in the Merger is fair to you from a
financial point of view. The full text of the opinion of Lazard dated
August 3, 1995, which sets forth the assumptions made, matters
considered and limits on the review undertaken, is attached as Exhibit E
to the accompanying Information Statement and is incorporated therein by
reference. ACBJ stockholders are urged to read such opinion carefully
and in its entirety. The Board believes the Merger to be fair to you
and has approved the transaction by unanimous vote. Upon consummation
of the Merger, stockholders will no longer have an equity interest in
ACBJ.
Stockholders who follow the procedures specified in Section 262
of the Delaware General Corporation Law have the right to dissent from
the Merger and will be entitled to have their shares of ACBJ Common
Stock appraised by the Delaware Court of Chancery and to receive payment
of the "fair value" of such shares as determined by such Court rather
than the amount of the Merger Consideration stated above.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY. Business Journal Associates Limited Partnership,
owning beneficially and of record approximately 56% of the outstanding
shares of ACBJ Common Stock, has provided its written consent to and
approval of the Merger, thereby satisfying the requirements of Delaware
law for stockholder approval of the Merger. For this reason, ACBJ is
not calling a special meeting of the stockholders in respect of the
proposed transaction, nor is ACBJ asking you for a proxy.
The record date for purposes of determining stockholders
entitled to consent to the Merger was August 3, 1995.
<PAGE>
We urge you to read the enclosed Information Statement and
related information carefully.
Sincerely yours,
/s/ Ray Shaw
Ray Shaw
Chairman and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
TO INFORMATION STATEMENT
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Page
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Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
Requisite Stockholder Approval . . . . . . . . . . . . . . . 2
Approval by the Board of Directors; Reasons for the Merger . 2
Opinion of ACBJ Financial Advisor . . . . . . . . . . . . . 3
Effects of the Merger . . . . . . . . . . . . . . . . . . . 3
Interests of Certain Persons in the Merger . . . . . . . . . 3
Accounting Treatment . . . . . . . . . . . . . . . . . . . . 4
Federal Income Tax Consequences . . . . . . . . . . . . . . 4
Payment for Shares, Etc. . . . . . . . . . . . . . . . . . . 5
Regulatory Approvals and Other Conditions . . . . . . . . . 5
Termination . . . . . . . . . . . . . . . . . . . . . . . . 6
Option Agreements . . . . . . . . . . . . . . . . . . . . . 6
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . 7
Market Price and Dividends . . . . . . . . . . . . . . . . . 7
Summary Financial Information . . . . . . . . . . . . . . . 7
Business of ACBJ . . . . . . . . . . . . . . . . . . . . . . 7
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Approval by the Board of Directors; Reasons for the Merger . . . . 8
Background of the Merger . . . . . . . . . . . . . . . . . . 8
Approval by the Board of Directors . . . . . . . . . . . . . 11
Opinion of ACBJ Financial Advisor . . . . . . . . . . . . . 12
Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . 16
Interests of Certain Persons in the Merger . . . . . . . . . . . . 17
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 18
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . 18
Stockholders of ACBJ . . . . . . . . . . . . . . . . . . . . 18
Holders of Convertible Debentures . . . . . . . . . . . . . 18
Holders of Options . . . . . . . . . . . . . . . . . . . . . 19
ACBJ . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Financing the Merger . . . . . . . . . . . . . . . . . . . . . . . 20
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The Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . 20
General . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 21
Payment for Shares, Etc. . . . . . . . . . . . . . . . . . . 21
Conditions to the Merger . . . . . . . . . . . . . . . . . . 22
Covenants and Additional Agreements . . . . . . . . . . . . 23
Redemption of Convertible Debentures . . . . . . . . . . . . 24
Indemnification . . . . . . . . . . . . . . . . . . . . . . 24
Termination . . . . . . . . . . . . . . . . . . . . . . . . 24
Amendments; Expenses of the Merger . . . . . . . . . . . . . 25
The Option Agreements . . . . . . . . . . . . . . . . . . . . . . . 25
The BJALP Option Agreement . . . . . . . . . . . . . . . . . 25
The Company Option Agreement . . . . . . . . . . . . . . . . 27
Information Concerning Advance and Merger Sub . . . . . . . . . . . 29
Appraisal Rights of Dissenting Stockholders . . . . . . . . . . . . 29
Market Price and Dividends . . . . . . . . . . . . . . . . . . . . 32
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 33
Management's Discussion and Analysis of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Financial Condition and Liquidity . . . . . . . . . . . . . 34
Results of Operations . . . . . . . . . . . . . . . . . . . 34
Information Concerning ACBJ . . . . . . . . . . . . . . . . . . . . 38
Business of ACBJ . . . . . . . . . . . . . . . . . . . . . . 38
Capital Stock Transactions . . . . . . . . . . . . . . . . . 41
Operations of the Business Newspapers . . . . . . . . . . . 41
Motorsport Publications . . . . . . . . . . . . . . . . . . 43
Employees . . . . . . . . . . . . . . . . . . . . . . . . . 43
Competition . . . . . . . . . . . . . . . . . . . . . . . . 43
Property . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . 45
Officers, Directors and Certain Stockholders of ACBJ . . . . . . . 47
Additional Information . . . . . . . . . . . . . . . . . . . . . . 50
Index to Financial Statements . . . . . . . . . . . . . . . . . . . 51
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Exhibit A Agreement and Plan of Merger . . . . . . . . . . . . A-1
Exhibit B BJALP Option Agreement . . . . . . . . . . . . . . . B-1
Exhibit C Company Option Agreement . . . . . . . . . . . . . . C-1
Exhibit D Text of Section 262 of the Delaware General
Corporation Law Concerning Appraisal Rights of
Dissenting Stockholders . . . . . . . . . . . . . D-1
Exhibit E Opinion of Lazard Freres & Co. LLC . . . . . . . . . E-1
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iii
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AMERICAN CITY BUSINESS JOURNALS, INC.
128 S. Tryon Street, Suite 2300
Charlotte, NC 28202
(704) 375-7404
INFORMATION STATEMENT
SUMMARY
The following is a brief summary of certain information
contained elsewhere in this Information Statement. This summary is not
intended to be a complete statement of all material features of the
proposed merger (and related transactions) described below and is
qualified in its entirety by more detailed information contained
elsewhere in this Information Statement including the exhibits attached
hereto.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY. STOCKHOLDERS ARE URGED, HOWEVER, TO READ THIS
INFORMATION STATEMENT IN ITS ENTIRETY. This Information Statement is
first being mailed to stockholders on or about September 28, 1995.
The Merger
Pursuant to the approval of the Board of Directors of American
City Business Journals, Inc. ("ACBJ" or the "Company"), ACBJ has entered
into a Merger Agreement, dated as of August 3, 1995 (the "Merger
Agreement"), whereby Advance Acquisition Sub. Inc. ("Merger Sub"), a
wholly owned subsidiary of Advance Publications, Inc. ("Advance"), will
be merged with and into ACBJ (the "Merger"). ACBJ will be the surviving
corporation and each outstanding share of common stock, par value $.01
per share, of ACBJ ("ACBJ Common Stock"), other than shares owned by any
dissenting stockholders, will be converted into the right to receive
$28.00 (the "Merger Consideration") in cash, and each outstanding share
of common stock of Merger Sub will be converted into one share of ACBJ
Common Stock. Also as part of the Merger, (i) outstanding options to
purchase shares of ACBJ Common Stock will be cancelled and each optionee
will receive cash for each such share subject to an option in an amount
equal to the excess of the Merger Consideration over the option exercise
price per share, and (ii) in accordance with the terms of the indenture
(the "Indenture") governing ACBJ's 6% Convertible Subordinated
Debentures (the "Convertible Debentures"), those Convertible Debentures
whose conversion rights are validly exercised after the effective time
of the Merger (the "Effective Time") but before the close of business on
the fifth business day prior to the Redemption Date (as defined below)
shall be converted into the right to receive an amount equal to the
Merger Consideration multiplied by the number of shares of ACBJ Common
Stock into which such Convertible Debentures could have been converted
immediately prior to the Effective Time.
Pursuant to the terms of the Merger Agreement, Business Journal
Associates Limited Partnership ("BJALP"), the Company's majority
stockholder, agreed to execute, and following approval by the Board of
Directors of the Merger Agreement and the Merger, did execute and
deliver, a written consent approving the Merger Agreement and the Merger
in accordance with Delaware law. See "Requisite Stockholder Approval"
below.
1
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Upon consummation of the Merger, Advance will own all of the
outstanding shares of ACBJ Common Stock. Under the terms of the Merger
Agreement, the ACBJ Certificate of Incorporation will be amended to
reduce the authorized capital of the Company to 1,000 shares of common
stock, par value $1.00 per share. However, this amendment will become
effective only upon consummation of the Merger. See "The Merger
Agreement" and Exhibit A attached hereto.
Requisite Stockholder Approval
Approval of the Merger Agreement requires the favorable vote or
consent of a majority of the outstanding shares of ACBJ Common Stock.
Pursuant to Sections 228 and 251 of the Delaware General Corporation
Law, and as provided in the Merger Agreement, BJALP, holder of
approximately 56% of the outstanding ACBJ Common Stock, acting by
written consent, has approved the Merger Agreement and the Merger and
related transactions. Consequently, no further stockholder action is
required to authorize the Merger.
Approval by the Board of Directors; Reasons for the Merger
The Board of Directors of ACBJ (including the outside
directors) has concluded that the Merger is in the best interest of the
stockholders of ACBJ and has unanimously approved the Merger and Merger
Agreement. In approving the Merger and Merger Agreement, the Board of
Directors of ACBJ considered the following factors: (i) information
relating to the business, assets, management, competitive position and
prospects of ACBJ, (ii) the financial condition, cash flows and results
of operations of ACBJ, both on an historical and on a prospective basis,
(iii) historical market prices and trading information with respect to
the ACBJ Common Stock, (iv) the relatively small "public float" and the
low trading volume of ACBJ Common Stock, (v) the results of the
solicitation of offers to purchase ACBJ in connection with the
evaluation of the best available alternatives for maximizing stockholder
value, (vi) the fact that the Merger Consideration for the ACBJ Common
Stock represents a substantial premium of approximately 23% over the
highest reported closing sale price for ACBJ Common Stock from July 1985
(when the ACBJ Common Stock first became publicly traded) until August
3, 1995 (the last trading day prior to the announcement of the Merger),
(vii) the fact that the terms of the Merger Agreement were negotiated on
an arm's-length basis, and (viii) the opinion, analyses and
presentations of Lazard Freres & Co. LLC ("Lazard") described under
"Approval by the Board of Directors; Reasons for the Merger --Opinion of
ACBJ Financial Advisor." See "Approval by the Board of Directors;
Reasons for the Merger."
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Opinion of ACBJ Financial Advisor
The Board of Directors engaged Lazard to render an opinion as
to the fairness of the Merger Consideration to the holders of ACBJ
Common Stock from a financial point of view. Lazard has delivered to
ACBJ its written opinion dated August 3, 1995, the date of the Merger
Agreement, to the effect that as of such date, based upon the
assumptions made, matters considered and limits of the review, all of
which are set forth in such opinion, the Merger Consideration to be
received in the Merger is fair to the holders of ACBJ Common Stock from
a financial point of view. Such opinion is attached as Exhibit E hereto
and should be read in its entirety. For additional information
concerning Lazard's opinion and the fee to be received by Lazard in
connection with this transaction, see "Approval by the Board of
Directors; Reasons for the Merger -- Opinion of ACBJ Financial Advisor"
and Exhibit E.
Effects of the Merger
After the Merger is consummated, Advance will own all of the
outstanding capital stock of ACBJ and the present holders of ACBJ Common
Stock will no longer have any equity interest in ACBJ, will not share in
the earnings and growth of ACBJ and will no longer have rights to vote
on corporate matters. Once the Merger is effective, ACBJ Common Stock
will no longer be traded on the NASDAQ National Market System,
registration of ACBJ Common Stock under the Securities Exchange Act of
1934 (the "Exchange Act") will terminate and ACBJ will cease filing
periodic reports with the Securities and Exchange Commission ("SEC").
Following the Merger, ACBJ will no longer be subject to the proxy rules
under the Exchange Act and ACBJ's officers and directors will no longer
be subject to certain filing requirements and the short-swing profit
provisions of the Exchange Act.
The Company's outstanding stock options will be cancelled upon
consummation of the Merger. In addition, the Merger Agreement provides
that at the Effective Time the surviving corporation shall take all
requisite actions in accordance with the terms of the Indenture to
redeem all of the then outstanding Convertible Debentures. Such
redemption shall be effected at the redemption price and on the terms
stated in the Indenture and shall become effective, subject to the terms
of the Indenture, as of the date that is thirty (30) days after the
Effective Time (the "Redemption Date") with respect to all Convertible
Debentures whose conversion rights are not validly exercised before the
close of business on the fifth business day prior to the Redemption
Date. Consequently, no Convertible Debentures will remain outstanding
following the Redemption Date. See "Effects of the Merger" and "The
Merger Agreement --Redemption of Convertible Debentures."
Interests of Certain Persons in the Merger
At the Effective Time, each share of ACBJ Common Stock, other
than those shares owned by any dissenting stockholders, will be
converted into the right to receive the Merger
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Consideration in cash. As of September 25, 1995, officers and directors
of ACBJ beneficially owned an aggregate of 3,960,598 shares of ACBJ
Common Stock (including shares owned by BJALP) which, if the Merger is
consummated, will be converted into the right to receive the Merger
Consideration, or an aggregate of $110,896,744 in cash. As of September
25, 1995, officers and directors also held options to purchase an
aggregate of 266,300 shares of ACBJ Common Stock. As part of the
Merger, these options will be cancelled and each optionee will receive
cash for each share subject to an option in an amount equal to the
excess of the Merger Consideration over the option exercise price per
share. As a result, such officers and directors will receive an
aggregate of $4,793,171 upon cancellation of such options. Finally, as
of September 25, 1995, officers and directors held an aggregate amount
of Convertible Debentures which are convertible into an aggregate of
13,007 shares of ACBJ Common Stock. If the conversion rights of such
Convertible Debentures are validly exercised before the close of
business on the fifth business day prior to the Redemption Date, then
such officers and directors shall be entitled to receive an aggregate of
$364,196. See "Officers, Directors and Certain Stockholders of ACBJ."
Mr. Ray Shaw, Chairman and Chief Executive Officer of the
Company, and the Company's other executive officers are anticipated to
continue as officers of ACBJ following the Merger.
Under the ACBJ bylaws, ACBJ's current officers, directors,
employees and agents will be indemnified by ACBJ following consummation
of the Merger against certain liabilities, including certain
liabilities, if they should arise, in connection with the Merger. In
the Merger Agreement, Advance agreed to cause ACBJ to maintain such
indemnification obligations with respect to events occurring prior to
the Merger for a period of six years after the Merger. The Merger
Agreement also provides, in general, that the Company shall maintain
directors' and officers' liability insurance with respect to actions
prior to the Merger for a period of two years after the Effective Time.
No director or officer of ACBJ has any relationship or
affiliation with Advance or Merger Sub or their affiliates.
Accounting Treatment
For accounting purposes, the Merger shall be treated as a
purchase by Advance of all of the outstanding ACBJ Common Stock.
Federal Income Tax Consequences
Generally, if the Merger is consummated, ACBJ stockholders will
recognize taxable gain or loss for federal income tax purposes equal to
any difference between cash received pursuant to the Merger (or in
respect of dissenting shares) and the tax basis of the ACBJ Common Stock
exchanged. Each stockholder should consult his tax advisor as to the
particular consequences of the Merger to him, including the application
of state, local and other tax laws. See "Federal Income Tax
Consequences."
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Payment for Shares, Etc.
The Merger is expected to become effective twenty (20) calendar
days from the date of the mailing of this Information Statement. As
soon as practicable after the Merger becomes effective, instructions
regarding procedures for delivery of stock certificates and receipt of
the Merger Consideration will be mailed to stockholders and payment will
be made upon delivery of stock certificates and other required
documents. Stockholders should not deliver stock certificates to the
Company or the Paying Agent (as defined below) prior to the Effective
Time. Payments in cancellation of outstanding stock options will be
made following effectiveness of the Merger and receipt of certain
required documentation. Payments in respect of the Convertible
Debentures shall be made in accordance with the terms of the Indenture.
See "The Merger Agreement -- Payment for Shares, Etc." for additional
information concerning such procedures.
Regulatory Approvals and Other Conditions
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), the Merger may not be consummated unless
notice has been given and certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust
Division") and the Federal Trade Commission (the "FTC") and certain
waiting period requirements have been satisfied. The requisite
notification and report forms under the HSR Act were filed with the
Antitrust Division and FTC on August 16, 1995. On September 12, 1995,
the FTC notified ACBJ and Advance that the waiting period required by
the HSR Act had been terminated.
The respective obligations of ACBJ, Advance and Merger Sub to
consummate the Merger are also subject to the fulfillment of certain
other conditions, including the absence of any prohibition by any
statute, rule, regulation, judgment, decree, injunction or other order
of a court or governmental or regulatory authority prohibiting the
consummation of the transactions contemplated by the Merger Agreement.
The obligations of Advance and Merger Sub are also subject to
the following conditions, among others: (i) the absence of any
proceeding instituted by any governmental agency, or threatened to be
instituted by an antitrust enforcement agency, seeking to prohibit the
consummation of the transactions contemplated by the Merger Agreement
or, except as set forth in the Merger Agreement, to impose on ACBJ,
Advance, or Merger Sub or any of their respective affiliates any terms
or conditions that in the good faith judgment of the Board of Directors
of Advance are reasonably likely to adversely affect in any significant
manner the economic benefits of the transactions contemplated by the
Merger Agreement to Advance and its stockholders; (ii) the absence of a
Material Adverse Effect (as defined in the Merger Agreement); (iii) the
receipt by ACBJ of certain third party consents; and (iv) that the
number of shares of ACBJ Common Stock held by dissenting stockholders
shall represent not more than 15% of the outstanding ACBJ Common Stock.
See "The Merger Agreement --Conditions to the Merger" and Exhibit A.
5
<PAGE>
Termination
The Merger Agreement may be terminated: (i) by the mutual
consent of Advance, Merger Sub and ACBJ, (ii) by Advance or ACBJ if (a)
the Merger is not consummated on or before December 31, 1995, (b) there
shall be a final and non-appealable order of a court or other
governmental body prohibiting the Merger, or (c) the other party is in
material breach under the Merger Agreement (subject to certain notice
and cure rights in respect of such breach), (iii) by ACBJ if (a) ACBJ
receives an unsolicited written offer with respect to an acquisition
transaction that would, if consummated, result in a transaction more
favorable to ACBJ's stockholders from a financial point of view than the
transaction contemplated by the Merger Agreement, (b) the Board of
Directors of ACBJ determines their approval of such transaction is
required by fiduciary obligations under applicable law, and (c)
following three business days' prior written notice to Advance of ACBJ's
possible intention to enter into an agreement in respect thereof, ACBJ
enters into a binding written agreement in respect thereof, or (iv) by
Advance, if (a) subject to certain conditions and limitations, a court
or other governmental body shall have effected an order prohibiting the
transactions contemplated by the Merger Agreement, (b) subject to
certain conditions and limitations, a governmental or regulatory body
shall have instituted an action seeking to prohibit the transactions
contemplated by the Merger Agreement or to impose on ACBJ, Advance or
Merger Sub or any of their affiliates any terms or conditions that in
the good faith judgment of the Board of Directors of Advance are
reasonably likely to adversely affect in any significant manner the
economic benefits of such transactions to Advance and its stockholders,
or (c) ACBJ shall engage in certain negotiations or provide certain
confidential information to third parties in the exercise by ACBJ's
Board of Directors of its fiduciary obligations under applicable law and
Advance has not exercised an option under either the BJALP Option
Agreement or the Company Option Agreement. See "The Merger Agreement --
Termination" and Exhibit A.
Option Agreements
Concurrently with the Merger Agreement, the parties executed
and delivered (i) an option agreement between BJALP, The Oklahoma
Publishing Company, the sole stockholder of OPUBCO Enterprises, Inc.,
the general partner of BJALP ("OPUBCO"), and Advance (the "BJALP Option
Agreement") pursuant to which BJALP granted Advance the option to
purchase for $28.00 per share all of the ACBJ Common Stock owned by
BJALP under certain limited circumstances described therein, and (ii) an
option agreement between the Company and Advance (the "Company Option
Agreement") pursuant to which the Company granted Advance the option to
purchase for $28.00 per share up to 1,376,000 previously unissued shares
of ACBJ Common Stock under certain limited circumstances described
therein. See "The Option Agreements -- The BJALP Option Agreement" and
"-- The Company Option Agreement," and Exhibit B and Exhibit C attached
hereto.
6
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Dissenters' Rights of Appraisal
Under Delaware law, holders of ACBJ Common Stock who file the
required written demand for appraisal of their shares within twenty (20)
days after the date of the mailing hereof will have the right to be paid
the "fair value" of their shares as determined by the Delaware Court of
Chancery in lieu of cash payments pursuant to the Merger Agreement.
Such appraisal right will be lost, however, if the procedural
requirements of the Delaware General Corporation Law are not fully and
precisely satisfied. See "Appraisal Rights of Dissenting Stockholders"
and Exhibit D attached hereto.
Market Price and Dividends
ACBJ has never paid a cash dividend on the ACBJ Common Stock
and does not presently anticipate declaring cash dividends in the
foreseeable future.
On August 3, 1995, the last business day prior to the public
announcement of the Merger, the closing sale price per share of ACBJ
Common Stock as reported on the NASDAQ National Market System (which was
also both the high and low sale price on such date) was $21 3/4. The range
of the bid and asked prices for the Convertible Debentures on such date
was 128% and 138% of par, respectively, as reported in the over-the-
counter market. As of September 25, 1995, the most recent closing sale
price per share of ACBJ Common Stock as reported on the NASDAQ National
Market System was $27 3/8. Stockholders of ACBJ are urged to obtain
current market quotations for ACBJ Common Stock. See "Market Price and
Dividends."
Summary Financial Information
For certain selected financial data concerning the Company for
the five years ended December 31, 1994 and for the six months ended June
30, 1994 and June 30, 1995, see "Selected Financial Data."
Business of ACBJ
ACBJ, through its subsidiaries, publishes a chain of weekly
business newspapers in major metropolitan areas throughout the United
States. ACBJ owns through its subsidiaries 28 business newspapers, one
legal newspaper, and three motorsport publications. The newspapers
focus on the local business community by including information not
readily available to business leaders from other sources, standard
features which readers find useful in their own businesses, and profiles
and feature stories on local business personalities. Revenue is
generated through advertising sales and paid circulation income. See
"Information Concerning ACBJ."
[END OF SUMMARY]
7
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INTRODUCTION
This Information Statement is being furnished in connection
with the Merger pursuant to which the Merger Sub, subject to the terms
and conditions of the Merger Agreement, will be merged with and into
ACBJ. If the Merger is consummated, each outstanding share of ACBJ
Common Stock, other than those shares owned by any dissenting
stockholders, will be converted into the right to receive the Merger
Consideration in cash, and each outstanding share of common stock of
Merger Sub will be converted into one share of ACBJ Common Stock.
Upon consummation of the Merger, Advance will own all of the
outstanding shares of ACBJ Common Stock. Under the terms of the Merger
Agreement, the ACBJ Certificate of Incorporation will be amended to
reduce the authorized capital stock of ACBJ to 1,000 shares of common
stock, par value $1.00 per share. However, this amendment will become
effective only upon consummation of the Merger.
This Information Statement is first being mailed to
stockholders on or about September 28, 1995.
Pursuant to the Delaware General Corporation Law and ACBJ's
Certificate of Incorporation and bylaws, the affirmative vote or consent
of the holders of a majority of the outstanding shares of ACBJ Common
Stock is required for approval of the Merger and the Merger Agreement.
The record date for purposes of determining stockholders entitled to
consent to the Merger and the Merger Agreement was August 3, 1995. As
of that date, BJALP held 3,885,105 shares of ACBJ Common Stock,
approximately 56% of the 6,917,516 shares then outstanding. BJALP has
delivered its written consent to the Merger and Merger Agreement and
related transactions. Therefore, the Merger requires no further
authorization or approval from the stockholders of ACBJ.
The address of the principal executive offices of ACBJ is 128
S. Tryon Street, Suite 2300, Charlotte, North Carolina 28202; Telephone
(704) 375-7404.
APPROVAL BY THE BOARD OF DIRECTORS;
REASONS FOR THE MERGER
Background of the Merger
The ACBJ Common Stock has been publicly traded since July 1985,
when ACBJ completed its initial public offering of common stock, on the
NASDAQ National Market System. In 1989, the predecessor-in-interest of
BJALP became the majority stockholder of ACBJ. Since that time, the
Company's performance and profitability has improved materially as the
Company has expanded its operations. At the beginning of 1995, BJALP
began preliminarily to consider possible strategic alternatives
regarding its investment in ACBJ.
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Such consideration was based on the long range investment objectives of
OPUBCO Enterprises, Inc. (a wholly owned subsidiary of OPUBCO) and Mr.
Ray Shaw, the general partner and limited partner of BJALP,
respectively, and, although BJALP had made no decision at that time
whether to pursue any particular plan or proposal, culminated in the
decision in March of 1995 to engage an investment banking firm to assist
BJALP in this process. After considering several investment banking
firms, BJALP retained Lazard on April 5, 1995 to evaluate on a
confidential basis various strategic alternatives regarding BJALP's
investment in ACBJ, including, but not limited to, a sale of such
interest or a possible sale of ACBJ as a whole on terms favorable to all
the Company's stockholders. In this latter regard, at the direction of
BJALP, Lazard made inquiries of various third parties to solicit on a
confidential basis offers or indications of interest to purchase ACBJ.
During this period, Mr. Shaw also spoke informally and separately with
the outside directors of the Company to inform them in general terms of
BJALP's interest in evaluating its strategic alternatives, including a
possible sale of ACBJ or BJALP's interest therein.
By June 19, 1995, Lazard had received and presented to BJALP
preliminary indications of interest from four potential buyers, each of
whom indicated an interest in acquiring ACBJ as a whole. Due to such
indications of interest and as a result of the fact that BJALP
determined not to consider other potential strategic alternatives at
that time, BJALP concluded that its activities to that date should be
presented to the Board of Directors of ACBJ for its review and
consideration.
On June 22, 1995, the Board of Directors of ACBJ met
telephonically and received a presentation from Mr. Shaw concerning
BJALP's retaining of Lazard and the results of Lazard's inquiries to
that date. In particular, Mr. Shaw described indications of interest
received from four potential strategic buyers. Mr. Shaw indicated in
that meeting that all indications of interest were for the Company as a
whole and, therefore, that it was appropriate for any potential
transaction to be considered by the Board of Directors on behalf of all
the Company's stockholders. The Board discussed in detail the steps
that would be taken following the meeting if the Board determined to
continue the process. It was decided that such additional steps would
include documentary due diligence and management interviews by potential
buyers pursuant to confidentiality agreements executed by such potential
buyers. The Board agreed that this process would be exploratory only
and that no decision was being made regarding any potential transaction.
If any such transaction were to be considered, it would only be
considered with the subsequent review, consideration and approval of the
entire Board.
Following this discussion at the June 22, 1995 meeting, the
Board adopted resolutions (i) authorizing management to explore possible
strategic alternatives to maximize stockholder value, including through
a potential sale of the Company, (ii) authorizing management to retain
the services of Lazard on behalf of ACBJ in connection with this
exploratory process, and (iii) ratifying the actions of BJALP taken
theretofore as being in the Company's interest and approving the
Company's reimbursement of BJALP's costs and expenses in respect
thereof.
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Pursuant to such resolutions, the Company formally retained
Lazard to advise it in this exploratory process on July 5, 1995. BJALP
also terminated its engagement of Lazard on that date. Between June 22,
1995 and July 19, 1995, the four potential buyers met with management
and conducted a review of information concerning the Company. On July
20, 1995, the Company distributed a draft merger agreement to the four
potential buyers and indicated that formal proposals should be submitted
by July 31, 1995. On July 24, 1995 this deadline was extended to August
7, 1995. In the meantime, however, by July 31, 1995, the Company,
through Lazard, received communications from each of the potential
buyers (although no formal offer had been received from Advance or any
other potential buyer) which indicated that the offer that would be
received from Advance would be greater than any other offer which was
likely to be received.
On this basis, after discussions with Lazard, the Board of
Directors concluded that it was in the Company's and its stockholders'
best interest to pursue, on an accelerated basis, a transaction with
Advance. As a result, on August 1, 1995, Lazard met with representatives
of Advance and its financial advisors and counsel to discuss the
potential terms for a transaction, including the sale of the Company as
a whole. At such August 1, 1995 meeting, Advance submitted proposed
modifications to the Company's draft merger agreement and indicated a
possible willingness to enter into such an agreement for an effective
purchase price for the outstanding ACBJ Common Stock plus shares
underlying the Convertible Debentures and outstanding stock options of
approximately $28.00 per share. As part of its proposal, Advance
required the execution of the BJALP Option Agreement and the Company
Option Agreement pursuant to which BJALP and the Company, respectively,
granted Advance options under certain limited circumstances described
therein to purchase the 3,885,105 shares of ACBJ Common Stock owned by
BJALP and up to 1,376,000 shares of previously unissued ACBJ Common
Stock, each at a purchase price per share equal to the amount of the
merger consideration. See "The Option Agreements" and Exhibits B and C.
Throughout the course of the August 1 discussions, representatives of
Advance indicated that Advance's willingness to negotiate a transaction
at the price and terms discussed was predicated on the Company's
negotiating with Advance on an exclusive basis. The Board determined
that it was willing to negotiate on that basis due to the prior
communications from the other potential buyers as indicated above.
During the time of Lazard's August 1, 1995 meeting with
Advance, the Board of Directors of ACBJ met separately to receive a
formal presentation from Lazard concerning its valuation analyses of
ACBJ and a review of the sale process to date, and to receive and
consider Lazard's report concerning its negotiations with Advance. Upon
receiving such report and advice from Lazard, the Board, after
substantial discussion and weighing of alternatives with its legal and
financial advisors and after review of Lazard's presentation, determined
that acceptance of Advance's offer of $28.00 per share was in the best
interest of all of the Company's stockholders. Such determination was
also based upon the Board's expectation that it would receive an opinion
from Lazard as to the fairness of the Merger Consideration to the
stockholders from a financial point of view, assuming satisfactory
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resolution of the outstanding terms of the Merger Agreement and final
approval from Lazard's internal management committee.
On August 1, 1995 while the Board of Directors meeting
continued in session, Lazard communicated the Board's decision to
Advance, and Advance indicated that it was prepared to sign the Merger
Agreement, the BJALP Option Agreement and the Company Option Agreement,
subject to resolution of the final terms of such agreements by the
parties' respective counsel. On that basis, the Board approved the
Merger, the Merger Agreement, the Company Option Agreement and other
transactions contemplated thereby, subject to resolution of the final
terms of such agreements and subject to delivery by Lazard of its
written opinion concerning the fairness of the Merger Consideration to
the stockholders from a financial point of view.
By August 3, 1995, (i) counsel had resolved the remaining terms
of the agreements, (ii) Lazard issued its written opinion concerning the
fairness of the Merger Consideration to the Company's stockholders from
a financial point of view, (iii) the Board executed, pursuant to
Delaware law, a further unanimous written consent of the directors to
action without meeting confirming the Board's approval of the
transaction previously approved at the August 1, 1995 meeting and, in
particular, approving the Merger, the Merger Agreement, the Company
Option Agreement and the other transactions contemplated thereby, and
(iv) based on the foregoing, the parties executed and delivered the
Merger Agreement, the BJALP Option Agreement and the Company Option
Agreement.
On August 4, 1995, the Company issued a press release
announcing the execution of the Merger Agreement, the BJALP Option
Agreement and the Company Option Agreement.
Approval by the Board of Directors
The Board of Directors of ACBJ (including the outside
directors) has concluded that the Merger is in the best interest of the
stockholders of ACBJ and has unanimously approved the Merger and the
Merger Agreement.
In making its determination with respect to the Merger, the
ACBJ Board considered the following factors: (i) information relating
to the business, assets, management, competitive position and prospects
of ACBJ, (ii) the financial condition, cash flows and results of
operations of ACBJ, both on an historical and on a prospective basis,
(iii) historical market prices and trading information with respect to
the ACBJ Common Stock, (iv) the relatively small "public float" and the
low trading volume of ACBJ Common Stock, (v) the results of the
solicitation of offers to purchase ACBJ in connection with the
evaluation of the best available alternatives for maximizing stockholder
value, (vi) the fact that the Merger Consideration for the ACBJ Common
Stock represents a substantial premium of approximately 23% over the
highest reported closing sale price for ACBJ Common Stock for the period
from July 1985 (when the ACBJ Common Stock first became publicly traded)
until August 3, 1995 (the last trading day prior to the announcement of
the Merger), (vii) the fact
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that the terms of the Merger Agreement were negotiated on an
arm's-length basis, and (viii) the opinion, analyses and presentations
of Lazard described under "-- Opinion of ACBJ Financial Advisor" below.
The Board also considered the fact that the BJALP Option Agreement and
Company Option Agreement could discourage competing bids,
notwithstanding the Board's ability to consider such bids pursuant to
the fiduciary duties exception in the Merger Agreement. The foregoing
factors were noted and discussed by individual directors during the
course of the Board's deliberations. However, the Board of Directors
did not attach any relative weight to the various factors considered in
reaching its decision, and the Board as a whole did not articulate how
each factor specifically supported its ultimate decision. Taking all of
the foregoing factors as a whole, the Board concluded that Advance's
offer represented the highest currently available price for the Company
(and the highest price likely to become available in the near future),
that it was a fair price and represented a substantial premium over
prices likely to be available in the public market for the foreseeable
future, and that the Merger was more attractive to ACBJ's stockholders
than other alternatives.
The ACBJ Board, therefore, unanimously approved the Merger and
the Merger Agreement and the transactions contemplated thereby.
Opinion of ACBJ Financial Advisor
Lazard has delivered to the ACBJ Board of Directors its written
opinion, dated August 3, 1995, to the effect that as of such date, based
upon and subject to various considerations set forth in such opinion,
the Merger Consideration to be received by the stockholders of ACBJ in
the Merger is fair to the stockholders of ACBJ from a financial point of
view. No limitations were imposed by the ACBJ Board of Directors upon
Lazard with respect to the investigations made or the procedures
followed by Lazard in rendering its opinion.
The full text of the opinion of Lazard, dated August 3, 1995,
which sets forth the assumptions made, matters considered and limits on
the review undertaken, is attached as Exhibit E to this Information
Statement and is incorporated herein by reference. ACBJ stockholders
are urged to read such opinion carefully and in its entirety. Lazard
made no recommendation to the Board as to whether the Board should
accept the amount of the Merger Consideration offered by Advance.
Lazard's opinion is directed only to the fairness of the Merger
Consideration from a financial point of view. The summary of the
opinion of Lazard set forth in this Information Statement is qualified
in its entirety by reference to the full text of such opinion.
In arriving at its opinion, Lazard (i) reviewed the financial
terms and conditions of the Merger Agreement; (ii) reviewed certain
historical business and financial information relating to ACBJ; (iii)
reviewed certain financial forecasts and other data provided to Lazard
by ACBJ relating to its business; (iv) held discussions with members of
the senior management of ACBJ with respect to the business and prospects
of ACBJ; (v) reviewed public information
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<PAGE>
with respect to certain other companies in lines of business Lazard
believed to be generally comparable to that of ACBJ; (vi) reviewed the
financial terms of certain business combinations involving companies in
lines of business Lazard believed to be generally comparable to ACBJ;
(vii) reviewed the historical stock prices and trading volumes of ACBJ
Common Stock and those of certain public companies deemed to be
generally comparable to ACBJ; and (viii) conducted such other financial
studies, analyses and investigations as Lazard deemed appropriate.
In connection with its review, Lazard relied upon the accuracy
and completeness of the financial and other information provided by ACBJ
to, reviewed by or for or discussed with Lazard or which was publicly
available, and did not assume any responsibility for any independent
verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of ACBJ, nor was Lazard
provided with any such appraisals. With respect to the financial
forecasts and other information referred to above, Lazard assumed that
such forecasts and information were reasonably prepared or reviewed, as
the case may be, on bases reflecting the best currently available
estimates and judgments of management of ACBJ as to the future financial
performance of ACBJ. Lazard assumed no responsibility for and expressed
no view as to such forecasts or the assumptions on which they were
based. Lazard's opinion was necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made
available as of the date of, the opinion and did not address ACBJ's
underlying business decision to effect the Merger or constitute a
recommendation to any stockholder of ACBJ as to how such stockholder
should vote with respect to the Merger. Lazard assumed that the Merger
would be consummated on the terms described in the Merger Agreement,
without any waiver of any material terms or conditions by ACBJ.
In connection with its written opinion delivered to the ACBJ
Board of Directors on August 3, 1995, Lazard performed certain analyses
which involved the following:
Comparable Public Company Trading Analysis. Lazard analyzed
certain publicly available financial, operating and stock market data of
13 companies in the newspaper and magazine publishing industry (the
"Public Comparables"), as well as that of ACBJ. Lazard noted that there
are no public companies which are directly comparable to ACBJ, since (i)
ACBJ has characteristics of both newspaper and magazine publishers and
(ii) most major newspaper and magazine publishers also own other media
assets which affect their market valuation, while ACBJ is exclusively
focused on its niches of the print publishing market. Lazard examined,
among other things, multiples of market capitalization to
latest-twelve-month ("LTM") earnings before interest, tax, depreciation
and amortization ("EBITDA"), 1995 estimated EBITDA (as estimated by Wall
Street financial analysts) and 1996 estimated EBITDA (as estimated by
Wall Street financial analysts). The analysis indicated that the Public
Comparables traded at ranges of 5.1x to 9.4x, 5.0x to 8.8x, and 4.9x to
8.1x LTM, estimated 1995 and estimated 1996 EBITDA, respectively.
Lazard noted that ACBJ traded at multiples of 10.6x and 9.3x LTM and
estimated 1995 EBITDA (based on Wall Street financial analysts'
estimates), respectively. (Wall Street analysts did not provide
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<PAGE>
estimates for ACBJ beyond 1995.) Lazard further noted that ACBJ's
multiples were at a significant premium to those of the Public
Comparables.
Comparable Transactions Analysis. Lazard reviewed and analyzed
selected financial and operating information relating to 20 acquisition
transactions in the newspaper and magazine publishing industry since
November 1991 (the "Comparable Transactions"). Lazard noted that the
most comparable transactions, involving the purchase of single business
journals, have been private transactions for which no financial
information is publicly available. With respect to the Comparable
Transactions, the analysis considered the transaction value and the
multiple of transaction value to LTM EBITDA. The analysis indicated
that these transactions occurred at multiples ranging from 8.0x to
12.4x. Multiples were derived from publicly available sources, which
may or may not be reliable. Lazard further noted that these multiples
would imply equity values for ACBJ of $16.78 to $26.54 per share,
respectively.
Leveraged Buyout Analysis. Lazard performed a leveraged buyout
("LBO") analysis of ACBJ, utilizing projections provided by management
of ACBJ, an assumed transaction date of September 30, 1995 and an exit
date of December 31, 1999, at EBITDA exit multiples ranging from 9.0x to
11.0x. Lazard also assumed a hypothetical capital structure comprised
of $80 million of senior debt and $40 million of subordinated debt, with
the remaining funding coming from new equity. Under the assumed LBO
structure, and assuming investors require a return on equity of 25% to
30%, the LBO analysis indicated the financial projections provided by
management of ACBJ could support a purchase price of up to $22.00 per
share.
Discounted Cash Flow Analysis. Based upon projections prepared
by management of ACBJ which assume continuing macroeconomic growth and
no cyclicality, and extrapolations therefrom, Lazard used a discounted
cash flow ("DCF") methodology to estimate the net present value of
future free cash flows as of September 30, 1995 available to the equity
holders of ACBJ if ACBJ were to perform on a stand-alone basis (without
giving effect to the Merger). In conducting this analysis, Lazard
assumed discount rates ranging from 10% to 12%, derived from a weighted
average cost of capital analysis of ACBJ and the Public Comparables, and
terminal value multiples ranging from 9.0x to 11.0x estimated 1999
EBITDA, derived from a review of the Public Comparables and the
Comparable Transactions. This analysis indicated a DCF equity valuation
of ACBJ Common Stock of between $26.55 and $33.65 per share. In
addition, as a sensitivity analysis, Lazard presented to the ACBJ Board
of Directors a downside case analysis which was based on discussions
with, and was reviewed by, management of ACBJ. The resulting DCF
analysis assumed a cyclical economic downturn in 1997 would cause
revenues to decline 10% in 1997 and increase 5% in 1998 and 10% in 1999,
and further cause EBITDA to decline by 40% of the reduction in revenue
in 1997 and then increase in margin by 1% thereafter. This analysis
indicated an equity valuation of ACBJ Common Stock of between $19.99 and
$25.30 per share.
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<PAGE>
Other Analyses. In rendering its opinion, Lazard also
performed: (i) a review of the history of trading prices and volumes
for ACBJ Common Stock and an index representing the prices of the stocks
of the Public Comparables, and (ii) an analysis of implied transaction
multiples of LTM, estimated 1995 and estimated 1996 EBITDA (each as
estimated by management of ACBJ), and estimated 1995 EBITDA adjusted to
exclude certain costs (as estimated by management of ACBJ) associated
with ACBJ being a public company, at prices of ACBJ Common Stock ranging
from $21.50 and $28.00. Lazard did not derive a valuation of ACBJ from
the above analyses but prepared such analyses only for informational
purposes for the ACBJ Board of Directors.
Lazard utilized the Public Comparables, Comparable
Transactions, LBO and DCF analyses described above to analyze ACBJ. The
methodologies described above were used by Lazard to determine whether
the consideration proposed to be paid by Advance for all the ACBJ Common
Stock was fair to the holders of such Common Stock in light of Lazard's
valuation of ACBJ. In addition, Lazard took into account the results of
its discussions with various third parties with respect to such parties'
potential interest in acquiring ACBJ in rendering its opinion.
In arriving at its written opinion, Lazard performed a variety
of financial analyses, the material portions of which are summarized
above. The summary set forth above does not purport to be a complete
description of the analyses performed by Lazard. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible
to partial analysis or summary description. The analyses must be
considered as a whole and selecting portions of such analyses and the
factors considered by Lazard, without considering all of such analyses
and factors, could create an incomplete view of the process underlying
the analyses set forth in the opinion. No company or transaction used
in the above analysis as a comparison is identical to ACBJ or the
transaction contemplated by the Merger Agreement. Accordingly, an
analysis of the foregoing is not mathematical; rather, it involves
complex considerations and judgments concerning differences in financial
and operating characteristics of the Public Comparables and other
factors that could affect the acquisition or public trading value of the
Public Comparables to which ACBJ is being compared.
The analyses were prepared solely for purposes of Lazard
providing its opinion to the ACBJ Board of Directors as to the fairness
of the Merger Consideration to the stockholders of ACBJ from a financial
point of view and do not purport to be appraisals or necessarily reflect
the prices at which businesses or securities actually may be sold, which
may be significantly more or less favorable than as set forth in these
analyses. Similarly, any estimate of values or forecast of future
results contained in the analyses is not necessarily indicative of
actual values or actual future results, which estimates are inherently
subject to uncertainty. Lazard's opinion to the ACBJ Board of Directors
was one of many factors taken into consideration by the ACBJ Board of
Directors in making its determination to approve the Merger Agreement.
The foregoing summary does not purport to be a complete description of
the analyses performed by Lazard and is qualified in its entirety by
reference to the full text of the Lazard opinion attached as Exhibit E
hereto.
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Lazard is an internationally recognized investment banking firm
that regularly engages in the valuation of businesses and their
securities in connection with mergers and acquisitions. The ACBJ Board
of Directors selected Lazard to act as its financial advisor in
connection with the Merger and related matters based upon its
qualifications, expertise and reputation in investment banking in
general and mergers and acquisitions specifically. As indicated below,
Lazard previously acted as financial advisor to BJALP, the controlling
stockholder of ACBJ.
In consideration for Lazard's services, if the Merger is
consummated, ACBJ will pay Lazard a fee of approximately $3.1 million.
If the Merger or a similar transaction is not consummated prior to April
5, 1996, ACBJ will have paid Lazard a fee of $35,000. In addition,
BJALP agreed to pay Lazard a fee of $15,000 in connection with services
provided to BJALP prior to ACBJ's retention of Lazard. Pursuant to the
authorization of the ACBJ Board of Directors indicated above, ACBJ has
agreed to reimburse BJALP for the amount of such payment. ACBJ has also
agreed to reimburse Lazard for its out-of-pocket expenses and to
indemnify Lazard and its affiliates, and their respective partners,
directors, officers, employees, agents and controlling persons against
certain expenses and liabilities, including liabilities under the
federal securities laws.
EFFECTS OF THE MERGER
After consummation of the Merger, Advance will own 100% of the
outstanding capital stock of ACBJ and will be entitled to all the
benefits that result from such ownership. Such benefits include
complete management and investment discretion with regard to the future
conduct of ACBJ's business and the benefit of all profits generated by
the operations of ACBJ and any increase in the value of ACBJ.
Similarly, Advance's ownership of the capital stock of ACBJ after the
Merger will mean that Advance will bear the risk of any decrease in the
value of ACBJ. The present holders of ACBJ Common Stock will no longer
have any equity interest in ACBJ, will not share in the earnings and
growth of ACBJ and will no longer have any rights to vote on corporate
matters. At the Effective Time, each share of ACBJ Common Stock held by
such persons will be converted into the right to receive the Merger
Consideration in cash, which will be paid promptly after delivery of
certificates for such shares and other required documents. See "The
Merger Agreement -- Payment for Shares, Etc." In lieu of the right to
receive the Merger Consideration, such persons may exercise the
statutory appraisal rights described under "Appraisal Rights of
Dissenting Stockholders."
After the Merger is consummated, shares of ACBJ Common Stock
will no longer be traded on the NASDAQ National Market System,
registration of ACBJ Common Stock under the Exchange Act will terminate,
and ACBJ will cease filing periodic reports with the SEC. Following the
Merger, ACBJ will no longer be subject to the proxy rules of the
Exchange Act and ACBJ's directors and officers will no longer be subject
to certain filing requirements and the short-swing profit recovery
provisions of the Exchange Act.
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The Company's outstanding stock options will be cancelled upon
consummation of the Merger. In addition, the Merger Agreement provides
that at the Effective Time the surviving corporation shall take all
requisite actions in accordance with the terms of the Indenture to
redeem all of the then outstanding Convertible Debentures. Such
redemption shall be effected at the redemption price and on the terms
stated in the Indenture and shall become effective, subject to the terms
of the Indenture, as of the Redemption Date, which is the date that is
thirty (30) days after the Effective Time, with respect to all
Convertible Debentures whose conversion rights are not validly exercised
before the close of business on the fifth business day prior to the
Redemption Date. Consequently, no Convertible Debentures will remain
outstanding following the Redemption Date.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
At the Effective Time, each share of ACBJ Common Stock, other
than those shares owned by any dissenting stockholders, will be
converted into the right to receive the Merger Consideration in cash.
As of September 25, 1995, officers and directors of ACBJ beneficially
owned an aggregate of 3,960,598 shares of ACBJ Common Stock (including
shares owned by BJALP) which, at the Effective Time, will be converted
into the right to receive the Merger Consideration or an aggregate of
$110,896,744 in cash. As of September 25, 1995, officers and directors
also held options to purchase an aggregate of 266,300 shares of ACBJ
Common Stock. As part of the Merger, these options will be cancelled
and each optionee will receive cash for each share subject to an option
in an amount equal to the excess of the Merger Consideration over the
option exercise price per share. As a result, such officers and
directors will receive an aggregate of $4,793,171 upon cancellation of
options. Finally, as of September 25, 1995, officers and directors held
an aggregate amount of Convertible Debentures which are convertible into
an aggregate of 13,007 shares of ACBJ Common Stock. If the conversion
rights of such Convertible Debentures are validly exercised before the
close of business on the fifth business day prior to the Redemption
Date, then such officers and directors shall be entitled to receive an
aggregate of $364,196. See "Officers, Directors and Certain
Stockholders of ACBJ."
Mr. Ray Shaw, the Company's Chairman and Chief Executive
Officer, and the Company's other executive officers are anticipated to
continue as officers of ACBJ following the Merger.
Under the ACBJ bylaws, ACBJ's current officers, directors,
employees and agents will be indemnified by ACBJ following consummation
of the Merger against certain liabilities, including certain
liabilities, if they should arise, in connection with the Merger. In
the Merger Agreement, Advance agreed to cause ACBJ to maintain such
indemnification obligations with respect to events occurring prior to
the Merger for a period of six years after the Merger. The Merger
Agreement also provides, in general, that the Company shall maintain
directors' and officers' liability insurance with respect to actions
prior to the Merger for a period of two years after the Effective Time.
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No director or officer of ACBJ has any relationship or
affiliation with Advance or Merger Sub or their affiliates.
ACCOUNTING TREATMENT
For accounting purposes, the Merger shall be treated as a
purchase by Advance of all of the outstanding ACBJ Common Stock.
FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY. EACH STOCKHOLDER SHOULD CONSULT HIS OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES OF THE MERGER TO HIM,
INCLUDING CONSEQUENCES UNDER APPLICABLE STATE, LOCAL AND OTHER TAX LAWS.
THE COMPANY HAS NOT SOUGHT AN OPINION OF COUNSEL WITH RESPECT TO THE TAX
CONSEQUENCES OF THE MERGER.
The following description of the federal income tax
consequences of the Merger is included solely for the general
information of stockholders.
Stockholders of ACBJ
Generally, the exchange of shares of ACBJ Common Stock for cash
pursuant to the Merger or the exercise of dissenters' rights will
constitute a taxable sale of stock by ACBJ stockholders. Consequently,
each such stockholder will generally recognize gain or loss equal to the
difference between the amount of cash so received and his tax basis in
the shares exchanged for cash. If the exchanged shares are capital
assets in the hands of a stockholder, he will recognize a capital gain
or loss. Such capital gain or loss will be long-term with respect to
shares held for more than one year at the time of consummation of the
Merger and short-term with respect to shares held for one year or less.
With regard to shares acquired by holders in a conversion of the
Company's Convertible Debentures, see the discussion below.
Holders of Convertible Debentures
It is intended that the Company's Convertible Debentures will
be redeemed promptly following the Effective Time. Such redemption
shall be subject to the right of each holder of Convertible Debentures
to exercise his conversion rights with respect to such Convertible
Debentures after the Effective Time but before the close of business on
the fifth business day prior to the Redemption Date and to receive, in
exchange for each share of ACBJ Common Stock into which such Convertible
Debentures could have been converted prior to the Effective Time, the
amount of the Merger Consideration in cash. See "The Merger Agreement
- -- Redemption of Convertible Debentures."
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If a Convertible Debenture is subject to original issue
discount ("OID") treatment, the Convertible Debenture holder will
recognize ordinary income attributable to the daily accrual of OID
during his taxable year during which the Convertible Debenture is
disposed of by conversion or redemption. The Convertible Debenture
holder's tax basis in the Convertible Debenture will reflect any OID at
any time included in the income of the holder. Likewise, a Convertible
Debenture holder's tax basis will reflect any unamortized bond premium.
The conversion of the Convertible Debentures into ACBJ Common
Stock, and the exchange of such ACBJ Common Stock, or conversion rights
in respect thereof, for cash will generally be taxed as described above
under "-- Stockholders of ACBJ." However, certain holders that acquired
their Convertible Debentures other than in exchange for the Company's
$1.50 Convertible Exchangeable Preferred Stock (the "Preferred Stock")
may be subject to the market discount provisions of the Internal Revenue
Code of 1986, as amended (the "Code"); if so, any accrued market
discount not previously included in income as of the date of the
conversion of the Convertible Debentures will be treated as ordinary
income. The holding period of the shares into which each Convertible
Debenture is converted will include the period during which the
Convertible Debenture was owned, provided such Convertible Debenture was
held as a capital asset.
If a Convertible Debenture holder does not convert his
Convertible Debentures into ACBJ Common Stock, the Company's redemption
of a Convertible Debenture for cash will be treated as a taxable sale of
the Convertible Debenture; and the Convertible Debenture holder will
generally recognize gain or loss equal to the difference between the
amount of cash so received (except to the extent attributable to accrued
interest) and his tax basis in the Convertible Debenture. Subject to
market discount provisions of the Code, such gain or loss will be
capital gain or loss if the Convertible Debentures were held as capital
assets. Such capital gain or loss will be long-term with respect to a
Convertible Debenture held for more than one year and short- term with
respect to a Convertible Debenture held for one year or less. The
Convertible Debenture holder will realize ordinary income to the extent
that the payment represents accrued interest or accrued market discount
on the Convertible Debenture.
Holders of Options
Each holder of an option granted under any of the Company's
stock option plans that is cancelled in the Merger will recognize
ordinary income to the extent that the amount of cash received upon
cancellation of his option(s) exceeds his tax basis in the option(s).
ACBJ
The Merger of Merger Sub into ACBJ should not result in the
recognition of any gain or loss by ACBJ.
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FINANCING THE MERGER
The consummation of the Merger by Advance is not conditioned
upon Advance obtaining financing for any of the amount payable to the
holders of ACBJ Common Stock, Company options or Convertible Debentures
pursuant to the Merger Agreement. Advance anticipates that the
consideration payable pursuant to the Merger Agreement will come from
the working capital of Advance (including amounts available for
borrowing under credit facilities).
THE MERGER AGREEMENT
General
ACBJ, BJALP, Advance and Merger Sub have entered into the
Merger Agreement, which provides that, subject to compliance with
certain covenants and conditions, Merger Sub will be merged with and
into ACBJ, which will be the surviving corporation (the "Surviving
Corporation"). All references in this Information Statement to the
terms and conditions in the Merger Agreement are qualified in their
entirety by reference to the Merger Agreement, a copy of which is
attached hereto as Exhibit A.
At the Effective Time, the holders of outstanding shares of
ACBJ Common Stock, except shares held by any dissenting stockholders,
will be entitled to receive the Merger Consideration in cash, without
interest, for each share of ACBJ Common Stock held by them, and each
outstanding share of common stock of the Merger Sub will be converted
into one share of ACBJ Common Stock.
Also, prior to the Effective Time, ACBJ will take such actions
as may be necessary such that at the Effective Time all outstanding
options granted pursuant to all of the stock option plans of ACBJ to
purchase ACBJ Common Stock will be cancelled and holders of such options
will receive the excess of the Merger Consideration over the exercise
price per share of such option for each share covered by the option. As
of September 25, 1995, there were options outstanding to purchase an
aggregate of 690,100 shares of ACBJ Common Stock.
In accordance with and subject to the terms of the Indenture,
each outstanding Convertible Debenture whose conversion rights are
validly exercised after the Effective Time but before the close of
business on the fifth business day prior to the Redemption Date shall be
converted into the right to receive, without interest, the amount that
would have been received by a holder of the number of shares of ACBJ
Common Stock into which such Convertible Debenture could have been
converted immediately prior to the Effective Time. As of September 25,
1995, there were Convertible Debentures outstanding in respect of an
aggregate of 1,957,561 shares of ACBJ Common Stock.
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Stockholders who have not consented in writing to approve the
Merger Agreement and who otherwise comply with the provisions of the
Delaware General Corporation Law regarding dissenters' rights have the
right to an appraisal of the fair value of their shares of ACBJ Common
Stock and to be paid the appraised value, with no rights as stockholders
in the Surviving Corporation. See "Appraisal Rights of Dissenting
Stockholders." After the Merger, holders of ACBJ Common Stock who
become entitled to receive cash will possess no interest in, or rights
as stockholders of, the Surviving Corporation. See "Effects of the
Merger."
Pursuant to the Merger Agreement, the Certificate of
Incorporation of ACBJ will be amended as of the Effective Time to reduce
the authorized capital stock of ACBJ to 1,000 shares of common stock,
$1.00 par value per share. This amendment has been included in the
Merger Agreement at the request of Advance since after the Merger, ACBJ
will be a wholly owned subsidiary of Advance. The amendment will not
become effective unless and until the Merger is consummated. It will,
therefore, have no effect on the rights of present stockholders.
Effective Time
The Effective Time will be as of the time and date of the
filing of the Certificate of Merger with the Secretary of State in
accordance with the Delaware General Corporation Law or at the time
specified in the Certificate of Merger, if later than the time of
filing. It is presently anticipated that the Certificate of Merger will
be filed with the Secretary of State of Delaware and that the Merger
will become effective as soon as practicable on or after twenty (20)
calendar days after the date of the mailing of this Information
Statement and after the conditions to the consummation of the Merger
have been satisfied or duly waived.
Payment for Shares, Etc.
The Merger Agreement provides that, as of the Effective Time,
each outstanding share of ACBJ Common Stock other than shares held by
any dissenting stockholders will be converted into a right to receive
the Merger Consideration in cash. The Merger Agreement provides that,
immediately prior to the Effective Time, Advance will deposit funds with
First Union National Bank, or another entity reasonably acceptable to
the Company, as Paying Agent (the "Paying Agent") in an amount equal to
(a) the funds necessary to pay the Merger Consideration times the number
of outstanding shares of ACBJ Common Stock, plus (b) the funds necessary
to satisfy obligations to the holders of stock options. The Surviving
Corporation may withdraw amounts payable with respect to shares of any
dissenting stockholders after such stockholders have perfected their
dissenters' rights, and such stockholders must thereafter look to the
Surviving Corporation for payment. As and when required in accordance
with the Indenture, Advance and the Surviving Corporation will provide
the Paying Agent with cash in an amount equal to the Merger
Consideration times the number of shares of ACBJ Common Stock into which
Convertible Debentures (whose conversion rights are exercised after the
Effective Time but before the close of business on
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the fifth business day prior to the Redemption Date) could have been
converted immediately prior to the Effective Time. In lieu of any
fractional share otherwise resulting from such conversion, a holder will
receive an amount equal to such fraction multiplied by the Merger
Consideration. Promptly after the Effective Time, stockholders will be
mailed a notice of the consummation of the Merger, together with
instructions as to delivery of certificates for ACBJ Common Stock
(including instructions for stockholders whose stock is held in street
name) and other documentation to the Paying Agent. The Paying Agent
will mail to each holder of ACBJ Common Stock as soon as practicable
after receipt of the stock certificate or certificates and properly
completed transmittal documentation, a check equal to the Merger
Consideration multiplied by the number of shares surrendered by such
stockholder, after giving effect to any required tax withholdings. No
interest will be paid or accrued on the amounts payable upon the
surrender of stock certificates. Six (6) months after the Effective Time
of the Merger, any remaining funds held by the Paying Agent may be
released to the Surviving Corporation upon written request, in which
case the Surviving Corporation shall thereafter act as Paying Agent.
Conditions to the Merger
The respective obligations of ACBJ, Advance and Merger Sub to
consummate the Merger are subject to the fulfillment of certain
conditions including, among others, the following: (i) the performance
in all material respects of all obligations and covenants made by the
other parties to the Merger Agreement; (ii) the absence of any
prohibition by any statute, rule, regulation, judgment, decree,
injunction or other order of a court or governmental or regulatory
authority of competent jurisdiction prohibiting the consummation of the
transactions contemplated by the Merger Agreement; (iii) the
representations and warranties made by the other parties in the Merger
Agreement being true and correct unless the failure of such
representations and warranties to be true and correct is caused by a
matter, development or event which has not had or is not reasonably
likely to have a material adverse effect (as provided in the Merger
Agreement); (iv) the delivery of all regulatory and other filings to,
and receipt of all consents, approvals and authorizations from,
governmental and regulatory authorities required by ACBJ in connection
with the execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby; and (v) the
expiration or termination of the waiting period under the HSR Act.
The obligations of Advance and Merger Sub are also subject to
the following conditions, among others: (i) the absence of any action,
suit or proceeding instituted by any governmental or regulatory
authority, agency, department or commission, or, in the case of the
valid exercise of jurisdiction over the transactions contemplated by the
Merger Agreement with respect to antitrust considerations, threatened to
be instituted by any such authority, agency, department or commission
exercising such antitrust jurisdiction, seeking to (a) prohibit the
consummation of the transactions contemplated by the Merger Agreement,
or (b) except as set forth in the Merger Agreement, impose on ACBJ,
Advance, Merger Sub or any of their respective affiliates, any terms or
conditions that in the good faith judgment of the Board of Directors of
Advance are reasonably likely to adversely affect in any significant
manner the economic benefits of the transactions contemplated by the
Merger Agreement to
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Advance and its stockholders; (ii) the absence of any material adverse
effect on the financial condition, business, assets, prospects or
results of operations of ACBJ and its subsidiaries taken as a whole;
(iii) the receipt by ACBJ of third party consents from lessors of
certain properties leased by the Company; and (iv) the number of shares
of ACBJ Common Stock held by stockholders who exercise appraisal rights
under Section 262 of the Delaware General Corporation Law must not
represent more than 15% of the outstanding ACBJ Common Stock.
The obligations of ACBJ are also subject to the confirmation by
the Paying Agent that Advance and Merger Sub have deposited all funds
necessary to consummate the transactions contemplated by the Merger
Agreement.
Other than compliance with the federal securities laws and
filings under the HSR Act, no federal or state regulatory requirements
must be complied with or approval obtained in connection with the
Merger. See "The Merger Agreement -- Conditions to the Merger."
Required notifications under the HSR Act were made on August
16, 1995. On September 12, 1995, the FTC notified ACBJ and Advance
that the waiting period required by the HSR Act had been terminated.
Covenants and Additional Agreements
Operational Covenants. In the Merger Agreement, ACBJ has
agreed, among other things, that prior to the Effective Time, ACBJ will
conduct its business diligently, in compliance with all applicable laws
and only in the ordinary and usual course and, to the extent consistent
therewith, will use its best efforts to preserve its business
organization intact, to maintain its existing relations with customers,
suppliers, employees and business associates and to keep available the
services of its present officers, agents and employees.
Acquisition Proposals. Each of ACBJ and BJALP also has agreed
in the Merger Agreement that it will not and will not permit any of
their respective officers, directors, employees, representatives or
agents to solicit or initiate any discussions, proposals, offers or
negotiations with, or, except to the extent required by fiduciary
obligations under applicable laws, participate in any negotiations or
discussions with or provide any information or data of any nature
whatsoever to, or otherwise cooperate in any way with, any other person
concerning any transaction involving the sale of all or a material
amount of the Company's assets, a merger or other form of business
combination involving ACBJ, the sale of 15% or more of the ACBJ Common
Stock or any other transaction effecting a change in control of the
Company. Each of ACBJ and BJALP has further agreed that it will
promptly notify Advance and Merger Sub in the event of its receipt of
any such proposals or offers and of any action it proposes to take in
response thereto.
Additional Agreements. ACBJ, Advance and Merger Sub have
agreed (i) to make any applicable regulatory filings and, thereafter,
any other required submissions with respect to the Merger and (ii) to
use all reasonable efforts to cooperate with each other, take all action
and
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do all other things necessary, proper or appropriate under the
Merger Agreement and all applicable laws and regulations to consummate
and make effective the transactions contemplated by the Merger
Agreement. BJALP further agreed in the Merger Agreement to execute and
deliver, as majority stockholder of ACBJ, a written consent to the
transaction pursuant to Sections 228 and 251 of the Delaware General
Corporation Law. BJALP delivered such consent to the Company as of
August 15, 1995.
Redemption of Convertible Debentures
The Merger Agreement also provides that at the Effective Time,
the Surviving Corporation will take all requisite actions in accordance
with the terms of the Indenture to redeem all of the then outstanding
Convertible Debentures. Such redemption shall become effective, subject
to the terms of the Indenture, 30 days after the Effective Time with
respect to all Convertible Debentures whose conversion rights are not
validly exercised before the close of business on the fifth business day
prior to the Redemption Date. The Board currently anticipates that, in
general, holders of the Convertible Debentures will exercise their
conversion rights and receive the Merger Consideration rather than
having their securities redeemed at the lower redemption rate provided
under the terms of the Indenture.
Indemnification
Under the ACBJ bylaws, ACBJ's current officers, directors,
employees and agents will be indemnified by ACBJ, following consummation
of the Merger against certain liabilities, including certain
liabilities, if they should arise, in connection with the Merger. In
the Merger Agreement, Advance agreed to cause ACBJ to maintain such
indemnification obligations with respect to events occurring prior to
the Merger for a period of six years after the Merger. The Merger
Agreement also provides, in general, that the Company shall maintain
directors' and officers' liability insurance with respect to actions
prior to the Merger for a period of two years after the Effective Time.
Termination
The Merger Agreement may be terminated as follows: (i) by the
mutual consent of Advance, Merger Sub and ACBJ; (ii) by Advance or ACBJ
if (a) the Merger shall not have been consummated on or before December
31, 1995 (unless the failure to consummate the Merger by such date is
due to a breach or violation of the Merger Agreement by the party
seeking to terminate), (b) there shall be a final and non-appealable
order of a court of competent jurisdiction or of another governmental
body prohibiting the Merger, or (c) the other party is in material
breach under the Merger Agreement and has failed to cure the breach
within ten (10) calendar days following written notice from the
non-breaching party; (iii) by ACBJ if (a) ACBJ receives an unsolicited
written offer with respect to an acquisition transaction that would, if
consummated, result in a transaction more favorable to ACBJ's
stockholders from a financial point of view than the transaction
contemplated by the Merger Agreement, (b) the Board of Directors of ACBJ
determines their approval of such transaction
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is required by fiduciary obligations under applicable law, and (c)
following three business days' prior written notice to Advance of ACBJ's
possible intention to enter into an agreement in respect thereof, ACBJ
enters into a binding written agreement in respect thereof, or (iv) by
Advance, if (a) a court or other governmental body shall have effected
an order prohibiting the transactions contemplated by the Merger
Agreement, or (b) a governmental or regulatory body shall have
instituted an action seeking to prohibit the transactions contemplated
by the Merger Agreement or to impose on ACBJ, Advance or Merger Sub or
any of their affiliates any terms or conditions that in the good faith
judgment of the Board of Directors of Advance are reasonably likely to
adversely affect in any significant manner the economic benefits of such
transactions to Advance and its stockholders; provided, that Advance
shall be entitled to terminate the Merger Agreement as provided in (a)
or (b) above only if prior to the entering of such order or institution
of such action, Advance shall have satisfied certain other terms and
conditions specified in the Merger Agreement, or (c) the Company shall
engage in certain negotiations or provide certain confidential
information to third parties in the exercise by the Company's Board of
Directors of its fiduciary obligations under applicable law and Advance
has not exercised an option under either the BJALP Option Agreement or
the Company Option Agreement.
Amendments; Expenses of the Merger
The Merger Agreement may be amended or modified pursuant to a
written agreement executed by ACBJ, BJALP, Advance and Merger Sub and
provides that ACBJ, Advance and Merger Sub will each bear their own
expenses incurred in connection with the Merger.
THE OPTION AGREEMENTS
The BJALP Option Agreement
Concurrently with and pursuant to the Merger Agreement, BJALP,
OPUBCO and Advance entered into the BJALP Option Agreement pursuant to
which BJALP granted Advance the irrevocable option, upon the occurrence
of certain limited circumstances described below, to purchase the
3,885,105 shares of ACBJ Common Stock owned by BJALP, including any
distributions of securities, cash, property or other assets or rights in
respect of such shares distributed or issued by ACBJ after the date of
the BJALP Option Agreement, at a price of $28.00 per share. The
purchase price and number of shares subject to the option are subject to
adjustment upon the occurrence of any change in the number of issued and
outstanding shares of ACBJ Common Stock by reason of any stock dividend,
stock split, split-up, recapitalization, merger or other change in the
corporate or capital structure of ACBJ. All references in this
Information Statement to the terms and conditions in the BJALP Option
Agreement are qualified in their entirety by reference to the BJALP
Option Agreement, a copy of which is attached hereto as Exhibit B.
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Advance may exercise such option at any time prior to the
termination of the BJALP Option Agreement upon at least one, but not
more than twenty, business days' prior written notice to BJALP and
OPUBCO. Advance's right to exercise the option, and BJALP's obligations
to deliver shares subject to such option, are subject to the following
conditions: (i) the occurrence of one or more of the following: (a) the
acquisition by any person, entity or group, other than Advance or an
affiliate of Advance, of the beneficial ownership of 20% or more of the
then outstanding shares of ACBJ Common Stock or the commencement of a
tender or exchange offer by any such person for 20% or more of the
outstanding shares of ACBJ Common Stock; (b) ACBJ or BJALP having
entered into an agreement (including an agreement in principle)
providing for or relating to a business combination involving ACBJ or a
subsidiary thereof, the acquisition of ACBJ Common Stock, or a material
portion of the assets, business or operations of ACBJ or any subsidiary
thereof; or (c) a public announcement or disclosure is made with respect
to an ongoing or continuing plan or intention by ACBJ or any person,
entity or group, other than Advance or an affiliate of Advance, to
propose or effect any of the above transactions; and (ii) the absence of
any preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting Advance's exercise of the option and/or BJALP's delivery of
the shares subject to the option.
The obligations of BJALP to deliver shares subject to such
option are also subject to the expiration or termination of any
applicable waiting period under the HSR Act.
In the BJALP Option Agreement, BJALP has agreed not to (i)
sell, transfer, pledge, assign, hypothecate or otherwise dispose of, or
enter into any contract with respect to any such disposition of, its
shares; or (ii) grant any proxies with respect to any such shares,
deposit any such shares into a voting trust or enter into a voting
agreement with respect to any such shares. BJALP also has agreed that,
on or prior to the closing of Advance's exercise of such option, it will
pay OPUBCO the principal amount and all accrued and unpaid interest owed
to OPUBCO under that certain promissory note (the "Note") issued by
BJALP in favor of OPUBCO, which Note is secured by that certain pledge
agreement (the "Pledge Agreement") between BJALP and OPUBCO pursuant to
which BJALP has pledged its shares of ACBJ Common Stock to OPUBCO, or
otherwise obtain the consents, waivers and releases of OPUBCO described
below. If prior to the closing, BJALP has not paid such amounts due
under the Note, Advance may pay OPUBCO that portion of the aggregate
purchase price for the shares necessary to satisfy such obligation and
any such payment shall be credited against the aggregate purchase price
payable to BJALP for the shares.
On the closing date of Advance's exercise of such option,
OPUBCO is required to deliver to Advance an unconditional and
irrevocable consent, waiver and release, effectively consenting to the
transfer of BJALP's shares, and waiving and releasing all of OPUBCO's
rights, title and interests in such shares pursuant to the Pledge
Agreement. The obligations of OPUBCO to deliver such consents, waivers
and releases are subject to the condition that BJALP (or Advance on its
behalf) shall have paid OPUBCO all amounts due under the Note.
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During the term of the BJALP Option Agreement, BJALP and/or
OPUBCO, as applicable, has agreed to vote BJALP's shares of ACBJ Common
Stock in any meeting or action by consent of ACBJ stockholders (i) in
favor of the Merger and the Merger Agreement, and (ii) against any
transaction involving the sale of all or a material portion of ACBJ's
assets, a merger or other business combination involving ACBJ or any of
its subsidiaries, the sale of 15% or more of ACBJ Common Stock or any
other transaction(s) effecting a change in control of ACBJ. If
requested by Advance, BJALP and/or OPUBCO, as applicable, has agreed to
grant Advance an irrevocable proxy to vote all BJALP's shares of ACBJ
Common Stock in regard to any of such matters.
The BJALP Option Agreement shall terminate upon the earlier of
(i) the Effective Time, and (ii) the termination of the Merger Agreement
(or sixty days after termination if the Merger Agreement is terminated
by ACBJ because (a) it received an unsolicited written offer with
respect to an acquisition transaction that would, if consummated, result
in a transaction more favorable to ACBJ's stockholders from a financial
point of view than the transaction contemplated by the Merger Agreement,
(b) the Board of Directors of ACBJ determines, as is provided for in the
Merger Agreement, that approval of such transaction is required in the
exercise of the Board's fiduciary obligations under applicable law and
(c) following three days' prior written notice to Advance of ACBJ's
possible intention to enter into an agreement in respect thereof, ACBJ
enters into a binding written agreement in respect thereof). However,
if the option cannot be exercised or the shares subject to the option
cannot be delivered upon exercise by reason of any applicable judgment,
decree or order or because an applicable waiting period under the HSR
Act has not expired or terminated, the expiration date of the BJALP
Option Agreement shall be extended until thirty days after such
impediment to exercise or delivery has been removed.
The BJALP Option Agreement provides that BJALP, OPUBCO and
Advance will each pay its own expenses in connection therewith.
The Company Option Agreement
Concurrently with and pursuant to the Merger Agreement, ACBJ
and Advance entered into the Company Option Agreement pursuant to which
ACBJ granted Advance the irrevocable option, upon the occurrence of
certain limited events described below, to purchase up to 1,376,000
shares of previously unissued shares of ACBJ Common Stock at a price of
$28.00 per share. The purchase price and number of shares issuable upon
exercise of the option are subject to adjustment, to restore Advance's
rights under the Company Option Agreement, upon the occurrence of any
change in the number of issued and outstanding shares of ACBJ Common
Stock by reason of any stock dividend, stock split, split-up,
recapitalization, merger or other change in the corporate or capital
structure of ACBJ. All references in this Information Statement to the
terms and conditions in the Company Option Agreement are qualified in
their entirety by reference to the Company Option Agreement, a copy of
which is attached hereto as Exhibit C.
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Advance may exercise such option, in whole or in part, at any
time prior to the termination of the Company Option Agreement upon at
least one, but not more than twenty, business days' prior written notice
to ACBJ. Advance's right to exercise the option, and ACBJ's obligations
to deliver shares subject to such option, are subject to the following
conditions: (i) the occurrence of one or more of the following: (a) the
acquisition by any person, entity or group, other than Advance or an
affiliate of Advance, of the beneficial ownership of 20% or more of the
then outstanding shares of ACBJ Common Stock or the commencement of a
tender or exchange offer by any such person for 20% or more of the
outstanding shares of ACBJ Common Stock; (b) ACBJ or BJALP having
entered into an agreement (including an agreement in principle)
providing for or relating to a business combination involving ACBJ or a
subsidiary thereof, the acquisition of ACBJ Common Stock, or a material
portion of the assets, business or operations of ACBJ or any subsidiary
thereof; or (c) a public announcement or disclosure is made with respect
to an ongoing or continuing plan or intention by ACBJ or any person,
entity or group, other than Advance or an affiliate of Advance, to
propose or effect any of the above transactions; and (ii) the absence of
any preliminary or permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the United States
prohibiting Advance's exercise of the option and/or ACBJ's delivery of
the shares subject to the option.
The obligations of ACBJ to deliver shares subject to the option
are also subject to the expiration or termination of any applicable
waiting period under the HSR Act. ACBJ has agreed to keep reserved for
issuance a number of authorized but unissued shares of ACBJ Common Stock
equal to the number of shares subject to the option.
The Company Option Agreement shall terminate upon the earlier
of (i) the Effective Time, and (ii) the termination of the Merger
Agreement (or sixty days after termination if the Merger Agreement is
terminated by ACBJ because (a) it received an unsolicited written offer
with respect to an acquisition transaction that would, if consummated,
result in a transaction more favorable to ACBJ's stockholders from a
financial point of view than the transaction contemplated by the Merger
Agreement, (b) the Board of Directors of ACBJ determines, as is provided
for in the Merger Agreement, that approval of such transaction is
required in the exercise of the Board's fiduciary obligations under
applicable law and (c) following three days' prior written notice to
Advance of ACBJ's possible intention to enter into an agreement in
respect thereof, ACBJ enters into a binding written agreement in respect
thereof). However, if the option cannot be exercised or the shares
subject to the option cannot be delivered upon exercise by reason of any
applicable judgment, decree or order or because an applicable waiting
period under the HSR Act has not expired or terminated, the expiration
date of the Company Option Agreement shall be extended until thirty days
after such impediment to exercise or delivery has been removed.
The Company Option Agreement provides that ACBJ and Advance
will each pay its own expenses in connection therewith.
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If Advance were to fully exercise the options granted under
both the BJALP Option Agreement and the Company Option Agreement (which
are exercisable only under the limited circumstances stated therein) it
would hold approximately 63% of the ACBJ Common Stock outstanding on
August 3, 1995 (approximately 48% on a fully diluted basis).
INFORMATION CONCERNING ADVANCE AND MERGER SUB
Advance is a New York corporation that was established in 1924.
The business conducted by Advance and its subsidiaries is primarily in
the publishing and communications fields, including the publication of
daily newspapers in 22 cities throughout the United States. Advance
owns The New Yorker magazine and The Conde Nast Publications Inc., which
publishes 14 magazines in the United States in addition to magazines in
Western Europe and Australia. Random House, Inc., also a subsidiary of
Advance, is a major United States book publisher. Advance also
publishes Parade magazine, a Sunday newspaper supplement. Another
subsidiary of Advance is a partner in an entity having a 1/3 interest in
Time Warner Entertainment-Advance/Newhouse Partnership, which owns and
operates cable systems. Advance is controlled by the family of S.I.
Newhouse.
Merger Sub is a Delaware corporation that was incorporated by
Advance as a vehicle to acquire all shares of ACBJ Common Stock by way
of the merger of Merger Sub with and into ACBJ as described herein. As
of the execution of the Merger Agreement, Advance was the sole
stockholder of Merger Sub.
The address of the principal executive offices of Advance and
Merger Sub is 350 Madison Avenue, New York, New York 10017; Telephone
(212) 692-4400.
APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
Stockholders of ACBJ who (i) hold shares of ACBJ Common Stock
on the date of making demand and continuously hold such shares through
the Effective Time, and (ii) follow the procedures specified in Section
262 of the Delaware General Corporation Law ("Section 262") will be
entitled to have their shares of ACBJ Common Stock appraised by the
Delaware Court of Chancery and to receive payment of the "fair value" of
such shares, exclusive of any element of value arising from the
accomplishment or expectation of the Merger, as determined by such
Court. The procedures set forth in Section 262 should be strictly
complied with. Failure to follow any of such procedures may result in a
termination or waiver of appraisal rights under Section 262.
The following discussion of the provisions of Section 262 is
not intended to be a complete statement of its provisions and is
qualified in its entirety by reference to the full text of that section,
a copy of which is attached as Exhibit D hereto.
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<PAGE>
Under Section 262, a stockholder of ACBJ electing to exercise
appraisal rights must both:
(1) within twenty (20) days after the date of the
mailing of this Information Statement, demand in writing from
ACBJ appraisal of his shares, which writing reasonably informs
ACBJ of the identity of the stockholder of record and that such
record stockholder intends thereby to demand the appraisal of
his shares of ACBJ Common Stock. Such written demand for
appraisal should be delivered either in person to the Corporate
Secretary of ACBJ or by mail (certified mail, return receipt
requested, being the recommended form of transmittal) to the
Corporate Secretary, at ACBJ, 128 S. Tryon Street, Suite 2300,
Charlotte, North Carolina 28202, and
(2) not consent in writing to the proposal relating to
the Merger Agreement.
The written demand for appraisal must be made by or for the
holder of record of ACBJ Common Stock registered in his name.
Accordingly, such demand should be executed by or for such stockholder
of record, fully and correctly, as such stockholder's name appears on
his stock certificates. If the stock is owned of record in a fiduciary
capacity, such as by a trustee, guardian or custodian, execution of the
demand should be made in such capacity and if the stock is owned of
record by more than one person as in a joint tenancy or tenancy in
common, such demand should be executed by or for all joint owners. An
authorized agent, including one of two or more joint owners, may execute
the demand for appraisal for a stockholder of record. However, the
agent must identify the record owner or owners and expressly disclose
the fact that in executing the demand he is acting as agent for the
record owner.
Within 120 days after the day of the Effective Time, ACBJ or
any stockholder of ACBJ who has satisfied the foregoing conditions and
who is otherwise entitled to appraisal rights under Section 262, may
file a petition in the Delaware Court of Chancery demanding a
determination of the value of the shares of ACBJ Common Stock held by
all stockholders entitled to appraisal rights. If no such petition is
filed, appraisal rights will be lost for all stockholders who had
previously demanded appraisal of their shares. Stockholders of ACBJ
seeking to exercise appraisal rights should not assume that ACBJ will
file a petition with respect to the appraisal of the value of their
shares or that ACBJ will initiate any negotiations with respect to the
"fair value" of such shares. Accordingly, stockholders of ACBJ who wish
to exercise their appraisal rights should regard it as their obligation
to take all steps necessary to perfect their appraisal rights in the
manner prescribed in Section 262.
Within 120 days after the day of the Effective Time, any
stockholder who has complied with the provisions of Section 262 is
entitled, upon written request, to receive from ACBJ a statement setting
forth the aggregate number of shares of ACBJ Common Stock which did not
consent to the adoption of the Merger Agreement and with respect to
which demands for appraisal have been received by ACBJ and the aggregate
number of holders of such shares. Such statement must be mailed to the
stockholder within 10 days after the
30
<PAGE>
written request therefor is received by ACBJ or within 10 days after
expiration of the period for delivery of demands for appraisal under
Section 262, whichever is later.
If a stockholder files the petition for appraisal in a timely
manner, ACBJ must file, within 20 days of service of the stockholder's
petition, a verified list of the names and addresses of all stockholders
who have demanded appraisal for their shares and with whom ACBJ has not
reached an agreement regarding value. If ACBJ files a petition, it must
be accompanied by a similar list. If so ordered by the Court, the
Register of Chancery is required to provide notice by registered or
certified mail of the hearing on such petition to stockholders shown on
the list and to provide notice by publication.
If a petition for an appraisal is timely filed, at the hearing
on such petition, the Delaware Court of Chancery will determine the
stockholders of ACBJ entitled to appraisal rights and will appraise the
value of the ACBJ Common Stock owned by such stockholders, determining
its "fair value" exclusive of any element of value arising from the
accomplishment or expectation of the Merger. The Court will direct
payment of the fair value of such shares together with a fair rate of
interest, if any, on such fair value to stockholders entitled thereto
upon surrender to ACBJ of share certificates. Upon application of a
stockholder, the Court may, in its discretion, order that all or a
portion of the expenses incurred by any stockholder in connection with
an appraisal proceeding, including without limitation, reasonable
attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all the shares entitled to appraisal.
Although ACBJ believes that the Merger Consideration to be paid
in the Merger is fair, it cannot make any representation as to the
outcome of the appraisal of fair value as determined by the Delaware
Court of Chancery, and stockholders should recognize that such an
appraisal could result in a determination of a lower, higher or
equivalent value.
Any stockholder of ACBJ who has duly demanded an appraisal in
compliance with Section 262 will not, after the Effective Time, be
entitled to vote his shares for any purpose nor be entitled to the
payment of any dividends or other distributions on his shares (other
than those payable to stockholders of record as of a date prior to the
Effective Time).
If no petition for an appraisal is filed within the time
provided, or if a stockholder of ACBJ delivers to ACBJ a written
withdrawal of his demand for an appraisal, either within 60 days after
the Effective Time or, with the written approval of ACBJ, thereafter,
then the right of such stockholder to an appraisal will cease and such
stockholder shall be entitled to receive in cash, without interest, the
Merger Consideration of ACBJ Common Stock, the amount to which he would
have been entitled had he not demanded appraisal of his shares. No
appraisal proceeding in the Court of Chancery will be dismissed as to
any stockholder without the approval of the Court, which approval may be
conditioned on such terms as the Court deems just.
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<PAGE>
MARKET PRICE AND DIVIDENDS
ACBJ's Common Stock trades on the NASDAQ National Market System
under the symbol "AMBJ." ACBJ Common Stock has been traded on the
NASDAQ National Market System since October 1, 1985. The following
table sets forth the high and low last sale prices for the periods
indicated as reported by the NASDAQ National Market System. These
market quotations reflect inter-dealer prices without retail mark-ups,
mark-downs and commissions and have been adjusted for a 2 for 1 stock
split in 1994 and a 5% stock dividend in 1995.
1995 High Low
First Quarter $19 1/2 $15
Second Quarter 22 18
1994 High Low
First Quarter $16 $14
Second Quarter 16 1/4 14
Third Quarter 16 14
Fourth Quarter 17 15 1/2
1993 High Low
First Quarter $ 9 1/2 $ 7
Second Quarter 11 8
Third Quarter 12 10 1/2
Fourth Quarter 14 1/2 12
The policy of ACBJ is to retain earnings to provide funds for
the operation and expansion of its business. Accordingly, ACBJ has
never paid a cash dividend on its common stock and does not anticipate
declaring cash dividends prior to the Effective Time.
As of September 25, 1995, there were approximately 1200
participants in security position listings, as defined in Rule 17Ad-8
under the Securities Act of 1934, for ACBJ Common Stock. As of September
25, 1995, the Company had approximately 400 stockholders of record of
the ACBJ Common Stock.
On August 3, 1995, the last business day prior to the public
announcement of the Merger, the closing sale price per share of ACBJ
Common Stock as reported on the NASDAQ National Market System (which was
also both the high and low sale price on such date) was $21 3/4. The range
of the bid and asked prices for the Convertible Debentures on such date
was 128% and 138% of par, respectively, as reported in the over-the-
counter market. As of September 25, 1995, the most recent closing sales
price per share of ACBJ Common Stock as reported on the NASDAQ National
Market System was $27 3/8.
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<PAGE>
Stockholders of ACBJ are urged to obtain current market quotations for
ACBJ Common Stock.
SELECTED FINANCIAL DATA (a)
(in thousands except per share amounts)
The summary financial data for the five years ended December
31, 1994 is prepared from the audited financial statements of the
Company. The data for the six months ended June 30, 1994 and 1995 is
prepared from the unaudited financial statements which, in the opinion
of management, reflect all adjustments necessary to fairly present the
financial position and results of operations for the respective periods.
The summary financial data should be read in conjunction with the
consolidated financial statements and notes thereto set forth elsewhere
herein.
<TABLE>
<CAPTION>
Six Months
Year Ended December 31 Ended June 30
1990 1991 1992 1993 1994 1994 1995
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $70,014 $68,712 $70,727 $86,672 $97,696 $44,677 $54,389
Operating expenses 66,084 63,085 64,069 75,860 83,346 39,476 47,803
Operating income 3,930 5,627 6,658 10,812 14,350 5,201 6,586
Gain on sale of assets 3,231 - - - - - -
Interest expense, net (1,551) (1,593) (1,874) (4,932) (4,637) (2,399) (2,302)
Other income (expense) (63) (7) 50 (5) (582) 3 10
Income before
income taxes 5,547 4,027 4,834 5,875 9,131 2,805 4,294
Provision for income taxes 217 200 943 2,475 3,835 1,178 1,761
Net income 5,330 3,827 3,891 3,400 5,296 1,627 2,533
Preferred stock dividends 2,187 2,032 1,926 - - - -
Income attributable to
common stockholders $ 3,143 $ 1,795 $ 1,965 $ 3,400 $ 5,296 $ 1,627 $ 2,533
Income per
share (b)-Primary $ .45 $ .27 $ .29 $ .50 $ .74 $ .23 $ .35
-Fully diluted - - - - .71 - .34
At period end:
Total assets $67,257 $68,178 $76,077 $82,886 $92,130 $85,834 $94,480
Long-term debt 33,297 33,263 36,514 36,785 35,788 36,402 35,403
Convertible subordinated debentures - - 31,878 31,878 31,878 31,878 31,826
Stockholders' investment 19,764 20,541 (10,081) (6,249) (1,461) (3,722) 1,259
Book value per share (c) $ 2.36 $ 2.45 $ 2.59 $ 3.02 $ 3.56 $ 3.27 $ 3.71
Cash dividends per share $ - $ - $ - $ - $ - $ - $ -
</TABLE>
(a) The comparability of this data is affected by (1) acquisitions
in 1990, 1991, 1992, 1993, 1994 and 1995; (2) restatement of the
consolidated financial statements for adoption in 1992 of SFAS
109-Accounting for Income Taxes; and (3) the exchange on
December 31, 1992 of the Company's convertible preferred stock
for convertible subordinated debentures.
(b) Adjusted for a 2-for-1 stock split distributed April 29, 1994 to
stockholders of record April 18, 1994, and for a 5% stock
dividend paid on January 16, 1995 to stockholders of record
December 15, 1994.
(c) Assumes conversion of the convertible subordinated debentures
(convertible preferred stock prior to 1992).
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
At December 31, 1994 the Company had a current ratio of 1.4:1
and over $17 million in cash and cash equivalents. At June 30, 1995 the
Company had a current ratio of 1.5:1 and over $21.1 million in cash and
cash equivalents. The level of liquidity increased from December 31,
1994 from internally generated funds.
The Company believes its existing liquidity and cash flow from
operations is sufficient in 1995 to fund (a) interest ($5 million) and
principal ($1 million) on long-term debt and Convertible Debentures; (b)
capital additions of approximately $1.2 million for new production
systems, computer software and hardware upgrades and miscellaneous items
of furniture and equipment; (c) working capital requirements which are
not expected to be significant; and (d) the $2,488,000 of federal income
taxes relating to years prior to 1994 under the settlement initiative
with the Internal Revenue Service as described in Note 5 to the Audited
Consolidated Financial Statements.
The Company has no agreements in place for the extension of
credit because no such arrangements are deemed necessary.
Results of Operations
Three Months Ended June 30, 1995 Compared to 1994. The
comparative operating results are impacted by acquisitions as described
in Note 4 to the Unaudited Consolidated Financial Statements.
Total revenues increased 22.5% for the quarter (12.2% excluding
acquisitions). Advertising revenue increased 15.5% (12.7% excluding
acquisitions) from increases in local and national advertising in the
business journals and a 65.0% (29.2% excluding acquisitions) increase in
advertising in the motorsports publications. Advertising revenue, which
comprised 72.9% of total revenue in the second quarter of 1995, is
sensitive to change in economic conditions and a slowdown in the economy
could adversely impact this revenue.
Circulation revenue increased 20.0% (8.1% excluding
acquisitions) from a 5.3% increase in the business journals on a 2.1%
increase in paid circulation and a 64.5% increase (17.2% excluding
acquisitions) in the motorsports publications. Paid circulation of the
business journals was 329,310 at June 30, 1995.
Other revenue increased 205.7% during the quarter primarily
from the inclusion of Performance Printing Company. For publications
operated throughout both periods, other revenue increased 26.9%.
34
<PAGE>
Operating expenses increased 23.1% (10.4% at publications
operated throughout both periods). The increase consisted of normal
compensation increases, increased commissions on the increase in
advertising sales, and some increase in printing and distribution
expenses.
Operating income increased $761,000 or 19.4% to $4,683,000 for
the quarter from increases in advertising and circulation revenue.
Operating income as a percent of total revenue was 15.9% (17.6%
excluding acquisitions) for the second quarter 1995 compared to 16.3% in
the second quarter 1994.
Net interest expense decreased $18,000 from the second quarter
of 1994 primarily from an increased level of invested funds. There were
modest changes in debt outstanding and a 1% increase in the interest
rate on the Company's $20 series promissory notes.
The Company recorded income tax expense in the second quarter
of 1995 at an estimated effective rate of 41%, compared to an effective
rate of 42% in the second quarter of 1994.
Six Months Ended June 30, 1995 Compared to 1994. The
comparative operating results are impacted by acquisitions as described
in Note 4 to the Unaudited Consolidated Financial Statements.
Total revenues for the six months ended June 30, 1995 increased
21.7% over the same period in 1994. Revenues of publications operated in
both 1995 and 1994 increased 11.8%.
Advertising revenue increased 14.6% (12.0% increase at
publications operated in both periods) from increases in local and
national advertising in the business journals and a 73.4% (38.2%
excluding acquisitions) increase in advertising in the motorsports
publications. Advertising revenue, which comprised 71.4% of total
revenue for the six months ended June 30, 1995, is sensitive to change
in economic conditions and a slowdown in the economy could adversely
impact this revenue.
Circulation revenue increased 20.7% (9.3% excluding
acquisitions) from increases in both paid circulation and subscription
rates. Motorsports publications increased circulation revenue 63.8%
(16.8% excluding acquisitions) and the business journals increased 7.1%.
Other revenue increased 171.9% for the six months ended June
30, 1995 compared with the same period in 1994, primarily from the
inclusion of Performance Printing Company. For publications operated
throughout both periods, other revenue increased 21.2%.
Operating expenses increased 21.1% (9.1% at publications
operated throughout both periods). The increase consisted of normal
increases in compensation, increased commissions on the increase in
advertising sales, and some increase in printing and distribution
expenses.
35
<PAGE>
Operating income increased $1,385,000 or 26.6% for the six
month period. The increase resulted primarily from increased
advertising and circulation revenue.
Net interest expense decreased $97,000 during the six months
primarily from an increased level of invested funds. There were modest
changes in debt outstanding and a 1% increase in the interest rate on
the Company's $20 series promissory notes.
The Company recorded income tax expense at an estimated
effective rate of 41% for the six months ended June 30, 1995 compared to
an effective rate of 42% for the six months ended June 30, 1994.
Comparison of 1994 to 1993. Comparative operating results
were modestly impacted by acquisitions in 1994 (see Note 2 to the
Audited Consolidated Financial Statements).
Total revenues increased 12.7% in 1994 (11.6% excluding
acquisitions). Advertising revenue increased 11.9% (11.2% excluding
acquisitions) from increases in local and national advertising in the
business journals and a 53.4% increase in advertising revenue in Winston
Cup Scene. 24 of the 26 business journals operated throughout 1993 and
1994 increased advertising revenue. Such increases reflect rate
increases, the general impact of an improving national economy and
enhanced selling efforts by the Company's sales force. Advertising
revenue, which comprised 77.1% of total revenue in 1994, is sensitive to
changes in general economic conditions and a deterioration in the
economy could have an adverse impact on this revenue source.
Circulation revenue increased 16.3% (13.5% excluding
acquisitions) from increases in paid circulation and rate increases.
Paid circulation of the business journals increased 3.8% for the year
and was 327,788 (including Austin) at December 31, 1994. Paid
circulation of Winston Cup Scene increased 13.5% to 119,844 at year end.
Other revenue increased 10.4% (9.8% excluding acquisitions)
from increased advertising in non-newspaper publications.
Total operating expenses increased 9.9% (7.7% excluding
acquisitions). Excluding acquisitions, percentage increases by expense
category were; editorial - 8.0%, sales - 4.7%, circulation - 9.3%,
production - 11.8%, administration - 7.5% and depreciation and
amortization - 3.5%. The increase in editorial and administration is
from normal compensation increases, increased training and a small
increase in total staff. Increased sales expense is from commissions on
additional volume partially offset by reduced promotional activity.
Excluding Winston Cup Scene which had increases in circulation and
production expenses of 32.8% and 30.6%, respectively, as a result of
increased volume, circulation expenses increased 5.8% primarily from
increased volume and production expenses increased 9.8% from increased
volume, additional focus and special sections and compensation
increases. Increases in newsprint prices did not have a significant
impact on operating results for 1994 and are not expected to materially
impact 1995's results as newsprint is not a
36
<PAGE>
significant component of total operating expenses. The increase in
depreciation and amortization is related to capital additions in 1993
and 1994.
Operating income increased $3,538,000 or 32.7% primarily as a
result of the increases in advertising and circulation revenue. In
1994, 32.1% of the increase in total revenue was added to operating
income vs. 26.1% in 1993. Operating income as a percent of total
revenue increased from 12.5% in 1993 to 14.7% in 1994.
Interest expense increased $19,000 from modest changes in debt
outstanding and an increase, in the fourth quarter of the year, in the
interest rate on the Company's $20 Series Promissory Notes to 8 1/2%.
Interest income increased $314,000 from increased yield and a
higher level of invested funds.
Other expense includes $554,000 representing the Company's
share of joint venture losses (see Note 2 to the Audited Consolidated
Financial Statements) on the BIZ publication which was discontinued in
January 1995.
The provision for income taxes was based on a 42% effective
rate in both 1993 and 1994. A reconciliation of this rate to the
statutory rate is set forth in Note 5 to the Audited Consolidated
Financial Statements.
Comparison of 1993 to 1992. The comparative operating results
are impacted by the acquisition of Winston Cup Scene on December 31,
1992 and by the acquisition of the San Jose Business Journal on March 1,
1993 (see Note 2 to the Audited Consolidated Financial Statements).
Both acquisitions were accounted for as purchases and the operating
results for 1993 include Winston Cup Scene for the entire year and the
San Jose Business Journal for ten months.
Total revenue increased 22.5% in 1993 (9.9% excluding
acquisitions). Advertising revenue increased 20.0% (11.5% excluding
acquisitions) from increases in both local and national advertising
aided by an improving economy. 23 of the 26 business journals operated
throughout 1993 and 1992 increased advertising revenue. Advertising
revenue, which comprised 77.7% of total Company revenue in 1993, is
sensitive to change in economic conditions and a deterioration of the
overall economy could have an adverse impact on this revenue source.
Circulation revenue increased 38.0% primarily from the
inclusion of Winston Cup Scene where circulation revenue comprises 65.0%
of total revenue. Excluding acquisitions, circulation revenue increased
5.4% from a 3.7% increase in paid circulation and modest rate increases.
Paid circulation was 312,952 (including San Jose Business Journal) at
December 31, 1993 compared to 288,724 at December 31, 1992.
37
<PAGE>
Other revenue increased 7.4% primarily from including acquisitions.
Total operating expenses increased 18.4% (6.3% excluding
acquisitions). Excluding acquisitions, percentage increases by expense
category were: editorial - 3.2%, sales - 12.2%, circulation - 9.1%,
production - 7.8% and administration - 4.7%. Depreciation and
amortization declined 9.4%. The increase in editorial and
administration expenses is from normal compensation increases. The
increase in sales expense is from commissions on an 11.5% increase in
advertising sales and increased promotional activity. The increase in
circulation expense is from compensation increases, increased volume
from a 3.7% increase in paid circulation and increased promotional
activity. The increase in production expense is from compensation
increases and increased volume.
Operating income increased $4,154,000 or 62.4%. Excluding
acquisitions, operating income increased 44.5% primarily from the
increase in advertising revenue.
Interest expense increased $2,129,000. The increase resulted
primarily from $1,913,000 of interest on the Convertible Debentures (the
Preferred Stock was converted to Convertible Debentures effective
December 31, 1992, see Note 7 to the Audited Consolidated Financial
Statements) and $262,000 of interest on the note issued in connection
with the acquisition of Winston Cup Scene on December 31, 1992 (see Note
2 to the Audited Consolidated Financial Statements).
Interest income declined $929,000 primarily from a reduced
level of invested funds. The Company used $17,325,000 of cash and a
$4,610,000 interest bearing note for acquisitions (see Note 2 to the
Audited Consolidated Financial Statements) and there was a slight
decline in the average rate on invested funds.
The effective income tax rate increased from 19.5% in 1992 to
42.1% in 1993 from utilization of remaining tax loss carryovers in 1992
(see Note 5 to the Audited Consolidated Financial Statements for the
components of income tax expense).
The Preferred Stock dividends in 1992 are classified as
interest expense in 1993 as a result of the conversion on December 31,
1992 of the Preferred Stock to Convertible Debentures.
INFORMATION CONCERNING ACBJ
Business of ACBJ
ACBJ, through its subsidiaries, publishes a chain of weekly
business newspapers in major metropolitan areas throughout the United
States. ACBJ owns through its subsidiaries 28 business newspapers, one
legal newspaper, and three motorsport publications. The newspapers
focus on the local business community by including information not
readily
38
<PAGE>
available to business leaders from other sources, standard features
which readers find useful in their own businesses, profiles and feature
stories on local business personalities. Revenue is generated through
advertising sales and paid circulation income. ACBJ was incorporated
under the laws of the State of Delaware in April 1985. ACBJ's principal
offices are located at 128 S. Tryon Street, Suite 2300, Charlotte, North
Carolina 28202, and its telephone number is (704) 375-7404.
On September 1, 1994, ACBJ acquired its second motorsport
publication, Winston Cup Illustrated. The publication is a monthly
magazine which covers the NASCAR Winston Cup stock car racing series.
On October 1, 1994, ACBJ acquired its 28th business newspaper,
The Austin Business Journal.
On October 21, 1994, ACBJ acquired its third motorsport
publication, On Track. The publication is a bi-weekly magazine that
covers all forms of auto racing around the world.
On January 20, 1995, ACBJ acquired 19.9% of the common stock of
Sunbelt Video, Inc ("SBV"). ACBJ also is a party to an option agreement
which gives the Company an option to acquire the remaining SBV shares at
their market value in three years from the shareholders of SBV. These
shareholders have a "put" option to require ACBJ to acquire the
remaining SBV shares at their market value in three years. SBV is a
video production company that produces sports programming for cable TV
networks and promotion and training videos for companies.
On January 31, 1995, ACBJ acquired Performance Printing, a
Charlotte, North Carolina based commercial printing company. It will
enable ACBJ to gain some cost advantage in consolidating the printing of
its magazines and other glossy publications.
In January 1995 ACBJ ceased publication of Biz Magazine. The
publication was owned by a partnership between Biz Publishing, Inc., a
subsidiary of ACBJ and Dow Jones Venture I, Inc., a subsidiary of Dow
Jones & Company, Inc. The magazine was introduced in early 1994 and
targeted to the heads of America's approximately 500,000 fastest-growing
small businesses. It was a controlled circulation publication.
39
<PAGE>
Date
Date First Acquired
Publications Owned Published by Company
AUSTIN BUSINESS JOURNAL 02/81 10/94
CAPITAL DISTRICT BUSINESS
REVIEW (ALBANY) 03/74 02/86
ATLANTA BUSINESS CHRONICLE 06/78 12/86
BALTIMORE BUSINESS JOURNAL 06/83 10/86
BUSINESS FIRST (BUFFALO) 10/84 10/84
BUFFALO LAW JOURNAL (legal newspaper) 1929 12/86
THE BUSINESS JOURNAL OF CHARLOTTE 04/86 04/86
THE BUSINESS JOURNAL SERVING SAN
JOSE AND THE SILICON VALLEY 05/83 03/93
CINCINNATI BUSINESS COURIER 05/84 10/86
BUSINESS FIRST (COLUMBUS) 09/84 09/84
DALLAS BUSINESS JOURNAL 08/77 12/86
DENVER BUSINESS JOURNAL 10/86 12/86
PACIFIC BUSINESS NEWS (HONOLULU) 05/63 12/84
HOUSTON BUSINESS JOURNAL 07/71 12/86
JACKSONVILLE BUSINESS JOURNAL 10/85 10/85
KANSAS CITY BUSINESS JOURNAL 09/82 09/82
BUSINESS FIRST (LOUISVILLE) 08/84 08/84
ON TRACK 04/81 10/94
ORLANDO BUSINESS JOURNAL 06/84 04/90
PHOENIX BUSINESS JOURNAL 11/80 12/89
BUSINESS JOURNAL OF PORTLAND (OREGON) 03/84 03/84
PUGET SOUND BUSINESS JOURNAL (SEATTLE) 05/80 12/86
SAN ANTONIO BUSINESS JOURNAL 03/82 07/86
SAN FRANCISCO BUSINESS TIMES 09/86 12/89
SOUTH FLORIDA BUSINESS JOURNAL (MIAMI) 09/80 12/86
ST. LOUIS BUSINESS JOURNAL 10/80 10/86
TAMPA BAY BUSINESS JOURNAL 01/81 04/90
TRIANGLE BUSINESS JOURNAL (RALEIGH) 09/85 10/91
WASHINGTON (D.C.) BUSINESS JOURNAL 05/82 12/86
WICHITA BUSINESS JOURNAL 03/86 03/86
WINSTON CUP ILLUSTRATED 09/81 09/94
WINSTON CUP SCENE 04/77 12/92
___________________________
ACBJ's publications are owned and operated by 19 subsidiaries.
40
<PAGE>
Capital Stock Transactions
On December 3, 1992 the Board of Directors authorized the
issuance of the Convertible Debentures in exchange for ACBJ's then
outstanding class of Preferred Stock. On the December 31, 1992 exchange
date, ACBJ had 1,575,131 shares of Preferred Stock issued. Upon the
completion of the exchange on December 31, 1992, Convertible Debentures
equal to $25 for each share of Preferred Stock were issued with a total
face value of $39,378,275. Bonds, with a face value of $7,500,000, are
held by the Company which will be used to meet the sinking fund
requirement.
On April 7, 1994, the Board of Directors approved a two for one
stock split of ACBJ Common Stock that was distributed as a 100% stock
dividend on April 29, 1994 to holders of record on April 18, 1994. As a
result of the stock split, the conversion rate of the Convertible
Debentures, which had been .74627 shares of ACBJ Common Stock for each
$25 principal amount of the Convertible Debentures, became 1.49254
shares of ACBJ Common Stock for each $25 principal amount of the
Convertible Debentures.
On December 1, 1994, the Board of Directors approved a 5% stock
dividend to be distributed on January 16, 1995 to shareholders of record
on December 15, 1994. As a result of the stock dividend, the conversion
rate of the Convertible Debentures became 1.567167 shares of ACBJ Common
Stock for each $25 principal amount of the Convertible Debentures.
Operations of the Business Newspapers
ACBJ's business strategy is to create a local identity for each
business newspaper, generally including selection of a publisher from
the community and a staff of individuals primarily from the area served,
each of whom is familiar with the local business community. National
wire service articles do not appear in the newspapers and few syndicated
stories are utilized.
Although the papers have local editorial content and a
primarily local advertiser base, they benefit from the support services
available from the corporate office and the sharing of information among
ACBJ's various papers concerning successful and unsuccessful projects,
advertising and circulation promotions. Further, employees of the
various papers are sometimes loaned to another paper for training or to
fill interim vacancies. The Network of City Business Journals, Inc., a
subsidiary of ACBJ (the "Network"), serves as the national advertising
agent for ACBJ's papers and other non-owned papers for the purpose of
selling advertising to national corporations.
The operations of each of the business newspapers are divided
into five departments: editorial, production, advertising sales,
circulation and administration.
Editorial. Interesting, accurate and readable articles are
considered to be the single most important factor in developing
readership and market acceptance of the business
41
<PAGE>
newspapers. The editorial staffs, comprised of experienced editors and
trained reporters, write articles and features which report business
news relevant to the local businessman. The newspapers focus on the
local business community by including articles that contain information
not readily available to businessmen from other sources, standard
features which readers find useful in their own businesses, and profiles
and feature stories on local business personalities.
Production. Management believes that quality in production is
critical to the success of the newspapers. ACBJ strives for a
professional appearance through typesetting and layout using advanced
computer production processes and by emphasizing the quality of the
graphics, newsprint, ink and all other physical components of the
newspaper. ACBJ contracts for the printing of the business newspapers
with unaffiliated printing companies. To date, there has been a
sufficient number of printing companies available to each newspaper so
that ACBJ has never experienced a serious problem with the availability
of quality printing services.
ACBJ's January 31, 1995 acquisition of Performance Printing
should enable ACBJ to achieve cost savings and quality control in
printing its magazines and other glossy publications.
Advertising Sales. Advertising is the primary revenue source
for ACBJ. ACBJ directs its marketing efforts toward advertisers who
want to reach the local business market. Members of the advertising
sales staff are paid on a commission basis and in the majority of
markets are assigned to work with specific industries. ACBJ believes
that industry specialization allows the salesperson to become more
familiar with the types of advertising programs which are effective for
advertisers in that industry. In a few markets, due to the geographic
size of the city, sales staff are assigned territories to cover.
Advertising sales are supported by special marketing efforts such as
special supplements which target specific industries.
Advertising revenue is sensitive to economic conditions, and
growth rates generally decline as the publications mature. Each year
ACBJ has experienced declines in certain markets because of local
conditions, both from within the publication and from external economic
factors. The dispersion of the revenue base across multiple markets has
enabled ACBJ to maintain its overall rate of revenue growth, overcoming
adverse circumstances in a few markets with above average results in
others.
In November 1986, ACBJ formed The Network of City Business
Journals, Inc., a national sales and marketing organization, for the
purpose of attracting multi-market advertising to be printed in ACBJ's
publications as well as in other unaffiliated business newspapers. The
Network's efforts are facilitated by a national sales force with
headquarters in Kansas City and sales offices in New York, Chicago,
Dallas, Detroit, Atlanta, Los Angeles and San Francisco.
42
<PAGE>
Circulation. In addition to supporting advertising sales,
subscriptions historically have been a significant source of revenue for
ACBJ. Paid subscriptions, on average, account for most of the total
paid circulation, with newsstand and vending box sales representing the
balance. During a publication's start-up phase, subscriptions are
initially promoted by mailing free sample papers to local businesses
during a three to four week period. Telemarketing is used as a
follow-up to the sample mailing to maximize the subscription promotion.
In mature markets, direct mail is used in conjunction with a sampling
program. Direct mail and telemarketing are used in obtaining renewals,
a key factor in continued circulation growth. ACBJ has historically
achieved a high percentage of annual renewals.
Administration. Each business newspaper has a local publisher
who is responsible for publication control and promotion of the business
newspaper in the community. Community involvement is an integral part
of ACBJ's "hometown" business focus. Publishers divide their attention
among all five departments and are responsible for local budgeting and
cost control, personnel decisions, editorial content, production
quality, advertising sales and circulation totals.
Motorsport Publications
On December 31, 1992, ACBJ acquired Winston Cup Scene, a
national publication which covers the NASCAR Winston Cup stock car
racing series. With a total paid circulation of 119,800, this
publication is ACBJ's largest paid circulation publication. The
addition of Winston Cup Illustrated and On Track in 1994 allows ACBJ to
consolidate the three motorsport publications at its corporate
headquarters in Charlotte, North Carolina.
Employees
On September 25, 1995, ACBJ and its subsidiaries employed 985
full-time employees, of whom 320 were in editorial, 307 were in
advertising, 81 were in circulation, 86 were in production, 138 were in
administration, and 53 were in the commercial printing operation. ACBJ
has employment agreements and contracts with certain of its key
management and personnel. ACBJ also has 83 part-time employees.
None of the employees of ACBJ are represented by a union. ACBJ
believes its relations with its employees are good. ACBJ has generally
been successful in retaining key employees of acquired publications as
well as filling any vacancies through internal transfers or external
hires.
Competition
The business newspapers compete with other news publications
for readership and circulation and with all types of media for
advertising revenue. With respect to circulation, local daily
newspapers and periodic local business magazines are the primary
competitors of each of the business newspapers.
43
<PAGE>
ACBJ, through its local business newspapers and the Network,
competes with local newspapers, radio, television, and magazines for
advertising revenue. ACBJ seeks to keep its advertising rates
competitive and targets advertisers seeking to reach the more focused
audience of the local business community.
ACBJ's publications On Track, Winston Cup Illustrated and
Winston Cup Scene are national publications which compete with national
media for advertising revenue.
Property
ACBJ leases all of the facilities in which its corporate
headquarters and subsidiaries are located. ACBJ does not own any
facility. The present leased space is adequate for the needs of the
respective publications. ACBJ has satisfied additional space
requirements either by acquiring additional space within the same
facility or by negotiating acceptable terms for space in new facilities.
The following table sets forth the location, approximate square footage
and expiration of lease term for each of the facilities operated and
leased by ACBJ:
44
<PAGE>
Square
Location Footage Expiration
Albany, NY 7,000 11/30/97
Atlanta, GA 11,618 12/31/95
Austin, TX 3,140 02/28/98
Baltimore, MD 5,217 09/30/97
Buffalo, NY 10,800 08/31/96
Charlotte, NC 4,964 10/24/99
Charlotte, NC 20,466 10/24/99
Chicago, IL 1,058 10/31/95
Cincinnati OH 6,477 03/31/00
Columbus, OH 7,264 03/21/02
Dallas, TX 8,852 12/31/96
Denver, CO 7,248 03/31/97
Honolulu, HI 7,462 06/30/99
Houston, TX 8,683 10/31/95
Jacksonville, FL 4,500 09/15/99
Kansas City, MO 8,685 08/31/05
Louisville, KY 8,985 04/09/97
Los Angeles, CA 825 06/30/98
Miami, FL 6,500 08/31/98
New York, NY 2,782 01/31/99
Orlando, FL 5,828 11/30/99
Phoenix, AZ 6,700 02/22/98
Portland, OR 5,755 01/31/97
Raleigh, NC 2,744 08/31/97
St. Louis, MO 7,646 06/30/97
St. Louis, MO 4,088 02/29/96
San Antonio, TX 5,878 05/03/98
San Francisco, CA 912 03/31/01
San Francisco, CA 7,192 12/31/98
San Jose, CA 7,195 04/30/02
Seattle, WA 8,031 03/31/99
Tampa, FL 7,109 10/31/01
Arlington, VA 8,220 03/31/99
Wichita, KS 3,541 07/01/99
Legal Proceedings
ACBJ's business newspapers and their personnel, like other
newspaper reporters and publishers, are sued from time to time for
articles that they publish. Typically, the suit is based on allegations
of libel or defamation and includes a claim for punitive damages. In
addition to general liability insurance, ACBJ carries publisher's
liability insurance covering
45
<PAGE>
libel and defamation with aggregate limits of $5,000,000 prior to 1993
and $10,000,000 after 1993, but statutes in several states do not allow
punitive damages to be paid by insurance. In each of the following legal
proceedings, and considering these proceedings in aggregate, it is the
opinion of the management that the likelihood of recovery in excess of
the insurance coverage is minimal and that such recovery, if it should
occur, would not have a material adverse effect on the results of
operation or the financial position of ACBJ.
Houston Business Journal, a publication of ACBJ, and a former
reporter are co-defendants in an action filed December 7, 1989 in the
District Court of Harris County, Texas by Al Fairfield. The plaintiff
alleges libel arising out of an article printed December 26, 1988 and
claims unspecified damages. Discovery is proceeding as an attempt by
the parties to mediate the case failed. ACBJ believes any recovery
should be within ACBJ's libel insurance coverage.
The Atlanta Business Chronicle (the "Chronicle"), a publication
of ACBJ, is the defendant in an action filed February 27, 1990 in the
State Court of Fulton County, Georgia by Thomas Stalvey. The plaintiff
alleges libel arising out of an article printed in April 1989 and claims
unspecified damages. A summary judgment was granted in favor of the
Chronicle on January 23, 1991. The plaintiff successfully appealed the
summary judgment and the case is waiting for a trial date to be
assigned. ACBJ believes any recovery should be within ACBJ's libel
insurance coverage.
The Kansas City Business Journal, ("KCBJ"), a publication of
ACBJ, is a defendant in an action filed July 19, 1993 in the Circuit
Court of Jackson County, Missouri at Kansas City by John M. Chezik. The
plaintiff alleges libel and false light arising out of an article
published in the KCBJ on August 2, 1991 and republished on December 31,
1991 and is claiming unspecified actual damages, plus punitive damages
in excess of $1,000,000. The matter was settled by the parties in
November 1994.
The Dallas Business Journal, ("DBJ"), a publication of ACBJ, is
the defendant in an action filed November 16, 1993 in the District
Court, Dallas County, Texas by James Dennis Allen. The plaintiff
alleges libel arising out of two articles printed by DBJ on January 22,
1993 and September 3, 1993 and claims unspecified damages. ACBJ
believes any recovery should be within ACBJ's libel insurance coverage.
DBJ is a defendant in an action filed May 10, 1994 in the
District Court, Henderson County, Texas by Bill C. Hunter. The
plaintiff alleges libel arising out of an article printed on April 22,
1994 and claims unspecified damages. ACBJ believes any recovery should
be within ACBJ's libel insurance coverage.
Business First of Columbus, a publication of ACBJ, and a
reporter are co-defendants in an action filed August 24, 1994 in the
Common Pleas Court of Franklin County, Ohio, by David T. McLaughlin Work
Well Company and David T. McLaughlin. The plaintiffs allege libel
arising out of an article printed August 30, 1993 in excess of $200,000
in damages.
46
<PAGE>
ACBJ's Motion for Summary Judgment was granted and has been appealed by
Mr. McLaughlin. ACBJ believes any recovery should be within ACBJ's
libel insurance coverage.
The Business Journal Serving San Jose and the Silicon Valley
("SJBJ"), a publication of ACBJ, a reporter and other non-related
companies and individuals, including the Maxtor Corporation and Gray
Cary Ware & Freidenrich, a professional corporation, are defendants in
an action filed December 12, 1994 in the Superior Court of the State of
California for the County of Santa Clara by Peter Van Beckum. The
plaintiff alleges libel out of an article published by SJBJ on May 23,
1994 and claims unspecified damages. The matter was settled by the
parties in April, 1995.
OFFICERS, DIRECTORS AND CERTAIN STOCKHOLDERS OF ACBJ
The following table sets forth certain information as of
September 25, 1995, with respect to ACBJ Common Stock regarding: (i)
each person who, to the best of ACBJ's knowledge, is the beneficial
owner of more than five percent (5%) of ACBJ Common Stock, and (ii)
shares of ACBJ Common Stock beneficially owned by each director and
named executive officer of ACBJ:
<TABLE>
<CAPTION>
Name and Address Amount & Nature of
of Beneficial Owner Beneficial Ownership (1) (13) Percent
<S> <C> <C>
Business Journal Associates 3,885,105 (2) 55.86
Limited Partnership
128 S. Tryon Street
Charlotte, NC 28202
Kirk A. Shaw 3,887,755 (2) (3) (8) 55.88
128 S. Tryon Street
Charlotte, NC 28202
Ray Shaw 3,885,105 (2) 55.86
128 S. Tryon Street
Charlotte, NC 28202
Whitney R. Shaw 3,913,455 (2) (3) (8) 56.04
128 S. Tryon Street
Charlotte, NC 28202
Glenn M. Stinchcomb 3,891,405 (2) 55.90
10111 N. Central Expressway
Dallas, TX 75231
47
<PAGE>
Name and Address Amount & Nature of
of Beneficial Owner Beneficial Ownership (1) (13) Percent
<S> <C> <C>
Spears, Benzak, Salomon & Farrell 830,677 (4) 11.50
45 Rockefeller Plaza
New York, NY 10111
SoGen International Fund, Inc. 380,031 (5) 5.48
1221 Avenue of the Americas
New York, NY 10020
Wellington Management Company 362,420 (6) 5.18
75 State Street
Boston, MA 02104
Quest Advisory Corp. 359,730 (7) 5.20
1414 Avenue of the Americas
New York, NY 10019
Grant L. Hamrick 91,839 (8) (9) 1.30
Richard J. Koch 75,402 (8) (10) 1.08
George A. Wiegers 35,280 (8) (11)
George M. Conley 39,515 (8) (11)
John M. McMeel 6,510 (8) (11)
James H. Hance, Jr. 4,200 (8) (11)
Directors & Officers 4,205,905 (12) 58.42
as Group (13 persons)
</TABLE>
___________________________
(1) The nature of beneficial ownership is direct unless otherwise
indicated by footnote. Beneficial ownership as shown in the
table arises from sole voting power and sole investment power
unless otherwise indicated by footnote.
(2) The shares owned by BJALP are attributed to Ray Shaw, Kirk A.
Shaw and Whitney R. Shaw because a 49% interest in BJALP is
owned by the Shaw family through Ray Shaw's limited partnership
interest. Such shares are also attributed to Mr. Stinchcomb,
the Vice President, Treasurer and Director of OPUBCO, which
owns 100% of OPUBCO Enterprises, Inc. (formerly Shaw
Publishing, Inc.), the 51% general partner
48
<PAGE>
of BJALP. Ray Shaw is the Chief Executive Officer of BJALP.
As reported in an amendment to the Schedule 13D filing of BJALP
(together with OPUBCO Enterprises, Inc. and Mr. Ray Shaw, its
general partner and limited partner, respectively) received by
the Company as of August 10, 1995, the interest of BJALP is
subject to the Merger Agreement and BJALP Option Agreement
described elsewhere herein. See "The Merger Agreement" and
"The Option Agreements -- The BJALP Option Agreement."
(3) Whitney R. Shaw, a Vice President of the Company, and Kirk A.
Shaw, Director of Operating Services, are sons of Ray Shaw.
(4) Based on information as of December 31, 1994 in its Schedule
13G dated February 6, 1995, Spears, Benzak, Salomon & Farrell,
a registered investment advisor, has customer accounts which
hold in aggregate 830,677 shares of ACBJ Common Stock after
giving effect to the conversion of Convertible Debentures.
(5) Based on information as of December 31, 1994 in its Schedule
13G dated January 31, 1995, SoGen International Fund, Inc. (the
"Fund") owns 380,031 shares and its investment advisor client,
Societe Generale Asset Management Corp., by virtue of its
investment advisory contract with the Fund, may be deemed a
beneficial owner of such shares.
(6) Based on information as of December 31, 1994 in its Schedule
13G dated January 24, 1995, Wellington Management Company, an
investment advisor, has clients with shared voting power for
156,620 shares and shared dispositive power for 362,420 shares,
which includes shares subject to acquisition upon conversion of
Convertible Debentures.
(7) Based on information as of December 31, 1994 in its Schedule
13G dated February 10, 1995.
(8) Includes presently exercisable options as follows:
Kirk A. Shaw 2,650 James H. Hance, Jr. 2,100
Whitney R. Shaw 28,350 John P. McMeel 2,100
Grant L. Hamrick 78,850 Glenn M. Stinchcomb 6,300
Richard J. Koch 37,900 George A. Wiegers 6,300
George M. Conley 39,200
(9) Includes 6,269 shares subject to acquisition upon conversion of
Convertible Debentures.
(10) Includes 30,458 shares and 6,789 shares subject to acquisition
upon conversion of Convertible Debentures held by Mr. Koch's
wife and children.
49
<PAGE>
(11) The percentage of shares beneficially owned does not exceed one
percent of the ACBJ Common Stock.
(12) Includes 13,007 shares of ACBJ Common Stock subject to
acquisition upon conversion of Convertible Debentures.
Includes presently exercisable options to purchase 232,300
shares.
(13) The Company has received an initial Schedule 13D filing of
Advance, S.I. Newhouse, Jr. and Donald E. Newhouse, dated as of
August 15, 1995, reporting Advance's interests under the Merger
Agreement, the BJALP Option Agreement and the Company Option
Agreement. See "The Merger Agreement" and "The Option
Agreements." The foregoing persons have disclaimed beneficial
ownership of ACBJ Common Stock in connection with such
agreements.
The transactions contemplated by the Merger Agreement and
described in this Information Statement will, when and if consummated,
result in a change of control of ACBJ. See "Effects of the Merger,"
"The Merger Agreement" and "The Option Agreements."
ADDITIONAL INFORMATION
ACBJ is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements
and other documents and information with the SEC. ACBJ's officers,
directors and principal stockholders are also presently subject to
filing requirements, as well as certain trading restrictions, imposed
under the Exchange Act. Such reports, proxy statements and other
documents and information are available for inspection and copying at
the reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
material may be obtained at prescribed rates from the SEC Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549.
/s/ Richard J. Koch
Richard J. Koch
Secretary
50
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
Consolidated Statement of Income for F-1
the Three Years Ended December 31, 1994
Consolidated Balance Sheet at F-2
December 31, 1994 and 1993
Consolidated Statement of Stockholders' F-4
Investment for the Three Years Ended
December 31, 1994
Consolidated Statement of Cash Flows F-5
for the Three Years Ended
December 31, 1994
Notes to Audited Consolidated Financial Statements F-6
Statement of Management Responsibility F-14
Report of Independent Public Accountants F-16
Consolidated Statement of Income for the Three F-17
Months Ended June 30, 1995 and 1994 and for
the Six Months Ended June 30, 1995 and
1994 (unaudited)
Consolidated Balance Sheet at June 30, 1995 (unaudited) F-18
and December 31, 1994
Consolidated Statement of Stockholders' F-20
Investment for the Year Ended December 31, 1994
and the Six Months Ended June 30, 1995 (unaudited)
Consolidated Statement of Cash Flows for the F-21
Three Months Ended June 30, 1995 and 1994
and for the Six Months Ended June 30, 1995
and 1994 (unaudited)
Notes to Unaudited Consolidated Financial Statements F-22
51
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
REVENUES:
Advertising $75,357,000 $67,314,000 $56,107,000
Circulation 19,186,000 16,502,000 11,960,000
Other 3,153,000 2,856,000 2,660,000
97,696,000 86,672,000 70,727,000
OPERATING EXPENSES:
Editorial 14,328,000 13,016,000 11,665,000
Sales 18,638,000 17,575,000 14,734,000
Circulation 12,525,000 11,241,000 8,515,000
Production 14,467,000 12,490,000 10,172,000
Administration 17,878,000 16,440,000 15,005,000
Depreciation and amortization 5,510,000 5,098,000 3,978,000
83,346,000 75,860,000 64,069,000
OPERATING INCOME 14,350,000 10,812,000 6,658,000
OTHER INCOME (EXPENSE):
Interest expense and discount amortization (5,260,000) (5,241,000) (3,112,000)
Interest income 623,000 309,000 1,238,000
Other (Note 2) (582,000) (5,000) 50,000
(5,219,000) (4,937,000) (1,824,000)
INCOME BEFORE PROVISION FOR INCOME TAXES 9,131,000 5,875,000 4,834,000
PROVISION FOR INCOME TAXES (Note 5) 3,835,000 2,475,000 943,000
NET INCOME 5,296,000 3,400,000 3,891,000
PREFERRED STOCK DIVIDENDS - - 1,926,000
NET INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ 5,296,000 $ 3,400,000 $ 1,965,000
INCOME PER SHARE (Note 1) - Primary $.74 $.50 $.29
- Fully diluted $.71 -- --
WEIGHTED AVERAGE SHARES OUTSTANDING
(Note 1) - Primary 7,154,000 6,779,000 6,733,000
- Fully diluted 9,152,000 -- --
</TABLE>
The accompanying notes are an integral part of this financial statement.
F - 1
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1994 AND 1993
ASSETS
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 8) $17,815,000 $13,992,000
Accounts receivable, net of allowance
for uncollectible accounts
of $462,000 in 1994 and $399,000 in 1993 13,205,000 10,822,000
Prepaid expenses 668,000 616,000
Deferred income taxes (Note 5) 476,000 676,000
Total current assets 32,164,000 26,106,000
FURNITURE AND EQUIPMENT 12,487,000 11,347,000
Less - Accumulated depreciation (8,015,000) (7,350,000)
4,472,000 3,997,000
DEFERRED INCOME TAXES (Note 5) 2,094,000 --
INTANGIBLES AND OTHER ASSETS, principally cost
in excess of assets acquired (Notes 2 and 3) 53,400,000 52,783,000
Total assets $92,130,000 $82,886,000
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F - 2
<PAGE>
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1994 AND 1993
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt (Note 4) $ 934,000 $ 983,000
Accounts payable 2,738,000 2,049,000
Accrued payroll and payroll taxes 2,211,000 1,373,000
Other accrued liabilities 1,335,000 1,254,000
Deferred subscription revenue 12,867,000 10,741,000
Accrued income taxes (Note 5) 3,163,000 739,000
Total current liabilities 23,248,000 17,139,000
LONG-TERM DEBT (Note 4) 35,788,000 36,785,000
DEFERRED SUBSCRIPTION REVENUE 2,677,000 2,443,000
DEFERRED INCOME TAXES (Note 5) -- 890,000
CONVERTIBLE SUBORDINATED DEBENTURES 31,878,000 31,878,000
COMMITMENTS AND CONTINGENCIES (Notes 5, 6 and 8)
STOCKHOLDERS' INVESTMENT:
Serial Preferred Stock, $.01 par value-2,500,000 shares
authorized; No shares issued -- --
Common stock, $.01 par value-30,000,000 shares
authorized; 7,216,000 and 10,246,000 shares
issued; 6,539,000 and 6,484,000 shares outstanding 72,000 51,000
Paid-in capital 7,691,000 43,550,000
Accumulated deficit (1,856,000) (7,152,000)
5,907,000 36,449,000
Treasury stock, 677,000 and 3,762,000
common shares at cost (7,368,000) (42,698,000)
Total stockholders' investment (1,461,000) (6,249,000)
Total liabilities and stockholders' investment $92,130,000 $82,886,000
</TABLE>
The accompanying notes are an integral part of this balance sheet.
F - 3
<PAGE>
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(Note 7)
<TABLE>
<CAPTION>
Pre-
ferred Common Paid-In Accumulated Treasury
Stock Stock Capital Deficit Stock
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1991 $16,000 $51,000 $80,072,000 ($12,517,000) ($47,081,000)
Issuance of common stock,
26,000 shares 172,000 90,000
Purchase of treasury stock,
48,804 preferred shares
at cost (968,000)
Exchange of convertible
subordinated debentures
for convertible preferred
stock (16,000) (36,978,000) 5,113,000
Net income 3,891,000
Preferred stock dividends
($1.50 per share) (1,926,000)
BALANCE AT DECEMBER 31, 1992 -- 51,000 43,266,000 (10,552,000) (42,846,000)
Issuance of common stock,
57,060 shares 284,000 148,000
Net income 3,400,000
BALANCE AT DECEMBER 31, 1993 51,000 43,550,000 (7,152,000) (42,698,000)
Issuance of common stock,
185,295 shares 604,000 931,000
Retirement of treasury
stock, 3,110,646 shares (15,000) (36,427,000) 36,442,000
Split of common stock (2 for l) --
par value of shares issued 36,000 (36,000)
Purchase of treasury stock,
131,279 common shares at cost (2,043,000)
Net income 5,296,000
BALANCE AT DECEMBER 31, 1994 $72,000 $7,691,000 ($1,856,000) ($7,368,000)
</TABLE>
The accompanying notes are an integral part of this financial statement.
F - 4
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,296,000 $ 3,400,000 $ 3,891,000
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation and amortization 5,510,000 5,098,000 3,978,000
Provision for bad debts 593,000 670,000 523,000
Loss on sale of assets 58,000 46,000 36,000
Net activity from trades (25,000) 10,000 (32,000)
Recognized imputed interest 267,000 238,000 215,000
Changes in assets and liabilities,
net of assets acquired -
Increase in accounts receivable
and other current assets (3,027,000) (2,028,000) (1,197,000)
(Increase) decrease in intangibles
and other assets 15,000 965,000 (1,243,000)
Increase (decrease) in accounts payable
and accrued expenses 1,179,000 (663,000) (691,000)
Increase in deferred subscription
revenue 1,295,000 458,000 1,693,000
Net cash provided by
operating activities 11,161,000 8,194,000 7,173,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 1,535,000 432,000 262,000
Purchase of treasury stock (2,043,000) -- (968,000)
Payment of preferred stock dividends -- -- (1,926,000)
Payment of long-term debt (1,738,000) (615,000) (210,000)
Net cash used for
financing activities (2,246,000) (183,000) (2,842,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of assets (3,100,000) (6,325,000) (11,000,000)
Capital expenditures (1,992,000) (2,116,000) (960,000)
Net cash used for investing activities (5,092,000) (8,441,000) (11,960,000)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,823,000 (430,000) (7,629,000)
CASH AND CASH EQUIVALENTS, beginning of year 13,992,000 14,422,000 22,051,000
CASH AND CASH EQUIVALENTS, end of year $17,815,000 $13,992,000 $14,422,000
</TABLE>
The accompanying notes are an integral part of this financial statement.
F - 5
<PAGE>
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993 AND 1992
(1) SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation and Consolidation - The financial
statements include American City Business Journals, Inc.
and its wholly owned subsidiaries (the Company) with all
significant intercompany accounts and transactions
eliminated. The cost ($925,000 in 1993 and $892,000 in
1992) of printing certain special publications has been
reclassified from editorial to production expense
consistent with 1994.
(b) Revenue Recognition - Circulation (subscription) revenue is
deferred and recognized as income on a pro-rata basis over
the subscription period, which is generally one to three
years. Advertising revenue is recognized when the
advertisement is published.
(c) Furniture and Equipment - Furniture and equipment is stated
at cost and depreciated over its estimated useful life (5
years) on the straight-line method. Maintenance and repairs
are expensed as incurred.
(d) Non-monetary Transactions - The Company sells advertising
space in its publications in return for goods and services.
Trade revenue is recorded at the market value of the
advertising space provided when the advertisements are
published and trade expense is charged to operations when
the goods or services are received or the time limit on the
trade has expired.
(e) Statement of Cash Flows - The Company invests all excess
cash in U.S. Treasury Securities, institutional trust
accounts, certificates of deposit and money market accounts
and considers these amounts cash equivalents. Interest
payments were $5,006,000, $4,942,000, and $2,898,000, in
1994, 1993, and 1992, respectively. Income taxes paid were
$3,915,000, $2,018,000, and $1,155,000 in 1994, 1993, and
1992, respectively.
(f) Employee Benefits - The Company maintains a Section 401(k)
plan which allows for employee elective contributions and
employer profit sharing contributions. The discretionary
profit sharing contributions are determined by the Board of
Directors. In 1993 the Company began a matching program of
25% of employee elective contributions limited to 4% of
salary. Total expense of the profit sharing and matching
program was $175,000 in 1992, $228,000 in 1993 and $223,000
in 1994.
F - 6
<PAGE>
(g) Per Share Data - Earnings per share are based on the
weighted average number of common and common equivalent
shares outstanding during the respective periods adjusted
retroactively for a 2 for 1 common stock split distributed
as a common stock dividend April 29, 1994 to stockholders
of record April 18, 1994 and for a 5% common stock dividend
payable January 16, 1995 to stockholders of record December
15, 1994. Fully diluted computations assume conversion of
the convertible subordinated debentures at the beginning of
the period.
(2) ACQUISITIONS
On December 31, 1992 the Company acquired Winston Cup Scene for
$15,000,000 consisting of $11,000,000 cash and a $4,000,000 note payable
over 5 years with 7% interest. The purchase price plus $2,680,000 of
subscription liabilities assumed was allocated to the assets based upon
an independent appraisal with the excess ($12,216,000) charged to
goodwill.
On March 1, 1993 the Company acquired the San Jose Business Journal.
The purchase price of $11,617,000 consisted of a $6,325,000 cash
payment, forgiveness of a note receivable and accrued interest thereon
in the total amount of $5,232,000 and $60,000 of acquisition expenses.
The purchase price plus $456,000 of net liabilities assumed was less
than the appraised value of the business as determined by an independent
appraisal. The excess ($9,278,000) of the purchase price over the
appraised value of the assets acquired was charged to goodwill.
If these transactions had occurred on January 1, 1992, unaudited pro
forma results of operations for 1992 would have been as follows:
Revenues $79,002,000
Income attributable to
common stockholders $ 1,752,000
Income per share $.26
A note receivable at December 31, 1992 of $4,610,000 due May 31, 1993
from MCP, Inc. less a $2,305,000 valuation reserve and accrued interest
thereon was cancelled and the litigation between the Company and MCP,
Inc. was dismissed as part of the San Jose acquisition. The valuation
reserve, which was established in prior years, was restored to
non-operating income and was substantially offset by the expense of a
consulting and non-competition agreement with the former president and a
provision for discontinuing certain unprofitable publications.
The Company entered into a 50/50 joint venture with Dow Jones & Company,
Inc. in October 1993 to publish a monthly magazine, beginning in 1994,
targeted to the country's fastest growing small businesses. The
Company's share ($554,000) of the joint venture loss in 1994 is included
in other non-operating expense. This publication was discontinued in
January
F-7
<PAGE>
1995.
In 1994 the Company acquired Winston Cup Illustrated magazine (September
1), The Austin Business Journal (October 1) and On Track magazine
(October 21) for an aggregate purchase price of $3,525,000 comprised of
$3,100,000 in cash, $300,000 in notes and $125,000 in non-competition
agreements. The excess ($2,314,000) of the purchase price plus the
liabilities assumed ($1,077,000) over the appraised value of the assets
acquired was charged to goodwill. If these transactions had occurred at
the beginning of the year they would not have had a material impact on
the results of operations.
(3) INTANGIBLES AND OTHER ASSETS
Intangible assets are amortized using the straight-line method and
include the following:
December 31
Amortization
1994 1993 Period
Goodwill $47,335,000 $45,012,000 40 years
Advertising base 11,745,000 10,700,000 5-15 years
Subscription base 7,038,000 6,652,000 5-12 years
Noncompete agreements
and other 6,513,000 5,680,000 3-20 years
72,631,000 68,044,000
Less-Accumulated
amortization (19,231,000) (15,261,000)
$53,400,000 $52,783,000
Annually, the Company evaluates the recoverability of goodwill and other
intangible assets by comparing the recorded amount to the estimated cash
flows from either operations or disposition of the publishing property.
If the estimated cash flows is less than the recorded amount an
impairment loss would be recognized.
F-8
<PAGE>
(4) LONG-TERM DEBT
Long-term debt is as follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
$20.00 Series Promissory Notes, due 1999, interest
payable monthly at prime rate (minimum 8%, maximum
12%, 8 1/2% at December 31, 1994), less $1,603,000 and
$1,841,000 unamortized discount; secured by common stock
and assets of nine business journals (combined assets
of $19,080,000 at December 31, 1994) $32,996,000 $32,758,000
$3.00 Series Promissory Notes, 6% interest, due 1999,
non-compete and capital lease obligations, less $180,000
and $208,000 unamortized discount 971,000 1,525,000
7% Unsecured Note payable $200,000 quarterly including
interest until December, 1997 2,755,000 3,485,000
36,722,000 37,768,000
Less-Current maturities (934,000) (983,000)
$35,788,000 $36,785,000
</TABLE>
Scheduled maturities during the next five years are as follows:
Year
1995 $ 934,000
1996 1,003,000
1997 1,058,000
1998 247,000
1999 35,263,000
38,505,000
Less-unamortized discount (1,783,000)
$36,722,000
F - 9
<PAGE>
(5) INCOME TAXES
The components of the net deferred tax asset are as follows:
<TABLE>
<CAPTION>
December 31,
1994 1993
<S> <C> <C>
Current deferred taxes:
Gross assets excluding net operating loss
carryforwards and alternative minimum
tax credit carryforwards $ 716,000 $ 581,000
Gross liabilities (240,000) (211,000)
Alternative minimum tax credit carryforwards - 306,000
Net current deferred tax asset 476,000 676,000
Noncurrent deferred taxes:
Gross assets excluding net operating
loss carryforwards and alternative
minimum tax credit carryforwards 2,153,000 361,000
Gross liabilities (271,000) (1,459,000)
Net operating loss carryforwards 212,000 208,000
Net noncurrent deferred tax asset (liability) 2,094,000 (890,000)
Net deferred tax asset (liability) $2,570,000 ($214,000)
</TABLE>
The tax effect of significant temporary differences representing
deferred tax assets and liabilities are as follows:
December 31,
1994 1993
Accelerated tax depreciation ($230,000) ($173,000)
Bad debt-specific write-off 130,000 102,000
Accrued vacation pay 280,000 242,000
Prepaid expenses (230,000) (207,000)
Amortization of intangibles 1,755,000 (1,219,000)
Non-competition and consulting agreements 407,000 485,000
Other 246,000 42,000
Alternative minimum tax credit carryforwards -- 306,000
Net operating loss carryforwards 212,000 208,000
Net deferred tax asset (liability) $2,570,000 ($214,000)
F - 10
<PAGE>
Following are the components of the federal and state income tax
provision:
<TABLE>
<CAPTION>
1994 1993 1992
Federal State Federal State Federal State
<S> <C> <C> <C> <C> <C> <C>
Currently payable $3,084,000 $604,000 $1,819,000 $400,000 $ 463,000 $19,000
Deferred exclusive
of items below (137,000) (25,000) (1,199,000) (183,000) 431,000 27,000
Net operating loss
carryforwards 2,000 1,000 518,000 79,000 1,404,000 90,000
Change in valuation
allowance -- -- -- -- (746,000) (49,000)
Alternative minimum tax
credit carryforwards 306,000 -- 1,086,000 -- (696,000) --
Other -- -- (43,000) (2,000) -- --
Total income tax
provision $3,255,000 $580,000 $2,181,000 $294,000 $ 856,000 $87,000
</TABLE>
The provision for federal income taxes differs from that computed at the
statutory corporate tax rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992
<S> <C> <C> <C>
Federal income tax at statutory rate $3,105,000 $1,998,000 $1,644,000
Benefit of state income taxes (279,000) (178,000) (100,000)
Tax effect of:
Goodwill amortization 199,000 202,000 203,000
Other permanent differences 230,000 159,000 (145,000)
Change in valuation allowance - - (746,000)
Federal income tax provision $3,255,000 $2,181,000 $856,000
</TABLE>
As of December 31, 1994, the Company and certain of its subsidiaries
have remaining tax net operating loss carryforwards of $530,000. Under
current income tax law, these carryforwards may be used to reduce future
taxable income of the companies generating the carryforwards and expire
in years 2000 through 2002. The tax effect of these carryforwards is
recognized as a deferred tax asset of $212,000 at December 31, 1994.
In November 1994 the Company agreed to participate in a settlement
initiative proposed by the Internal Revenue Service ("IRS") whereby the
Company agreed to extend the useful lives of certain intangible assets.
Under this settlement initiative, the Company has agreed, subject to
final IRS approval, to pay $2,488,000 in additional income taxes for
years prior to 1994 which will be recovered in future years from
additional income tax deductions for intangibles amortization.
Management estimates that approximately 75% of this amount will be
recovered over the next 9 years. Participation in the settlement
initiative had no impact on operating results for 1994 and the
$2,488,000 is included in income taxes currently payable and as a
deferred tax asset in the December 31, 1994 balance sheet.
F - 11
<PAGE>
(6) LEASE COMMITMENTS
In addition to office space, the Company also leases various equipment
under operating leases. Future minimum payments are as follows:
Year Amount
1995 $ 2,986,000
1996 2,676,000
1997 2,265,000
1998 1,820,000
1999 1,091,000
Thereafter 785,000
Total minimum lease commitments $11,623,000
Total rent expense for the years ended December 31, 1994, 1993 and 1992
was approximately $2,863,000, $2,944,000 and $2,731,000, respectively.
The Company utilizes common headquarters office space and a common phone
system with a partnership that is the Company's principal stockholder.
The cost of each is allocated based on actual usage.
(7) CAPITAL STOCK AND CONVERTIBLE SUBORDINATED DEBENTURES
The Company's Directors authorized the exchange of 6% Convertible
Subordinated Debentures ("the Debenture") for the Convertible
Exchangeable Preferred Stock ("the Preferred Stock") effective December
31, 1992. Each share of Preferred Stock was exchanged for a Debenture
in the principal amount of $25 due December 31, 2011 with interest at 6%
payable semi-annually. Each Debenture is convertible, at the holder's
option, into 1.567167 shares of Common Stock, the same conversion rate
as the Preferred Stock. At the date of exchange, there were 1,275,131
shares of Preferred Stock outstanding. The Debentures require annual
sinking fund payments of $1,969,000 beginning in 1996; however,
Preferred Stock repurchases are credited toward sinking fund payments
and previous repurchases made by the Company fulfills its sinking fund
requirements until 2000.
In March 1994 the Directors authorized the retirement of 3,110,646
shares of common stock held as treasury stock. The excess ($36,427,000)
of the cost of the shares retired over their par value was charged to
paid-in capital.
On May 20, 1994 the stockholders approved an amendment to the Company's
Articles of Incorporation to increase the authorized shares of common
stock from 10,000,000 shares to 30,000,000 shares.
F - 12
<PAGE>
On April 7, 1994 the Company split its common stock 2 for 1 in the form
of a common stock dividend distributed April 29, 1994 to stockholders of
record April 18, 1994. The consolidated financial statements and per
share data have been adjusted to retroactively reflect the increase in
outstanding shares.
On December 1, 1994 the Directors declared a 5% common stock dividend
payable January 16, 1995 to stockholders of record December 15, 1994.
Per share data has been adjusted retroactively to reflect the additional
shares.
In 1992, 1993 and 1994 the Company granted options to purchase 92,610,
102,480 and 56,805 shares, respectively, of common stock under the
Employee Stock Purchase Plan at an option price of the lower of $7.09,
$8.50 and $12.34 per share, respectively, or 85% of the market price on
date of exercise. Options were exercised for 27,090 shares in 1992,
37,800 shares in 1993 and 84,310 shares in 1994. Options for 14,495
shares have expired and options for 55,020 shares were outstanding at
December 31, 1994.
The Company has granted options to certain officers and key employees to
purchase shares of common stock at an option price equal to the fair
market value at date of grant. The options granted become exercisable
in one year. At December 31, 1994 there were 581,700 shares under
option at an option price of from $5.24 to $14.93 per share (average of
$9.12 per share) of which options for 573,300 shares were exercisable at
an option price of from $5.24 to $12.27 per share (average of $9.04 per
share). Options were exercised for 13,650 shares at $6.01 per share
(average) in 1992, 22,050 shares at $7.71 per share (average) in 1993
and 110,250 shares at $7.35 per share (average) in 1994. Options for
2,100 shares in 1992 and 423,150 shares in 1993 were canceled and the
option price ranged from $5.24 to $10.83 per share. All option shares
and prices have been adjusted retroactively for the stock split and
stock dividend in 1994.
In June, 1994 the Directors authorized the purchase of 100,000 shares of
common stock in the open market. At December 31, 1994 the Company had
purchased as treasury stock 65,100 shares at a cost of $1,001,000. The
Directors also authorized the purchase in December 1994 of 66,179 shares
of common stock from the Company's section 401(k) plan at a cost of
$1,042,000 which was based on the average market price for the preceding
month.
(8) COMMITMENTS AND CONTINGENCIES
The Company has various lawsuits outstanding incidental to its
operations. Management believes the outcome of this litigation will
not have a material adverse effect on the financial position or
operating results of the Company.
In connection with the purchase of Business Journal Publications
Corporation (BJPC) in 1986, the Company granted certain rights to a
former major stockholder of BJPC, which included a call option to
acquire 20% of the issued and outstanding stock in St. Louis Business
Journal Corp. and St. Louis Magazine, Inc., for $1,600,000, a put option
to require the Company to
F-13
<PAGE>
repurchase the 20% interest at fair market value plus a contingent
option to acquire the remaining 80% in the event any person or group of
persons, other than the then principal stockholders, control in excess
of 40% of the Company's common stock, as well as a right of first
refusal if the publications are sold. During 1989 this agreement was
amended whereby the former BJPC stockholder agreed not to exercise the
contingent option or the put option for a period of 3 years in exchange
for an amendment of the right to put the 20% option to the Company.
This agreement was extended for an additional 3 years in 1992. The
Company has issued a letter of credit of $1,500,000, backed by
$1,500,000 in certificates of deposit, to secure its obligations under
this agreement.
(9) UNAUDITED QUARTERLY DATA
Following is a summary of unaudited quarterly results for the years
ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
March 31 June 30 September 30 December 31
(Unaudited)
<S> <C> <C> <C> <C>
1994
Revenues $20,578,000 $24,099,000 $23,572,000 $29,447,000
Operating income 1,279,000 3,922,000 3,314,000 5,835,000
Net income 30,000 1,597,000 1,154,000 2,515,000
Income per share:
Primary -- $.23 $.16 $.35
Fully diluted -- $.21 N/A $.31
1993
Revenues $18,105,000 $21,854,000 $21,673,000 $25,040,000
Operating income 767,000 3,111,000 2,632,000 4,302,000
Net income (loss) (296,000) 1,158,000 766,000 1,772,000
Income (loss) per share -
primary ($.04) $.17 $.11 $.26
</TABLE>
Statement of Management Responsibility
Management is primarily responsible for the preparation, accuracy and
integrity of the financial information presented in this annual report.
The financial statements have been prepared in accordance with generally
accepted accounting principles and, of necessity, include amounts that
are based on management's best estimates and judgments.
The Company maintains a system of internal accounting control designed
to provide reasonable assurance of the reliability of financial records
and the safeguard of assets. The controls are based on established
policies and procedures, are implemented by qualified people and are
monitored by a financial review program and internal and independent
audits.
F-14
<PAGE>
The independent accountants were engaged to perform an audit of the
consolidated financial statements which provides an objective review of
management's responsibility to report operating results and financial
position. They review and make tests as appropriate of the data
included in the financial statements and this report.
The Board of Directors, through its Audit Committee, is responsible for
an oversight role with respect to the Company's financial statements and
internal controls. The Audit Committee meets periodically with
management and independent accountants to discuss auditing, accounting
and financial matters. The independent accountants and internal
auditors have direct access to the Audit Committee to discuss the scope
and results of their work as well as any other matters concerning
internal accounting controls and financial reporting.
Ray Shaw Grant L. Hamrick
Chairman of the Board Senior Vice President
and Chief Executive Officer and Chief Financial Officer
F - 15
<PAGE>
Report of Independent Public Accountants
To the Stockholders of
American City Business Journals, Inc.:
We have audited the accompanying consolidated balance sheet of American
City Business Journals, Inc. (a Delaware corporation), and subsidiaries
as of December 31, 1994 and 1993, and the related consolidated
statements of income, stockholders' investment and cash flows for each
of the three years in the period ended December 31, 1994. These
consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
American City Business Journals, Inc. and subsidiaries as of December
31, 1994 and 1993, and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1994,
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Charlotte, North Carolina,
February 10, 1995.
F - 16
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues $29,518,000 $24,099,000 $54,389,000 $44,677,000
Operating expenses 24,835,000 20,177,000 47,803,000 39,476,000
Operating income 4,683,000 3,922,000 6,586,000 5,201,000
Interest expense - net (1,152,000) (1,170,000) (2,302,000) (2,399,000)
Other income 10,000 2,000 10,000 3,000
Income before income taxes 3,541,000 2,754,000 4,294,000 2,805,000
Provision for income taxes 1,452,000 1,157,000 1,761,000 1,178,000
Net income $2,089,000 $1,597,000 $2,533,000 $1,627,000
Income per common share (a):
Primary $.29 $.22 $.35 $.23
Fully diluted $.26 $.21 $.34 (b)
Weighted average
Shares outstanding (a):
Primary 7,217 7,116 7,211 7,106
Fully diluted 9,215 9,128 9,209 ----
</TABLE>
(a) Adjusted to reflect 2 for 1 stock split effective April 29,
1994 and 5% stock dividend paid on January 16, 1995.
(b) Anti-dilutive.
F - 17
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $19,264,000 $17,815,000
Accounts receivable, net of allowance for uncollectible
accounts of $569,000 in 1995 and $462,000 in 1994 13,287,000 13,205,000
Prepaid expenses 1,511,000 668,000
Deferred income taxes 476,000 476,000
Total current assets 34,538,000 32,164,000
FURNITURE AND EQUIPMENT 14,307,000 12,487,000
Less - Accumulated depreciation (8,513,000) (8,015,000)
5,794,000 4,472,000
DEFERRED INCOME TAXES 2,094,000 2,094,000
INTANGIBLES AND OTHER ASSETS, principally cost in 52,054,000 53,400,00
excess of assets acquired - net
Total assets $94,480,000 $92,130,000
</TABLE>
F - 18
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 943,000 $ 934,000
Accounts payable 3,118,000 2,738,000
Accrued payroll and payroll taxes 1,739,000 2,211,000
Other accrued liabilities 1,674,000 1,335,000
Deferred subscription revenue 13,400,000 12,867,000
Accrued income taxes 2,276,000 3,163,000
Total current liabilities 23,150,000 23,248,000
LONG-TERM DEBT 35,403,000 35,788,000
DEFERRED SUBSCRIPTION REVENUE 2,842,000 2,677,000
CONVERTIBLE SUBORDINATED DEBENTURES 31,826,000 31,878,000
STOCKHOLDERS' INVESTMENT:
Serial Preferred Stock, $.01 par value - 2,5000,000 shares
authorized; No shares issued -------- -------
Common stock, $.01 par value - 30,000,000 shares authorized;
7,625,000 and 7,216,000 shares issued;
6,913,000 and 6,539,000 shares outstanding 76,000 72,000
Paid-in capital 8,299,000
7,691,000
Retained earnings (deficit) 677,000 (1,856,000)
9,052,000 5,907,000
Treasury stock - 712,000 and 677,000 common shares at cost (7,793,000) (7,368,000)
Total stockholders' investment 1,259,000 (1,461,000)
Total liabilities and stockholders' investment $94,480,000 $92,130,000
</TABLE>
F - 19
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' INVESTMENT
FOR THE YEAR ENDED DECEMBER 31, 1994 AND
THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Common Paid-In Retained Treasury
Stock Capital Earnings Stock
(Deficit)
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $51,000 $43,550,000 ($7,152,000) ($42,698,000)
Issuance of common stock,
185,295 shares 604,000 931,000
Retirement of treasury stock,
3,110,646 shares (15,000) (36,427,000) 36,442,000
Split of common stock (2 for 1) -
par value of shares issued 36,000 (36,000)
Purchase of treasury stock,
131,279 common shares at cost (2,043,000)
Net income 5,296,000
BALANCE AT DECEMBER 31, 1994 72,000 7,691,000 (1,856,000) (7,368,000)
Issuance of common stock,
44,545 shares 560,000 395,000
Common stock dividend (5%) -
par value of shares issued 4,000 (4,000)
Purchase of treasury stock,
42,700 common shares at cost (820,000)
Conversion of Convertible Subordinated
Debentures, 3,308 common shares issued 52,000
Net income 2,533,000
BALANCE AT JUNE 30, 1995 $76,000 $8,299,000 $677,000 ($7,793,000)
(UNAUDITED)
</TABLE>
F - 20
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,089,000 $1,597,000 $2,533,000 $1,627,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,396,000 1,357,000 2,760,000 2,682,000
Provision for bad debts 158,000 130,000 358,000 298,000
Loss on sale of assets ---- 4,000 2,000 4,000
Net activity from trades (28,000) (51,000) (29,000) (52,000)
Recognized imputed interest 73,000 65,000 144,000 129,000
Changes in assets and liabilities, net of assets acquired:
Increase in accounts receivable and other current assets (1,430,000) (1,900,000) (1,254,000) (1,355,000)
Decrease in intangibles and other assets 3,000 16,000 38,000 53,000
Increase (decrease) in accounts payable and accrued expenses (1,166,000) 35,000 (760,000) (51,000)
Increase (decrease) in deferred subscription revenue (116,000) (96,000) 698,000 715,000
Net cash provided by operating activities 979,000 1,157,000 4,490,000 4,050,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 552,000 732,000 955,000 1,204,000
Repayment of long-term debt (224,000) (188,000) (400,000) (372,000)
Purchase of treasury stock (174,000) (304,000) (820,000) (304,000)
Net cash provided by (used for) financing activities 154,000 240,000 (265,000) 528,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase price of companies acquired ---- ---- (1,924,000) ----
Capital expenditures (398,000) (652,000) (852,000) (1,163,000)
Net cash used for investing activities (398,000) (652,000) (2,776,000) (1,163,000)
NET INCREASE IN CASH AND CASH EQUIVALENTS 735,000 745,000 1,449,000 3,415,000
CASH AND CASH EQUIVALENTS, beginning of period 18,529,000 16,662,000 17,815,000 13,992,000
CASH AND CASH EQUIVALENTS, end of period $19,264,000 $17,407,000 $19,264,000 $17,407,000
</TABLE>
F - 21
<PAGE>
AMERICAN CITY BUSINESS JOURNALS, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
1. The 1995 consolidated financial statements have been prepared
by the Company, without audit, and reflect all adjustments
which are, in the opinion of management, necessary to fairly
present the financial position and results of operations for
the interim periods. All such adjustments are of a normal and
recurring nature. Certain information and footnote disclosures
normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted, although the Company believes that
the disclosures are adequate to make the information presented
not misleading. It is suggested that these condensed financial
statements be read in conjunction with the consolidated
financial statements and notes thereto for the year ended
December 31, 1994 included elsewhere in this Information
Statement.
2. The consolidated financial statements include the accounts of
American City Business Journals, Inc., and its wholly owned
subsidiaries. All significant intercompany accounts and
transactions have been eliminated in the consolidated
statements.
3. Earnings per share are based on the weighted average number of
common and common equivalent shares outstanding during the
respective periods adjusted retroactively for a 2-for-1 common
stock split distributed as a common stock dividend April 29,
1994 to shareholders of record April 18, 1994, and a 5% common
stock dividend paid on January 16, 1995 to shareholders of
record December 15, 1994. Fully diluted computations assume
conversion of the convertible subordinated debentures at the
beginning of the period.
4. In 1994 the Company acquired Winston Cup Illustrated magazine
(September 1), The Austin Business Journal (October 1) and On
Track magazine (October 21) for an aggregate purchase price of
$3,525,000 comprised of $3,100,000 in cash, $300,000 in notes
and $125,000 in non-competition agreements. The excess
($2,100,000) of the purchase price plus the liabilities assumed
($1,100,000) over the appraised value of the assets acquired
was charged to goodwill. On February 1, 1995 the Company
acquired Performance Printing Company for $1,300,000 in cash.
The purchase price was allocated to the assets acquired as
determined by an independent appraisal. Also, on January 20,
1995 the Company purchased a minority interest in Sunbelt
Video, Inc., for $624,000 in cash and obtained an option to
acquire the remaining shares in three years at appraised value.
F - 22
<PAGE>
Exhibit A
AGREEMENT AND PLAN OF MERGER
by and among
AMERICAN CITY BUSINESS JOURNALS, INC.,
BUSINESS JOURNAL ASSOCIATES LIMITED PARTNERSHIP,
ADVANCE PUBLICATIONS, INC.
and
ADVANCE ACQUISITION SUB. INC.
dated as of
August 3, 1995
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I - Definitions . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - The Merger; Closing; Effective Time . . . . . . 7
2.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . 7
2.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3. Effective Time . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III - Certificate of Incorporation, Bylaws,
Directors and Officers of the Surviving
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Certificate of Incorporation . . . . . . . . . . . . . . 7
3.2. Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3. Directors and Officers . . . . . . . . . . . . . . . . . 8
ARTICLE IV - Conversion and Payment of Shares; Treatment of
Options; Dissenting Stockholders . . . . . . 8
4.1. Conversion or Cancellation of Shares and Convertible
Debentures . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2. Stock Options . . . . . . . . . . . . . . . . . . . . . 9
4.3. Payment for Shares, Convertible Debentures and Options 10
4.4. Dissenters' Rights . . . . . . . . . . . . . . . . . . . 11
4.5. Transfer of Shares After the Effective Time . . . . . . 12
ARTICLE V - Representations and Warranties of the Company . . 12
5.1. Corporate Organization and Qualification . . . . . . . . 12
5.2. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 12
5.3. Capital Structure . . . . . . . . . . . . . . . . . . . 13
5.4. Corporate Authority . . . . . . . . . . . . . . . . . . 13
5.5. Governmental Filings . . . . . . . . . . . . . . . . . . 14
5.6 No Violations; Non-Contravention; Requisite Consents . . 14
5.7. Company Reports; Financial Statements . . . . . . . . . 14
5.8. Absence of Certain Changes . . . . . . . . . . . . . . . 15
5.9. Litigation . . . . . . . . . . . . . . . . . . . . . . . 15
5.10. Liabilities . . . . . . . . . . . . . . . . . . . 16
5.11. Employee Benefit Plans . . . . . . . . . . . . . 16
5.12. Brokers and Finders . . . . . . . . . . . . . . . 17
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<PAGE>
5.13. Intellectual Property . . . . . . . . . . . . . . 17
5.14. Taxes . . . . . . . . . . . . . . . . . . . . . . 17
5.15. Properties . . . . . . . . . . . . . . . . . . . 18
5.16. Licenses, Franchises, Etc. . . . . . . . . . . . 18
5.17. Information Statement and Applications . . . . . 18
5.18. Powers of Attorney, Etc. . . . . . . . . . . . . 19
5.19. Contracts and Leases . . . . . . . . . . . . . . 19
5.20. Accounts Payable; Accrued Expenses; Prepaid Expenses
19
5.21. Compliance with Laws . . . . . . . . . . . . . . 19
5.22. Insurance . . . . . . . . . . . . . . . . . . . . 20
5.23. Environmental Matters . . . . . . . . . . . . . . 20
5.24. Disclosure . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI - Representations and Warranties of BJALP . . . . 21
6.1. Organization . . . . . . . . . . . . . . . . . . . . . . 21
6.2. Authority . . . . . . . . . . . . . . . . . . . . . . . 21
6.3. Brokers and Finders . . . . . . . . . . . . . . . . . . 21
6.4. BJALP Ownership of Company Shares . . . . . . . . . . . 21
ARTICLE VII - Representations and Warranties of Purchaser
and Merger Sub . . . . . . . . . . . . . . . 22
7.1. Corporate Organization and Qualification . . . . . . . . 22
7.2. Corporate Authority . . . . . . . . . . . . . . . . . . 22
7.3. Governmental Filings . . . . . . . . . . . . . . . . . . 22
7.4. No Violations; Non-Contravention; Requisite Consents . . 22
7.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . 23
7.6. Purchaser's Investigation . . . . . . . . . . . . . . . 23
ARTICLE VIII - Covenants . . . . . . . . . . . . . . . . . . 23
8.1. Interim Operations of the Company . . . . . . . . . . . 23
8.2. Acquisition Proposals . . . . . . . . . . . . . . . . . 26
8.3. Approval by the Company's Stockholders . . . . . . . . . 27
8.4. Filings; Other Action . . . . . . . . . . . . . . . . . 28
8.5. Access; Confidentiality . . . . . . . . . . . . . . . . 29
8.6. Notification of Certain Matters . . . . . . . . . . . . 29
8.7. Publicity . . . . . . . . . . . . . . . . . . . . . . . 29
8.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 29
8.9. Transmittal to Optionholders . . . . . . . . . . . . . . 30
8.10. Redemption of Convertible Debentures . . . . . . 30
8.11. Approval of Merger by BJALP; Granting of Options 30
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<PAGE>
8.12. Survival of Indemnification Obligations . . . . . 30
8.13. Funding . . . . . . . . . . . . . . . . . . . . . 31
8.14. Takeover Statute . . . . . . . . . . . . . . . . 31
8.15. Fairness Opinion . . . . . . . . . . . . . . . . 31
8.16. SLBJ and SLM Option Agreement . . . . . . . . . . 31
ARTICLE IX - Conditions . . . . . . . . . . . . . . . . . . . 32
9.1. Conditions to Obligations of the Company . . . . . . . . 32
9.2. Conditions to Obligations of Purchaser and
Merger Sub . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE X - Termination . . . . . . . . . . . . . . . . . . . 35
10.1. Termination by Mutual Consent . . . . . . . . . . 35
10.2. Termination by Either Party . . . . . . . . . . . 35
10.3. Termination by Company . . . . . . . . . . . . . 35
10.4. Termination by Purchaser and Merger Sub . . . . . 36
10.5. Effect of Termination and Abandonment . . . . . . 36
ARTICLE XI - Miscellaneous . . . . . . . . . . . . . . . . . 37
11.1. Survival . . . . . . . . . . . . . . . . . . . . 37
11.2. Modification or Amendment . . . . . . . . . . . . 37
11.3. Waiver of Conditions . . . . . . . . . . . . . . 37
11.4. Counterparts . . . . . . . . . . . . . . . . . . 37
11.5. Governing Law . . . . . . . . . . . . . . . . . . 37
11.6. Notices . . . . . . . . . . . . . . . . . . . . . 37
11.7. Obligation of Purchaser . . . . . . . . . . . . . 39
11.8. Captions . . . . . . . . . . . . . . . . . . . . 39
11.9. Severability . . . . . . . . . . . . . . . . . . 39
11.10. Entire Agreement; Assignment . . . . . . . . . . 39
11.11. Tax Filing Consistency . . . . . . . . . . . . . 39
Exhibits
Exhibit A Certificate of Merger
Annexes
Annex 8.11(a)(i)Company Stock Option Agreement
Annex 8.11(a)(ii) BJALP Stock Option Agreement
Annex 8.11(b) BJALP Irrevocable Written Consent
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<PAGE>
Disclosure Schedule
Section 5.2 Subsidiaries
Section 5.3 Stock Options, Etc.
Section 5.6 No Violations; Non-Contravention; Requisite
Consents
Section 5.8 Absence of Certain Changes
Section 5.9 Litigation
Section 5.10 Liabilities
Section 5.11 Employee Benefit Plans
Section 5.13 Intellectual Property
Section 5.14 Taxes
Section 5.15 Leased Real Estate
Section 5.19 Contracts and Leases
Section 5.20 Accrued and Prepaid Expenses
Section 5.21 Compliance with Laws
Section 5.22 Insurance
Section 5.23 Environmental Matters
Section 8.1 Capital Expenditures Budget
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER dated as of August 3,
1995, is entered into by and among AMERICAN CITY BUSINESS
JOURNALS, INC., a Delaware corporation (the "Company"), BUSINESS
JOURNAL ASSOCIATES LIMITED PARTNERSHIP, a Delaware limited
partnership and the principal stockholder of the Company
("BJALP"), ADVANCE PUBLICATIONS, INC., a New York corporation
("Purchaser"), and ADVANCE ACQUISITION SUB. INC., a newly-formed
Delaware corporation and the wholly-owned subsidiary of Purchaser
("Merger Sub").
RECITALS:
WHEREAS, the respective Boards of Directors of the
Purchaser, the Merger Sub and the Company have determined that it
is in the best interests of such companies and of their
respective stockholders for the Purchaser to acquire the Company
through a merger of Merger Sub into the Company upon the terms
and subject to the conditions set forth herein;
NOW, THEREFORE, the Company, BJALP, the Purchaser and the
Merger Sub hereby agree as follows:
ARTICLE I
Definitions
The terms defined in this Article I shall have the following
respective meanings for all purposes of this Agreement, with the
definitions being equally applicable to both the singular and the
plural forms of the terms defined:
"Acquisition Proposal" shall have the meaning set forth in
Section 8.2.
"Affiliate", with respect to the Company, shall mean any
Person which is a directly or indirectly held Subsidiary of the
Company or any Person which controls, is controlled by or is
under common control with the Company, and, with respect to any
Person other than the Company, shall mean any Person which is a
directly or indirectly held subsidiary of, or controls, is
controlled by or is under common control with, such Person.
"Agreement" shall mean this Agreement and Plan of Merger
dated as of August 3, 1995 among the Company, BJALP, the
Purchaser and the Merger Sub.
"BJALP" shall mean Business Journal Associates Limited
Partnership, a Delaware limited partnership.
<PAGE>
"BJALP Irrevocable Written Consent" shall mean the
irrevocable written consent to be executed by BJALP and delivered
to the Company pursuant to Section 8.11(b).
"BJALP Stock Option Agreement" shall mean the Stock Option
Agreement executed by the Purchaser, BJALP and The Oklahoma
Publishing Company, a Delaware corporation ("OPUBCO"), on the
date hereof pursuant to Section 8.11(a)(ii).
"Certificate of Merger" shall mean the Certificate of Merger
attached hereto as Exhibit A which shall be executed and filed
with the Secretary of State of Delaware in accordance with the
applicable provisions of the DGCL to effectuate the Merger as
provided for in this Agreement.
"Closing" shall mean the closing of the Merger as provided
in Section 2.2 of this Agreement.
"Closing Date" shall mean the date on which the Closing
takes place.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended, and all regulations promulgated thereunder.
"Company" shall mean American City Business Journals, Inc.,
a Delaware corporation.
"Company Reports" shall mean all forms, reports, schedules,
registration statements, proxy statements and other documents
which the Company has been or shall be required to file with the
SEC with respect to all periods commencing on or after January 1,
1992 and up to and including the Effective Time.
"Company Shares" shall mean the 30,000,000 authorized shares
of the Company's common stock, with a par value of $0.01 per
share.
"Company Stock Option Agreement" shall mean the Stock Option
Agreement executed by the Purchaser, the Merger Sub and the
Company on the date hereof pursuant to Section 8.11(a)(i).
"Confidentiality Agreement" shall mean the Confidentiality
Agreement executed by the Purchaser for the benefit of BJALP and
the Company on June 2, 1995.
"Contracts" shall mean all material contracts, agreements
and commitments to which the Company or any Subsidiary is a party
(other than the Leases) (i) calling for payment of more than One
Hundred Thousand Dollars ($100,000) in any calendar year which
are not terminable by any party thereto on less than one hundred
eighty (180) days' notice without penalty and which are not
entered into in the ordinary course of business, (ii) containing
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<PAGE>
covenants limiting, in any material respect, the freedom of the
Company or any Subsidiary to compete with any Person in any line
of business or in any territory, (iii) evidencing or relating to
indebtedness for borrowed money, (iv) mortgaging, pledging or
otherwise placing a lien on the assets of the Company or a
Subsidiary, all of which are identified in Section 5.19 of the
Disclosure Schedule, or (v) requiring the consent of the other
party thereto in connection with the execution and delivery of
this Agreement and the Company Stock Option Agreement or the
consummation of the transactions contemplated hereby and thereby.
"Convertible Debentures" shall mean the Company's 6%
Convertible Subordinated Debentures due December 31, 2011.
"DGCL" shall mean the Delaware General Corporation Law.
"Director Stock Option Plan" shall mean the American City
Business Journals, Inc. Formula Stock Option Plan effective as of
June 1, 1993.
"Disclosure Schedule" shall mean the disclosure schedule
document executed by the Company, the Purchaser and the Merger
Sub as of the date hereof.
"Dissenting Stockholders" shall mean the Company
stockholders who exercise appraisal rights pursuant to Section
262 of the DGCL with respect to their Company Shares in
connection with the consummation of the Merger.
"Effective Time" shall mean the time and date upon which the
Merger is effective pursuant to the provisions of Section 2.3.
"Employee Benefit Plan" shall mean any bonus, pension,
retirement, profit sharing, deferred compensation, restricted
stock, stock option, stock appreciation right, severance and
welfare plans, employment or severance agreements (including any
plans described in Section 3(3) of ERISA) and all similar
arrangements contributed to or maintained by the Company (or any
of its Subsidiaries) for the benefit of any current or former
employee, officer, or director of the Company or its
Subsidiaries.
"Employee Stock Option Plan" shall mean the American City
Business Journals, Inc. 1989 Stock Option Plan effective as of
November 15, 1989.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations
promulgated thereunder.
"ERISA Affiliate Plan" shall have the meaning set forth in
Section 5.11.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
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<PAGE>
"GAAP" shall mean United States generally accepted
accounting principles promulgated or adopted by the Financial
Accounting Standards Board or its predecessors that are in effect
from time to time.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indenture" shall mean the indenture dated as of February 1,
1987 between the Company and Boatmen's First National Bank of
Kansas City, as trustee (First Union National Bank currently
serving as trustee under the Indenture).
"Information Statement" shall mean, as applicable, the
information or proxy statement and all related amendments,
materials or supplements to be distributed by the Company to its
stockholders concerning the subject matter of this Agreement as
is described further in Section 8.3.
"Intellectual Property" shall mean all trade names, service
marks, service mark registrations and applications, trademarks,
trademark registrations and applications, domestic and foreign
patents (including, without limitation, letters, design and
reissue, utility models and industrial design registrations),
patent applications, unpatented inventions, material licenses,
copyrights, copyright registrations and applications and other
intellectual property owned, licensed or used by the Company or
any of the Subsidiaries and that are material to its business,
all of which are identified in Section 5.13 of the Disclosure
Schedule.
"Leases" shall mean the leases of real or personal property
relating to the Company's business to which the Company or any
Subsidiary is a party, as lessor or lessee, or by which the
Company or any Subsidiary is bound, calling for payment of more
than One Hundred Thousand Dollars ($100,000) in any calendar year
which are not terminable by any party thereto on less than one
hundred eighty (180) days' notice without penalty and, with
respect to personal property leases, which are not entered into
in the ordinary course of business, all of which are identified
in Section 5.19 of the Disclosure Schedule.
"Material Adverse Effect" shall mean a material adverse
effect on the financial condition, business, assets, prospects or
results of operations of the Company and the Subsidiaries taken
as a whole.
"Merger" shall mean the merger of the Merger Sub with and
into the Company upon the terms set forth in Section 2.1.
"Merger Consideration" shall mean an amount equal to $28.00
per share, without interest thereon.
"Merger Sub" shall mean Advance Acquisition Sub. Inc., a
Delaware corporation.
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<PAGE>
"Merger Sub Shares" shall mean all of the authorized shares
of the common stock of the Merger Sub.
"Order" shall mean any statute, rule, regulation, judgment,
decree, injunction or other order, whether temporary, preliminary
or permanent, which is in effect and prohibits consummation of
the transactions contemplated by this Agreement.
"Paying Agent" shall mean the entity or entities designated
by the Purchaser or Merger Sub in accordance with Section 4.3 to
facilitate the payment of the Merger Consideration to the
Company's stockholders, holders of certain stock options and
holders of Convertible Debentures in accordance with this
Agreement.
"Person" shall mean any individual, partnership,
corporation, trust, unincorporated organization, association,
joint venture or other entity or a government, agency, political
subdivision, instrumentality or division thereof.
"Purchaser" shall mean Advance Publications, Inc., a New
York corporation.
"Real Estate" shall mean the real estate owned or leased by
the Company or its Subsidiaries, all of which is described in
Section 5.15 of the Disclosure Schedule.
"Redemption Date" shall mean the date fixed for the
redemption of the Convertible Debentures as described in Section
7.10.
"Regulatory Filings" shall mean all filings required to
legally consummate the Merger under the HSR Act, the Exchange
Act, the rules of the National Association of Securities Dealers,
Inc. and any applicable state "blue sky" securities rules or
regulations.
"Requisite Consents" shall mean all consents of contracting
parties, governmental or regulatory authorities or other Persons
to the execution and delivery by the Company of this Agreement or
the consummation of the transactions contemplated hereby, which
consents are identified in Section 5.6 of the Disclosure
Schedule.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Stock Option Plans" shall mean, collectively, the Director
Stock Option Plan, the Employee Stock Option Plan, the Stock
Purchase Plan and those "Additional Stock Option Agreements" set
forth in Section 5.3 of the Disclosure Schedule.
"Stock Purchase Plan" shall mean the Amended and Restated
American City Business Journals, Inc. Employee Stock Purchase
Plan effective as of July 1, 1990.
"Subsidiary", with respect to the Company, shall mean any
entity 50% or more of
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<PAGE>
the stock of which is owned directly or indirectly by the
Company, and, with respect to any Person other than the
Company, any entity 50% or more of the stock of which is owned
directly or indirectly by such Person.
"Substantial Transaction" shall mean a transaction involving
the sale of all or a material portion of the Company's assets, a
merger or other form of business consolidation involving the
Company or any of its material Subsidiaries, the sale of 15% or
more of the Company Shares or other equity securities (by means
of a stock sale or other transaction) or any other transaction or
series of transactions effecting a change in control of the
Company.
"Superior Proposal" shall have the meaning set forth in
Section 8.2.
"Surviving Corporation" shall mean the surviving corporation
in the Merger as provided for in Section 2.1.
"Taxes" shall mean all taxes, fees, levies, duties, charges
or other like assessments, including, without limitation, income,
withholding, gross receipts, excise, real or personal property,
asset, sales, use, license, payroll, transaction, transfer,
transfer gains, documentary recording, capital, net worth and
franchise taxes imposed by or payable to any federal, state,
county, local or foreign government, taxing authority,
subdivision or agency thereof, including interest, penalties or
additional amounts related thereto.
"Tax Return" shall mean any report, return, declaration or
other information required to be supplied to or filed with a
taxing authority in connection with the Taxes of the Company or
any Subsidiary.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. In accordance with this Agreement and
the DGCL, at the Effective Time the Merger Sub shall be merged
with and into the Company and the separate corporate existence of
the Merger Sub shall thereupon cease. The Company shall be the
surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware, and the separate
corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The Merger shall have the effects
specified in the DGCL.
2.2. Closing. Subject to the provisions of Articles IX
and X, the Closing shall take place at the offices of Parker,
Poe, Adams & Bernstein L.L.P. at 2500 Charlotte Plaza, Charlotte,
North Carolina 28244 promptly after the satisfaction or waiver
of all conditions precedent set forth in Article IX, or at such
other place or time or on such other date as the parties may
agree.
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<PAGE>
2.3 Effective Time. The Merger shall become effective as
of the time and date of the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware in
accordance with the provisions of the DGCL, or at the time
specified in the Certificate of Merger, if later than the time of
filing. The date and time when the Merger shall become effective
is herein referred to as the "Effective Time." Notwithstanding
the foregoing, for accounting purposes the Merger shall be deemed
to have occurred at the close of business on the date of the
Effective Time.
ARTICLE III
Certificate of Incorporation, Bylaws, Directors
and Officers of the Surviving Corporation
3.1. Certificate of Incorporation. The Certificate of
Incorporation of the Company, as in effect at the Effective Time,
shall be the Certificate of Incorporation of the Surviving
Corporation, until thereafter amended in accordance with the
terms thereof and in accordance with the Surviving Corporation's
bylaws and the DGCL, except that Article Four of the Certificate
of Incorporation shall be amended to read in its entirety as
follows:
"The aggregate number of shares which the
Corporation shall have the authority to issue is 1,000
shares of Common Stock, par value $1.00 per share."
3.2. Bylaws. The bylaws of the Merger Sub, as in effect
at the Effective Time, shall be the bylaws of the Surviving
Corporation, until thereafter amended in accordance with the
terms thereof and in accordance with the Surviving Corporation's
Certificate of Incorporation and the DGCL.
3.3. Directors and Officers. The directors of the Merger
Sub and the officers of the Company at the Effective Time shall,
from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors
have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and bylaws.
ARTICLE IV
Conversion and Payment of Shares; Treatment of Options;
Dissenting Stockholders
4.1. Conversion or Cancellation of Shares and Convertible
Debentures. As
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of the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof:
(a) All Company Shares that are held by the Company
as treasury stock or by any Subsidiary shall be cancelled and
retired, without any conversion thereof.
(b) Except as otherwise provided in Section 4.4,
each remaining issued and outstanding Company Share shall be
converted into the right to receive, without interest, an amount
equal to the Merger Consideration. From and after the Effective
Time, all such Company Shares shall no longer be outstanding and
shall be cancelled, and each holder of a certificate representing
any such Company Shares shall thereafter cease to have any rights
with respect to such Company Shares, except the right to receive
the Merger Consideration upon the surrender of such certificate
pursuant to Section 4.3.
(c) Each issued and outstanding Merger Sub Share
shall be converted into and exchangeable for one (1) fully paid
and nonassessable share of the $0.01 par value common stock of
the Surviving Corporation. From and after the Effective Time,
each outstanding certificate theretofore representing Merger Sub
Shares shall be deemed for all purposes to evidence ownership of
and to represent the number of shares of Surviving Corporation
common stock into which such Merger Sub Shares shall have been
converted. Promptly after the Effective Time and upon the tender
of the certificate or certificates formerly representing a
holder's Merger Sub Shares, the Surviving Corporation shall issue
to each such holder of Merger Sub Shares a stock certificate or
certificates representing such holder's shares of Surviving
Corporation common stock, and the certificate or certificates
which formerly represented Merger Sub Shares shall be cancelled.
(d) In accordance with and subject to the terms of
the Indenture, each outstanding Convertible Debenture whose
conversion rights are validly exercised after the Effective Time
but before the close of business on the fifth business day prior
to the Redemption Date shall be converted into the right to
receive, without interest, the amount that would have been
received by a holder of the number of Company Shares into which
such Convertible Debenture could have been converted immediately
prior to the Effective Time.
(e) All notes and other debt instruments of the
Company other than the Convertible Debentures (including, but not
limited to, the $20.00 Series Promissory Notes due 1999 of the
Company and the $3.00 Series Promissory Notes due 1999 of the
Company) outstanding at the Effective Time shall continue to be
outstanding subsequent to the Effective Time as notes and other
debt instruments of the Surviving Corporation, subject to their
respective terms and covenants, and shall not be affected by the
Merger.
4.2. Stock Options. Prior to the Effective Time, the
Company shall take such actions (including those described in
Section 7.9) as may be necessary such that at the Effective Time
all outstanding stock options granted pursuant to the Stock
Option Plans
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(regardless of whether such stock options are vested or
exercisable as of the Effective Time, all such unvested
options being deemed to be fully vested and exercisable as of
the Effective Time) shall be cancelled and shall only entitle
the holder thereof, upon the holder's relinquishing all rights
therein, to receive an amount equal to the excess, if any, of
the Merger Consideration over the exercise price per Company
Share of such option multiplied by the number of Company
Shares previously subject to such option (less all required
tax withholdings), and such options and all rights thereunder
shall cease to exist. The Company may extend the expiration
date of any stock option issued pursuant to any of the Stock
Option Plans which is outstanding on the date hereof and is
scheduled to expire prior to the Closing Date, provided that
such options shall be subject to the terms of this Section
4.2.
4.3. Payment for Shares, Convertible Debentures and
Options.
(a) Prior to the Effective Time, Purchaser or
Merger Sub shall designate First Union National Bank, or
another entity reasonably acceptable to the Company, to act as
Paying Agent. Immediately prior to the Effective Time,
Purchaser and Merger Sub will provide the Paying Agent with
the funds necessary to make the payments contemplated by
Section 4.1(b) and will make available an amount equal to the
funds necessary to satisfy the obligations to the holders of
stock options pursuant to the terms of Section 4.2. The
Purchaser and the Surviving Corporation will provide the
Paying Agent with funds necessary to make the payments
contemplated by Section 4.1(d) as and when required in
accordance with the terms of the Indenture.
(b) Promptly after the Effective Time, or in the
case of holders of the Convertible Debentures, as, when and to
the extent prescribed under the terms of the Indenture, the
Surviving Corporation shall cause to be mailed to each person who
was, immediately prior to the Effective Time, a holder of record
of issued and outstanding Company Shares or Convertible
Debentures a form (mutually agreed to by Purchaser and the
Company) of letter of transmittal and instructions for use in
effecting the surrender of the certificates which, immediately
prior to the Effective Time, represented any of such Company
Shares or Convertible Debentures, in exchange for payment
therefor. Purchaser and Merger Sub shall also arrange (i) for
the Surviving Corporation and the Paying Agent to make available
letters of transmittal and instructions for use in effecting
surrender of certificates to holders of Company Shares or
Convertible Debentures, who satisfy the requirements of the
letter of transmittal and request personal delivery thereof after
the Effective Time and (ii) for the Paying Agent to make payment
to any such holder who desires to receive payment in person after
the Effective Time. Upon surrender to the Paying Agent of
certificates formerly representing Company Shares or Convertible
Debentures, or the satisfaction of the prerequisites identified
in the letter of transmittal regarding lost stock certificates,
together with the letter of transmittal, duly executed and
completed in accordance with the instructions, the Surviving
Corporation shall promptly cause to be delivered to the persons
entitled thereto a check in the amount to which such persons are
entitled, after giving effect to any required tax withholdings.
No interest will be paid or will accrue on the amount payable
upon the
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surrender of any such certificate. If payment is to be
made to a person other than the registered holder of the
certificate surrendered, it shall be a condition of such payment
that the certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the
registered holder of the certificate surrendered (unless the
Surviving Corporation or the Paying Agent determines that the tax
is not applicable). The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in
connection with the exchange of Company Shares and Convertible
Debentures.
(c) Any portion of the aggregate Merger
Consideration made available to the Paying Agent pursuant to this
Section 4.3 that remains unclaimed by the holders of Company
Shares six (6) months after the Effective Time shall be returned
to the Surviving Corporation, upon demand, and any such holder
who has not exchanged certificates representing his or her
Company Shares for the Merger Consideration in accordance with
this Agreement shall thereafter look to the Surviving Corporation
for payment of the Merger Consideration in respect of his or her
Company Shares.
(d) Any portion of the aggregate Merger
Consideration made available to the Paying Agent pursuant to this
Section 4.3 to pay for Company Shares for which Dissenting
Stockholders rights have been perfected shall be returned to the
Surviving Corporation, upon demand.
4.4. Dissenters' Rights.
(a) Notwithstanding the provisions of Section 4.1,
Company Shares held by Dissenting Stockholders who have perfected
the right to dissent under the DGCL shall not be converted into
the right to receive any portion of the aggregate Merger
Consideration. Instead, all Company Shares so held shall be
converted into and represent only a right to payment in
accordance with Section 262 of the DGCL; provided that if any
Dissenting Stockholder fails to perfect or shall have effectively
withdrawn or lost the right to dissent under the DGCL, each
Company Share held by such Dissenting Stockholder shall thereupon
be treated as having been converted as of the Effective Time into
the right to receive, and be exchangeable for, the Merger
Consideration pursuant to Section 4.1(b). The Company shall
promptly give Purchaser notice upon receipt by the Company of any
written demand for appraisal under the DGCL by any Dissenting
Stockholder, and Purchaser shall have the right to participate in
all negotiations and proceedings with respect to any such
demands. The Company agrees that prior to the Effective Time it
will not, except with the written consent of Purchaser,
voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment.
(b) Each Dissenting Stockholder who becomes
entitled, pursuant to the provisions of Section 262 of the DGCL,
to payment for his Company Shares shall receive
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payment therefor after the Effective Time from the Surviving
Corporation (but only after the amount thereof shall have been
agreed upon or finally determined pursuant to such
provisions), and such Company Shares shall be cancelled.
4.5. Transfer of Shares After the Effective Time. At the
Effective Time, the stock transfer books of the Surviving
Corporation shall be closed and no transfer of Company Shares
shall thereafter be made. If after the Effective Time
certificates previously representing Company Shares are presented
to the Surviving Corporation or the Paying Agent, they shall be
cancelled and exchanged for the Merger Consideration as provided
in Section 4.1.
ARTICLE V
Representations and Warranties of the Company
The Company hereby represents and warrants to Purchaser and
Merger Sub as follows:
5.1. Corporate Organization and Qualification. Each of
the Company and each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with all requisite corporate
power and authority to own, operate and lease its properties and
to carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in
each jurisdiction in which it is required to be so qualified or
licensed, except where the failure to be so qualified or
licensed, individually or in the aggregate, has not had (except
as reflected in the Company Reports filed prior to the date
hereof) and is not reasonably likely to have a Material Adverse
Effect. The Company has provided to Purchaser complete and
correct copies of the Company's Certificate of Incorporation and
bylaws as in effect on the date hereof.
5.2. Subsidiaries. Set forth in Section 5.2 of the
Disclosure Schedule are all of the Subsidiaries of the Company,
together with their respective jurisdictions of incorporation,
their authorized and issued shares of capital stock and the
percentage of outstanding shares of each class of capital stock
of each Subsidiary owned, directly or indirectly, by the Company.
Except as set forth in Section 5.2 of the Disclosure Schedule,
all of the issued and outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and are owned, of record and
beneficially, by the Company or a Subsidiary, free and clear of
all liens, encumbrances, equities, options or claims whatsoever.
Except as set forth in Section 5.2 of the Disclosure Schedule, no
shares of capital stock of a Subsidiary are reserved for issuance
and there are no outstanding options, warrants, rights,
subscriptions, agreements, obligations, convertible or
exchangeable securities or other commitments or claims,
contingent or otherwise, relating to the capital stock of a
Subsidiary, pursuant to which a Subsidiary is or may become
obligated to issue, sell, transfer
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or exchange any shares of such capital stock. Except as set
forth in Section 5.2 of the Disclosure Schedule, neither the
Company nor any of the Subsidiaries owns, directly or
indirectly, any capital stock or other equity, ownership or
proprietary interest in any other Person.
5.3. Capital Structure. As of the date hereof, the
authorized capital stock of the Company consists of (i)
30,000,000 Company Shares, of which 6,917,741 shares are issued
and outstanding and 707,842 shares are issued and held in the
Company's treasury, and (ii) 2,500,000 shares of preferred stock,
par value $.01 per share, of the Company, none of which are
issued and outstanding. All of the outstanding Company Shares
have been duly authorized and are validly issued, fully paid and
nonassessable. The class of Company Shares has been duly and
validly registered pursuant to Section 12(g) of the Exchange Act,
which registration is in full force and effect. As of the date
hereof, (i) 29,000 Company Shares were issuable upon exercise of
outstanding stock options granted under the Director Stock Option
Plan to purchase Company Shares (at a weighted average exercise
price of $14.49 per share), (ii) 541,000 Company Shares were
issuable upon exercise of outstanding stock options granted under
the Employee Stock Option Plan to purchase Company Shares (at a
weighted average exercise price of $10.362 per share), (iii)
59,400 Company Shares were issuable upon exercise of outstanding
stock options granted under the Stock Purchase Plan to purchase
Company Shares (at a weighted average exercise price of $18.70
per share), (iv) 63,000 Company Shares were issuable upon
exercise of outstanding stock options granted under the
"Additional Stock Option Agreements" set forth in Section 5.3 of
the Disclosure Schedule to purchase Company Shares (at a weighted
average exercise price of $7.262 per share), and (v) 1,995,035
Company Shares were issuable upon conversion of the outstanding
Convertible Debentures. Section 5.3 of the Disclosure Schedule
sets forth the grantee, grant date, number of shares, option
price, vesting schedules and expiration date for all outstanding
options granted pursuant to the Stock Option Plans as of the date
hereof. Except as set forth in this Section 5.3 and in Section
5.3 of the Disclosure Schedule, there are no preemptive rights or
any outstanding subscriptions, options, warrants, rights,
convertible securities or other agreements, commitments or
benefit arrangements of any character relating to the issued or
unissued capital stock or other securities of the Company or
which give rise to an obligation to issue or an option or right
to acquire Company Shares or any other shares from the Company.
5.4. Corporate Authority. The Board of Directors of the
Company has approved and authorized the execution and delivery of
this Agreement and has determined that it will recommend to the
Company's stockholders the approval of this Agreement and the
Merger. The Company has the requisite corporate power and
authority and has taken all corporate action necessary in order
to execute and deliver this Agreement and, subject only to
approval of this Agreement by the holders of a majority of the
outstanding Company Shares, to consummate the transactions
contemplated hereby. Subject to such stockholder approval, this
Agreement is a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms.
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<PAGE>
5.5. Governmental Filings. Other than the filing of the
Certificate of Merger and the Regulatory Filings, no notices,
reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any
governmental or regulatory authorities of the United States or
the several states in connection with the execution and delivery
of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby.
5.6. No Violations; Non-Contravention; Requisite Consents.
Except as disclosed in Section 5.6 of the Disclosure Schedule and
except for the requisite approval by the Company's stockholders,
the execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions
contemplated by this Agreement will not create, constitute or
result in: (i) a breach or violation of, or a default under, or
the obligation to obtain the consent or approval of any Person
pursuant to, the Certificate of Incorporation or bylaws of the
Company; (ii) a breach or violation of, a default under, or the
obligation to obtain the consent or approval of any Person or the
triggering of any payment, stock issuance, acceleration of
vesting or other material obligations pursuant to, any of the
Company's Employee Benefit Plans or any grant or award made
thereunder; (iii) a breach or violation of, or a default under,
or the obligation to obtain the consent or approval of any
Person, or the acceleration of, or the creation of a material
lien, pledge, security interest or other encumbrance on Company
or any Subsidiary assets (with or without the giving of notice or
the lapse of time or both) pursuant to, any provision of (A) any
Contract or Lease or (B) any law, rule, ordinance or regulation
or judgment, decree, order, award or governmental or
non-governmental permit or license to which the Company or any
Subsidiary is subject; or (iv) any material change in the rights
or obligations of any party to any of the Contracts or Leases.
5.7. Company Reports; Financial Statements. The Company
has duly and timely filed all Company Reports required to be
filed as of the date hereof, all of which, when filed, complied
in all material respects with all applicable requirements of the
Securities Act of 1933, as amended, and the Exchange Act and the
rules and regulations promulgated thereunder. Correct and
complete copies of the Company Reports have been, or when filed
shall be, provided by the Company to Purchaser. As of their
respective dates, the Company Reports did not, and if filed
subsequent to the date hereof shall not, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were
made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports
(including the related notes and schedules), and if included in
or
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<PAGE>
incorporated by reference in a Company Report filed subsequent
to the date hereof shall, fairly present the consolidated
financial position of the Company as of its date, and each of the
consolidated statements of income, of changes in stockholder
equity and of cash flows included in or incorporated by reference
into the Company Reports (including any related notes and
schedules) is, and if included in or incorporated by reference in
a Company Report filed subsequent to the date hereof shall be,
complete and correct in all material respects and does or shall
fairly present the results of operations, retained earnings and
cash flows, as the case may be, of the Company and its
subsidiaries for the periods identified therein (subject, in the
case of unaudited statements, to normal year-end audit
adjustments), in each case in accordance with GAAP consistently
applied during the periods involved.
5.8 Absence of Certain Changes. Except as set forth in
Section 5.8 of the Disclosure Schedule, during the period between
January 1, 1995 and the date of the Agreement, the Company has
conducted its business in, and has not engaged in any material
transaction other than in, the ordinary and usual course of
business consistent with past practices and there has not been
(1) any change in the financial condition, business, prospects or
results of operations of the Company and the Subsidiaries taken
as a whole, or any development or combination of developments of
which management of the Company has knowledge which, individually
or in the aggregate, has had or is reasonably likely to result in
a Material Adverse Effect; (2) any direct or indirect redemption,
purchase or other acquisition of any Company Shares by the
Company or any declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock
of the Company; (3) any change by the Company in its accounting
principles, practices or methods; (4) any damage, destruction or
other casualty loss (whether or not covered by insurance) which,
individually or in the aggregate, has had or may reasonably be
expected to have a Material Adverse Effect; (5) any increase in
the compensation payable or to become payable by the Company to
any of its officers, employees or agents, other than normal cost
of living increases, normal merit increases and increases
previously disclosed in writing to Purchaser; (6) any option to
purchase or other right to acquire Company Shares granted to any
person by the Company; (7) any issuance of Company Shares except
in connection with the exercise of stock options issued pursuant
to any of the Stock Option Plans; or (8) any indebtedness for
borrowed money incurred or permitted by the Company or guaranties
provided by the Company except in the ordinary course of business
or other than as reflected in the Company Reports.
5.9 Litigation. Except as set forth in Section 5.9 of
the Disclosure Schedule, there is no action, suit, proceeding at
law or in equity by any Person, or any arbitration or any
administrative or other proceeding by or before (or, to the
knowledge of management of the Company, any investigation by) any
governmental or other instrumentality or agency, pending, or, to
the knowledge of management of the Company, threatened, against
or affecting the Company, the Subsidiaries or their respective
properties or rights which is reasonably likely to materially and
adversely affect the Company's ability to perform its obligations
hereunder or the transactions contemplated hereby or which,
individually or in the aggregate, has had (except as reflected in
the Company Reports filed prior to the date hereof) or is
reasonably likely to have a Material Adverse Effect, and the
Company and the Subsidiaries are not subject to any judgement,
order or decree entered in any lawsuit or proceeding which,
individually or in the aggregate, has had (except as reflected in
the Company Reports filed prior to the date hereof) or is
reasonably likely to have a Material
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Adverse Effect.
5.10. Liabilities. Except as set forth in Section 5.10 of
the Disclosure Schedule, or except as and to the extent reserved
against or otherwise referenced in the financial statements
included in the Company Reports filed with the SEC on or prior to
the date hereof, the Company and the Subsidiaries have no
existing claims, liabilities (including potential liabilities) or
indebtedness, contingent or otherwise, which, individually or in
the aggregate have had or are reasonably likely to have a
Material Adverse Effect.
5.11. Employee Benefit Plans. Set forth in Section 5.11 of
the Disclosure Schedule is an accurate and complete list of all
Employee Benefit Plans established, maintained or contributed to
by the Company. No Employee Benefit Plan is a "Defined Benefit
Plan" as defined in Section 3(35) of ERISA or a "Multiemployer
Plan" as defined in Sections 3(37) and 4001(a)(3) of ERISA and
Section 414(f) of the Code and the Company has no obligations
related to such a Multiemployer Plan. Except as set forth in
Section 5.11 of the Disclosure Schedule, with respect to the
Employee Benefit Plans (or any plan subject to Title IV of ERISA
or Section 412 of the Code maintained by any entity considered
one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate Plan")), no event
has occurred and, to the knowledge of the management of the
Company, there exists no condition or set of circumstances in
connection with which the Company or any Subsidiary could be
subject to any material liability under the terms of such
Employee Benefit Plans (or ERISA Affiliate Plan), ERISA, the Code
or any other applicable law (other than the payment of
contributions and benefits in the ordinary course). With respect
to each Employee Benefit Plan, the Company has made available, if
applicable, a true and correct copy of: (i) the most recent
annual report (Form 5500) filed with the Internal Revenue Service
(the "IRS"); (ii) the plan document; (iii) each related trust
agreement; (iv) the most recent summary plan description; and (v)
the most recent determination letter issued by the IRS. Except
as set forth in Section 5.11 of the Disclosure Schedule, or as
otherwise required by applicable law, no Employee Benefit Plan
provides retiree medical or life insurance benefits to any
person.
5.12. Brokers and Finders. Except for the engagement of
Lazard Freres & Co. by the Company as previously disclosed to the
Purchaser in writing, the Company, the Subsidiaries and their
officers, directors or employees have not employed any broker or
finder or incurred any liability for any brokerage fees,
commissions or finders' fees or any break-up fees or liability
for the expenses of third parties in connection with the
transactions contemplated herein.
5.13. Intellectual Property. Section 5.13 of the
Disclosure Schedule contains a correct and complete list of all
Intellectual Property as of the date hereof. Except as set forth
in Section 5.13 of the Disclosure Schedule, as of the date
hereof, (i) no claim is pending or, to the knowledge of the
Company's management, threatened to the effect that the present
or past operations of the Company or any of its Subsidiaries
infringe upon or conflict with the
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rights of others with respect to any patents, patent
applications, trademarks, trademark applications, tradenames,
copyrights or any other intellectual property rights, (ii) the
Company or a Subsidiary thereof, as the case may be, is the
sole owner of all of the Intellectual Property (except to the
extent the Company or Subsidiary is a licensee of any
Intellectual Property as indicated in Section 5.13 of the
Disclosure Schedule) currently used in the conduct of the
Company's or Subsidiary's business, free and clear of any
liens, claims, encumbrances or interests, (iii) no claim is
pending or, to the knowledge of the Company's management,
threatened to the effect that any of the Intellectual Property is
invalid or unenforceable, and (iv) no contract, agreement or
understanding with any party exists which would prevent the
continued use by the Company or Subsidiary (as currently used by
the Company or Subsidiary) of any Intellectual Property.
5.14. Taxes.
(a) Except as set forth on Section 5.14 of the
Disclosure Schedule, the Company and each of the Subsidiaries
have duly filed all Tax Returns required to be filed by them, and
have duly paid, caused to be paid or made adequate provision for
the payment of all Taxes required to be paid in respect of the
periods covered by such returns except where any failures to pay
are not, individually or in the aggregate, reasonably likely to
have a Material Adverse Effect. Except as set forth in Section
5.14 of the Disclosure Schedule, (i) no claims for federal Taxes
have been asserted against the Company or any of the Subsidiaries
and no deficiency for any federal Taxes has been proposed,
asserted or assessed which has not been resolved or paid in full,
(ii) no claims for Taxes other than federal Taxes have been
asserted against the Company or any of the Subsidiaries and no
deficiency for any such Taxes has been proposed, asserted or
assessed which has not been resolved or paid in full, (iii) no
Tax Return or taxable period of the Company or any of the
Subsidiaries is under examination and neither the Company nor any
Subsidiary has received written notice of any pending audit, (iv)
there are no outstanding agreements or waivers extending the
statutory period of limitation applicable to any Tax Return for
any period of the Company or any of the Subsidiaries, (v) neither
the Company nor any Subsidiary has any obligation or liability to
pay Taxes of or attributable to any other Person, (vi) there are
no tax liens other than liens for Taxes not yet due and (vii)
neither the Company nor any Subsidiary is a party to any
agreement or contract which would result in payment of any
"excess parachute payment" within the meaning of Section 280G of
the Code.
(b) Neither the Company nor any Subsidiary has filed
any consent pursuant to Section 341(f) of the Code or agreed to
have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset owned by the Company or any Subsidiary.
(c) Neither the Company nor any Subsidiary has been,
and is not, a United States real property holding company (as
defined in Section 897(c)(2) of the Code) during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code.
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5.15. Properties. Neither the Company nor any Subsidiary
currently owns any Real Estate. Section 5.15 of the Disclosure
Schedule sets forth a list of Real Estate currently leased in
whole or in part by the Company or any Subsidiary. Except as set
forth in Section 5.15 of the Disclosure Schedule, the Company
enjoys quiet and peaceful possession of all leased properties.
The tangible properties of the Company are adequate for the
business of the Company and its Subsidiaries as conducted in
accordance with past practices.
5.16. Licenses, Franchises, Etc. The Company and each of
its Subsidiaries has all licenses, franchises, permits or
authorizations required in connection with the operations of the
Company and each of its Subsidiaries as presently conducted,
except to the extent that the absence of any requisite license,
franchise, permit or authorization, individually or in the
aggregate, is not reasonably likely to have a Material Adverse
Effect. No material license, franchise, permit or authorization
held by the Company or any of its Subsidiaries will be terminated
or impaired by reason of the Merger, which termination or
impairment, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect.
5.17. Information Statement and Applications. When the
Information Statement is mailed to the holders of Company Shares,
such Information Statement, with respect to all information set
forth therein furnished by the Company with respect to this
Agreement, shall comply in all material respects with the
provisions (to the extent applicable) of the Exchange Act. The
information furnished by the Company in respect of the
Information Statement as filed with the SEC under the Exchange
Act will not contain any untrue statement of any material fact or
omit to state a material fact required to be stated therein
necessary to make the statements contained therein not
misleading.
5.18. Powers of Attorney, Etc. No power of attorney or
similar authorization given by the Company is presently
outstanding other than powers of attorney given in the ordinary
course of business with respect to routine matters.
5.19. Contracts and Leases. Section 5.19 of the Disclosure
Schedule contains a current and complete list of all Contracts
and Leases by which the Company is bound as of the date hereof
and identifies all such Contracts and Leases to which any
Affiliate is a party. Each of the Contracts and Leases is valid
and in full force and effect and there exists no material default
or event of default or occurrence, condition, commitment or act
(including the consummation of the Merger) which would, with the
passage of time or the giving of notice or both, cause a default
thereunder which would have a Material Adverse Effect. Except as
set forth in Section 5.19 of the Disclosure Schedule, to the
knowledge of management of the Company, all of the material
covenants to be performed by each other contracting party under
all such Contracts and Leases have been fully performed.
5.20. Accounts Payable; Accrued Expenses; Prepaid Expenses.
Each of the trade accounts payable of the Company was incurred in
the ordinary course of the Company's business. Except as
disclosed in Section 5.20 of the Disclosure Schedule or as
reserved for in
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the financial statements appearing in the Company Reports, all
material accrued expenses of the Company which would be
required to be reported in the Company's financial statements
on the date of this Agreement if such statements were prepared
as of such date, were incurred in the ordinary course of the
business. Each of the Company's prepaid expenses was incurred
in the ordinary course of the Company's business.
5.21. Compliance with Laws. Except as set forth in Section
5.21 of the Disclosure Schedule, neither the Company nor any
Subsidiary has, within the three (3) year period prior to the
date of this Agreement, received any notice of any material
violation of any material law, rule, regulations, order,
judgment, writ or decree of any court or any governmental agency
or instrumentality. Except as set forth in Section 5.21 of the
Disclosure Schedule, the Company and each Subsidiary are in
compliance in all material respects with all applicable federal,
state, local and foreign laws, regulations, orders, judgments and
decrees, including, without limitation, matters relating to the
environment, antitrust and anticompetitive practices,
discrimination, employment and employment practices, wage and
hour, health and safety matters and matters covered by ERISA and
other laws regarding employee benefit matters.
5.22. Insurance. Section 5.22 of the Disclosure Schedule
sets forth a correct and complete list of all policies of
insurance and self insurance arrangements maintained by the
Company as of the date hereof. The Company's insurance policies
are valid and in full force and effect and shall remain in full
force and effect following the Closing without impairment or
increase in premium as a result of the consummation of the
Merger.
5.23. Environmental Matters. Except as set forth in
Section 5.23 of the Disclosure Schedule:
(a) during and, to the knowledge of management of
the Company, prior to the period of the Company's or a
Subsidiary's ownership or use thereof, all properties owned or
used by the Company and the Subsidiaries have been maintained,
and all activities of the Company and the Subsidiaries have been
conducted, in compliance with all federal, state and local
environmental laws, rules and regulations, except where any such
failure to be in compliance, individually or in the aggregate,
has not had (except as reflected in the Company Reports filed
prior to the date hereof) and is not reasonably likely to have a
Material Adverse Effect; and the Company and its Subsidiaries are
not liable under any federal, state and local environmental laws,
rules and regulations, except where any such liability,
individually or in the aggregate, has not had (except as
reflected in the Company Reports filed prior to the date hereof)
and is not reasonably likely to have a Material Adverse Effect;
(b) neither the Company nor any of the Subsidiaries
has received written notification from any governmental authority
with respect to current, existing violations or liabilities
relating to the Company or the Subsidiaries of any of the laws
referred to in clause
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(a) above, or pursuant to any of the respective implementing
regulations to such laws, rules or regulations; and
(c) neither the Company nor any of the Subsidiaries
has received written notification (i) from the United States
Environmental Protection Agency that it is a Potentially
Responsible Party under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") for "removal" or
"remedial" action at a waste site listed on the National
Priorities List to which it sent or arranged for the
transportation or disposal of hazardous waste, or (ii) that it is
liable for contribution for costs incurred by another Person in
taking "removal" or "remedial" action under CERCLA.
5.24. Disclosure. No written statement made in any
schedule or certificate or other document delivered by or on
behalf of the Company to Purchaser or Merger Sub in connection
with this Agreement contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE VI
Representations and Warranties of BJALP
BJALP hereby represents and warrants to Purchaser and Merger
Sub as follows:
6.1. Organization. BJALP is a limited partnership duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its organization, with all requisite power
and authority to own, operate and lease its properties and to
carry on its business as it is now being conducted, and is
qualified or licensed to do business and is in good standing in
each jurisdiction in which it is required to be so licensed or
qualified, except where the failure to be so qualified or
licensed, individually or in the aggregate, has not had and is
not reasonably likely to have a Material Adverse Effect.
6.2. Authority. BJALP has the requisite power and
authority and has taken all action necessary under the BJALP
Limited Partnership Agreement, Certificate of Limited Partnership
and applicable law to execute and deliver this Agreement and the
BJALP Irrevocable Written Consent. This Agreement is a valid and
binding agreement of BJALP enforceable against BJALP in
accordance with its terms.
6.3. Brokers and Finders. Except for the engagement of
Lazard Freres & Co. LLC by BJALP as previously disclosed to the
Purchaser in writing, neither BJALP nor any of its general or
limited partners, officers or employees has employed any broker
or finder or incurred any liability for any brokerage fees,
commissions or finders' fees or any break-up fees or liability
for the expenses of third parties in connection with the
transactions
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contemplated herein.
6.4. BJALP Ownership of Company Shares. As of the date of
this Agreement and the date of the BJALP Irrevocable Written
Consent, BJALP is the record owner of 3,885,105 Company Shares.
ARTICLE VII
Representations and Warranties
of Purchaser and Merger Sub
Purchaser and Merger Sub, jointly and severally, represent
and warrant to the Company as follows:
7.1. Corporate Organization and Qualification. Each of
Purchaser and Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its incorporation and each has the requisite corporate power
and authority to own, operate and lease all of its property and
assets and to carry on its business as now being conducted by it.
7.2. Corporate Authority. Purchaser and Merger Sub each
has the requisite corporate power and authority and has taken all
corporate action necessary to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. This
Agreement is a legal, valid and binding agreement of Purchaser
and Merger Sub enforceable against each of Purchaser and Merger
Sub in accordance with its terms.
7.3. Governmental Filings. Other than the filing of the
Certificate of Merger and the Regulatory Filings, no notices,
reports or other filings are required to be made by Purchaser or
Merger Sub with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by Purchaser or
Merger Sub from, any governmental and regulatory authorities of
the United States or the several states in connection with the
execution and delivery of this Agreement by Purchaser and Merger
Sub or the consummation by the Purchaser and Merger Sub of the
transactions contemplated hereby.
7.4. No Violations; Non-Contravention; Requisite Consents.
The execution and delivery of this Agreement by Purchaser or
Merger Sub do not, and the consummation of the transactions
contemplated hereby by Purchaser or Merger Sub will not,
constitute or result in (i) a breach or violation of, or a
default under, or the obligation to obtain the consent or
approval of any Person pursuant to, the Certificate of
Incorporation or bylaws of Purchaser or Merger Sub; or (ii) a
breach or violation of, or a default under, or the acceleration
of, or the creation of a material lien, pledge, security interest
or other encumbrance on assets (with or without the giving of
notice or the lapse of time or both) pursuant to any provision of
any agreement, lease, contract, note, mortgage, indenture,
arrangement or other obligation of
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Purchaser or Merger Sub, or any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental
or non-governmental permit or license to which Purchaser or
Merger Sub is subject.
7.5. Litigation. There is no action, suit, proceeding at
law or in equity by any person, or any arbitration or any
administrative or other proceeding by or before (or, to the
knowledge of management of the Purchaser or Merger Sub, any
investigation by) any governmental or other instrumentality or
agency, pending, or, to the knowledge of management of the
Purchaser or Merger Sub, threatened, against or affecting the
Purchaser or Merger Sub, which is reasonably likely to materially
and adversely affect the Purchaser's or Merger Sub's ability to
perform its obligations hereunder or the transactions
contemplated hereby.
7.6 Purchaser's Investigation. Purchaser is an informed
and sophisticated purchaser and has engaged expert advisors
experienced in the evaluation and purchase of companies such as
the Company. Purchaser has undertaken such investigation as it
has deemed necessary to enable it to make an informed and
intelligent decision with respect to this Agreement and the
transactions contemplated hereby. To the extent expressly
permitted hereafter under this Agreement, Purchaser may undertake
such further investigation as it deems necessary. Purchaser
acknowledges that in entering into this Agreement and in
consummating the other transactions contemplated herein,
Purchaser has relied solely upon its own investigation analysis
and, to the extent expressly permitted by this Agreement, the
representations and warranties contained in this Agreement.
Except in the case of fraud, intentional misstatement or
intentional omission, neither the Company nor BJALP (nor any of
their agents, officers, directors, employees, affiliates or
representatives) shall have any liability to Purchaser or Merger
Sub (or any of their respective agents, officers, directors,
employees, affiliates or representatives) to the extent based
upon any information made available or statements made to
Purchaser or Merger Sub (or any of there respective agents,
officers, directors, employees, affiliates or representatives),
including, without limitation, the representations and warranties
set forth in this Agreement.
ARTICLE VIII
Covenants
8.1 Interim Operations of the Company. The Company
covenants and agrees that, prior to the Effective Time, the
business of the Company and its Subsidiaries shall be conducted
diligently, in compliance with all applicable laws and only in
the ordinary and usual course and, to the extent consistent
therewith, the Company shall use its best efforts to preserve its
business organization intact, to maintain its existing relations
with customers, suppliers, employees and business associates and
to keep available the services of its present officers, agents
and employees (nothing herein implying any obligation on the part
of the
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Company to maintain or retain any particular officer, agent or
employee). Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Agreement,
prior to the Effective Time or the termination of this
Agreement, whichever first occurs, the Company will not, and
will not permit its Subsidiaries to, without the prior written
consent of Purchaser:
(a) amend its Certificate of Incorporation or
bylaws;
(b) split, combine or reclassify the outstanding
Company Shares;
(c) declare, set aside or pay or make any dividend
or distribution payable in cash, stock, right or property with
respect to the Company Shares or adopted any form of stockholder
rights plan;
(d) issue, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible or exchangeable
for, or options, warrants, calls, commitments or rights of any
kind to acquire, any shares of its capital stock of any class of
the Company or its Subsidiaries, or any other property or assets
other than Company Shares issuable pursuant to options
outstanding on the date hereof under any of the Stock Option
Plans or upon conversion of any of the Convertible Debentures;
(e) transfer, lease, license, sell, mortgage,
pledge, dispose of (other than the disposal of inventory in the
ordinary course of business) or encumber any assets with a value
in excess of $100,000 in the aggregate for all such transactions
(unless such assets are worn-out or obsolete), or incur or modify
any liability or obligation other than in the ordinary and usual
course of business or extend any loan, advance, guaranty or
indemnification where the effect of such would be, in the
aggregate, material to the Company and the Subsidiaries taken as
a whole;
(f) acquire directly or indirectly by redemption or
otherwise any shares of the capital stock of the Company;
(g) authorize additional capital expenditures not
provided for in Section 8.1 of the Disclosure Schedule in excess
of $50,000 in the aggregate, or make acquisition of, or
investment in, the assets or stock of any other Person;
(h) (i) grant any severance or termination pay to,
or enter into or modify any employment, sales agency, change of
control or severance agreement with, any director or officer of
the Company or any Subsidiary, or (ii) grant any severance or
termination pay to any other employee of the Company or any
Subsidiary other than pursuant to existing plans or policies of
the Company or its Subsidiaries set forth in Section 5.11 of the
Disclosure Schedule or otherwise consistent with past practice,
or (iii) enter into or modify in any respect any change of
control agreement with any other such employee of the Company or
any
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Subsidiary, or (iv) enter into or modify in any material
respect any employment or sales agency agreement with any other
such employee of the Company or any Subsidiary other than in the
ordinary course of business and consistent with past practices;
and the Company shall not establish, adopt, enter into or amend
in any material respect any plan or arrangement which is or would
constitute an Employee Benefit Plan hereunder for the benefit of
any directors, officers or employees or increase in any material
manner the compensation or fringe benefits of any director,
officer or employee, in any case not required by an existing plan
or arrangement, or pay any benefit not required by any existing
Employee Benefit Plan;
(i) settle or compromise any claim or litigation
involving amounts in excess of $50,000 other than claims relating
directly to returns, credits or allowances settled in the
ordinary course of business, or, except in the ordinary and usual
course of business, modify, amend or terminate any of the
Contracts or Leases, or waive, release or assign any material
rights or claims;
(j) make any tax election or permit any insurance
policy naming the Company as a beneficiary or a loss payable
payee to be cancelled or terminated without notice to Purchaser,
except in the ordinary and usual course of business;
(k) file any registration statement with the SEC or
with any blue sky authority relating to the capital stock or
other securities of the Company or file an application for
quotation with The National Association of Securities Dealers,
Inc. (the "NASD") or listing with any national securities
exchange;
(l) engage in any sale/leaseback transactions other
than in the ordinary and usual course of business;
(m) except as otherwise contemplated by Section 4.2
of this Agreement, make any grants of stock options under, or
extend or accelerate the vesting schedule of any of its stock
options granted pursuant to, any of the Stock Option Plans or any
other Employee Benefit Plan;
(n) except to the extent permitted by Section 8.2,
agree to, directly or indirectly, merge or consolidate with,
purchase substantially all of the assets of, have substantially
all of the Company's assets purchased or otherwise acquire or be
acquired by any Person; or
(o) take, or agree in writing or otherwise to take,
any of the foregoing actions, or any action which is reasonably
likely to prevent the satisfaction of any condition to closing
set forth in Article IX hereof, or which would make any
representation or warranty of the Company contained in this
Agreement untrue or incorrect, as of the date when made, such
that, individually or in the aggregate, it is reasonably likely
that there shall be a Material Adverse Effect.
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8.2. Acquisition Proposals. (a) Prior to the termination
of this Agreement, the Company and BJALP will not, and will cause
their respective directors, officers, employees, representatives
or agents not to, directly or indirectly, solicit or initiate any
discussions, submissions of proposals or offers or negotiations
with, or, participate in any negotiations or discussions with, or
provide any information or data of any nature whatsoever to, or
otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage any effort or attempt to buy on the part
of, any Person other than Purchaser, Merger Sub and their
respective stockholders, employees, representatives, agents and
Affiliates, concerning any Substantial Transaction; provided,
however, that nothing contained in this Agreement shall prevent
the Company or its Board of Directors from (A) participating in
any negotiations or discussions with or providing any information
to any Person in response to an unsolicited bona fide written
acquisition proposal (an "Acquisition Proposal") by any such
Person; or (B) recommending such an unsolicited bona fide written
Acquisition Proposal to the stockholders of the Company, if and
only to the extent that, in each such case referred to in clauses
(A) and (B), (i) the Board of Directors of the Company believes
in good faith (after consultation with its financial advisor)
that such Acquisition Proposal would, if consummated, result in a
transaction more favorable to BJALP and the Company's other
stockholders from a financial point of view than the transaction
contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a
"Superior Proposal") and the Board of Directors of the Company
determines in good faith after consultation with outside legal
counsel that such action is necessary for the Company and its
Board of Directors to comply with their respective fiduciary
duties to stockholders under applicable law and (ii) prior to
providing any information or data to any Person in connection
with an Acquisition Proposal by any such Person, the Board of
Directors of the Company receives from such Person an executed
confidentiality agreement on terms substantially similar to those
contained in the Confidentiality Agreement; or (C) complying with
Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
(b) The Company or BJALP, as applicable, shall
immediately notify Purchaser and Merger Sub if any proposal,
offer, inquiry or other contact is received by, any information
is requested from, or any discussions or negotiations are sought
to be initiated or continued with, the Company in respect of a
Substantial Transaction, and shall, in any such notice to
Purchaser and Merger Sub, indicate the identity of the offeror
and the terms and conditions of any proposals or offers or the
nature of any inquiries or contacts and thereafter shall keep
Purchaser and Merger Sub informed, on a current basis, of the
status and terms of any such proposals or offers and the status
of any such discussions or negotiations. The Company and BJALP
shall immediately cease any existing discussions with any Person
relating to a Substantial Transaction and inform any inquiring
party of the existence of this Agreement and of the obligations
of the Company and BJALP hereunder. The Company and BJALP shall
not release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company or
BJALP is a party.
8.3. Approval by the Company's Stockholders. (a) Subject
to the last
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sentence of this subparagraph (a), the Company will take all
action necessary in connection with the BJALP Irrevocable
Written Consent (including the completion and mailing of the
Information Statement) in accordance with the DGCL and its
Certificate of Incorporation and bylaws and otherwise to
notify the holders of Company Shares as promptly as
practicable of the approval of this Agreement and the Merger.
The record date for purposes of determining the holders of
record entitled to consent to the Merger pursuant to this
subparagraph (a) shall be as determined pursuant to Section
213(b) of the DGCL without any action being taken by the
Company or its Board of Directors with respect to setting such
record date. Notwithstanding the foregoing and
notwithstanding any other provision of this Agreement to the
contrary, to the extent the Company is unable or it becomes
reasonably impractical for the Company, pursuant to the rules
and regulations of the SEC and/or of the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") to
obtain the requisite stockholder approval for this Agreement
and the Merger, by means of the BJALP Irrevocable Written
Consent and as contemplated by this subparagraph, the Company
shall and shall be entitled to seek to obtain such stockholder
approval pursuant to subparagraph (b) below.
(b) To the extent required as contemplated by the
last sentence of subparagraph (a) above, the Company will take
all action necessary (including the completion and mailing of the
Information Statement) in accordance with the DGCL and its
Certificate of Incorporation and bylaws to convene a meeting of
holders of Company Shares as promptly as practicable to consider
and vote upon the approval of this Agreement and the Merger. To
the extent the Company shall determine it to be necessary or
appropriate, in respect of any such meeting, to solicit proxies
in order to obtain the requisite stockholder approval, such
solicitation shall be made in accordance with Regulation 14A of
the SEC and the Company's proxy statement in respect thereof
shall, for all purposes hereunder, be deemed to constitute the
Information Statement. Subject to fiduciary requirements of
applicable law, in the event of such a proxy solicitation, the
Board of Directors of the Company shall recommend such approval
and the Company shall use its best efforts to solicit such
approval.
(c) The Information Statement, as of the date that
it is first mailed to the Company's stockholders, will not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that the
foregoing shall not apply to the extent that any such untrue
statement of a material fact or omission to state a material fact
was made by the Company in reliance upon information concerning
the Purchaser and Merger Sub furnished to the Company by
Purchaser or Merger Sub specifically for use in the Information
Statement. Following any such meeting of the Company's
stockholders described in this Section 8.3, the Secretary of the
Corporation shall certify to the Purchaser and Merger Sub the
number of Company Shares voting to approve this Agreement and the
Merger and the number of Company Shares held by Dissenting
Stockholders, if any.
(d) Neither a preliminary nor a definitive
Information Statement shall be
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filed, and no amendment or supplement to a preliminary or
definitive Information Statement will be made by the Company,
without consultation with Purchaser and its counsel. The
Information Statement shall contain the notices and other
information required by Section 228(d) and 262(d)(2) of the
DGCL as applicable.
8.4. Filings; Other Action. Subject to the terms and
conditions herein provided, the Company, Purchaser and Merger Sub
shall: (a) as soon as practicable after the date hereof make
their respective filings and thereafter make any other required
submissions under the Regulatory Filings with respect to the
Merger; and (b) use all reasonable efforts to cooperate with each
other and as soon as practicable take, or cause to be taken, all
other action and do, or cause to be done, all other things
necessary, proper or appropriate under this Agreement and all
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement as soon as
practicable, including (i) with respect to the Company, promptly
completing the Information Statement, submitting it to the SEC
for its review, and addressing the SEC's comments thereon and
seeking to obtain satisfaction of the condition set forth in
Section 9.1(i) hereof, (ii) with respect to all parties, promptly
furnishing any information required in connection with the
preparation of all necessary documents, the preparation of all
filings, and the obtaining of all required consents under
Regulatory Filings and any other approvals or consents required
to consummate the transaction contemplated hereby, and (iii) with
respect to Purchaser, proffering its willingness to sell or hold
separate and agree to sell such assets or businesses of the
Company as, in Purchaser's good faith judgment, shall become
necessary in order to consummate the Merger (the "Section 8.4
Offer"); provided, however, that nothing in this Section 8.4
shall require, or be construed to require, Purchaser or any of
its Affiliates to proffer to, or agree to, sell or hold separate
and agree to sell any assets, businesses, or interests in any
such assets or businesses of Purchaser or any of its Affiliates.
8.5. Access; Confidentiality. Upon reasonable notice, the
Company shall afford Purchaser's and Merger Sub's officers,
employees, counsel, accountants and other authorized
representatives access, during reasonable business hours
throughout the period prior to the Effective Time, to its
premises, officers, employees, agents, representatives,
properties, books, contracts, leases and records and, during such
period, the Company shall furnish promptly to Purchaser all
information concerning its business, properties and personnel as
Purchaser may reasonably request for the purpose of conducting a
complete and thorough investigation and review of the Company's
business and properties; provided, however, that no investigation
pursuant to this Section 8.5 shall affect or be deemed to modify
any representation or warranty made by the Company or BJALP
hereunder. The terms and conditions of the Confidentiality
Agreement are hereby ratified and confirmed and shall remain in
full force and effect.
8.6. Notification of Certain Matters. The Company and
BJALP shall give prompt notice to Purchaser and Merger Sub of:
(a) any occurrence or notice of, or other communication relating
to, a default or event that, with the giving of notice or the
lapse of
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time or both, would or could become a default under the
Agreement or cause a breach of any representation or warranty
or any Contract or Lease; and (b) any change which results or
which, so far as reasonably can be foreseen at the time of its
occurrence, is reasonably likely to result in a Material
Adverse Effect. Each of the Company and Purchaser shall give
prompt notice to the other party of any notice or
communication from any third party alleging that the consent
of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
8.7. Publicity. The Company and Purchaser shall consult
with each other in connection with and shall endeavor to agree
upon the content and timing of any press releases or other public
statements with respect to the transactions contemplated hereby
and in making any filings with any federal or state governmental
or regulatory agency or with any national securities exchange
with respect thereto. The parties hereto shall not issue any
such press release or make any such public statement or filing
prior to such consultation, except as may be required by law or
by obligations pursuant to any listing agreement with the NASD.
In the event the parties are unable to agree on a public
statement or announcement and either the Company or the Purchaser
determines, after consultation with their respective counsel,
that such statement or announcement is required by law or
otherwise appropriate, then the Company or the Purchaser, as the
case may be, may issue such statement or announcement.
8.8. Expenses. Each of the Company, the Purchaser and the
Merger Sub shall pay its own expenses incident to the
transactions contemplated hereby, including all fees of
attorneys, brokers, finders, accountants and financial advisors.
8.9. Transmittal to Optionholders. Promptly after the
execution of this Agreement, the Company shall mail to each
person who is a holder of outstanding stock option(s) granted
pursuant to any of the Stock Option Plans (regardless of whether
such stock options are vested or exercisable at the time) a
letter in a form acceptable to Purchaser which describes the
treatment of and payment for such options pursuant to Section 4.2
and provides instructions for use in obtaining payment for such
options pursuant to Section 4.2. Each such holder shall sign a
release by which the holder effectively relinquishes all rights
with respect to all outstanding stock options issued pursuant to
any of the Stock Option Plans upon payment therefor in accordance
with Section 4.2 in connection with the Closing.
8.10. Redemption of Convertible Debentures. At the
Effective Time, the Surviving Corporation shall take all
requisite actions in accordance with the terms of the Indenture
to redeem all of the then outstanding Convertible Debentures,
such redemption to be effective 30 days after the Effective Time,
subject to the conversion rights of the holders of the
Convertible Debentures under the Indenture.
8.11. Approval of Merger by BJALP; Granting of Options.
(a) Contemporaneously with the execution and delivery of this
Agreement, (i) the Company shall enter into the Company Stock
Option Agreement substantially in the form attached hereto as
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Annex 8.11(a)(i) granting the Purchaser the right to purchase
1,376,000 Company Shares and (ii) BJALP shall, and BJALP shall
cause OPUBCO to, enter into the BJALP Stock Option Agreement
substantially in the form attached hereto as Annex 8.11(a)(ii)
granting the Purchaser the right to purchase 3,885,105 Company
Shares, representing all of the Company Shares owned by BJALP.
(b) Immediately following the execution of this
Agreement or at such other time as Purchaser may reasonably
request, BJALP shall deliver to the Company at its principal
place of business the BJALP Irrevocable Written Consent,
substantially in the form attached hereto as Annex 8.11(b), such
delivery to be as described in such BJALP Irrevocable Written
Consent, thereby consenting to the adoption of this Agreement;
provided, however, that to the extent it shall become necessary
for the Company to seek to obtain stockholder approval of this
Agreement and the Merger pursuant to the provisions of Section
8.3(b) hereof, BJALP hereby irrevocably agrees that, in lieu of
the BJALP Irrevocable Written Consent, it shall vote the
3,885,105 Company Shares owned by BJALP in favor of approval of
this Agreement and the Merger at the meeting of stockholders
called for such purpose as contemplated by Section 8.3(b).
8.12. Survival of Indemnification Obligations. The
Purchaser and Merger Sub hereby acknowledge and agree that they
will cause the Surviving Corporation to (i) maintain for six (6)
years after the Effective Time all indemnification obligations
currently owed by the Company to its directors and officers in
respect of events occurring on or prior to the Effective Time to
the extent that the Company owed such indemnification obligations
prior to the Effective Time pursuant to the terms of the
Company's Certificate of Incorporation, bylaws or the DGCL, and
(ii) maintain directors' and officers' liability insurance
comparable to that currently maintained by the Company with
respect to actions prior to the Effective Time for a period of
two years following the Effective Time; provided, however, that
the Purchaser will not be required to maintain or obtain policies
providing such coverage except to the extent that such coverage
can be provided at an annual cost no greater than $80,000, and
provided further that if the Purchaser shall be unable to
maintain or obtain such insurance coverage as called for by this
Section, the Purchaser will maintain or obtain for such two year
period as much comparable insurance as shall be available for
$80,000 per year. The provisions of this Section 8.12 shall
survive the Effective Time and shall be enforceable by the
beneficiaries of such indemnification rights.
8.13 Funding. The Purchaser and Merger Sub hereby
acknowledge and agree that as of the Closing Date, Purchaser and
Merger Sub will have available sufficient funding to enable
Purchaser and Merger Sub to consummate the transactions
contemplated by this Agreement and otherwise to perform all their
respective obligations under this Agreement.
8.14. Takeover Statute. The Board of Directors of the
Company has taken all appropriate action to exempt the
transactions contemplated by this Agreement, the Company Stock
Option Agreement, and the BJALP Stock Option Agreement from
Section 203 of the
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DGCL ("Section 203"). Without limiting the
generality of the foregoing, the Company hereby acknowledges and
agrees that the approval of this Agreement by the Board of
Directors of the Company constitutes, for purposes of subsection
(a)(1) of Section 203, approval of (a) the "business combination"
(as defined in Section 203) contemplated by this Agreement, the
Company Stock Option Agreement and the BJALP Stock Option
Agreement, and (b) the transactions whereby Purchaser and, as
applicable, the Merger Sub may become "interested stockholders"
(as defined in Section 203) of the Company, including the
execution and delivery of the Company Stock Option Agreement and
the BJALP Stock Option Agreement.
8.15. Fairness Opinion. On or immediately prior to the
date hereof, the Company shall have received an opinion from an
investment banking firm in form and substance reasonably
satisfactory to the Company, that the Merger Consideration to be
received by the holders of Company Shares pursuant to the Merger
is fair to such holders from a financial point of view.
8.16. SLBJ and SLM Option Agreement. The Company shall not
obtain any release of the optionee's rights under the SLBJ and
SLM Option Agreement, dated September 28, 1986, as amended,
between Mark B. Vittert and Carol Vittert (as assignees of Mark
Vittert, the "Optionee") and Business Journal Publications
Corporation, a wholly-owned Subsidiary of the Company or
otherwise effect any buy out of the Optionee's rights thereunder
without obtaining the prior written consent of the Purchaser.
ARTICLE IX
Conditions
9.1. Conditions to Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to
the fulfillment of each of the following conditions, any or all
of which may be waived in whole or in part by the Company to the
extent permitted by applicable law:
(a) this Agreement shall have been duly approved
by the holders of a majority of the outstanding Company
Shares, in accordance with applicable law and the Company's
Certificate of Incorporation and bylaws;
(b) the waiting period applicable to the
consummation of the Merger under the HSR Act shall have
expired or been terminated and, other than the filing of the
Certificate of Merger, all Regulatory Filings and other
filings required to be made prior to the Effective Time by the
Company with, and all consents, approvals and authorizations
required to be obtained prior to the Effective Time by the
Company from, governmental and regulatory authorities in
connection with the execution and delivery of this Agreement
by the Company
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and the consummation of the transactions contemplated hereby
by the Company, Purchaser and Merger Sub shall have been made
or obtained (as the case may be);
(c) no United States or state court or
governmental or regulatory authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered
any Order;
(d) the representations and warranties of the
Purchaser and the Merger Sub made in this Agreement shall be
true and correct as of the Closing Date with the same effect
as if made on the Closing Date and the Purchaser and Merger
Sub shall have provided a certificate of an authorized officer
certifying to such effect, provided that the condition set
forth in this subparagraph (d) shall be deemed to have been
satisfied unless the matter, development or event causing such
representations and warranties not to be true and correct as
of the Closing Date, individually or in the aggregate,
has had or is reasonably likely to have a material adverse effect
on the Company and its stockholders;
(e) the Purchaser and Merger Sub shall have
performed and complied in all material respects with all
obligations and covenants required to be performed and
completed by them under this Agreement at or prior to the
Effective Time and the Purchaser and the Merger Sub shall have
provided a certificate of an authorized officer certifying to
such effect;
(f) the Company shall have received from the
Purchaser and the Merger Sub the opinion of Sabin, Bermant &
Gould in a form reasonably satisfactory to the Company;
(g) the Purchaser and Merger Sub shall have
provided the Company with certified copies of the resolutions
duly adopted by the respective Boards of Directors of the
Purchaser and Merger Sub, and by Purchaser as the sole
stockholder of Merger Sub, approving this Agreement and the
consummation of the transactions contemplated hereby; and
(h) the Paying Agent shall have provided a
certificate to the Company certifying that the Purchaser and the
Merger Sub have transferred the requisite funds to the Paying
Agent pursuant to Section 4.3(a).
9.2. Conditions to Obligations of Purchaser and
Merger Sub. The obligation of Purchaser and Merger Sub to
consummate the Merger is subject to the fulfillment of the
following conditions, any or all of which may be waived in whole
or in part by Purchaser or Merger Sub, as the case may be, to the
extent permitted by law:
(a) this Agreement shall have been duly approved
by the holders of a majority of the outstanding Company
Shares, in accordance with applicable law and the Company's
Certificate of Incorporation and bylaws and as contemplated by
Section 8.3;
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(b) the waiting period applicable to the
consummation of the Merger under the HSR Act shall have
expired or been terminated and all Regulatory Filings and
other filings required to be made prior to the Effective Time
by the Company with, and all consents, approvals and
authorizations required to be obtained prior to the Effective
Time by the Company from, governmental and regulatory
authorities in connection with the execution and delivery of
this Agreement by the Company and the consummation of the
transactions contemplated hereby by the Company, Purchaser and
Merger Sub shall have been made or obtained (as the case may
be);
(c) (i) no United States or state court or
governmental or regulatory authority of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered
an Order and (ii) no governmental or regulatory authority,
agency, department or commission shall have instituted any
action, suit or proceeding, or, with respect to any such
authority, agency, department or commission validly exercising
jurisdiction over the transaction with respect to antitrust
considerations, threatened to institute any action, suit or
proceeding, seeking (A) an Order or (B) to impose on the
Company, Purchaser, Merger Sub or any of their respective
Affiliates, any terms or conditions that in the good faith
judgment of the Board of Directors of the Purchaser are
reasonably likely to adversely affect in any significant
manner the economic benefits of the transactions contemplated
by this Agreement to the Purchaser and its stockholders;
provided, however, that clause (ii) of this Section 9.2(c)
shall not be available to Purchaser if it shall not have made
the Section 8.4 Offer prior to its seeking to delay the
Closing on the basis of such condition;
(d) the representations and warranties of the
Company made in this Agreement shall be true and correct as of
the Closing Date with the same effect as if made on the
Closing Date and the Company shall have provided a certificate
of an authorized officer certifying to such effect, provided
that the condition set forth in this subparagraph (d) shall be
deemed to have been satisfied unless the matter, development
or event causing such representations and warranties not to be
true and correct as of the Closing Date, individually or in
the aggregate, has had or is reasonably likely to have a
Material Adverse Effect;
(e) the Company shall have performed and complied
in all material respects with all obligations and covenants
required to be performed or completed by it under this Agreement
at or prior to the Effective Time and the Company shall have
provided a certificate of an authorized officer certifying to
such effect;
(f) no Material Adverse Effect shall have occurred
on or prior to the Closing Date;
(g) the Company shall have obtained all Requisite
Consents and provided satisfactory evidence thereof to the
Purchaser and Merger Sub;
(h) the Company shall have provided the Purchaser
with certified copies
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<PAGE>
of the resolutions of the Board of Directors and of the
minutes and record of the vote of the Company's stockholders
authorizing the execution, delivery and performance of this
Agreement in accordance with the terms hereof;
(i) the Company shall have delivered to the
Purchaser a certificate of good standing issued by the
secretary of state of the State of Delaware and a certificate
of qualification of good standing in each of the states in
which the Company is required to be qualified to transact
business issued by the secretary of state or other appropriate
authority of each such state, except where the failure to be
so qualified would not have a Material Adverse Effect, in each
case dated no more than thirty days in advance of the Closing;
(j) Purchaser and Merger Sub shall have received
the opinion of Richard J. Koch, Esq. in a form reasonably
satisfactory to the Purchaser;
(k) Purchaser and Merger Sub shall have received
the opinion of Parker, Poe, Adams & Bernstein L.L.P. in a form
reasonably satisfactory to the Purchaser; and
(l) There shall be no more than fifteen percent
(15%) of the total issued and outstanding Company Shares (taking
account of all Company Shares issued pursuant to Stock Options
and the Convertible Debentures) which shall have exercised
appraisal rights pursuant to Section 262 of the DGCL.
ARTICLE X
Termination
10.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the filing of the Certificate of Merger, before or after approval
by the holders of Company Shares, by the mutual consent of
Purchaser, the Merger Sub and the Company.
10.2. Termination by Either Party. This Agreement may
be terminated and the Merger may be abandoned by either Purchaser
or the Company if (i) the Merger shall not have been consummated
by December 31, 1995 (unless the failure to consummate the Merger
by such date is due to a breach or violation of this Agreement by
the party seeking to terminate), (ii) any permanent Order shall
have become final and non-appealable, or (iii) there has been a
material breach by either Purchaser or the Company of any of its
covenants or obligations set forth in this Agreement, but such
termination shall not be effective unless and until the
non-breaching party has given written notice to the breaching
party of such breach and of its intention to terminate this
Agreement in accordance with the provisions hereof and the
breaching party fails to cure such breach within ten (10)
calendar days following such notice.
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<PAGE>
10.3. Termination by Company. This Agreement may be
terminated and the Merger may be abandoned by the Company at any
time prior to the filing of the Certificate of Merger, before or
after the approval by holders of Company Shares, if (i) the
Company is not in material breach of any of the terms of this
Agreement, (ii) the Board of Directors of the Company approves,
and the Company enters into, a binding written agreement
concerning a Substantial Transaction which constitutes a Superior
Proposal and (iii) the Board of Directors of the Company prior to
such termination determines in good faith that approval,
acceptance or recommendation of such Superior Proposal is
required by fiduciary obligations under applicable law. Any
termination pursuant to this Section 10.3 by action of the
Company's Board of Directors shall be effective upon written
notice to the Purchaser, but only if the Purchaser receives a
separate written notification at least three (3) business days
prior to entering into such a binding written agreement of the
Company's possible intention to enter into such agreement, which
notice shall set forth the terms of any such Superior Proposal
(it being agreed that the Company shall give immediate notice to
Purchaser should such intention change at any time after the
giving of such notification).
10.4. Termination by Purchaser and Merger Sub. This
Agreement may be terminated by the Purchaser if (i) BJALP fails
to deliver to the Company the BJALP Irrevocable Written Consent
substantially in the form attached hereto as Annex 8.11(b)
promptly after being requested to do so by Purchaser; (ii) a
United States or state court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered an Order; (iii) a governmental
or regulatory authority, agency, department or commission shall
have instituted any action, suit or proceeding seeking (A) an
Order or (B) to impose on the Company, Purchaser, Merger Sub or
any of their respective Affiliates, any terms or conditions that
in the good faith judgment of the Board of Directors of the
Purchaser are reasonably likely to adversely affect in any
significant manner the economic benefits of the transactions
contemplated by this Agreement to the Purchaser and its
stockholders; provided, however, Purchaser shall not be entitled
to terminate the Agreement pursuant to clauses (ii) or (iii) of
this Section 10.4 if prior to the entering of such Order or
institution of such action, suit or proceeding referred to in
clause (iii) it shall not have made the Section 8.4 Offer; or
(iv) (A) the Company or any other Persons described in Section
8.2(a) shall engage in any negotiations or provide any
confidential information concerning the Company to any Person
that would be prescribed by Section 8.2(a) but for the proviso
therein allowing certain actions to be taken if required by
fiduciary duties under applicable law as advised by outside legal
counsel, and (B) the Purchaser has not exercised an option under
either the BJALP Stock Option Agreement or the Company Stock
Option Agreement.
10.5. Effect of Termination and Abandonment. In the event
of termination of this Agreement and abandonment of the Merger
pursuant to this Article X, no party hereto (or any of its
directors or officers) shall have any liability or further
obligation to any other party to this Agreement, except as
provided in Section 8.8 and except that nothing will relieve any
party from liability for any breach of this Agreement.
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<PAGE>
ARTICLE XI
Miscellaneous
11.1. Survival. The representations, warranties,
agreements, and covenants in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement,
except that the agreements set forth in Sections 8.10, 8.12 and
11.11 hereof shall survive the consummation of the Merger and
except that the agreement set forth in Section 8.8 hereof shall
survive termination.
11.2. Modification or Amendment. Subject to the applicable
provisions of the DGCL, at any time prior to the filing of the
Certificate of Merger, the parties hereto may modify or amend
this Agreement only by written agreement executed and delivered
by duly authorized officers of the respective parties.
11.3. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole
benefit of such party and may be waived by such party in whole or
in part to the extent permitted by applicable law.
11.4. Counterparts. This Agreement may be executed in any
number of counterparts, and any such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts
together shall constitute but one agreement.
11.5. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware, without giving effect to the principles of conflicts of
laws thereof.
11.6. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given, if delivered in person, by overnight
courier, by facsimile transmission, telexed or mailed by
certified or registered mail, postage prepaid, return/receipt
requested, as follows (or at such other address for a party as
shall be specified by like notice; provided that notice of a
change of address shall be effective only upon receipt thereof):
(a) If to Purchaser or Merger Sub:
Advance Publications, Inc.
350 Madison Avenue
New York, New York 10017
Attention: S.I. Newhouse, Jr.
Fax: (212) 692-4469
With a copy to:
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<PAGE>
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Peter C. Gould, Esq.
Fax: (212) 692-4469
And to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy, Esq.
Fax: (212) 558-3588
(b) If to the Company:
American City Business Journals, Inc.
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
With a copy to:
Parker, Poe, Adams & Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Fred C. Thompson, Jr., Esq.
Fax: (704) 334-4706
(c) If to BJALP:
Business Journal Associates Limited Partnership
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
11.7. Obligation of Purchaser. Whenever this Agreement
requires Merger Sub to take any action (including, without
limitation, the making of payment for the Company
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<PAGE>
Shares), such requirement shall be deemed to include an
undertaking on the part of Purchaser to cause Merger Sub to
take such action.
11.8. Captions. The Article, Section and paragraph
captions herein are for convenience of reference only, do not
constitute part of this Agreement and shall not be deemed to
limit or otherwise affect any of the provisions hereof.
11.9. Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provisions of this Agreement, which
shall remain in full force and effect.
11.10. Entire Agreement; Assignment. This Agreement
(including any schedules, exhibits or annexes hereto) and the
Confidentiality Agreement (i) constitute the entire agreement,
and supersede all other prior agreements, understandings,
representations and warranties both written and oral among the
parties, with respect to the subject matter hereof, (ii) shall
not be assignable by operation of law or otherwise and (iii) are
not intended to create any obligations to, or rights in respect
of, any persons other than the parties hereto; provided, however,
that Purchaser may cause Merger Sub to assign its rights and
obligations hereunder to Purchaser or any subsidiary controlled
by Purchaser, but no such assignment shall relieve Purchaser and
Merger Sub of their obligations hereunder.
11.11. Tax Filing Consistency. The parties agree that
Purchaser's acquisition of the Company through the Merger
constitutes, for income tax purposes, a purchase of the Company's
outstanding stock for cash. The parties agree that all of their
income tax filings relative to the Merger shall be consistent
with a sale of Company stock by its stockholders and a purchase
of Company stock by Purchaser for cash.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by the duly authorized officers of the parties
hereto on the date first hereinabove written.
AMERICAN CITY BUSINESS JOURNALS, INC.
By: /s/ Ray Shaw
Name: Ray Shaw
Title: Chief Executive Officer
BUSINESS JOURNAL ASSOCIATES
LIMITED PARTNERSHIP
By: OPUBCO Enterprises, Inc.,
Its general partner
By: /s/ Edward L. Gaylord
ADVANCE PUBLICATIONS, INC.
By: /s/ S.I. Newhouse, Jr.
Name: S.I. Newhouse, Jr.
Title: Chairman
ADVANCE ACQUISITION SUB. INC.
By: /s/ S.I. Newhouse, Jr.
Name: S.I. Newhouse, Jr.
Title: President
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<PAGE>
Exhibit A
Certificate of Merger
of
Advance Acquisition Sub. Inc.
into
American City Business Journals, Inc.
The undersigned corporation organized and existing under
and by virtue of the General Corporation Law of the State of
Delaware does hereby certify:
FIRST: That the name and state of incorporation of each
of the constituent corporations of the merger is as follows:
Name State of Incorporation
American City Business Journals, Inc. Delaware
Advance Acquisition Sub. Inc. Delaware
SECOND: That an Agreement and Plan of Merger between the
parties to the merger has been approved, adopted, certified,
executed and acknowledged by each of the constituent corporations
in accordance with the requirements of Section 251 of the General
Corporation Law of the State of Delaware. Written consent has been
given in accordance with Section 228 of the General Corporation Law
of the State of Delaware and written notice has been given as
provided in such Section 228.
THIRD: That the name of the surviving corporation of the
merger is American City Business Journals, Inc.
FOURTH: That the certificate of incorporation of American
City Business Journals, Inc., the surviving corporation, shall be
its certificate of incorporation, except that Article Four of the
certificate of incorporation shall be amended to read in its
entirety as follows:
"The aggregate number of shares which the
Corporation shall have authority to issue is 1,000 shares
of Common Stock, par value $1.00 per share."
FIFTH: That the executed Agreement and Plan of Merger is
on file at the principal place of business of the surviving
corporation. The address of the principal place of business of the
surviving corporation is 128 S. Tryon Street, Suite 2200,
Charlotte, North Carolina 28202.
<PAGE>
SIXTH: That a copy of the Agreement and Plan of Merger
will be furnished by the surviving corporation, on request and
without cost, to any stockholder of any constituent corporation.
SEVENTH: That this Certificate of Merger shall be
effective as of ____ p.m. Eastern Time on the ___ day of ________,
1995.
AMERICAN CITY BUSINESS JOURNALS, INC.
By: _____________________________________
President
ATTEST:
By: ____________________
Secretary
<PAGE>
Annex 8.11(a)(i)
STOCK OPTION AGREEMENT, dated as of August 3, 1995,
(the "Agreement"), among Advance Publications, Inc., a New York
corporation (the "Purchaser"), and American City Business
Journals, Inc., a Delaware corporation (the "Company").
WHEREAS, immediately prior to the execution and
delivery of this Agreement, the Purchaser, Advance Acquisition
Sub. Inc., a Delaware corporation and the wholly-owned subsidiary
of Purchaser (the "Merger Sub"), the Company, and Business
Journal Associates Limited Partnership, a Delaware limited
partnership and the principal stockholder of the Company
("BJALP"), are entering into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), which
provides, among other things, that at the Effective Time Merger
Sub shall be merged with and into the Company and the separate
corporate existence of the Merger Sub shall thereupon cease (the
"Merger");
WHEREAS, as a condition to their willingness to enter
into the Merger Agreement, the Purchaser and Merger Sub have
requested that the Company grant to the Purchaser an option to
purchase up to 1,376,000 shares of Common Stock, par value $.01
per share, of the Company (the "Common Stock"), upon the terms
and subject to the conditions hereof; and
WHEREAS, in order to induce the Purchaser and Merger
Sub to enter into the Merger Agreement, the Company is willing to
grant the Purchaser the requested option.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
1. The Option; Exercise; Adjustments. Subject to the
terms and conditions hereof, the Company hereby grants to the
Purchaser an irrevocable option (the "Option") to purchase up to
1,376,000 shares of Common Stock (the "Shares") at a purchase
price of $28.00 per Share (the "Purchase Price"). Subject to the
terms and conditions hereof, the Option may be exercised by the
Purchaser, in whole or in part, at any time after the date hereof
and prior to the termination of the Option in accordance with the
terms of this Agreement.
In the event the Purchaser wishes to exercise the
Option, the Purchaser shall send a written notice to the Company
(the "Stock Exercise Notice") specifying a date (subject to the
HSR Act (as defined below), not later than 20 business days and
not earlier than the next business day following the date such
notice is given) for the closing of such purchase. In the event
<PAGE>
of any change in the number of issued and outstanding shares of
Common Stock by reason of any stock dividend, stock split, split-
up, recapitalization, merger or other change in the corporate or
capital structure of the Company, the number of Shares and the
Purchase Price shall be appropriately adjusted to restore the
Purchaser to its rights hereunder, including its right to
purchase approximately 19.9% of the capital stock of the Company
entitled to vote generally for the election of the directors of
the Company which is issued and outstanding immediately prior to
the exercise of the Option at an aggregate purchase price of
approximately $38,528,000.
2. Conditions to Exercise of Option and
Delivery of Shares. The Company's obligation to deliver Shares
upon exercise of the Option is subject only to the conditions
that:
(i) No preliminary or permanent injunc-
tion or other order issued by any federal or
state court of competent jurisdiction in the
United States prohibiting the exercise of the
Option and/or the delivery of the Shares
shall be in effect;
(ii) Any applicable waiting periods
under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act")
shall have expired or been terminated; and
(iii) One or more of the following
events shall have occurred on or after the
date hereof: (1) any person, firm,
corporation, partnership, association or
other entity or group, other than the
Purchaser (or an affiliate of the Purchaser)
(such person, firm, corporation, partnership,
association or other entity or group being
referred to hereinafter, singularly or
collectively, as a "Person") shall have
become the beneficial owner of 20% or more of
the shares of Common Stock outstanding at the
time of such acquisition or commenced a
tender or exchange offer for 20% or more of
the outstanding shares of Common Stock; (2)
the Company or BJALP shall have entered into
an agreement, including without limitation an
agreement in principle, providing for or
relating to a merger or other business
combination involving the Company or a
subsidiary of the Company or the acquisition
of Common Stock or a material portion of the
assets, business or operations of the Company
or any subsidiary, other than the acquisition
contemplated by the Merger Agreement and the
BJALP Stock Option Agreement; or (3) there is
a public announcement or other public
<PAGE>
disclosure with respect to an ongoing or
continuing plan or intention by the Company
or any Person to propose or effect any of the
foregoing transactions. For purposes of this
Agreement, the terms "group" and "beneficial
owner" shall have the meanings assigned
thereto in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the
"Exchange Act").
Purchaser's right to exercise the Option shall be subject
only to the conditions set forth in clauses (i) and (iii)
above.
3. The Closing. (a) Any closing hereunder shall
take place on the date specified by the Purchaser in its
Stock Exercise Notice delivered pursuant to Section 1 at
9:00 A.M., local time, at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York, or at such
other time and place as the parties hereto may agree (the
"Closing Date"). On the Closing Date, the Company will
deliver to the Purchaser a certificate or certificates, duly
endorsed (or accompanied by duly executed stock powers),
representing the Shares in the denominations designated by
the Purchaser in its Stock Exercise Notice and the Purchaser
will purchase such Shares from the Company at the price per
Share equal to the Purchase Price. Any payment made by the
Purchaser to the Company pursuant to this Agreement shall be
made by certified or official bank check or by wire transfer
of federal funds to a bank designated by the Company.
(b) The certificates representing the Shares may
bear an appropriate legend relating to the fact that such
Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act").
4. Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser that
(a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of organization and has the requisite corporate
power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement
by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company and this Agreement
has been duly executed and delivered by a duly authorized
officer of the Company and constitutes a valid and binding
obligation of the Company; (c) except as required by the HSR
Act, the Company has the power and authority to issue and
deliver the Shares and has taken all necessary corporate
action to authorize and reserve the Shares issuable upon
exercise of the Option; (d) the Shares, when issued and
delivered by the Company upon exercise of the Option, will
be duly authorized, validly issued, fully paid and non-
<PAGE>
assessable and free of preemptive rights; and (e) no form of
stockholder rights plan or "fair price", "moratorium",
"control share acquisition" or other form of antitakeover
statute or regulation (including, without limitation,
Section 203 of the Delaware General Corporation Law) is or
shall be applicable to the acquisition of shares of Common
Stock pursuant to this Agreement or the BJALP Stock Option
Agreement.
5. Representations and Warranties of the Purchas-
er. The Purchaser represents and warrants to the Company
that (a) the execution and delivery of this Agreement by the
Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all neces-
sary corporate action on the part of the Purchaser, and (b)
this Agreement has been duly executed and delivered by a
duly authorized officer of the Purchaser and constitutes a
valid and binding obligation of the Purchaser.
6. Listing of Shares; HSR Act Filings; Govern-
mental Consents. The Company will effect as promptly as
practicable after the date hereof all necessary filings by
the Company under the HSR Act. Each of the parties will use
its reasonable efforts to obtain consents of all third
parties and governmental authorities, if any, necessary to
the consummation of the transactions contemplated herein.
7. Expenses. Each party hereto shall pay its own
expenses incurred in connection with this Agreement.
8. Company's Covenants. From and after the date
of this Agreement, the Company agrees to keep reserved for
issuance a number of authorized but unissued shares of
Common Stock equal to the number of Shares subject to option
hereunder.
9. Specific Performance. The Company
acknowledges that if the Company fails to perform any of its
obligations under this Agreement immediate and irreparable
harm or injury would be caused to the Purchaser for which
money damages would not be an adequate remedy. In such
event, the Company agrees that the Purchaser shall have the
right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if the
Purchaser should institute an action or proceeding seeking
specific enforcement of the provisions hereof, the Company
hereby waives the claim or defense that the Purchaser has an
adequate remedy at law and hereby agrees not to assert in
any such action proceeding the claim or defense that such a
remedy at law exists. The Company further agrees to waive
any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
10. Notice. All notices, requests, demands and
other communications hereunder shall be deemed to have been
duly given and made if in writing and if served by personal
<PAGE>
delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested,
or if sent by telecopier or rapifax, upon receipt of oral
confirmation that such transmission has been received, to
the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the
same manner, by such person:
If to Purchaser or Merger Sub:
Advance Publications, Inc.
730 Park Avenue
New York, New York 10021
Attention: S.I. Newhouse, Jr.
Fax: (212) 692-4469
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Peter C. Gould
Fax: (212) 692-4469
And to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy
Fax: (212) 558-3588
If to the Company:
American City Business Journals, Inc.
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
With a copy to:
Parker, Poe, Adams & Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Fred C. Thompson, Jr., Esq.
Fax: (704) 334-4706
11. Parties in Interest. This Agreement shall
inure to the benefit of and be binding upon the parties
named herein and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended
to confer upon any Person other than the Company or the
Purchaser, or their successors or assigns, any rights or
<PAGE>
remedies under or by reason of this Agreement.
12. Entire Agreement; Amendments. This Agree-
ment, together with the Merger Agreement and the other
documents referred to therein, contains the entire agreement
between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous
agreements and understandings, oral or written, with respect
to such transactions. This Agreement may not be changed,
amended or modified orally, but may be changed only by an
agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge may be
sought.
13. Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement
without the prior written consent of the other parties
hereto, except that the Purchaser may assign its rights and
obligations hereunder to any of its direct or indirect
wholly owned subsidiaries (including Merger Sub), but no
such transfer shall relieve the Purchaser of its obligations
hereunder if such transferee does not perform such
obligations.
14. Headings. The section headings herein are
for convenience only and shall not affect the construction
of this Agreement.
15. Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when executed,
shall be deemed to be an original and all of which together
shall constitute one and the same document.
16. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of
conflicts of laws thereof.
17. Termination. The right to exercise the
Option granted pursuant to this Agreement shall terminate at
the earlier of (i) the Effective Time (as defined in the
Merger Agreement), (ii) termination of the Merger Agreement
in accordance with its terms other than pursuant to
Section 10.3 thereof, or (iii) sixty (60) days after the
termination of the Merger Agreement in accordance with the
terms of Section 10.3 thereof; provided that, if the Option
cannot be exercised or the Shares cannot be delivered to
Purchaser upon such exercise by reason of any applicable
judgment, decree or order or because the condition set forth
in Section 2(ii) is not yet satisfied, the expiration date
of this Agreement shall be extended until thirty days after
such impediment to exercise has been removed.
All representations and warranties contained in
this Agreement shall survive delivery of and payment for the
Shares.
<PAGE>
18. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforce-
able, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company
have caused this Agreement to be duly executed and delivered
on the day and year first above written.
ADVANCE PUBLICATIONS, INC.
By:
Name:
Title: Chairman
AMERICAN CITY BUSINESS JOURNALS, INC.
By:
Name:
Title: Chief Executive Officer
<PAGE>
Annex 8.11(a)(ii)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 3, 1995
(this "Agreement"), between Business Journal Associates Limited
Partnership, a Delaware limited partnership ("Stockholder"), The
Oklahoma Publishing Company, a Delaware corporation ("OPUBCO"),
and Advance Publications, Inc., a New York corporation
("Purchaser").
WHEREAS, Stockholder, American City Business Journals,
Inc., a Delaware corporation (the "Company"), Purchaser and
Advance Acquisition Sub. Inc., a Delaware corporation and a
wholly owned subsidiary of Purchaser ("Merger Sub") are entering
into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), which provides, among other things,
that Purchaser, on the terms and subject to the conditions
thereof, will acquire the Company by means of a merger (the
"Merger") in which Merger Sub will be merged with and into the
Company;
WHEREAS, as a condition to their willingness to enter
into the Merger Agreement, Purchaser and Merger Sub have
requested that Stockholder grant to Purchaser an option to
purchase 3,885,105 shares of Common Stock, par value $.01 per
share ("Shares"), of the Company (the "Stockholder Shares") and
that OPUBCO deliver to Purchaser the consents, waivers and
releases specified herein, in each case, upon the terms and
subject to the conditions hereof;
WHEREAS, Stockholder has granted OPUBCO certain rights,
title and interests in, including a pledge of, the Stockholder
Shares pursuant to the Pledge Agreement, dated October 31, 1992
(the "Pledge Agreement"), by and between Stockholder and OPUBCO;
WHEREAS, in order to induce Purchaser and Merger Sub to
enter into the Merger Agreement Stockholder is willing to grant
Purchaser an option on the Stockholder Shares; and
WHEREAS, in order to induce Purchaser to enter into the
Merger Agreement and this Agreement, OPUBCO is willing to deliver
to Purchaser the consents, waivers and releases specified herein.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
1. The Option; Exercise; Adjustments; Note Payment.
(a) Subject to the terms and conditions hereof, Stockholder here-
by grants to Purchaser an irrevocable option (the "Option") to
purchase the Stockholder Shares at a purchase price of $28.00 per
<PAGE>
Share (the "Purchase Price"). Subject to the terms and
conditions hereof, the Option may be exercised by Purchaser at
any time after the date hereof and prior to the termination of
the Option in accordance with the terms of this Agreement.
(b) In the event Purchaser wishes to exercise the
Option, Purchaser shall send a written notice to Stockholder and
OPUBCO (the "Stock Exercise Notice") specifying a date (subject
to the HSR Act (as defined below), not later than 20 business
days and not earlier than the next business day following the
date such notice is given) for the closing of such purchase. In
the event of any change in the number of issued and outstanding
Shares by reason of any stock dividend, stock split, split-up,
recapitalization, merger or other change in the corporate or
capital structure of the Company, the number of Stockholder
Shares subject to this Agreement and this Option and the Purchase
Price shall be appropriately adjusted. For purposes of this
Agreement, Stockholder Shares shall include any distributions of
securities, cash, property or other assets or rights in respect
of such Stockholder Shares distributed or issued by the Company
on or after the date of this Agreement.
(c) On or prior to the Closing, Stockholder shall pay
OPUBCO the principal amount together with any accrued and unpaid
interest owed to OPUBCO under the Promissory Note, dated October
31, 1992 (the "Note") executed by Stockholder in favor of OPUBCO
in connection with the Pledge Agreement or shall otherwise obtain
the consents, waivers and releases of OPUBCO specified in
Section 4 hereof. If prior to the Closing, Stockholder has not
satisfied its obligation pursuant to the first sentence of this
Section 1(c), Purchaser, at its option, may pay OPUBCO that
portion of the aggregate Purchase Price for the Stockholder
Shares pursuant to this Agreement necessary to satisfy such
obligation and the condition to OPUBCO's obligations set forth in
Section 3. Any payments made by Purchaser to OPUBCO pursuant to
this Section 1(c) shall be credited against the aggregate
Purchase Price payable to Stockholder for the Stockholder Shares
pursuant to this Agreement. Notwithstanding anything in this
Agreement to the contrary, Purchaser shall have no obligation to
make any payments to OPUBCO.
2. Conditions to Exercise of Option and
Delivery of Stockholder Shares. The obligation of Stockholder to
deliver the Stockholder Shares upon exercise of the Option is
subject only to the conditions that:
(a) No preliminary or permanent injunction or other
order issued by any federal or state court of competent
jurisdiction in the United States prohibiting the exercise of the
Option and/or the delivery of the Shares shall be in effect;
(b) Any applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), shall have expired or been terminated; and
(c) One or more of the following events shall have
<PAGE>
occurred on or after the date hereof: (1) any person, firm,
corporation, partnership, association or other entity or group,
other than the Purchaser (or an affiliate of the Purchaser) (such
person, firm, corporation, partnership, association or other
entity or group being referred to hereinafter, singularly or
collectively, as a "Person") shall have become the beneficial
owner of 20% or more of the shares of Common Stock outstanding at
the time of such acquisition or commenced a tender or exchange
offer for 20% or more of the outstanding shares of Common Stock;
(2) the Company or Stockholder shall have entered into an
agreement, including without limitation an agreement in prin-
ciple, providing for or relating to a merger or other business
combination involving the Company or a subsidiary of the Company
or the acquisition of Common Stock or a material portion of the
assets, business or operations of the Company or any subsidiary,
other than the acquisition contemplated by the Merger Agreement
and this Agreement; or (3) there is a public announcement or
other public disclosure with respect to an ongoing or continuing
plan or intention by the Company or any Person to propose or
effect any of the foregoing transactions. For purposes of this
Agreement, the terms "group" and "beneficial owner" shall have
the meanings assigned thereto in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act").
Purchaser's right to exercise the Option is subject
only to the conditions set forth in clauses (a) and (c) above.
3. Conditions to Delivery of the Consents, Waivers and
Releases. The obligation of OPUBCO to deliver the consents,
waivers and releases specified in Section 4 shall be subject only
to the condition that Stockholder (or Purchaser on its behalf)
shall have satisfied its obligation pursuant to Section 1(c).
4. The Closing. The closing (the "Closing") hereunder
shall take place on the date specified by Purchaser in its Stock
Exercise Notice delivered pursuant to Section 1(b) at 9:00 A.M.,
local time, at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York, or at such other time and place as
the parties hereto may agree (the "Closing Date"). On the
Closing Date (a) Stockholder will deliver to Purchaser a
certificate or certificates, duly endorsed (or accompanied by
duly executed stock powers), representing the Stockholder Shares,
free and clear of all Liens (as defined below), in the
denominations designated by Purchaser in its Stock Exercise
Notice, (b) OPUBCO shall deliver (i) to Purchaser, an
unconditional and irrevocable consent, waiver and release,
effectively consenting to the transfer of the Stockholder Shares
to Purchaser and waiving and releasing all of OPUBCO's rights,
title and interests in the Stockholder Shares pursuant to the
Pledge Agreement or otherwise, and (ii) to Stockholder, the Note
marked "Cancelled, Satisfied in Full," against payment of the
amount required to be paid to OPUBCO pursuant to the first
sentence of Section 1(c), if full payment is made, or appropriate
documentation of any partial payment of the Note. Any payment
made by Purchaser to the Stockholder or OPUBCO pursuant to this
<PAGE>
Agreement shall be made by certified or official bank check or by
wire transfer of federal funds to a bank designated by
Stockholder or OPUBCO, as the case may be. In this Agreement,
"Lien" shall mean any lien, claim, charge, encumbrance, pledge,
security interest or restriction of any nature whatsoever.
5. Representations and Warranties of Stockholder.
Stockholder represents and warrants to Purchaser that:
(a) Organization. Stockholder is a limited partnership
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization.
(b) Authority. Subject to the HSR Act, Stockholder
has the requisite power and authority and has taken all action
necessary under the Stockholder's Limited Partnership Agreement
and Certificate of Limited Partnership of Stockholder and
applicable law to authorize, execute and deliver this Agreement,
to perform its obligations pursuant to this Agreement and to
consummate the transactions contemplated hereby. This Agreement
is a valid and binding agreement of Stockholder enforceable
against Stockholder in accordance with its terms.
(c) Brokers and Finders. Neither Stockholder nor any
of its general or limited partners, officers or employees has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders, fees in connection with
the transactions contemplated herein, except that Stockholder has
employed Lazard Freres & Co. LLC as its financial advisors.
(d) Stockholder Shares. As of the date of this
Agreement, Stockholder is the record holder of, and has good and
valid title to, the Stockholder Shares, free and clear of all
Liens other than Liens held by OPUBCO pursuant to the Pledge
Agreement. At the Closing, Stockholder shall deliver to
Purchaser good and valid title to the Stockholder Shares to
Purchaser, free and clear of all Liens. There are no options or
rights to acquire or other contracts (including proxies, voting
trusts or voting agreements) relating to the Stockholder Shares
to which Stockholder is a party other than the Pledge Agreement.
6. Representations and Warranties of OPUBCO. OPUBCO
represents and warrants to Purchaser that:
(a) Organization. OPUBCO is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation.
(b) Authority. OPUBCO has the requisite corporate
power and authority and has taken all corporate action to
authorize, execute and deliver this Agreement, to perform its
obligations pursuant to this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and
binding agreement of OPUBCO enforceable against OPUBCO in
accordance with its terms.
<PAGE>
(c) Stockholder Shares. OPUBCO has not sold,
transferred, assigned or otherwise disposed of any portion of its
rights, title and interests in the Stockholder Shares and will
not sell, transfer, assign or otherwise dispose of any such
rights, title and interests or grant any proxies with respect to
any Stockholder Shares, deposit any such Shares into a voting
trust or enter into any voting agreement with respect to any such
Shares (except as set forth herein) during the term of this
Agreement. Upon delivery of the consents, waivers and releases
to be delivered by OPUBCO to Purchaser pursuant to Section 3,
OPUBCO will have no rights, title or interests in the Stockholder
Shares.
(d) Promissory Note. Payment to OPUBCO of the amount
set forth in the first sentence of Section 1(c) shall satisfy and
discharge in full all of Stockholder's obligations pursuant to
the Pledge Agreement and the Promissory Note relating to the
Stockholder Shares.
7. Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company that the
execution and delivery of this Agreement by Purchaser and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the
part of Purchaser and this Agreement has been duly executed and
delivered by a duly authorized officer of Purchaser and will
constitute a valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
8. HSR Act Filings; Governmental Consents.
Stockholder and/or OPUBCO, as applicable, will effect as promptly
as practicable after the date hereof all necessary filings by
Stockholder and/or OPUBCO under the HSR Act. Each of the parties
hereto will use its reasonable efforts to obtain the consents of
all third parties and governmental authorities, if any, necessary
to the consummation of the transactions contemplated hereby.
9. Expenses. Each party hereto shall pay its own
expenses incurred in connection with this Agreement.
10. Covenants. From and after the date of this
Agreement, Stockholder agrees not to (i) sell, transfer, pledge,
assign, hypothecate or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation or other disposition of any Stockholder Shares;
(ii) grant any proxies with respect to any Stockholder Shares,
deposit any such Shares into a voting trust or enter into a
voting agreement with respect to any of such Shares; or (iii)
take any action which would make any representation or warranty
of Stockholder herein untrue or incorrect or prevent, burden or
materially delay the consummation of the transactions
contemplated by this Agreement.
<PAGE>
11. Voting Agreements; Proxy.
(a) For so long as this Agreement is in effect, in any
meeting of stockholders of the Company, however called, and in
any action by consent of the stockholders of the Company,
Stockholder and/or OPUBCO, if applicable, shall vote all of the
Stockholder Shares (i) in favor of the Merger Agreement and the
Merger contemplated thereby, (ii) against any transaction
involving the sale of all or a material portion of the Company's
assets, a merger or other form of business consolidation
involving the Company or any of its subsidiaries, the sale of 15%
or more of the Common Stock or other equity securities of the
Company (by means of a stock sale or other transaction) or any
other transaction or series of transactions effecting a change in
control of the Company, other than the Merger.
(b) Upon the written request of Purchaser, Stockholder
and/or OPUBCO, if applicable, shall grant Purchaser an
irrevocable proxy and irrevocably appoint Purchaser or its
designees, with full power of substitution, its attorney and
proxy to vote all Stockholder Shares with regard to any of the
matters referred to in paragraph (a) above at any meeting of the
stockholders of the Company however called, or in connection with
any action by written consent by the stockholders of the Company.
Stockholder acknowledges and agrees that such proxy, if and when
given, will be coupled with an interest, will be irrevocable and
shall not be terminated by operation of law or otherwise upon the
occurrence of any event and that no subsequent proxies will be
given (and if given will not be effective).
12. Specific Performance. Each of Stockholder and
OPUBCO acknowledges and agrees that if they fail to perform any
of their respective obligations under this Agreement immediate
and irreparable harm or injury would be caused to Purchaser for
which money damages would not be an adequate remedy. In such
event, each of Stockholder and OPUBCO agrees that Purchaser shall
have the right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if
Purchaser should institute an action or proceeding seeking
specific enforcement of the provisions hereof, each of
Stockholder and OPUBCO hereby waives the claim or defense that
Purchaser has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that
such a remedy at law exists. Each of Stockholder and OPUBCO
further agrees to waive any requirements for the securing or
posting of any bond in connection with obtaining any such
equitable relief.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given, if delivered in person, by overnight
courier, by facsimile transmission, telexed or mailed by
certified or registered mail, postage prepaid, return receipt
requested, as follows (or at such other address for a party as
shall be specified by like notice; provided that notice of a
change of address shall be effective only upon receipt thereof):
<PAGE>
If to the Purchaser or Merger Sub:
Advance Publications, Inc.
350 Madison Avenue
New York, New York 10017
Attention: S.I. Newhouse, Jr.
Fax: (212) 692-4469
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Peter C. Gould
Fax: (212) 692-4469
And to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy
Fax: (212) 558-3588
If to the Company:
American City Business Journals, Inc.
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
With a copy to:
Parker, Poe, Adams & Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Fred C. Thompson, Jr., Esq.
Fax: (704) 334-4706
If to BJALP:
Business Journal Associates Limited Partnership
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
14. Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties named herein
<PAGE>
and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any
Person other than Purchaser, Stockholder or OPUBCO, or their
successors or assigns, any rights or remedies under or by reason
of this Agreement.
15. Entire Agreement; Amendments. This Agreement,
together with the Merger Agreement, the BJALP Irrevocable Written
Consent (as defined in the Merger Agreement) and the other
documents referred to in the Merger Agreement, contains the
entire agreement between Stockholder, OPUBCO and Purchaser with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, oral or written,
with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but may be changed only by
an agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge may be
sought.
16. Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the
prior written consent of the other party hereto, except that
Purchaser may assign its rights and obligations hereunder to any
of its direct or indirect wholly owned subsidiaries (including
Merger Sub), but no such transfer shall relieve Purchaser of its
obligations hereunder if such transferee does not perform such
obligations.
17. Headings. The section headings herein are for
convenience only and shall not affect the construction of this
Agreement.
18. Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when executed, shall
be deemed to be an original and all of which together shall
constitute one and the same document.
19. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware.
20. Termination. The right to exercise the Option
granted herein shall terminate at the earlier of (i) sixty (60)
days after the termination of the Merger Agreement in accordance
with the terms of Section 10.3 thereof; (ii) termination of the
Merger Agreement in accordance with its terms other than pursuant
to Section 10.3 thereof; and (iii) the Effective Time (as defined
in the Merger Agreement); provided that, if the Option cannot be
exercised or the Shares cannot be delivered to Purchaser upon
such exercise by reason of any applicable judgment, decree or
order or because the condition set forth in Section 2(b) has not
yet been satisfied, the expiration date of this Agreement shall
be extended until thirty days after such impediment to exercise
has been removed.
All representations and warranties contained in this
<PAGE>
Agreement shall survive delivery of and payment for the
Stockholder Shares.
21. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, Purchaser, Stockholder and OPUBCO
have caused this Agreement to be duly executed and delivered on
the day and year first above written.
BUSINESS JOURNAL ASSOCIATES
LIMITED PARTNERSHIP
BY: OPUBCO Enterprises, Inc.,
its general partner
By:
Name:
Title: Chairman
ADVANCE PUBLICATIONS, INC.
By:
Name:
Title: Chairman
THE OKLAHOMA PUBLISHING
COMPANY
By:
Name:
Title: Chairman
<PAGE>
Annex 8.11(b)
CONSENT SOLICITED BY ADVANCE PUBLICATIONS, INC.
IRREVOCABLE WRITTEN CONSENT OF MAJORITY STOCKHOLDER
OF
AMERICAN CITY BUSINESS JOURNALS, INC.
(Pursuant to Sections 228 and 251 of
the Delaware General Corporation Law)
Pursuant to Sections 228 and 251 of the Delaware
General Corporation Law (the "DGCL"), the undersigned, being the
holder of 3,885,105 shares of Common Stock, par value $.01 per
share ("Shares"), of American City Business Journals, Inc., a
Delaware corporation (the "Company"), being a majority of the
issued and outstanding Shares of the Company (such Shares having
not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted), hereby
irrevocably consents to (i) the adoption of the Agreement and
Plan of Merger, dated as of August 3, 1995 (the "Merger
Agreement"), among the undersigned, the Company, Advance
Publications, a New York corporation ("Purchaser"), and ACBJ
Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Purchaser, and (ii) the adoption of the Option
Agreement, dated as of August 3, 1995 (the "Company Stock Option
Agreement"), among the Company, Purchaser and Merger Sub.
In accordance with Section 228 of the DGCL, this
written consent is being delivered to the Company by delivery to
its registered office in the State of Delaware, the Company's
principal place of business or an officer or agent of the Company
having custody of the book in which proceedings of meetings of
stockholders of the Company are recorded. If delivery is being
made to the Company's registered office in the State of Delaware,
it is being made by hand or by certified or registered mail,
return receipt requested.
In accordance with Section 228(d) of the DGCL, the
Company is required to give prompt notice of the taking of this
action to all other stockholders of the Company. In accordance
with Section 262(d) of the DGCL, the Company is required, either
before the effective date of the Merger (as defined in the Merger
Agreement) or within ten days thereafter, to notify to each
stockholder of the Company entitled to appraisal rights under
Section 262 of the DGCL of the effective date of the Merger and
that appraisal rights are available for any or all of their
Shares. The notices sent pursuant to Section 262 of the DGCL are
<PAGE>
required to include a copy of Section 262 of the DGCL and must be
sent by certified or registered mail, return receipt requested,
addressed to each stockholder of the Company at their address as
it appears on the records of the Company.
Pursuant to Section 228(d) of the DGCL, the Certificate
of Merger to be filed by the Company pursuant to Sections 251(c)
and 103 of the DGCL to effect the Merger is required to state
that written consent to the adoption of the Merger Agreement has
been given in accordance with Section 228(d) of the DGCL and that
written notice of such action has been given to all other
stockholders of the Company in accordance with such Section.
Dated: August , 1995
BUSINESS JOURNAL ASSOCIATES
LIMITED PARTNERSHIP
BY: OPUBCO Enterprises, Inc.,
its general partner
By: ____________________
Name:
Title:
-2-
<PAGE>
<PAGE>
EXHIBIT B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of August 3, 1995
(this "Agreement"), between Business Journal Associates Limited
Partnership, a Delaware limited partnership ("Stockholder"), The
Oklahoma Publishing Company, a Delaware corporation ("OPUBCO"),
and Advance Publications, Inc., a New York corporation
("Purchaser").
WHEREAS, Stockholder, American City Business Journals,
Inc., a Delaware corporation (the "Company"), Purchaser and
Advance Acquisition Sub. Inc., a Delaware corporation and a
wholly owned subsidiary of Purchaser ("Merger Sub") are entering
into an Agreement and Plan of Merger, dated as of the date hereof
(the "Merger Agreement"), which provides, among other things,
that Purchaser, on the terms and subject to the conditions
thereof, will acquire the Company by means of a merger (the
"Merger") in which Merger Sub will be merged with and into the
Company;
WHEREAS, as a condition to their willingness to enter
into the Merger Agreement, Purchaser and Merger Sub have
requested that Stockholder grant to Purchaser an option to
purchase 3,885,105 shares of Common Stock, par value $.01 per
share ("Shares"), of the Company (the "Stockholder Shares") and
that OPUBCO deliver to Purchaser the consents, waivers and
releases specified herein, in each case, upon the terms and
subject to the conditions hereof;
WHEREAS, Stockholder has granted OPUBCO certain rights,
title and interests in, including a pledge of, the Stockholder
Shares pursuant to the Pledge Agreement, dated October 31, 1992
(the "Pledge Agreement"), by and between Stockholder and OPUBCO;
WHEREAS, in order to induce Purchaser and Merger Sub to
enter into the Merger Agreement Stockholder is willing to grant
Purchaser an option on the Stockholder Shares; and
WHEREAS, in order to induce Purchaser to enter into the
Merger Agreement and this Agreement, OPUBCO is willing to deliver
to Purchaser the consents, waivers and releases specified herein.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
1. The Option; Exercise; Adjustments; Note Payment.
(a) Subject to the terms and conditions hereof, Stockholder here-
by grants to Purchaser an irrevocable option (the "Option") to
purchase the Stockholder Shares at a purchase price of $28.00 per
<PAGE>
Share (the "Purchase Price"). Subject to the terms and
conditions hereof, the Option may be exercised by Purchaser at
any time after the date hereof and prior to the termination of
the Option in accordance with the terms of this Agreement.
(b) In the event Purchaser wishes to exercise the
Option, Purchaser shall send a written notice to Stockholder and
OPUBCO (the "Stock Exercise Notice") specifying a date (subject
to the HSR Act (as defined below), not later than 20 business
days and not earlier than the next business day following the
date such notice is given) for the closing of such purchase. In
the event of any change in the number of issued and outstanding
Shares by reason of any stock dividend, stock split, split-up,
recapitalization, merger or other change in the corporate or
capital structure of the Company, the number of Stockholder
Shares subject to this Agreement and this Option and the Purchase
Price shall be appropriately adjusted. For purposes of this
Agreement, Stockholder Shares shall include any distributions of
securities, cash, property or other assets or rights in respect
of such Stockholder Shares distributed or issued by the Company
on or after the date of this Agreement.
(c) On or prior to the Closing, Stockholder shall pay
OPUBCO the principal amount together with any accrued and unpaid
interest owed to OPUBCO under the Promissory Note, dated October
31, 1992 (the "Note") executed by Stockholder in favor of OPUBCO
in connection with the Pledge Agreement or shall otherwise obtain
the consents, waivers and releases of OPUBCO specified in
Section 4 hereof. If prior to the Closing, Stockholder has not
satisfied its obligation pursuant to the first sentence of this
Section 1(c), Purchaser, at its option, may pay OPUBCO that
portion of the aggregate Purchase Price for the Stockholder
Shares pursuant to this Agreement necessary to satisfy such
obligation and the condition to OPUBCO's obligations set forth in
Section 3. Any payments made by Purchaser to OPUBCO pursuant to
this Section 1(c) shall be credited against the aggregate
Purchase Price payable to Stockholder for the Stockholder Shares
pursuant to this Agreement. Notwithstanding anything in this
Agreement to the contrary, Purchaser shall have no obligation to
make any payments to OPUBCO.
2. Conditions to Exercise of Option and
Delivery of Stockholder Shares. The obligation of Stockholder to
deliver the Stockholder Shares upon exercise of the Option is
subject only to the conditions that:
(a) No preliminary or permanent injunction or other
order issued by any federal or state court of competent
jurisdiction in the United States prohibiting the exercise of the
Option and/or the delivery of the Shares shall be in effect;
(b) Any applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), shall have expired or been terminated; and
(c) One or more of the following events shall have
<PAGE>
occurred on or after the date hereof: (1) any person, firm,
corporation, partnership, association or other entity or group,
other than the Purchaser (or an affiliate of the Purchaser) (such
person, firm, corporation, partnership, association or other
entity or group being referred to hereinafter, singularly or
collectively, as a "Person") shall have become the beneficial
owner of 20% or more of the shares of Common Stock outstanding at
the time of such acquisition or commenced a tender or exchange
offer for 20% or more of the outstanding shares of Common Stock;
(2) the Company or Stockholder shall have entered into an
agreement, including without limitation an agreement in prin-
ciple, providing for or relating to a merger or other business
combination involving the Company or a subsidiary of the Company
or the acquisition of Common Stock or a material portion of the
assets, business or operations of the Company or any subsidiary,
other than the acquisition contemplated by the Merger Agreement
and this Agreement; or (3) there is a public announcement or
other public disclosure with respect to an ongoing or continuing
plan or intention by the Company or any Person to propose or
effect any of the foregoing transactions. For purposes of this
Agreement, the terms "group" and "beneficial owner" shall have
the meanings assigned thereto in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act").
Purchaser's right to exercise the Option is subject
only to the conditions set forth in clauses (a) and (c) above.
3. Conditions to Delivery of the Consents, Waivers and
Releases. The obligation of OPUBCO to deliver the consents,
waivers and releases specified in Section 4 shall be subject only
to the condition that Stockholder (or Purchaser on its behalf)
shall have satisfied its obligation pursuant to Section 1(c).
4. The Closing. The closing (the "Closing") hereunder
shall take place on the date specified by Purchaser in its Stock
Exercise Notice delivered pursuant to Section 1(b) at 9:00 A.M.,
local time, at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York, or at such other time and place as
the parties hereto may agree (the "Closing Date"). On the
Closing Date (a) Stockholder will deliver to Purchaser a
certificate or certificates, duly endorsed (or accompanied by
duly executed stock powers), representing the Stockholder Shares,
free and clear of all Liens (as defined below), in the
denominations designated by Purchaser in its Stock Exercise
Notice, (b) OPUBCO shall deliver (i) to Purchaser, an
unconditional and irrevocable consent, waiver and release,
effectively consenting to the transfer of the Stockholder Shares
to Purchaser and waiving and releasing all of OPUBCO's rights,
title and interests in the Stockholder Shares pursuant to the
Pledge Agreement or otherwise, and (ii) to Stockholder, the Note
marked "Cancelled, Satisfied in Full," against payment of the
amount required to be paid to OPUBCO pursuant to the first
sentence of Section 1(c), if full payment is made, or appropriate
documentation of any partial payment of the Note. Any payment
made by Purchaser to the Stockholder or OPUBCO pursuant to this
<PAGE>
Agreement shall be made by certified or official bank check or by
wire transfer of federal funds to a bank designated by
Stockholder or OPUBCO, as the case may be. In this Agreement,
"Lien" shall mean any lien, claim, charge, encumbrance, pledge,
security interest or restriction of any nature whatsoever.
5. Representations and Warranties of Stockholder.
Stockholder represents and warrants to Purchaser that:
(a) Organization. Stockholder is a limited partnership
duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization.
(b) Authority. Subject to the HSR Act, Stockholder
has the requisite power and authority and has taken all action
necessary under the Stockholder's Limited Partnership Agreement
and Certificate of Limited Partnership of Stockholder and
applicable law to authorize, execute and deliver this Agreement,
to perform its obligations pursuant to this Agreement and to
consummate the transactions contemplated hereby. This Agreement
is a valid and binding agreement of Stockholder enforceable
against Stockholder in accordance with its terms.
(c) Brokers and Finders. Neither Stockholder nor any
of its general or limited partners, officers or employees has
employed any broker or finder or incurred any liability for any
brokerage fees, commissions or finders, fees in connection with
the transactions contemplated herein, except that Stockholder has
employed Lazard Freres & Co. LLC as its financial advisors.
(d) Stockholder Shares. As of the date of this
Agreement, Stockholder is the record holder of, and has good and
valid title to, the Stockholder Shares, free and clear of all
Liens other than Liens held by OPUBCO pursuant to the Pledge
Agreement. At the Closing, Stockholder shall deliver to
Purchaser good and valid title to the Stockholder Shares to
Purchaser, free and clear of all Liens. There are no options or
rights to acquire or other contracts (including proxies, voting
trusts or voting agreements) relating to the Stockholder Shares
to which Stockholder is a party other than the Pledge Agreement.
6. Representations and Warranties of OPUBCO. OPUBCO
represents and warrants to Purchaser that:
(a) Organization. OPUBCO is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation.
(b) Authority. OPUBCO has the requisite corporate
power and authority and has taken all corporate action to
authorize, execute and deliver this Agreement, to perform its
obligations pursuant to this Agreement and to consummate the
transactions contemplated hereby. This Agreement is a valid and
binding agreement of OPUBCO enforceable against OPUBCO in
accordance with its terms.
<PAGE>
(c) Stockholder Shares. OPUBCO has not sold,
transferred, assigned or otherwise disposed of any portion of its
rights, title and interests in the Stockholder Shares and will
not sell, transfer, assign or otherwise dispose of any such
rights, title and interests or grant any proxies with respect to
any Stockholder Shares, deposit any such Shares into a voting
trust or enter into any voting agreement with respect to any such
Shares (except as set forth herein) during the term of this
Agreement. Upon delivery of the consents, waivers and releases
to be delivered by OPUBCO to Purchaser pursuant to Section 3,
OPUBCO will have no rights, title or interests in the Stockholder
Shares.
(d) Promissory Note. Payment to OPUBCO of the amount
set forth in the first sentence of Section 1(c) shall satisfy and
discharge in full all of Stockholder's obligations pursuant to
the Pledge Agreement and the Promissory Note relating to the
Stockholder Shares.
7. Representations and Warranties of Purchaser.
Purchaser represents and warrants to the Company that the
execution and delivery of this Agreement by Purchaser and the
consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the
part of Purchaser and this Agreement has been duly executed and
delivered by a duly authorized officer of Purchaser and will
constitute a valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms.
8. HSR Act Filings; Governmental Consents.
Stockholder and/or OPUBCO, as applicable, will effect as promptly
as practicable after the date hereof all necessary filings by
Stockholder and/or OPUBCO under the HSR Act. Each of the parties
hereto will use its reasonable efforts to obtain the consents of
all third parties and governmental authorities, if any, necessary
to the consummation of the transactions contemplated hereby.
9. Expenses. Each party hereto shall pay its own
expenses incurred in connection with this Agreement.
10. Covenants. From and after the date of this
Agreement, Stockholder agrees not to (i) sell, transfer, pledge,
assign, hypothecate or otherwise dispose of, or enter into any
contract with respect to the sale, transfer, pledge, assignment,
hypothecation or other disposition of any Stockholder Shares;
(ii) grant any proxies with respect to any Stockholder Shares,
deposit any such Shares into a voting trust or enter into a
voting agreement with respect to any of such Shares; or (iii)
take any action which would make any representation or warranty
of Stockholder herein untrue or incorrect or prevent, burden or
materially delay the consummation of the transactions
contemplated by this Agreement.
<PAGE>
11. Voting Agreements; Proxy.
(a) For so long as this Agreement is in effect, in any
meeting of stockholders of the Company, however called, and in
any action by consent of the stockholders of the Company,
Stockholder and/or OPUBCO, if applicable, shall vote all of the
Stockholder Shares (i) in favor of the Merger Agreement and the
Merger contemplated thereby, (ii) against any transaction
involving the sale of all or a material portion of the Company's
assets, a merger or other form of business consolidation
involving the Company or any of its subsidiaries, the sale of 15%
or more of the Common Stock or other equity securities of the
Company (by means of a stock sale or other transaction) or any
other transaction or series of transactions effecting a change in
control of the Company, other than the Merger.
(b) Upon the written request of Purchaser, Stockholder
and/or OPUBCO, if applicable, shall grant Purchaser an
irrevocable proxy and irrevocably appoint Purchaser or its
designees, with full power of substitution, its attorney and
proxy to vote all Stockholder Shares with regard to any of the
matters referred to in paragraph (a) above at any meeting of the
stockholders of the Company however called, or in connection with
any action by written consent by the stockholders of the Company.
Stockholder acknowledges and agrees that such proxy, if and when
given, will be coupled with an interest, will be irrevocable and
shall not be terminated by operation of law or otherwise upon the
occurrence of any event and that no subsequent proxies will be
given (and if given will not be effective).
12. Specific Performance. Each of Stockholder and
OPUBCO acknowledges and agrees that if they fail to perform any
of their respective obligations under this Agreement immediate
and irreparable harm or injury would be caused to Purchaser for
which money damages would not be an adequate remedy. In such
event, each of Stockholder and OPUBCO agrees that Purchaser shall
have the right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if
Purchaser should institute an action or proceeding seeking
specific enforcement of the provisions hereof, each of
Stockholder and OPUBCO hereby waives the claim or defense that
Purchaser has an adequate remedy at law and hereby agrees not to
assert in any such action or proceeding the claim or defense that
such a remedy at law exists. Each of Stockholder and OPUBCO
further agrees to waive any requirements for the securing or
posting of any bond in connection with obtaining any such
equitable relief.
13. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given, if delivered in person, by overnight
courier, by facsimile transmission, telexed or mailed by
certified or registered mail, postage prepaid, return receipt
requested, as follows (or at such other address for a party as
shall be specified by like notice; provided that notice of a
change of address shall be effective only upon receipt thereof):
<PAGE>
If to the Purchaser or Merger Sub:
Advance Publications, Inc.
350 Madison Avenue
New York, New York 10017
Attention: S.I. Newhouse, Jr.
Fax: (212) 692-4469
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Peter C. Gould
Fax: (212) 692-4469
And to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy
Fax: (212) 558-3588
If to the Company:
American City Business Journals, Inc.
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
With a copy to:
Parker, Poe, Adams & Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Fred C. Thompson, Jr., Esq.
Fax: (704) 334-4706
If to BJALP:
Business Journal Associates Limited Partnership
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
14. Parties in Interest. This Agreement shall inure
to the benefit of and be binding upon the parties named herein
<PAGE>
and their respective successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any
Person other than Purchaser, Stockholder or OPUBCO, or their
successors or assigns, any rights or remedies under or by reason
of this Agreement.
15. Entire Agreement; Amendments. This Agreement,
together with the Merger Agreement, the BJALP Irrevocable Written
Consent (as defined in the Merger Agreement) and the other
documents referred to in the Merger Agreement, contains the
entire agreement between Stockholder, OPUBCO and Purchaser with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, oral or written,
with respect to such transactions. This Agreement may not be
changed, amended or modified orally, but may be changed only by
an agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge may be
sought.
16. Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the
prior written consent of the other party hereto, except that
Purchaser may assign its rights and obligations hereunder to any
of its direct or indirect wholly owned subsidiaries (including
Merger Sub), but no such transfer shall relieve Purchaser of its
obligations hereunder if such transferee does not perform such
obligations.
17. Headings. The section headings herein are for
convenience only and shall not affect the construction of this
Agreement.
18. Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when executed, shall
be deemed to be an original and all of which together shall
constitute one and the same document.
19. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware.
20. Termination. The right to exercise the Option
granted herein shall terminate at the earlier of (i) sixty (60)
days after the termination of the Merger Agreement in accordance
with the terms of Section 10.3 thereof; (ii) termination of the
Merger Agreement in accordance with its terms other than pursuant
to Section 10.3 thereof; and (iii) the Effective Time (as defined
in the Merger Agreement); provided that, if the Option cannot be
exercised or the Shares cannot be delivered to Purchaser upon
such exercise by reason of any applicable judgment, decree or
order or because the condition set forth in Section 2(b) has not
yet been satisfied, the expiration date of this Agreement shall
be extended until thirty days after such impediment to exercise
has been removed.
All representations and warranties contained in this
<PAGE>
Agreement shall survive delivery of and payment for the
Stockholder Shares.
21. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, Purchaser, Stockholder and OPUBCO
have caused this Agreement to be duly executed and delivered on
the day and year first above written.
BUSINESS JOURNAL ASSOCIATES
LIMITED PARTNERSHIP
BY: OPUBCO Enterprises, Inc.,
its general partner
By: /s/ Edward L. Gaylord
Name: Edward L. Gaylord
Title: Chairman
ADVANCE PUBLICATIONS, INC.
By: /s/ S.I. Newhouse, Jr.
Name: S.I. Newhouse, Jr.
Title: Chairman
THE OKLAHOMA PUBLISHING
COMPANY
By: /s/ Edward L. Gaylord
Name: Edward L. Gaylord
Title: Chairman
<PAGE>
EXHIBIT C
STOCK OPTION AGREEMENT, dated as of August 3, 1995,
(the "Agreement"), among Advance Publications, Inc., a New York
corporation (the "Purchaser"), and American City Business
Journals, Inc., a Delaware corporation (the "Company").
WHEREAS, immediately prior to the execution and
delivery of this Agreement, the Purchaser, Advance Acquisition
Sub. Inc., a Delaware corporation and the wholly-owned subsidiary
of Purchaser (the "Merger Sub"), the Company, and Business
Journal Associates Limited Partnership, a Delaware limited
partnership and the principal stockholder of the Company
("BJALP"), are entering into an Agreement and Plan of Merger,
dated as of the date hereof (the "Merger Agreement"), which
provides, among other things, that at the Effective Time Merger
Sub shall be merged with and into the Company and the separate
corporate existence of the Merger Sub shall thereupon cease (the
"Merger");
WHEREAS, as a condition to their willingness to enter
into the Merger Agreement, the Purchaser and Merger Sub have
requested that the Company grant to the Purchaser an option to
purchase up to 1,376,000 shares of Common Stock, par value $.01
per share, of the Company (the "Common Stock"), upon the terms
and subject to the conditions hereof; and
WHEREAS, in order to induce the Purchaser and Merger
Sub to enter into the Merger Agreement, the Company is willing to
grant the Purchaser the requested option.
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
1. The Option; Exercise; Adjustments. Subject to the
terms and conditions hereof, the Company hereby grants to the
Purchaser an irrevocable option (the "Option") to purchase up to
1,376,000 shares of Common Stock (the "Shares") at a purchase
price of $28.00 per Share (the "Purchase Price"). Subject to the
terms and conditions hereof, the Option may be exercised by the
Purchaser, in whole or in part, at any time after the date hereof
and prior to the termination of the Option in accordance with the
terms of this Agreement.
In the event the Purchaser wishes to exercise the
Option, the Purchaser shall send a written notice to the Company
(the "Stock Exercise Notice") specifying a date (subject to the
HSR Act (as defined below), not later than 20 business days and
not earlier than the next business day following the date such
notice is given) for the closing of such purchase. In the event
<PAGE>
of any change in the number of issued and outstanding shares of
Common Stock by reason of any stock dividend, stock split, split-
up, recapitalization, merger or other change in the corporate or
capital structure of the Company, the number of Shares and the
Purchase Price shall be appropriately adjusted to restore the
Purchaser to its rights hereunder, including its right to
purchase approximately 19.9% of the capital stock of the Company
entitled to vote generally for the election of the directors of
the Company which is issued and outstanding immediately prior to
the exercise of the Option at an aggregate purchase price of
approximately $38,528,000.
2. Conditions to Exercise of Option and
Delivery of Shares. The Company's obligation to deliver Shares
upon exercise of the Option is subject only to the conditions
that:
(i) No preliminary or permanent injunc-
tion or other order issued by any federal or
state court of competent jurisdiction in the
United States prohibiting the exercise of the
Option and/or the delivery of the Shares
shall be in effect;
(ii) Any applicable waiting periods
under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act")
shall have expired or been terminated; and
(iii) One or more of the following
events shall have occurred on or after the
date hereof: (1) any person, firm,
corporation, partnership, association or
other entity or group, other than the
Purchaser (or an affiliate of the Purchaser)
(such person, firm, corporation, partnership,
association or other entity or group being
referred to hereinafter, singularly or
collectively, as a "Person") shall have
become the beneficial owner of 20% or more of
the shares of Common Stock outstanding at the
time of such acquisition or commenced a
tender or exchange offer for 20% or more of
the outstanding shares of Common Stock; (2)
the Company or BJALP shall have entered into
an agreement, including without limitation an
agreement in principle, providing for or
relating to a merger or other business
combination involving the Company or a
subsidiary of the Company or the acquisition
of Common Stock or a material portion of the
assets, business or operations of the Company
or any subsidiary, other than the acquisition
contemplated by the Merger Agreement and the
BJALP Stock Option Agreement; or (3) there is
a public announcement or other public
<PAGE>
disclosure with respect to an ongoing or
continuing plan or intention by the Company
or any Person to propose or effect any of the
foregoing transactions. For purposes of this
Agreement, the terms "group" and "beneficial
owner" shall have the meanings assigned
thereto in Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the
"Exchange Act").
Purchaser's right to exercise the Option shall be subject
only to the conditions set forth in clauses (i) and (iii)
above.
3. The Closing. (a) Any closing hereunder shall
take place on the date specified by the Purchaser in its
Stock Exercise Notice delivered pursuant to Section 1 at
9:00 A.M., local time, at the offices of Sullivan &
Cromwell, 125 Broad Street, New York, New York, or at such
other time and place as the parties hereto may agree (the
"Closing Date"). On the Closing Date, the Company will
deliver to the Purchaser a certificate or certificates, duly
endorsed (or accompanied by duly executed stock powers),
representing the Shares in the denominations designated by
the Purchaser in its Stock Exercise Notice and the Purchaser
will purchase such Shares from the Company at the price per
Share equal to the Purchase Price. Any payment made by the
Purchaser to the Company pursuant to this Agreement shall be
made by certified or official bank check or by wire transfer
of federal funds to a bank designated by the Company.
(b) The certificates representing the Shares may
bear an appropriate legend relating to the fact that such
Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act").
4. Representations and Warranties of the Company.
The Company represents and warrants to the Purchaser that
(a) the Company is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of organization and has the requisite corporate
power and authority to enter into and perform this
Agreement; (b) the execution and delivery of this Agreement
by the Company and the consummation by it of the
transactions contemplated hereby have been duly authorized
by the Board of Directors of the Company and this Agreement
has been duly executed and delivered by a duly authorized
officer of the Company and constitutes a valid and binding
obligation of the Company; (c) except as required by the HSR
Act, the Company has the power and authority to issue and
deliver the Shares and has taken all necessary corporate
action to authorize and reserve the Shares issuable upon
exercise of the Option; (d) the Shares, when issued and
delivered by the Company upon exercise of the Option, will
be duly authorized, validly issued, fully paid and non-
<PAGE>
assessable and free of preemptive rights; and (e) no form of
stockholder rights plan or "fair price", "moratorium",
"control share acquisition" or other form of antitakeover
statute or regulation (including, without limitation,
Section 203 of the Delaware General Corporation Law) is or
shall be applicable to the acquisition of shares of Common
Stock pursuant to this Agreement or the BJALP Stock Option
Agreement.
5. Representations and Warranties of the Purchas-
er. The Purchaser represents and warrants to the Company
that (a) the execution and delivery of this Agreement by the
Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all neces-
sary corporate action on the part of the Purchaser, and (b)
this Agreement has been duly executed and delivered by a
duly authorized officer of the Purchaser and constitutes a
valid and binding obligation of the Purchaser.
6. Listing of Shares; HSR Act Filings; Govern-
mental Consents. The Company will effect as promptly as
practicable after the date hereof all necessary filings by
the Company under the HSR Act. Each of the parties will use
its reasonable efforts to obtain consents of all third
parties and governmental authorities, if any, necessary to
the consummation of the transactions contemplated herein.
7. Expenses. Each party hereto shall pay its own
expenses incurred in connection with this Agreement.
8. Company's Covenants. From and after the date
of this Agreement, the Company agrees to keep reserved for
issuance a number of authorized but unissued shares of
Common Stock equal to the number of Shares subject to option
hereunder.
9. Specific Performance. The Company
acknowledges that if the Company fails to perform any of its
obligations under this Agreement immediate and irreparable
harm or injury would be caused to the Purchaser for which
money damages would not be an adequate remedy. In such
event, the Company agrees that the Purchaser shall have the
right, in addition to any other rights it may have, to
specific performance of this Agreement. Accordingly, if the
Purchaser should institute an action or proceeding seeking
specific enforcement of the provisions hereof, the Company
hereby waives the claim or defense that the Purchaser has an
adequate remedy at law and hereby agrees not to assert in
any such action proceeding the claim or defense that such a
remedy at law exists. The Company further agrees to waive
any requirements for the securing or posting of any bond in
connection with obtaining any such equitable relief.
10. Notice. All notices, requests, demands and
other communications hereunder shall be deemed to have been
duly given and made if in writing and if served by personal
<PAGE>
delivery upon the party for whom it is intended or delivered
by registered or certified mail, return receipt requested,
or if sent by telecopier or rapifax, upon receipt of oral
confirmation that such transmission has been received, to
the person at the address set forth below, or such other
address as may be designated in writing hereafter, in the
same manner, by such person:
If to Purchaser or Merger Sub:
Advance Publications, Inc.
730 Park Avenue
New York, New York 10021
Attention: S.I. Newhouse, Jr.
Fax: (212) 692-4469
With a copy to:
Sabin, Bermant & Gould
350 Madison Avenue
New York, New York 10017
Attention: Peter C. Gould
Fax: (212) 692-4469
And to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy
Fax: (212) 558-3588
If to the Company:
American City Business Journals, Inc.
128 S. Tryon Street
Suite 2300
Charlotte, NC 28202
Attention: A. Ray Shaw
Fax: (704) 371-3299
With a copy to:
Parker, Poe, Adams & Bernstein, L.L.P.
2500 Charlotte Plaza
Charlotte, NC 28244
Attention: Fred C. Thompson, Jr., Esq.
Fax: (704) 334-4706
11. Parties in Interest. This Agreement shall
inure to the benefit of and be binding upon the parties
named herein and their respective successors and assigns.
Nothing in this Agreement, express or implied, is intended
to confer upon any Person other than the Company or the
Purchaser, or their successors or assigns, any rights or
<PAGE>
remedies under or by reason of this Agreement.
12. Entire Agreement; Amendments. This Agree-
ment, together with the Merger Agreement and the other
documents referred to therein, contains the entire agreement
between the parties hereto with respect to the subject
matter hereof and supersedes all prior and contemporaneous
agreements and understandings, oral or written, with respect
to such transactions. This Agreement may not be changed,
amended or modified orally, but may be changed only by an
agreement in writing signed by the party against whom any
waiver, change, amendment, modification or discharge may be
sought.
13. Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement
without the prior written consent of the other parties
hereto, except that the Purchaser may assign its rights and
obligations hereunder to any of its direct or indirect
wholly owned subsidiaries (including Merger Sub), but no
such transfer shall relieve the Purchaser of its obligations
hereunder if such transferee does not perform such
obligations.
14. Headings. The section headings herein are
for convenience only and shall not affect the construction
of this Agreement.
15. Counterparts. This Agreement may be executed
in any number of counterparts, each of which, when executed,
shall be deemed to be an original and all of which together
shall constitute one and the same document.
16. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware without giving effect to the principles of
conflicts of laws thereof.
17. Termination. The right to exercise the
Option granted pursuant to this Agreement shall terminate at
the earlier of (i) the Effective Time (as defined in the
Merger Agreement), (ii) termination of the Merger Agreement
in accordance with its terms other than pursuant to
Section 10.3 thereof, or (iii) sixty (60) days after the
termination of the Merger Agreement in accordance with the
terms of Section 10.3 thereof; provided that, if the Option
cannot be exercised or the Shares cannot be delivered to
Purchaser upon such exercise by reason of any applicable
judgment, decree or order or because the condition set forth
in Section 2(ii) is not yet satisfied, the expiration date
of this Agreement shall be extended until thirty days after
such impediment to exercise has been removed.
All representations and warranties contained in
this Agreement shall survive delivery of and payment for the
Shares.
<PAGE>
18. Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforce-
able, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired or
invalidated.
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Company
have caused this Agreement to be duly executed and delivered
on the day and year first above written.
ADVANCE PUBLICATIONS, INC.
By: /s/ S.I. Newhouse, Jr.
Name: S.I. Newhouse, Jr.
Title: Chairman
AMERICAN CITY BUSINESS JOURNALS, INC.
By: /s/ Ray Shaw
Name: Ray Shaw
Title: Chief Executive Officer
<PAGE>
EXHIBIT D
TEXT OF SECTION 262 OF THE DELAWARE GENERAL CORPORATION
LAW CONCERNING APPRAISAL RIGHTS OF DISSENTING STOCKHOLDERS
(Section Mark) 262. Appraisal rights.
(a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand
pursuant to subsection (d) of this section with respect to such
shares, who continuously holds such shares through the effective
date of the merger or consolidation, who has otherwise complied
with subsection (d) of this Section and who has neither voted in
favor of the merger or consolidation nor consented thereto in
writing pursuant to (Section Mark)228 of this title shall be
entitled to an appraisal by the Court of Chancery of the fair value
of his shares of stock under the circumstances described in
subsections (b) and (c) of this Section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock
corporation and also a member of record of a nonstock corporation;
the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of
a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions
thereof, solely of stock of a corporation, which stock is deposited
with the depository.
(b) Appraisal rights shall be available for the shares of any
class or series of stock of a constituent corporation in a merger
or consolidation to be effected pursuant to (Section Marks)(Section
Marks) 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series
of stock, which stock, or depository receipts in respect thereof,
at the record date fixed to determine the stockholders entitled to
receive notice of and to vote at the meeting of stockholders to
act upon the agreement of merger or consolidation, were either (i)
listed on a national securities exchange or designated as a
national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or (ii)
held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of
stock of the constituent corporation surviving a merger if the
merger did not require for its approval the vote of the holders of
the surviving corporation as provided in subsection (f) of
(Section Mark)251 of this title.
(2) Notwithstanding paragraph (1) of this
subsection, appraisal rights under this section shall be available
for the shares of any class or series of stock of a constituent
corporation if the holders thereof are required by the terms of an
agreement of merger or consolidation pursuant to (Section Mark)
(Section Mark) 251, 252, 254, 257 and 258, 263 and 264 of this
title to accept for such stock anything except:
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a. Shares of stock of the
corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other
corporation, or depository receipts in respect thereof, which
shares of stock or depository receipts at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a national market system
security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or held of record by more
than 2,000 holders;
c. Cash in lieu of fractional shares
or fractional depository receipts described in the foregoing
subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of
stock, depository receipts and cash in lieu of fractional shares or
fractional depository receipts described in the foregoing
subparagraphs a., b., and c. of this paragraph.
(3) In the event all of the stock of a subsidiary
Delaware corporation party to a merger effected under (Section
Mark) 253 of this title is not owned by the parent corporation
immediately prior to the merger, appraisal rights shall be
available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of
incorporation that appraisal rights under this section shall be
available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any
merger or consolidation in which the corporation is a constituent
corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains
such a provision, the procedures of this section, including those
set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for
which appraisal rights are provided under this section is to be
submitted for approval at a meeting of stockholders, the
corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal
rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy
of this section. Each stockholder electing to demand the appraisal
of his shares shall deliver to the corporation, before the taking
of the vote on the merger or consolidation, a written demand for
appraisal of his shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date
of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted
in favor of or consented to the merger or consolidation of the date
that the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved
pursuant to (Section Mark) 228 or 253 of this title, the surviving
or resulting corporation, either before the effective date of the
merger or consolidation or with 10 days thereafter, shall notify
each of the stockholders entitled to
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appraisal rights of the effective date of the merger or
consolidation and that appraisal rights are available for any or
all of the shares of the constituent corporation, and shall include
in such notice a copy of this section. The notice shall be sent by
certified or registered mail, return receipt requested, addressed
to the stockholder at his address as it appears on the records of
the corporation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of the notice, demand in
writing from the surviving or resulting corporation the appraisal
of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that
the stockholder intends thereby to demand the appraisal of his
shares.
(e) Within 120 days after the effective date of the
merger or consolidation; the surviving or resulting corporation or
any stockholder who has complied with subsections (a) and (d)
hereof and who is otherwise entitled to appraisal rights, may file
a petition in the Court of Chancery demanding a determination of
the value of the stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the effective date
of the merger or consolidation, any stockholder shall have the
right to withdraw his demand for appraisal and to accept the terms
offered upon the merger or consolidation. Within 120 days after the
effective date of the merger or consolidation, any stockholder who
has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of
shares not voted in favor of the merger or consolidation and with
respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. Such written statement
shall be mailed to the stockholder within 10 days after his written
request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d)
hereof, whichever is later.
(f) Upon the filing of any such petition by a
stockholder, service of a copy thereof shall be made upon the
surviving or resulting corporation, which shall within 20 days
after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment
for their shares and with whom agreements as to the value of their
shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or
resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the
Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown on
the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day
of the hearing, in a newspaper of general circulation published in
the City of Wilmington, Delaware or such publication as the Court
deems advisable. The forms of the notices by mail and by
publication shall be approved by the Court, and the costs thereof
shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall
determine the stockholders who have complied with this section and
who have become entitled to appraisal rights. The Court may
require the stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit
their certificates of stock to the Register in
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<PAGE>
Chancery for notation thereon of the pendency of the appraisal
proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to
an appraisal, the Court shall appraise the shares, determining
their fair value exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation,
together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In
determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the
surviving or resulting corporation would have had to pay to borrow
money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings
and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section
and who has submitted his certificate of stock to the Register in
Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that he is not entitled
to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value
of the shares, together with interest, if any, by the surviving or
resulting corporation to the stockholders entitled thereto.
Interest may be simple or compound, as the Court may direct.
Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and in the case of
holders of shares represented by certificates upon the surrender to
the corporation of the certificates representing such stock. The
Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the
circumstances. Upon application of a stockholder, the Court may
order all or a portion of the expenses incurred by any stockholder
in connection with the appraisal proceeding, including, without
limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares
entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal rights
as provided in subsection (d) of this section shall be entitled to
vote such stock for any purpose or to receive payment of dividends
or other distributions on the stock (except dividends or other
distributions payable to stockholders of record at a date which is
prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be
filed within the time provided in subsection (e) of this section,
or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and
an acceptance of the merger or consolidation, either within 60 days
after the effective date of the merger or consolidation as provided
in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to
an appraisal shall cease. Notwithstanding the foregoing, no
appraisal proceeding in the Court of Chancery shall be
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<PAGE>
dismissed as to any stockholder without the approval of the Court,
and such approval may be conditioned upon such terms as the Court
deems just.
(1) The shares of the surviving or resulting
corporation to which the shares of such objecting stockholders
would have been converted had they assented to the merger or
consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
D-5
<PAGE>
EXHIBIT E
August 3, 1995
The Board of Directors
American City Business Journals, Inc.
128 S. Tryon Street
Charlotte, North Carolina 28202
Dear Members of the Board:
We understand that Advance Acquisition Sub. Inc. (the
"Merger Sub"), a wholly-owned subsidiary of Advance Publications,
Inc. (the "Acquiror"), American City Business Journals, Inc., (the
"Company") and its controlling stockholder, Business Journal
Associates Limited Partnership ("BJALP") are entering into an
Agreement and Plan of Merger dated as of August 3, 1995 (the
"Merger Agreement"), whereby the Acquiror will acquire the Company
through a merger (the "Merger") of Merger Sub with and into the
Company, in which shares of Common Stock (par value $0.01 per
share) of the Company will be converted into the right to receive
$28.00 per share in cash (the "Merger Consideration").
You have requested our opinion as to the fairness, from a
financial point of view, to the stockholders of the Company of the
Merger Consideration. In connection with this opinion, we have,
among other things:
(i) Reviewed the financial terms and conditions of the
Agreement;
(ii) Reviewed certain historical business and financial
information relating to the Company;
(iii) Reviewed certain financial forecasts and other
data provided to us by the Company relating to its
business;
(iv) Held discussions with members of the senior
management of the Company with respect to the
business and prospects of the Company;
(v) Reviewed public information with respect to
certain other companies in lines of business we
believe to be generally comparable to the business
of the Company;
(vi) Reviewed the financial terms of certain business
combinations involving companies in lines of
business we believe to be generally comparable to
that of the Company;
E-1
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(vii) Reviewed the historical stock prices and trading
volumes of the Company's common stock and those of
certain public companies deemed to be generally
comparable to the Company; and
(viii) Conducted such other financial studies, analyses
and investigations as we deemed appropriate.
In addition, at the request of the Company, we have
contacted various third parties with respect to such third parties'
potential interest in the acquisition of the Company, and have
taken into account the results of such discussions in rendering
this opinion.
We have relied upon the accuracy and completeness of the
financial and other information provided by the Company to,
reviewed by or for or discussed with us or publicly available, and
have not assumed any responsibility for any independent
verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company, nor
have we been provided with any such appraisals. With respect to
financial forecasts provided by the Company to, reviewed by or for
or discussed with us, we have assumed that they have been
reasonably prepared or reviewed, as the case may be, on bases
reflecting the best currently available estimates and judgments of
management of the Company as to the future financial performance of
the Company. We assume no responsibility for and express no view
as to such forecasts or the assumptions on which they are based.
Further, our opinion is necessarily based on economic,
monetary, market and other conditions as in effect on, and the
information made available to us as of, the date hereof and does
not address the Company's underlying business decision to effect
the Merger or constitute a recommendation to any stockholder of the
Company as to how such stockholder should vote with respect to the
Merger.
In rendering our opinion, we have assumed that the Merger
will be consummated on the terms described in the Merger Agreement,
without any waiver of any material terms or conditions by the
Company.
Lazard Freres & Co. LLC ("Lazard") is acting as financial
advisor to the Company in connection with the Merger and will
receive a fee for our services, a substantial portion of which is
contingent upon the closing of the Merger. Lazard has, in the
past, acted as financial advisor to BJALP and received a fee for
such services.
It is understood that this letter may not be disclosed or
otherwise referred to without our prior consent, except as may
otherwise be required by law or by a court of competent
jurisdiction.
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Based on and subject to the foregoing and such other
factors as we deem relevant, we are of the opinion that, as of the
date hereof, the Merger Consideration is fair to the stockholders
of the Company from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By /s/ Steve Rattner
Managing Director
E-3