SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
Of the Securities Exchange Act of 1934
Date of Report: March 12, 1996
CENTRAL NEWSPAPERS, INC.
(Exact name of registrant as specified in its charter)
INDIANA 1-10333 35-0220660
(State or other jurisdiction Commission file number (I.R.S. Employer
of incorporated or organization) Identification Number)
135 North Pennsylvania Street, Suite 1200, Indianapolis, Indiana 46204
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (317) 231-9200
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 12, 1996, Central Newspapers, Inc. (the "Company") completed
the acquisition of 100% of the 2,289 outstanding shares of capital stock
of McCormick & Company, Inc., ("McCormick") a Louisiana corporation that
publishes the Alexandria, Louisiana Daily Town Talk and that owns
McCormick Graphics Co., Inc., a commercial printing company. This
acquisition was completed pursuant to the terms of the Contract to Buy
and Sell Entire Stock of McCormick & Company, Inc., ("Contract") dated
January 10, 1996.
The Contract specifies that each of the 18 individual holders (most
of whom are decendants of the founder of McCormick) of the 2,289
outstanding shares of capital stock of McCormick will receive cash
consideration of $27,086 per share for a total purchase price of
approximately $62 million. The purchase price per share is subject to
adjustments based upon changes in stockholders' equity between October
31, 1995 and February 29, 1996. There are no relationships between the
selling shareholders and the Company or its affiliates, the officers and
directors of the Company, or any associates of the officers and directors
of the Company. The total purchase price was funded with a portion of
the Company's existing investments in marketable securities.
The principles followed in determining the amount of consideration to be
paid included management's determination of the fair market value of
McCormick utilizing a projected cash flow analysis taking into account
the economic synergies arising from combining McCormick with the Company.
On March 12, 1996, the Company issued a press release relating to the
consummation of this transaction, a copy of which is attached as an
exhibit and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired described below are attached
to this report as Exhibit 99-2.
(1) Audited Consolidated Balance Sheets of McCormick & Co.,
Inc. as of December 31, 1995 and 1994 and the related
Consolidated Statements of Income, Stockholders' Equity and
Cash Flows for the years then ended (filed as an exhibit
hereto).
(b) The following historical pro forma combining financial statements of
the Company and McCormick are attached to this report as Exhibit 99-3.
(1) Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1995 and the Unaudited Pro Forma Condensed
Combined Statement of Income for the year ended December 31,
1995 (filed as an exhibit hereto).
(c) See Exhibit Index for list of exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CENTRAL NEWSPAPERS, INC.
By: /s/ Thomas K. MacGillivray
-------------------------------
Thomas K. MacGillivray
Treasurer and Chief Financial Officer
March 13, 1996
Exhibit Index
Exhibit
Number Title or Description
2-1 Contract to Buy and Sell Entire Stock of McCormick &
Company, Inc., dated January 10, 1996.
23-1 Consent of Ernst & Young LLP
99-1 Press Release
99-2 Audited Consolidated Balance Sheets of McCormick
& Company, Inc., as of December 31, 1995 and 1994 and
the related Statements of Income, Stockholders'
Equity and Cash Flows for each of the two
years ended December 31, 1995, and 1994.
99-3 Unaudited Pro Forma Condensed Combined Balance
Sheet as of December 31, 1995 and Unaudited Pro
Forma Condensed Combined Statement of Income for
the year ended December 31, 1995.
CONTRACT TO BUY AND SELL ENTIRE
STOCK OF McCORMICK & COMPANY, INC.
TO
CENTRAL NEWSPAPERS, INC.
DATE: January 10, 1996
[ORIGINAL]
<PAGE>
Table of Contents
I. SALE OF CORPORATE STOCK. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Stock Transfer. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Stock Interests . . . . . . . . . . . . . . . . . . . . . 1
II. CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Purchase Price and Payment. . . . . . . . . . . . . . . . 2
2.2 Adjustment to Base Purchase Price . . . . . . . . . . . . 2
2.3 Distribution by Escrow Agent. . . . . . . . . . . . . . . 3
III. CLOSING AND CLOSING DATE . . . . . . . . . . . . . . . . . . . . . 3
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Time and Place. . . . . . . . . . . . . . . . . . . . . 3
3.3. Effective Date of Closing. . . . . . . . . . . . . . . . 3
3.4 Conditions. . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Postponement. . . . . . . . . . . . . . . . . . . . . . 4
IV. REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . . . . . . . . . . 4
4.1 Organization, Capitalization, etc. of
McCormick and Subsidiaries. . . . . . . . . . . . . . . 4
4.2 Affiliates. . . . . . . . . . . . . . . . . . . . . . . 6
4.3 No Violation, etc. . . . . . . . . . . . . . . . . . . . 6
4.4 Financial Statements. . . . . . . . . . . . . . . . . . 6
4.5 Undisclosed Liabilities. . . . . . . . . . . . . . . . . 7
4.6 Absence of Certain Changes. . . . . . . . . . . . . . . 7
4.7 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Title to Properties, Encumbrances. . . . . . . . . . . . 9
4.9 Leases. . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Patents, Trademarks, Trade Names, Etc. . . . . . . . . . 10
4.11 Litigation. . . . . . . . . . . . . . . . . . . . . . . 10
4.12 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Employee Benefit Plans. . . . . . . . . . . . . . . . . 11
4.14 Bank Accounts and Credit Cards. . . . . . . . . . . . . 12
4.15 Contracts and Commitments. . . . . . . . . . . . . . . . 12
4.16 Environmental Matters. . . . . . . . . . . . . . . . . 13
4.17 Employees. . . . . . . . . . . . . . . . . . . . . . . . 14
4.18 Circulation and Advertising Linage. . . . . . . . . . . 15
4.19 Legal Advertisement. . . . . . . . . . . . . . . . . . . 15
4.20 No Governmental Violation. . . . . . . . . . . . . . . . 15
4.21 Condition of Machinery and Equipment. . . . . . . . . . 15
4.22 Approvals. . . . . . . . . . . . . . . . . . . . . . . . 15
4.23 Disclosure. . . . . . . . . . . . . . . . . . . . . . . 15
4.24 Operation. . . . . . . . . . . . . . . . . . . . . . . . 15
V. REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . . . . 16
5.1 Corporate Status. . . . . . . . . . . . . . . . . . . . 16
5.2 No Violations. . . . . . . . . . . . . . . . . . . . . . 16
5.3 Governmental Filing. . . . . . . . . . . . . . . . . . . 16
5.4 No Misrepresentations. . . . . . . . . . . . . . . . . . 16
5.5 Authorization. . . . . . . . . . . . . . . . . . . . . . 16
5.6 Buyer's Investigation. . . . . . . . . . . . . . . . . . 16
VI. CONDITIONS APPLICABLE TO BUYER. . . . . . . . . . . . . . . . . . . 17
6.1 Resignations. . . . . . . . . . . . . . . . . . . . . . 17
6.2 Certification and Opinion. . . . . . . . . . . . . . . . 17
6.3 Financial Condition. . . . . . . . . . . . . . . . . . . 17
6.4 Real Estate Requirements. . . . . . . . . . . . . . . . 17
6.5 Governmental Action. . . . . . . . . . . . . . . . . . . 18
6.6 Approvals. . . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Closing Balance Sheet. . . . . . . . . . . . . . . . . . 18
6.8 Hart-Scott-Rodino Filing. . . . . . . . . . . . . . . . 18
VII. CONDITIONS APPLICABLE TO SELLERS . . . . . . . . . . . . . . . . . 18
VIII. OPERATION DURING INTERIM PERIOD . . . . . . . . . . . . . . . . . 19
8.1 Liabilities. . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Debts and Loans. . . . . . . . . . . . . . . . . . . . . 19
8.3 Dividends and Stock. . . . . . . . . . . . . . . . . . . 19
8.4 Assets. . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Business. . . . . . . . . . . . . . . . . . . . . . . . 19
IX. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.1 Termination by Mutual Consent. . . . . . . . . . . . . . 20
9.2 Termination by Either Party. . . . . . . . . . . . . . . 20
9.3 Specific Performance. . . . . . . . . . . . . . . . . . 20
X. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Agreement to Indemnify by Sellers. . . . . . . . . . . . 20
10.2 Period of Claims. . . . . . . . . . . . . . . . . . . . 21
10.3 Minimum Claim. . . . . . . . . . . . . . . . . . . . . . 21
10.4 Indemnification by Buyer. . . . . . . . . . . . . . . . 21
10.5 Conditions of Indemnification. . . . . . . . . . . . . . 21
XI. ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.1 Escrow Fund. . . . . . . . . . . . . . . . . . . . . . . 22
11.2 Security Deposit. . . . . . . . . . . . . . . . . . . . 22
11.3 Distribution of the Purchase Money. . . . . . . . . . . 22
11.4 Rights of Buyer. . . . . . . . . . . . . . . . . . . . . 24
11.5 Obligations of Sellers. . . . . . . . . . . . . . . . . 24
11.6 Income of Escrow Fund. . . . . . . . . . . . . . . . . . 24
11.7 Concursus. . . . . . . . . . . . . . . . . . . . . . . . 24
11.8 Discharge of Escrow Agent. . . . . . . . . . . . . . . . 24
11.9 Compensation. . . . . . . . . . . . . . . . . . . . . . 25
11.10 Escrow Agent's Duties. . . . . . . . . . . . . . . . . . 25
11.11 Other Agreement. . . . . . . . . . . . . . . . . . . . . 25
11.12 Reasonable Reliance. . . . . . . . . . . . . . . . . . . 25
XII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1 Assignment. . . . . . . . . . . . . . . . . . . . . . . 25
12.2 Publicity. . . . . . . . . . . . . . . . . . . . . . . . 25
12.3 Access to Books and Records. . . . . . . . . . . . . . . 26
12.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . 26
12.5 Survival. . . . . . . . . . . . . . . . . . . . . . . . 26
12.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 26
12.7 Professional Fees. . . . . . . . . . . . . . . . . . . . 27
12.8 Law Governing. . . . . . . . . . . . . . . . . . . . . . 27
12.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . 27
12.10 Consents. . . . . . . . . . . . . . . . . . . . . . . . 27
12.11 Further Assurances. . . . . . . . . . . . . . . . . . . 27
12.12 Individual Covenants Not to Compete. . . . . . . . . . . 27
CONTRACT TO BUY AND SELL ENTIRE
STOCK OF McCORMICK & COMPANY, INC.
THIS AGREEMENT to buy and sell (the "Agreement"), entered into
on the dates set forth below, to be effective as of January 10,
1996 (the "Effective Date") by and between:
CENTRAL NEWSPAPERS, INC., an Indiana corporation ("Buyer");
and, each of the signatories designated below as Seller
(hereinafter collectively referred to as the "Sellers"), all of the
stockholders of McCormick & Company, Inc., a Louisiana corporation
("Corporation" and/or "McCormick"); and HIBERNIA NATIONAL BANK, a
national bank having a place of business in Alexandria, Louisiana
("Escrow Agent").
WITNESSETH:
Whereas Sellers own all of the 2,289 outstanding shares of
common stock of the Corporation; and
Whereas Buyer desires to acquire such shares from the Sellers,
and the Sellers desire to sell the same to the Buyer upon the terms
and conditions hereinafter set forth.
Now, therefore, in consideration of the premises and mutual
covenants herein contained, the parties agree as follows:
I. SALE OF CORPORATE STOCK
1.1 Stock Transfer. Sellers shall grant, bargain, sell,
transfer, assign and deliver unto Buyer and Buyer shall purchase
all of Sellers' right, title and interest in and to the 2,289
shares of stock (the "Stock") of the Corporation constituting all
of the capital stock of the Corporation outstanding, said Stock
being represented by the certificates of stock representing the
number of outstanding shares indicated and appearing opposite the
name of each stockholder on Exhibit 1.1 attached hereto.
1.2 Stock Interests. Sellers acknowledge that this sale
of Stock shall and does constitute a full and complete transfer by
Sellers to Buyer of all of Sellers' rights, title, interest and
claims in, to and against the Corporation, including any right,
title, interest or claim which may be represented by any document
or evidence other than the Stock herein transferred. Incident
thereto, to the extent necessary, Sellers do hereby agree to grant,
bargain, sell, transfer, assign and deliver unto Buyer and do
waive, relinquish and release in favor of Buyer, any rights, title,
interest, claim or demand which Sellers may have in, to, or against
Corporation, whether such interest exists from Sellers' status as
shareholder, employee, independent contractor, officer, director,
creditor, or otherwise.
II. CONSIDERATION
2.1 Purchase Price and Payment. The purchase price for
all shares shall be Sixty-Two Million and No/100 ($62,000,000.00)
Dollars (the "Base Purchase Price") computed on the basis of
Twenty-Seven Thousand Eighty-Six and No/100 ($27,086.00) Dollars
per share. Payment shall be made by certified or bank cashier's
checks payable to the order of, or wire transfers of federal funds
to, the Escrow Agent as follows: (a) a deposit of $1,000,000.00
upon execution of this Agreement (the "Security Deposit"); and (b)
the balance of Sixty-One Million and No/100 ($61,000,000.00)
Dollars upon delivery to Buyer of the Stock of the Corporation at
the Closing (the "Balance"). The Security Deposit and Balance are
hereinafter collectively referred to as the "Purchase Money."
2.2 Adjustment to Base Purchase Price. The Base
Purchase Price shall be adjusted as of the Closing pursuant to the
following:
(a) Buyer and Sellers acknowledge that the Base
Purchase Price has been negotiated based upon, in
part, the financial condition of McCormick and
Subsidiaries as reflected on the Current Balance
Sheet described in Section 4.4(b) hereof and shown
on Exhibit 4.4(b-1). The net worth of McCormick
and Subsidiaries, as reflected on the Current
Balance Sheet, shall be referred to herein as the
"Base Net Worth".
(b) The Sellers will cause, at their expense, Ernst &
Young, Certified Public Accountants, to prepare a
balance sheet of McCormick and its Subsidiaries as
of the last day of the calendar month immediately
preceding the date on which the closing
contemplated by this Agreement will occur (the
"Closing Balance Sheet"). The Closing Balance
Sheet will be certified by Ernst & Young as having
been prepared in a manner consistent with the way
the Current Balance Sheet was prepared using
similar practices, procedures, methods and
assumptions. The net worth of McCormick and
Subsidiaries as set forth on the Closing Balance
Sheet shall be referred to as the "Closing Net
Worth".
(c) The Base Purchase Price shall be adjusted in either
of the following circumstances:
(i) If the Closing Net Worth exceeds the
Base Net Worth, the Base Purchase Price
shall be increased by the amount that the
Closing Net Worth exceeds the Base Net
Worth (the "Positive Adjustment"), and in
such case, the Positive Adjustment shall
be added to and become part of the
Balance to be paid by Buyer pursuant to
Section 2.1(b) above.
(ii) If the Base Net Worth exceeds the Closing
Net Worth, the Base Purchase Price shall
be reduced by the amount that the Base
Net Worth exceeds the Closing Net Worth
(the "Negative Adjustment"), and in such
case, the Negative Adjustment shall be
subtracted from and reduce the Balance to
be paid by Buyer to Sellers pursuant to
Section 2.1(b) above.
2.3 Distribution by Escrow Agent. The Escrow Agent
shall receive and distribute the Purchase Money (as adjusted
pursuant to Section 2.2 above) as provided in Article XI below.
III. CLOSING AND CLOSING DATE
3.1 Closing. The term "Closing" as used herein shall
contemplate the execution of all documents necessary to transfer
the Stock herein described by Seller unto Buyer and the transfer by
Buyer unto Seller of all consideration herein agreed to be paid,
pursuant to the terms of this Agreement, together with all other
documents contemplated by this Agreement.
3.2 Time and Place. The Closing shall occur on
March 12, 1996, (the "Closing Date"), at the offices of Provosty,
Sadler & deLaunay, 934 Third Street, Suite 901, Alexandria,
Louisiana, at 10:00 a.m., or such other place and time as is
mutually agreed upon by the parties.
3.3. Effective Date of Closing. The sale and transfer of
Stock by Seller unto Buyer shall be effective in all respects as of
12:01 a.m. on the Closing Date, notwithstanding the fact that the
documents contemplated by this Agreement shall in fact be executed
at an earlier or later time.
3.4 Conditions. In the event there is a failure of any
condition set forth in this Agreement, between the date of this
Agreement and the Closing Date, the party for whose benefit the
condition exists may elect to either (i) postpone the Closing Date
to a date that is ten (10) days following the satisfaction of such
condition, provided such date is not beyond the Termination Date in
Section 9.2, or (ii) proceed with the Closing to the extent
performance is tendered, and seek indemnification or exercise any
right or remedy accruing to such party.
3.5 Postponement. The Closing may be postponed by the
mutual consent of both parties hereto.
IV. REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby represent and warrant as follows:
4.1 Organization, Capitalization, etc. of McCormick and
Subsidiaries.
(a) McCormick & Company, Inc. is a corporation
duly organized, validly existing and in good
standing under the laws of the State of
Louisiana. McCormick has the corporate power
and authority to own and operate its
properties and assets, and to operate and
carry on its businesses as presently
conducted.
(b)(i) The authorized capital stock of McCormick
consists of 10,000 shares of capital stock
(par value $100 each), of which 4,000 shares
are issued, with 1,711 being in Treasury and
2,289 are outstanding and are and will be
fully paid and nonassessable at and
immediately prior to the Closing.
(ii) The Sellers, as a group own all of the
presently outstanding shares of McCormick
capital stock, and each of the Sellers will,
at and immediately prior to the Closing, own
the number of Shares set forth opposite his
name on Exhibit 1.1 hereto, in each case free
and clear of all liens, claims, options,
charges or encumbrances of whatsoever nature.
(iii) Except as provided in Exhibit 4.1(b)(iii),
there are no outstanding options or other
agreements of any nature whatsoever relating
to the issuance of any shares of capital stock
of McCormick.
(iv) This Agreement has been duly executed by each
Seller and constitutes the legal, valid, and
binding obligation of all Sellers.
(c) Exhibit 4.1(c) hereto sets forth the name, the
jurisdiction of incorporation and the
capitalization of each corporation of which
McCormick owns, as of the date of this
Agreement or will own at and immediately prior
to the Closing (directly or indirectly,
through another corporation or otherwise),
thirty-three (33%) percent or more of the
capital stock and the number of shares (and
percentage of outstanding shares) of each
class of capital stock of each such
corporation so owned by McCormick as of the
date of this Agreement or to be so owned by
McCormick at and immediately prior to the
Closing. Such corporations are referred to
herein as "Subsidiaries" of McCormick. Each
McCormick Subsidiary is a corporation duly
organized, validly existing and in good
standing under the laws of its jurisdiction of
incorporation, and has the corporate power and
authority to carry on its business as
presently conducted. The shares of capital
stock and other securities of each McCormick
Subsidiary stated in Exhibit 4.1(c) hereto are
or will be owned by McCormick free and clear
of all liens, claims, options, charges, or
encumbrances of whatsoever nature, and such
shares are or will be validly issued, fully
paid and nonassessable. There are no
outstanding options or other agreements of any
nature whatsoever relating to the issuance of
any shares of capital stock or other
securities of any McCormick Subsidiary.
(d) The copies of the Certificate of
Incorporation, and all amendments thereto, of
McCormick and each McCormick Subsidiary,
certified by the appropriate authorities of
their respective jurisdictions of
incorporation, and of the By-Laws, as amended
to date, of McCormick and each McCormick
Subsidiary, which have heretofore been
delivered to Buyer, are complete and correct
as of the date hereof.
(e) At the Closing, the Sellers will deliver to
Buyer certificates of good standing with
respect to McCormick and each McCormick
Subsidiary, certified (as of the latest
practicable date prior to the Closing) by the
appropriate authorities of their respective
jurisdictions of incorporation and of the
respective jurisdictions in which they are
qualified to do business as foreign
corporations.
(f) Neither McCormick, nor any McCormick
Subsidiary is in violation of, or under
investigation with respect to, and none have
been charged with or received any notice of,
any violations of or non-conformities with any
statute, ordinance, law, rule, regulation,
ruling or judgment of any governmental
authority or court applicable to McCormick or
the McCormick Subsidiaries or their assets.
(g) McCormick and the McCormick Subsidiaries have
all governmental licenses, permits,
authorizations, registrations and approvals
that are necessary to own and use their
properties and conduct their businesses in the
manner in which they have been conducted.
4.2 Affiliates. None of the Sellers has any direct or
indirect interest in any corporation or business which is involved
in any way with, competes with, conducts any business similar to
any business conducted by, or conducts any business with McCormick
or any McCormick Subsidiary, except for the possible ownership of
not more than 1 percent of the outstanding equity securities of any
corporation whose shares are regularly traded on any stock exchange
or in the over-the-counter market.
4.3 No Violation, etc. Except as disclosed in this
Agreement, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby does not and
will not violate any provisions of any agreement or violate or
conflict with any other restrictions of any kind or character to
which McCormick, McCormick Subsidiaries or any of the Sellers is a
party or by which any of them is bound and Sellers have the
unqualified right to sell, assign and deliver the Shares to Buyer,
and the unqualified right upon consummation of the transactions
contemplated by this Agreement, to pass to Buyer good and valid
title to the Shares, free and clear of all liens, claims, options,
charges or encumbrances of whatsoever nature.
4.4 Financial Statements.
(a) The Sellers have delivered to the Buyer a
report prepared by Ernst & Young, dated
December 31, 1994, which is an audited,
certified, consolidated and/or a combined
balance sheet or balance sheets of McCormick
and Subsidiaries.
(b) The Sellers have prepared a current balance
sheet and income statement of McCormick and
its Subsidiaries as of October 31, 1995 (the
"Current Balance Sheet"), using the same
practices and procedures as used by Ernst &
Young for the audited December 31, 1994
report. Ernst & Young has reviewed the
Current Balance Sheet which is attached hereto
as Exhibit 4.4(b-1). This Current Balance
Sheet is true and complete and fairly
represents the financial condition of
McCormick and Subsidiaries - assets,
liabilities, income and expenses as of October
31, 1995, all in conformity with generally
accepted accounting principles consistently
applied. The reserves shown on the Current
Balance Sheet are adequate and sufficient for
the purposes thereof.
4.5 Undisclosed Liabilities. Except as and to the
extent reflected or reserved against in the Current Balance Sheet
or in Exhibit 4.5 attached hereto, and except for purchase or sale
contracts or commitments in the ordinary course of business and not
required to be disclosed in any exhibit hereto by reason of
specific exclusions in this Agreement, neither McCormick nor any
McCormick Subsidiary as of such date had any liabilities or
obligations of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due (including, without
limitation, liabilities for taxes in respect of or measured by the
income of McCormick or any McCormick Subsidiary through October 31,
1995, and liabilities for taxes arising out of any transaction of
McCormick or any McCormick Subsidiary entered into prior to such
date or out of any state of facts existing prior thereto).
Furthermore, none of the Sellers knows or has any reasonable ground
to know of any basis for the assertions against McCormick or any
McCormick Subsidiary of any liability or obligation as of
October 31, 1995 of any nature or in any amount not fully reflected
or reserved against on the Current Balance Sheet, except as set
forth in the exhibits attached hereto and except for purchase or
sale contracts or commitments in the ordinary course of business
and not required to be disclosed in any exhibit hereto by reason of
specific exclusions in this Agreement.
4.6 Absence of Certain Changes. Except as disclosed in
Exhibit 4.6 or in this Agreement or any other exhibit hereto,
neither McCormick nor any McCormick Subsidiary has since the date
of the Current Balance Sheet:
(a) Suffered any material adverse change in its
financial condition, assets, liabilities or
business;
(b) Incurred any obligation or liability (whether
absolute, accrued or contingent) other than in
the ordinary course of its business and
consistent with the past practice;
(c) Paid any claim or discharged or satisfied any
lien encumbrance or liability (whether
absolute, accrued or contingent), other than
liabilities shown or reflected in the Current
Balance Sheet or incurred since the Current
Balance Sheet in the ordinary course of
business and consistent with past practice;
(d) Permitted or allowed any of its assets,
tangible or intangible, to be mortgaged,
pledged or subjected to any liens or
encumbrances other than encumbrances excepted
from the provisions of Section 4.8 hereof;
(e) Written down the value of any inventory or
written off as uncollectible any notes or
accounts receivable or any portion thereof,
except for write-offs and write-downs of such
items in the ordinary course of business;
(f) Canceled any other debts or claims or waived
any rights of substantial value or sold or
transferred any of its assets except in the
ordinary course of business and consistent
with past practice;
(g) Disposed of or permitted to lapse any material
patents, trademarks or copyrights or any
material patent, trademark, or copyright
applications or disposed of or disclosed to
any person any trade secrets, formula,
process, or know-how;
(h) Granted any general uniform increase in the
compensation of employees (including any such
increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or
any substantial increase in any such
compensation payable or to become payable by
it to any officer or employee;
(i) Made any capital expenditures or commitments
in excess of an aggregate of $10,000 for
McCormick and Subsidiaries for additions to
property, plant, or equipment;
(j) Except to the extent disclosed on Exhibit 4.6
hereof, declared, paid or set aside for
payment to its stockholders any extraordinary
dividend or other distribution in respect of
its capital stock or redeemed or purchased or
otherwise acquired any of its capital stock or
any options relating thereto or agreed to take
any such action;
(k) Made any material change in any method of
accounting or accounting practice;
(l) Paid any amounts to or in respect of, or sold
or transferred any assets to, any company, a
substantial portion of the capital stock of
which is owned by McCormick or any McCormick
Subsidiary or owned by the Sellers
individually or as a group; or
(m) Experienced any material labor difficulty.
4.7 Tax Returns. McCormick and each McCormick
Subsidiary have duly filed all tax reports and returns required to
be filed by them and have duly paid all taxes and other charges due
or claimed to be due from them by federal, state or local taxing
authorities (including, without limitation, those due in respect of
properties, income, franchises, licenses, sales and payrolls); and,
except as may be noted on the Current Balance Sheet there are no
pending questions relating to, or claims asserted for, taxes or
assessments against McCormick or any McCormick Subsidiary (except
for any liabilities that may result from action taken by Buyer
after the Closing).
4.8 Title to Properties, Encumbrances. McCormick and
McCormick Subsidiaries have good and marketable title to all of
their properties and assets, real and personal, tangible and
intangible, including, without limitation, the properties and
assets reflected in the Current Balance Sheet (except for inventory
and except for other properties and assets not in excess of $5,000
for McCormick and $5,000 for McCormick Subsidiaries which have been
sold or otherwise disposed of in the ordinary course of business).
All such properties and assets (as well as any other properties and
assets used in the businesses of McCormick and Subsidiaries) are
subject to no mortgage, pledge, lien, conditional sale agreement,
encumbrance or charge of whatsoever nature, except for liens shown
on such balance sheets as securing specified liabilities (with
respect to which no default exists), liens which have been
disclosed to Buyer (and are reflected on Exhibit 4.8(c)), liens for
current taxes not yet due, and minor imperfections of title and
encumbrances, if any, which are not in the aggregate substantial in
amount, do not materially detract from the value of the property
subject thereto or materially impair the operations of McCormick or
any Subsidiary, and have arisen only in the ordinary course of
business and consistent with past practice. The assets described
on Exhibit 4.8(a) (the "Leased Assets") do not belong to McCormick,
but are available for use by McCormick pursuant to valid leases or
other use agreements, which leases are current, not in default, and
more particularly described in Section 4.9 hereof. The assets
described in Exhibit 4.8(b) (the "Excluded Assets") either do not
belong to McCormick, or, at the time of the Closing, will not
belong to McCormick, but in any event, will not be available for
use by McCormick or Buyer after the Closing.
4.9 Leases. Exhibit 4.9 annexed hereto contains an
accurate description of the terms of all leases pursuant to which
either McCormick or any McCormick Subsidiary leases real or
personal property. All such leases are valid and in full force and
effect.
4.10 Patents, Trademarks, Trade Names, Etc. Except as
set forth in Exhibit 4.10 annexed hereto, there are no patents,
patent applications, trademarks, trade names, copyrights or
licenses presently owned or held by McCormick or any McCormick
Subsidiary or under which McCormick or any McCormick Subsidiary
holds any license; none of the Sellers knows or has any reason to
believe that any of the products manufactured or sold by McCormick
or any McCormick Subsidiary , or any of the processes or
designations used in their businesses, infringes on any patents,
trademarks or copyrights; McCormick and each McCormick Subsidiary
have the sole and exclusive right to manufacture and market their
existing products under the names set forth on Exhibit 4.10, except
the names stated as not registered; none of the Sellers knows or
has any reason to believe that there is any claim or claims of
third parties to the use of such names set forth on Exhibit 4.10.
4.11 Litigation. Except as set forth on Exhibit 4.11
annexed hereto, there are no actions, proceedings, or
investigations pending, or to the knowledge of the Sellers
threatened, against McCormick or any McCormick Subsidiary, nor does
any of the Sellers know or have any reasonable ground to know of
any basis for any such action, proceeding, or investigation. None
of the Sellers knows or has any reason to believe that there is any
event or condition of any kind or character pertaining to the
business or assets of McCormick or any McCormick Subsidiary that
may materially adversely affect any such business or assets.
4.12 Insurance. The policies of fire, liability,
workmen's compensation and other forms of insurance described in
Exhibit 4.12 annexed hereto are in effect with respect to McCormick
and Subsidiaries; are valid, outstanding and enforceable policies;
in the Sellers' reasonable opinion provide adequate insurance
coverage for the assets and operations of McCormick and
Subsidiaries; and such policies or comparable policies will by
their terms (absent cancellation after the Closing) remain in full
force and effect for at least 30 days after the Closing.
4.13 Employee Benefit Plans. Exhibit 4.13 annexed hereto
sets forth a description of the retirement, savings, medical, life
insurance and disability benefit plans of McCormick and
Subsidiaries (whether formal or informal), and with respect
thereto, Sellers warrant that:
(a) All employee benefit plans of McCormick and
McCormick Subsidiaries that are subject to
Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, ("ERISA")
are in compliance in all material respects
with all laws, regulations, and other
requirements applicable to such ERISA plans
the breach or violation of which could
(singularly or in the aggregate) have a
materially adverse effect on McCormick or the
plans.
(b) All employee benefit plans that are intended
to be qualified plans under Sections 401(a) or
501 of the Internal Revenue Code (the "Code")
are, as currently stated, in compliance in all
material respects with all applicable
requirements of the Code (except requirements
that may be satisfied by a retroactive
amendment), and favorable determination
letters have been received from the IRS with
respect to each such plan stating that each,
in its current form, is qualified and
satisfies all applicable provisions of the
Code.
(c) No employee benefit plan to which Section 4021
of ERISA applies has been partially or
completely terminated nor has there been a
"reportable event," as the term is defined in
Section 4043(b) of ERISA, with respect to an
ERISA plan since the effective date of Section
4043(b).
(d) Each employee benefit plan that is subject to
the continuous coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act
of 1985 ("COBRA") has satisfied in all
material respects all applicable requirements
of COBRA for all plan years beginning after
July 1, 1986.
4.14 Bank Accounts and Credit Cards. Exhibit 4.14(a)
annexed hereto sets forth the names and locations of all banks,
bank accounts, certificates of deposit and safe deposit boxes in
which McCormick and Subsidiaries have accounts and the names of all
persons authorized to sign thereon. Exhibit 4.14(b) annexed hereto
sets forth the names of all companies with whom McCormick and
Subsidiaries have charge accounts for which charge cards have been
issued.
4.15 Contracts and Commitments. Except for contracts set
forth in Exhibit 4.15 annexed hereto or in this Agreement and the
exhibits hereto; and except for contracts which are incurred in the
normal course of business, have expiration dates within twelve (12)
months of the Effective Date of this Agreement and the payments
incident thereto are reflected on and disclosed in the financial
statements of McCormick and Subsidiaries previously provided to
Buyer:
(a) Neither McCormick nor any McCormick Subsidiary
has any contracts or commitments which are
material to the business, operations or
financial condition of McCormick or such
McCormick Subsidiary other than those
described in, or incurred in the ordinary
course of business and not required to be
described in, this Agreement, any of the
exhibits annexed hereto or pursuant hereto by
reason of a specific exclusion contained
herein;
(b) None of the Sellers knows or has any reason to
believe that there are any purchase
commitments by McCormick or any McCormick
Subsidiary in excess of the normal, ordinary
and usual requirements of the business of
McCormick or such McCormick Subsidiary or at
any excessive price;
(c) None of the Sellers knows or has any reason to
believe that there are any outstanding
contracts or commitments which in the
aggregate will result in any material loss to
McCormick or any McCormick Subsidiary upon
completion of performance thereof, after
allowance for direct distribution expenses.
None of the Sellers knows or has any reason to
believe that there are any outstanding
contracts, bid or sales or service proposals
quoting prices which in the aggregate will not
result in a normal profit to McCormick or any
McCormick Subsidiary;
(d) Neither McCormick nor any McCormick Subsidiary
has given any irrevocable power of attorney to
any person, firm or corporation for any
purpose whatsoever;
(e) Neither McCormick nor any McCormick Subsidiary
has any employment agreements, or any
agreements that contain any severance or
termination pay liabilities or obligations;
(f) Neither McCormick nor any McCormick Subsidiary
is presently paying any pension, deferred
compensation or retirement allowance to anyone
except as set forth on Exhibit 4.13.
(g) Neither McCormick nor any McCormick Subsidiary
nor any of the Sellers has received any notice
that McCormick or any McCormick Subsidiary is
in default under any contracts made or
obligations owed by it, and none of the
Sellers knows or has any reason to believe
that there is any basis for any valid claim of
default;
4.16 Environmental Matters.
(a) All properties owned or used by the
Corporation and the Subsidiaries have been
operated in compliance with all federal, state
and local environmental laws, rules and
regulations; and, the Corporation and its
Subsidiaries are not liable under any federal,
state and local environmental laws, rules and
regulations;
(b) Neither the Corporation nor any of the
Subsidiaries has received written notification
from any governmental authority with respect
to current, existing violations or liabilities
relating to the Corporation or the
Subsidiaries of any of the laws referred to in
clause (a) above, or pursuant to any of the
respective implementing regulations to such
laws, rules or regulations; and
(c) Neither the Corporation 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.
(d) Seller has, at Seller's expense, engaged
Jacobs Engineering Group, Inc. to conduct two
(2) Phase I Environmental Site Assessments
(the "Environmental Assessments") covering all
of the real estate owned by McCormick and its
Subsidiaries. The Environmental Assessment is
attached hereto as Exhibit 4.16.
(e) Notwithstanding anything contained to the
contrary in this Section 4.16 above, Sellers
acknowledge that McCormick received on January
8, 1996, verbal notification from the
Department of Environmental Quality that a
complaint had been filed against McCormick
with respect to McCormick's demolition of the
building and improvements (the "Wellan's
Building") located in Square 22 of Old Town
Alexandria (the "Wellan's Environmental
Complaint"). No written complaint has yet
been received by Sellers, but Sellers have
been advised by the Department of
Environmental Quality that a written complaint
is forthcoming.
4.17 Employees. Exhibit 4.17 contains a true and correct
list of all current employees of McCormick and Subsidiaries
including for each: date of birth, date of employment, department,
and rate of compensation, as of the date of this Agreement.
Neither McCormick, Subsidiaries or Sellers have made any agreements
or entered into any arrangements with any employees or independent
contractors which would have the effect of depriving the
Corporation of their services after the Closing. There has been no
formal or informal request to McCormick or any McCormick Subsidiary
for collective bargaining or an employee election from any union or
from the National Labor Relations Board or any other activity
pertaining to the unionization or other similar organization of any
of McCormick's employees. There is no unfair labor practice
complaint against McCormick or any McCormick Subsidiary pending
before any court or governmental authority, and there is no labor
strike, dispute, slow down or stoppage, or any union organizing
campaign, pending or threatened against or involving McCormick or
any McCormick Subsidiary.
4.18 Circulation and Advertising Linage. Exhibit 4.18
attached hereto accurately describes in all material respects the
latest circulation figures and year to date advertising linage sold
for the Alexandria Daily Town Talk newspaper (the "Newspaper") for
the period beginning January 1, 1995 and ending October 31, 1995.
4.19 Legal Advertisement. The Newspaper is duly
qualified under the laws of Louisiana as the official journal of
the governmental units described in Exhibit 4.20, and it is
authorized to publish notices and advertising on their behalf.
4.20 No Governmental Violation. Neither the execution or
delivery of this Agreement nor the consummation of the transactions
contemplated hereby will constitute a violation of any rule,
regulation, order, judgment or decree of any court or of any local
government.
4.21 Condition of Machinery and Equipment. To the best
of the reasonable knowledge and belief of Sellers, all buildings,
structures, fixtures and improvements, and all machinery and
equipment of McCormick and its Subsidiaries are structurally sound
(with no known defect material to the suitability thereof to
present operations) and in good operating condition and repair.
Sellers have not received notification that McCormick or its
Subsidiaries are in violation of any applicable building, zoning or
other law, ordinance or regulation in respect of its real estate
and equipment, and none of the Sellers have any reason to believe
that such violation exists.
4.22 Approvals. Except for compliance with the
Hart-Scott-Rodino Antitrust Compliance Improvement Act, no approval
of or filing with any person, public or private, is required to
permit Sellers to execute and deliver this Agreement, or to
consummate the sale transaction described herein or to comply with
and fulfill the terms hereof.
4.23 Disclosure. The Sellers have herein disclosed to
Buyer all facts material to the assets and business of McCormick
and Subsidiaries other than facts which they do not know or have
reason to know. No representation or warranty by the Sellers
contained in this Agreement, and no statement contained in any
certificate, exhibit, list or other instrument furnished to Buyer
pursuant to the provisions hereof, contains any untrue statement of
a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading.
4.24 Operation. Between the date of this Agreement and
the Closing, Sellers will cause the Corporation to be operated in
accordance with the conditions set forth in Section VIII.
V. REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each of the Sellers that:
5.1 Corporate Status. The Buyer is a corporation, duly
organized, validly existing, and in good standing under the laws of
the State of Indiana.
5.2 No Violations. Neither the execution nor the
delivery of this Agreement nor the consummation of the transactions
contemplated thereby, will result in the breach of any term or
provision of, or constitute a default under, or accelerate or
augment the performance otherwise required under, any charter
provision, bylaw, or any material agreement, indenture, instrument,
order, law or regulation to which Buyer is a party or which is
otherwise applicable to Buyer.
5.3 Governmental Filing. All notices, reports or other
filings required to be made by Buyer with, and any consents,
registrations, approvals, permits or authorizations required to be
obtained by Buyer 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 Buyer or the
consummation by the Buyer of the transactions contemplated hereby,
shall be made by Buyer at Buyer's expense.
5.4 No Misrepresentations. None of the information
contained in the representations and warranties of Buyer set forth
in this Agreement, or in any information delivered or to be
delivered by Buyer contains or will contain any untrue statement of
a material fact or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
5.5 Authorization. The execution and delivery of this
Agreement by the Buyer has been duly authorized by proper corporate
action, and on the Closing Date the Buyer will have all necessary
corporate power and authority to consummate the transactions
provided herein.
5.6 Buyer's Investigation. Buyer is an informed and
sophisticated buyer experienced in the evaluation and purchase of
companies such as the Corporation. Buyer 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. Buyer acknowledges that
in entering into this Agreement and in consummating the other
transactions contemplated herein, Buyer has relied upon its own
investigation and analysis, and upon the information provided by
Sellers and the Sellers' representations and warranties contained
in this Agreement.
VI. CONDITIONS APPLICABLE TO BUYER
Buyer's obligations to complete the transactions provided
herein shall be subject to the performance by the Sellers of all of
the actions and obligations to be performed by them on or before
the Closing Date, to the material accuracy and correctness of the
representations and warranties of the Sellers contained herein, and
to the further condition that:
6.1 Resignations. On or before the Closing Date, the
Sellers shall have caused the resignation of the officers and
directors of the Corporation and Subsidiaries.
6.2 Certification and Opinion. The Sellers shall have
delivered to the Buyer on the Closing Date (i) a certificate of the
Sellers to the effect that the representations and warranties of
the Sellers contained herein are true and correct on and as of the
Closing Date with the same effects as if made on and as of the
Closing Date, and (ii) the opinion of Provosty, Sadler & deLaunay,
Esqs., dated as of the Closing Date, covering the items referred to
in Section 4.1(a), (b), (c) and (g), and 4.3.
6.3 Financial Condition. The Sellers shall have
furnished to the Buyer on the Closing Date a certificate or letter
from Thomas J. Hardin, Treasurer of the Corporation, as of the
Closing Date, stating that there has been no change in the
capitalization of the Corporation nor any change in its financial
condition or assets other than changes arising out of the ordinary
course of business, none of which have been materially adverse.
6.4 Real Estate Requirements. As evidence of title to
the three parcels of real property owned by McCormick, and used as
its main office, its main printing plant for the Newspaper, and its
main plant for McCormick Graphics (collectively, the "Operations
Real Estate"), which three parcels of real property are more
particularly described on Exhibit 6.4 attached hereto, Sellers, at
their expense, shall have obtained and provided to Buyer the
following:
(a) Title Insurance: An owner's policy of title
insurance, issued by a title insurance company
satisfactory to Buyer ("Title Insurer"),
containing an ALTA Form 3.1 Zoning Endorsement
and access and survey endorsements for the
Operations Real Estate (the "Title
Insurance"). The Title Insurance shall insure
good and marketable fee simple title in
McCormick for each parcel of the Operations
Real Estate, subject only to (i) liens for
current taxes not yet due and payable,
(ii) mortgages described on Exhibit 4.8(c)
attached hereto, (iii) specifically identified
easements, rights of way, and other
encumbrances on the Operations Real Estate as
are shown in the public records and which do
not detract from the current use of the
Operations Real Estate, and (iv) such other
encumbrances as may be satisfactory to Buyer
(collectively, the "Permitted Encumbrances").
The Title Insurance shall be in the amount of
Five Million and No/100 ($5,000,000.00)
Dollars.
(b) Survey. A survey of the Operations Real
Estate performed by an engineer or surveyor
satisfactory to Buyer, which meets the minimum
standard detail requirements for Louisiana
land title surveys, and which is certified to
McCormick and Title Insurer as of a current
date (the "Survey"). Each Survey shall be
completed in accordance with the requirements
described on Exhibit 6.4(b) attached hereto.
6.5 Governmental Action. No order, decree or ruling of
any governmental authority or court shall have been entered, and no
governmental or other action, suit, claim, investigation or
proceeding shall be pending or threatened, challenging the
legality, validity, or propriety of, or otherwise relating to, the
transactions described herein.
6.6 Approvals. Buyer shall have obtained each and every
approval which is required to permit McCormick and McCormick
Subsidiaries to continue to conduct their businesses and operations
after the closing in a manner consistent with that in which they
are presently conducted. Buyer shall be required to make a good
faith, affirmative effort to satisfy this condition.
6.7 Closing Balance Sheet. Seller shall have provided
to Buyer the Closing Balance Sheet prepared in the manner required
by Section 2.2(b) of this Agreement.
6.8 Hart-Scott-Rodino Filing. Buyer and Seller shall
have completed all filings required by the Hart-Scott-Rodino
Antitrust Improvements Act and have satisfied any request by the
government for further information and all time periods for the
government to request further information under this Act shall have
expired. Buyer shall be required to make a good faith, affirmative
effort to satisfy this condition.
VII. CONDITIONS APPLICABLE TO SELLERS
The Sellers' obligations to complete the transactions provided
herein shall be subject to the performance by the Buyer of all of
the obligations to be performed by it on or before the Closing
Date, to the accuracy and correctness of the representations and
warranties of the Buyer contained herein, and to the further
condition that the Buyer shall have delivered to the Sellers on the
Closing Date the opinion of Barnes & Thornburg, covering the items
referred to in Section 5.1, 5.2, and 5.5.
VIII. OPERATION DURING INTERIM PERIOD
From the date hereof to the Closing Date, the Sellers shall
continue to conduct the business and operations of the Corporation
in the same manner in which they have heretofore been conducted,
and shall maintain its books of accounts in a manner which fairly
and accurately reflects its income, expenses, assets and
liabilities in accordance with generally accepted accounting
principles consistently applied. During such period, unless the
Buyer may have given its consent thereto in writing, the
Corporation will not, and the Sellers will not cause the
Corporation to:
8.1 Liabilities. Incur any obligation or liability,
absolute or contingent, other than current liabilities incurred in
the ordinary and usual course of its business.
8.2 Debts and Loans. Incur any indebtedness for
borrowed money; make any loans or advances to any individual, firm,
or corporation, or assume, guarantee, endorse, or otherwise become
liable for the obligations of any other individual, firm, or
corporation.
8.3 Dividends and Stock. Except to the extent disclosed
on Exhibit 4.6, declare or pay any dividends on its capital stock,
or otherwise acquire for value any of its outstanding capital
stock, or issue, sell, or contract to sell any equity or debt
securities.
8.4 Assets. Subject any of its properties or assets to
any mortgage, pledge, security interest, or lien, except
encumbrances of the character heretofore incurred in the ordinary
and usual course of its business; sell or transfer any or its
properties; or use any of its assets or properties except for
proper corporate purposes.
8.5 Business. Make any investment of a capital nature,
enter into any long-term contracts or commitments, or modify,
amend, or terminate any existing agreement except in the ordinary
and usual course of its business.
IX. TERMINATION
9.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Closing by the mutual
consent of Buyer and the Corporation.
9.2 Termination by Either Party. This Agreement may be
terminated by either Buyer or Seller if (i) the Closing has not
occurred by April 30, 1996 (the "Termination Date"), or (ii) if
there has been a material breach by either Buyer or Sellers of any
of their 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 however not to extend past the Termination Date.
9.3 Specific Performance. In the event of Termination
or inability to close resulting from either party's nonperformance
or material breach of this Agreement, the other party shall have,
and may exercise, any and all rights and remedies provided by law
and this Agreement including, but not limited to, the right to
retain the Security Deposit and to seek specific performance.
X. INDEMNIFICATION
10.1 Agreement to Indemnify by Sellers. Subject to the
Limitation Amount hereinafter set forth, Sellers hereby, jointly,
severally and in solido, agree to indemnify, defend and hold
harmless Buyer and McCormick and Subsidiaries from and against all
demands, claims, actions, assessments, losses, damages,
liabilities, costs and reasonable expenses (including, without
limitation, interest, penalties and reasonable attorneys' fees and
expenses) (collectively the "Buyer's Claims"), asserted against or
imposed upon or incurred by Buyer or Corporation after the Closing
Date (a) resulting from or by reason of any facts constituting a
breach of any representation or warranty of the Sellers contained
in or made pursuant to this Agreement, or (b) resulting from any
tax claim asserted against Buyer with respect to any taxes relating
to the operation of the Corporation through the Closing Date, or
(c) resulting from any environmental contamination of the
Operations Real Estate or any other violation of any environmental
law or standard prior to the Closing Date. With respect to any
claim for indemnity pursuant to this paragraph, the collective
liability of all Sellers, as a group, shall be limited to the net
cost of Buyer's claims after taking into account any tax benefits
and insurance proceeds and, provided, however, that the liability
of all Sellers, as a group, for all claims made pursuant to this
paragraph, shall not exceed, in the aggregate the sum of Two
Million and No/100 ($2,000,000.00) Dollars plus one hundred (100%)
percent of any fine, penalty, and/or curative action and/or expense
incurred by McCormick and Subsidiaries incident to the Wellan's
Environmental Complaint (the "Limitation Amount"). In addition,
the "Limitation Amount" with respect to any one Seller owning less
than five (5%) percent of the outstanding stock of McCormick as
reflected on Exhibit 1.1 shall not exceed that individual Seller's
proportionate share of the Purchase Money, determined by
multiplying the entire Purchase Money as determined in Paragraph
2.1 (as it may be adjusted by Paragraph 2.2) by that Seller's
percentage interest of the Corporation as reflected on Exhibit 1.1.
For purposes of this Agreement, Joe D. Smith, Jr. shall not be
considered to be a Seller owning less than five (5%) percent of the
outstanding stock of McCormick.
10.2 Period of Claims. Anything in this Agreement to the
contrary notwithstanding, the liability of Sellers under this
Agreement to indemnify Buyer against any Buyer's Claims shall be
limited to Buyer's Claims as to which written notice thereof shall
have been given to the Sellers and Escrow Agent on or before a date
which is fifteen (15) months following the Closing Date for all
matters described in Paragraph 10.1(a) and a period of thirty-six
(36) months following the Closing Date for matters described in
Paragraphs 10.1(b) or 10.1(c).
10.3 Minimum Claim. The provisions for indemnity
contained in Section 10.1 hereof shall be effective only after and
to the extent that valid and enforceable Buyer's Claims, in the
aggregate, exceed $50,000.00, it being the intention of the parties
that Sellers shall not have any liability with respect to this
indemnity agreement to the extent that aggregate Buyer's Claims do
not exceed $50,000.00. The provisions of this Paragraph 10.3 shall
not apply with respect to any indemnification due Buyer as a result
of the Wellan's Environmental Complaint.
10.4 Indemnification by Buyer. Buyer shall indemnify the
Sellers and hold each of them harmless from and against all
demands, claims, actions, assessments, losses, damages,
liabilities, costs and reasonable expenses, including, without
limitation, interest, penalties and reasonable attorneys' fees and
expenses (collectively the "Sellers' Claims") asserted against or
imposed upon or incurred by Sellers, or any of them, resulting from
or by reason of any facts constituting a breach of any
representation or warranty of the Buyer contained in or made in
this Agreement or with respect to any taxes or other obligations of
the Corporation relating to the operation of the Corporation (or
its successor) after the date of the Closing.
10.5 Conditions of Indemnification. In order for a party
to be entitled to indemnity hereunder with respect to a third party
claim, such party must, upon receipt of notice of a third party
claim, give prompt written notice to the party against whom such
indemnity is sought for such claim. The potential indemnifying
party shall have the right, at its option and at its own expense,
to undertake the defense thereof by representatives of its own
choosing.
XI. ESCROW AGREEMENT
11.1 Escrow Fund. The Escrow Agent shall receive, hold
and distribute any and all monies required by this Agreement to be
deposited with the Escrow Agent (the monies collectively referred
to as the "Escrow Fund"). The Escrow Fund shall consist of two
separate amounts, as follows:
(a) The monies to be deposited upon execution of
this Agreement pursuant to Section 2.1(a) (the
"Security Deposit") and
(b) The monies to be deposited at Closing pursuant
to Section 2.1(b) (which when added to the
Security Deposit shall be the "Purchase
Money").
11.2 Security Deposit. The Security Deposit shall be
held and distributed by the Escrow Agent pursuant to the following:
(a) In the event the Closing occurs as
contemplated by this Agreement, the Security
Deposit shall be applied to the purchase
price.
(b) In the event the Closing does not occur due to
either (i) the mutual consent of the parties
pursuant to Section 9.1 or (ii) the failure of
a condition described in Article VI, then the
Escrow Agent shall return the Security Deposit
to the Buyer.
(c) In the event the Closing does not occur due to
Buyer's refusal or inability to close for any
other reason, the Escrow Agent shall
distribute the Security Deposit to the Sellers
in accordance with their Percentage Interest
as described in Exhibit 1.1. The payment
provided for herein due to Buyer's default,
shall not be Sellers exclusive remedy, but
shall be in addition to any other rights or
remedies provided by law or in this Agreement.
11.3 Distribution of the Purchase Money. In the event
the Closing occurs as contemplated by this Agreement, the Buyer
shall deposit the Balance of the Purchase Money with the Escrow
Agent as required by Section 2.1. The Purchase Money shall be
distributed by the Escrow Agent as follows:
(a) Immediately upon Closing, the Escrow Agent
shall distribute to the Sellers, in accordance
with their Percentage Interest, the Purchase
Money, less (i) the sum of $2,000,000.00 (the
"Escrow Deposit") and (ii) the closing costs
to be paid by Sellers incident to the Closing.
(b) The Escrow Agent shall, at Closing, pay from
the Escrow Fund, all closing costs of Sellers.
(c) As security for Sellers' indemnity obligations
set forth in Article X, the Escrow Agent shall
retain the Escrow Deposit for a period of
fifteen (15) months following the date of the
Closing. If at any time during the fifteen
(15) month period after the Closing, Buyer
believes that it is owed indemnity by Sellers
under Article X then Buyer shall provide
written notice to the Escrow Agent of such
fact. The written notice shall specify the
alleged facts supporting a material breach of
Sellers' warranties and representations and
the amount of money for which Buyer has
become, or reasonably believes it may be held,
liable as a result thereof. Escrow Agent
shall pay over and deliver to Buyer the
requested amount of funds from the Escrow
Deposit, to the extent available, unless
within thirty (30) days of Escrow Agent's
receipt of Buyer's notice, he has received
notice from any Seller questioning the
propriety of Buyer's Claim or otherwise
disputing the underlying claim giving rise to
the Buyer's claim and stating that Sellers
intend to defend Buyer against such claim.
Should Sellers provide such notice to the
Escrow Agent as contemplated herein, then no
funds from the Escrow Deposit shall be paid
over to Buyer but shall be retained by the
Escrow Agent until such time as: (i) the
Escrow Agent receives a written directive
signed by both parties stating that the
dispute has been mutually resolved and
directing distribution of the funds; (ii)
Escrow Agent receives an order from a court of
competent jurisdiction directing the
distribution of said funds; or (iii) the
Escrow Agent receives written notice from
Buyer that it has relinquished or waived its
claim to the funds.
(d) At the expiration of the fifteen (15) month
period provided for above, the Escrow Agent
shall distribute the balance of the Escrow
Deposit, if any (except for any amounts then
in dispute and held pursuant to the last
sentence of 11.3(c) above), to the Sellers in
accordance with their Percentage Interests as
described in Exhibit 1.1.
(e) Upon settlement of all claims timely filed
with Escrow Agent, the Escrow Agent shall
distribute the balance, if any, of the Escrow
Deposit, to the Sellers, in accordance with
their Percentage Interests.
11.4 Rights of Buyer. Nothing contained in this Article
XI shall in any way limit the Buyer's right to indemnification from
Sellers, as provided in Article X.
11.5 Obligations of Sellers. Nothing contained in this
Article XI shall in any way limit the Seller's obligation to
indemnify Buyer as provided in Article X.
11.6 Income of Escrow Fund. The Escrow Agent may deposit
the Escrow Fund in any federally insured financial institution or
in the Hibernia National Bank Tower U.S. Treasury Money Market
Mutual Fund (as long as such fund maintains the highest rating
available by Standard and Poor's or Moody's), and Escrow Agent
shall invest the Escrow Fund for maximum safety, ready
availability, and reasonable rate of return. Any income earned by
the Escrow Fund shall be distributed to the parties who receive the
balance of the Escrow Fund at its final distribution.
11.7 Concursus. Escrow Agent shall have the right, at
any time to invoke a concursus proceeding in a court of proper
jurisdiction in Rapides Parish, Louisiana if Escrow Agent cannot
determine a claim by any party to all or any part of the Escrow
Fund. Escrow Agent shall be indemnified by the parties hereto for
all costs, including reasonable attorneys' fees in connection with
the above said concursus action and shall be fully protected in
suspending all or part of its activities under this Escrow
Agreement until a judgment in the concursus proceeding becomes
final.
11.8 Discharge of Escrow Agent. Upon the performance by
the Escrow Agent of its obligations hereunder, including final
distribution of the Escrow Deposit, whether among the parties or
through invocation of a concursus proceeding, all obligations of
Escrow Agent shall cease.
11.9 Compensation. The Escrow Agent shall be entitled to
compensation for performing its obligations under this Escrow
Agreement, which compensation is hereby fixed at Four Thousand and
No/100 ($4,000.00) Dollars, which compensation shall be paid fifty
(50%) percent from the Escrow Fund and fifty (50%) percent by the
Buyer, payable at closing.
11.10 Escrow Agent's Duties. The parties hereto agree
that the duties of Escrow Agent are only such as are herein
specifically provided, being purely ministerial in nature, and that
so long as it has acted in good faith, the Escrow Agent shall incur
no liability whatsoever except for willful misconduct or gross
negligence. The Escrow Agent may consult with counsel of its own
choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel. The
parties hereto agree to defend and hold the Escrow Agent harmless
from liability, including expenses incurred by Escrow Agent, from
suits or claims arising from acting as Escrow Agent, except those
suits or claims or expenses which arise from the willful misconduct
or gross negligence of Escrow Agent.
11.11 Other Agreement. All of the terms and conditions in
connection with the Escrow Agent's duties and responsibilities are
contained in this instrument, and the Escrow Agent is not expected
or required to be familiar with the provisions of any other
instrument or agreement between the parties hereto, or anyone else,
and shall not be charged with any responsibility or liability in
connection with the observance or non-observance by anyone of the
provisions of such instrument or agreement.
11.12 Reasonable Reliance. The Escrow Agent may rely and
shall be protected in acting upon any paper or other document which
may be submitted to it in connection with its duties hereunder and
which is believed by it to be genuine and have been signed or
presented by the proper party or parties and shall have no
liability or responsibility with respect to the form, execution or
validity thereof.
XII. MISCELLANEOUS
12.1 Assignment. Buyer shall not be allowed to assign or
otherwise transfer this Agreement without the express written
consent of Sellers.
12.2 Publicity. The Corporation and Buyer 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 New York Stock Exchange.
In the event the parties are unable to agree on a public statement
or announcement and either the Corporation, Sellers or the Buyer
determines, after consultation with their respective counsel, that
such statement or announcement is required by law or otherwise
appropriate, then the Corporation, Sellers or the Buyer, as the
case may be, may issue such statement or announcement.
12.3 Access to Books and Records. From the date of this
Agreement to the Closing Date, the Sellers will give
representatives of the Buyer free access to the Corporation's
offices, records, files, books of account, and tax returns,
provided the same shall not unreasonably interfere with its normal
operations.
12.4 Binding Effect. This Agreement shall inure to the
benefit of and be binding upon the Buyer and the Sellers and their
respective heirs, executors, administrators and successors.
12.5 Survival. All representations and warranties shall
survive the closing of the transactions hereunder.
12.6 Notices. Any notice, report, or demand required or
permitted by any provision of this Agreement shall be deemed to
have been sufficiently given for all purposes when posted if it is
sent by registered mail, postage prepaid, addressed as follows:
If to the Sellers, to
H. Brenner Sadler and Joe D. Smith, Jr.
Provosty, Sadler & deLaunay 2734 George's Lane
P. O. Drawer 1791 Alexandria, LA 71301
Alexandria, LA 71309
or to any other address as shall be designated from time to time by
the Sellers. Notice given to the above individuals shall be deemed
proper and sufficient notice to each Seller.
If to the Buyer, to
Thomas K. MacGillivray and Kent E. Agness
Central Newspapers, Inc. Barnes & Thornburg
First Indiana Plaza 1313 Merchants Bank Bldg
135 N. Pennsylvania Street Indianapolis, IN 46204
Suite 1200
Indianapolis, IN 46204-2400
12.7 Professional Fees. Neither the Buyer nor the
Sellers, nor any of their officers, directors or employees has
employed any broker or finder in connection with the transactions
contemplated by this agreement, other than Dirks, Van Essen &
Associates, or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions
contemplated by this agreement, other than to Dirks, Van Essen &
Associates, whose commissions and fees will be paid by the Sellers.
Other than Dirks, Van Essen & Associates, each party hereto shall
bear its own costs and expenses.
12.8 Law Governing. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of
Louisiana.
12.9 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all
such counterparts shall constitute one and the same instrument.
12.10 Consents. Sellers shall use their best efforts to
assist Buyer in obtaining any approvals which, as expressly
provided herein, are required to be obtained by Buyer to permit the
consummation of the transaction, or to permit Buyer to continue to
conduct the business and operations of McCormick and its
Subsidiaries after the date of the Closing in a manner consistent
with that in which they are presently being conducted.
12.11 Further Assurances. Seller shall, from time to
time, at Buyer's request, and without further consideration,
perform such acts and execute and deliver to Buyer such other and
further instruments and documents as Buyer may reasonably request
for the more effective consummation of the sale transaction
described herein and satisfaction by Sellers of their obligations
under this Agreement.
12.12 Individual Covenants Not to Compete. As additional
consideration for Buyer's purchase of McCormick pursuant to this
Agreement, and in order to protect the business being purchased,
each of Joe D. Smith, Jr., Larry D. Smith, Tom J. Hardin, and
Thomas J. O'Quin individually agree that through and including the
second anniversary of the Closing Date, he will not own or operate,
directly or indirectly, as principal, agent, proprietor,
shareholder, director, officer, employee or consultant, or
participate in the ownership, management, operation or control of,
or act as a creditor or a lessor of, any business or entity which
competes with McCormick or McCormick Subsidiaries in their
respective publishing businesses in the State of Louisiana. Joe D.
Smith, Jr., Larry D. Smith, Tom J. Hardin, and Thomas J. O'Quin,
each acknowledge that the legal remedies for breach of the covenant
not to compete contained in this subparagraph may be inadequate and
therefore, agrees that, in the event of any actual or threatened
breach of such covenant, in addition to any other right or remedy
which Buyer may have, Buyer shall be entitled to specific
performance of such covenant through injunctive or other equitable
relief obtained from a court with appropriate equity jurisdiction.
Nothing in this paragraph shall prevent the persons named in this
Paragraph 12.12 from owning, as shareholder or creditor, an
interest in any business or entity that competes with McCormick and
McCormick's Subsidiaries if such interest is held in a corporation
that is publicly traded and in which the person owns less than a
one (1%) percent interest.
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of January 10, 1996.
WITNESSES: CENTRAL NEWSPAPERS, INC.
/s/Sandra Bordelon BY: /s/ Louis A. Weil, III
- -------------------- -----------------------
Sandra Bordelon Louis A. Weil, III
President & Chief Executive
Officer
/s/John Doggett
- --------------------
John Doggett
/s/ H. Brenner Sadler
-----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Sandra Bordelon /s/ Joe D. Smith Jr.
- --------------------- ---------------------
Sandra Bordelon Joe D. Smith, Jr., Individually
/s/ John Doggett /s/ Joe D. Smith Jr.
- --------------------- ----------------------
John Doggett Joe D. Smith, Jr., Usufructuary
/s/ H. Brenner Sadler
-----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Sandra Bordelon /s/ Larry D. Smith
- --------------------- -------------------
Sandra Bordelon Larry D. Smith
/s/ John Doggett
- ---------------------
John Doggett
/s/ H. Brenner Sadler
------------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Sandra Bordelon /s/ Tom J. Hardin
- -------------------- -------------------
Sandra Bordelon Tom J. Hardin
/s/ John Doggett
- --------------------
John Doggett
/s/ H. Brenner Sadler
-----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Sandra Bordelon /s/ Thomas J. O'Quin
- -------------------- ----------------------
Sandra Bordelon Thomas J. O'Quin
/s/ John Doggett
- --------------------
John Doggett
/s/ H. Brenner Sadler
----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of 1996, to be effective as of the 10th day of Janaury, 1996.
WITNESSES:
/s/ William C. Porter /s/ John Claude O'Quin, III
- ------------------- ---------------------------
William C. Porter John Claude O'Quin, III
/s/ Larry D. Smith
- -------------------
Larry D. Smith
/s/ Catherine B. Estes
------------------------
Catherine B. Estes
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ William C. Porter /s/ John T. O'Quin
- --------------------- --------------------
William C. Porter John T. O'Quin
/s/ Tom J. Hardin
- ---------------------
Tom J. Hardin
/s/ Catherine B. Estes
------------------------
Catherine B. Estes
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 3rd
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Thomas J. O'Quin /s/ Mickie O'Quin Mast
- ---------------------- ------------------------
Thomas J. O'Quin Mickie O'Quin Mast
/s/ Steve T. Mast
- ----------------------
Steve T. Mast
/s/ Joy L. Williford
----------------------
Joy L. Williford
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Karen Carthen /s/ Minnie Lou Hardin
- -------------------- ----------------------
Karen Carthen Minnie Lou Hardin
/s/ Renee' Townsend
- --------------------
Renee' Townsend
/s/ Gail C. Bell
-------------------
Gail C. Bell
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
CRISTIN GAY HARDIN TRUST #1
/s/ Sandra Bordelon BY: /s/ Thomas J. Hardin, Trustee
- --------------------- -------------------------------
Sandra Bordelon Thomas J. Hardin, Trustee
/s/ John Doggett
- ---------------------
John Doggett
/s/ H. Brenner Sadler
----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
MELISSA MARIE HARDIN TRUST #1
/s/ Sandra Bordelon BY: /s/ Tom J. Hardin, Trustee
- --------------------- ----------------------------
Sandra Bordelon Tom J. Hardin, Trustee
/s/ John Doggett
- ---------------------
John Doggett
/s/ H. Brenner Sadler
-----------------------
H. Brenner Sadler
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Renee' Townsend /s/ Beverly Hardin Diechert
- -------------------- ----------------------------
Renee' Townsend Beverly Hardin Deichert
/s/ Karen Carthen
- --------------------
Karen Carthen
/s/ Gail C. Bell
-------------------
Gail C. Bell
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Renee' Townsend /s/ Betsy B. Hardin
- --------------------- ---------------------
Renee' Townsend Betsy B. Hardin
/s/ Karen Carthen
- ---------------------
Karen Carthen
/s/ Gail C. Bell
-----------------
Gail C. Bell
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 4th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
MCCORMICK-SMITH FUND, INC.
/s/ Michele Aymond BY: /s/ Dr. Robert Lynn, President
- ------------------- --------------------------------
Michele Aymond Dr. Robert Lynn, President
/s/ Larry D. Smith
- -------------------
Larry D. Smith
/s/ Joy L. Williford
----------------------
Joy L. Williford
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Renee' Townsend /s/ Thomas Allen Jarreau Hardin
- --------------------- ---------------------------------
Renee' Townsend Thomas Allen Jarreau Hardin
/s/ Karen Carthen
- ---------------------
Karen Carthen
/s/ Gail C. Bell
------------------
Gail C. Bell
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/ Renee' Townsend /s/ Julia Key Hardin
- -------------------- ----------------------
Renee' Townsend Julia Key Hardin
/s/ Karen Carthen
- --------------------
Karen Carthen
/s/ Gail C. Bell
------------------
Gail C. Bell
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 5th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
/s/Michael De Stefano /s/ Jolene O'Quin
- --------------------- -------------------
Michael De Stefano Jolene O'Quin
/s/illegible
- -------------------
illegible
/s/ Michael De Stefano
-----------------------
Michael De Stefano
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the 8th
day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES: HIBERNIA NATIONAL BANK
Escrow Agent
/s/ Terry G. Wilkerson BY:/s/ Michael Davis
- ----------------------- -------------------
Terry G. Wilkerson Michael Davis
/s/ Thomas J. Hardin
- ----------------------
Thomas J. Hardin
/s/ Joy L. Williford
----------------------
Joy L. Williford
NOTARY PUBLIC
<PAGE>
AFFIDAVIT OF EXECUTION
IN WITNESS WHEREOF this Contract To Buy and Sell Entire Stock
of McCormick & Company, Inc., executed by the undersigned before
me, Notary, and the undersigned competent witnesses on this the
10th day of January, 1996, to be effective as of the 10th day of
January, 1996.
WITNESSES:
ALEXANDRIA MUSEUM OF ART
/s/ Sandra Bordelon BY: /s/ Renee' P. Chappel
- --------------------- -----------------------
Sandra Bordelon Renee' P. Chappel
/s/ John Doggett
- ---------------------
John Doggett
/s/ H. Brenner Sadler
-----------------------
H. Brenner Sadler
NOTARY PUBLIC
Exhibit 23-1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-33026) pertaining to The Central Newspapers, Inc. Savings Plus
Plan and the Registration Statements (Nos. 33-37566, 33-40776, and 33-61397)
pertaining to the Central Newspapers, Inc. Stock Compensation Plan (formerly
Central Newspapers, Inc. Stock Option Plan) of our report dated January 24,
1996, with respect to the consolidated financial statements of McCormick & Co.,
Inc. included in the Form 8-K of Central Newspapers, Inc. pertaining to the
purchase by Central Newspapers, Inc. of all of the issued and outstanding
capital stock of McCormick & Co., Inc.
/s/ Ernst & Young LLP
-----------------------
Ernst & Young LLP
New Orleans, Louisiana
March 11, 1996
Exhibit 99-1
For Immediate Release
CENTRAL NEWSPAPERS COMPLETES ACQUISITION
OF ALEXANDRIA (LOUISIANA) DAILY TOWN TALK;
NEW PUBLISHER APPOINTED FROM NY TIMES COMPANY
INDIANAPOLIS, IN, March 12, 1996 - Central Newspapers, Inc.
has completed the previously announced acquisition of McCormick &
Company, Inc. the parent company of the Alexandria Daily Town Talk
newspaper of Louisiana, and McCormick Graphics Co., Inc., a commercial
printing subsidiary, Louis A. Weil III, president and chief executive
officer of Central Newspapers, announced today. The purchase price was
$62 million in cash.
It was also announced that John E. Newhouse II, 42, has been appointed
the new publisher of the Town Talk. Mr. Newhouse had previously been
with the New York Times Company as publisher of the Daily News in
Palatka, Florida. Prior to that he was publisher of the New York
Times' Daily Corinthian in Corinth, Mississippi. He held various other
positions at the Times-News in Hendersonville, North Carolina and at
the Daily Commercial in Leesburg, Florida.
The Town Talk has a circulation of 40,400 daily and 41,300
Sundays. Its market primarily covers seven parishes in Louisiana with a
population of over 400,000.
"The Town Talk is one of the premier medium-sized dailies in the
South," Mr. Weil said. "It fits with our goal of acquiring newspaper
properties with strong positions in their market areas and a proven
history of journalistic integrity."
Central Newspapers is a media company that publishes daily,
Sunday and weekly newspapers including the Arizona Republic and The
Gazette in metropolitan Phoenix, Arizona and The Star and The News in
Indianapolis, Indiana, as well as smaller Indiana community papers. It is
the 15th largest U.S. newspaper company in terms of circulation.
*******
Report of Independent Auditors
The Board of Directors
McCormick & Co., Inc.
We have audited the accompanying consolidated balance sheets of
McCormick & Co., Inc. as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity, and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of McCormick
& Co., Inc. at December 31, 1995 and 1994, and the consolidated results of
its operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1995
the Company changed its method of accounting for investments in equity
securities.
/s/Ernst & Young LLP
----------------------
Ernst & Young LLP
New Orleans, Louisiana
January 24, 1996
<PAGE>
McCormick & Co., Inc.
Consolidated Balance Sheets
===============================================================================
ASSETS December 31,
1995 1994
- -------------------------------------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $2,711,396 $1,186,884
Trade accounts receivable, less allowance for
doubtful accounts (1995-$41,159; 1994-$76,017) 1,387,202 1,393,594
Refundable income taxes 55,808
Current portion of notes receivable 91,250
Inventories 552,414 478,901
Prepaid expenses 190,704 291,586
- -------------------------------------------------------------------------------
Total current assets 4,932,966 3,406,773
- -------------------------------------------------------------------------------
INVESTMENTS AND OTHER ASSETS:
Corporate stocks 2,450,871 1,168,703
Money market funds 92,608 3,203
Real estate, at cost 32,750 226,643
Notes receivable, less current portion 183,750
Equity in split-dollar insurance policies 71,915
Deposits, loans and other assets 23,424 114,486
Cash value of life insurance 452,156 434,156
Investment in real estate subsidiary 564,386 564,587
Investment in other publications 107,500
Prepaid pension costs 2,606,522 2,362,694
- -------------------------------------------------------------------------------
6,406,467 5,053,887
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 420,906 347,013
Land improvements 90,121 90,121
Buildings 6,037,452 6,127,942
Machinery and equipment 6,184,080 7,577,770
- -------------------------------------------------------------------------------
12,732,559 14,142,846
Less allowance for depreciation 6,331,171 6,889,157
- -------------------------------------------------------------------------------
6,401,388 7,253,689
- -------------------------------------------------------------------------------
TOTAL ASSETS $17,740,821 $15,714,349
===============================================================================
<PAGE>
McCormick & Co., Inc.
Consolidated Balance Sheets
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY December 31,
1995 1994
- --------------------------------------------------------------------------------
CURRENT LIABILITIES:
Trade accounts payable and accrued expenses $524,302 $491,774
Advance subscription payments 512,302 510,640
Estimated refunds on display contracts 2,708 6,964
Income taxes payable 11,425
Carriers' cash bonds 127,480 117,543
Dividends payable 73,248 54,936
Current portion of capital lease obligations 28,994 31,580
Current portion of long term debt 500,000 420,000
- -------------------------------------------------------------------------------
Total current liabilities 1,780,459 1,633,437
- -------------------------------------------------------------------------------
CAPITAL LEASE OBLIGATIONS (Less current portion) 112,451 116,445
- -------------------------------------------------------------------------------
LONG-TERM DEBT (Less current portion) 4,500,000 5,000,000
- -------------------------------------------------------------------------------
DEFERRED INCOME TAXES 1,351,996 930,084
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Capital stock, par value $100 per share - authorized
10,000 shares, issued and outstanding 4,000 shares 400,000 400,000
Retained earnings 16,584,976 15,352,018
Unrealized gains on corporate stocks 728,574
- -------------------------------------------------------------------------------
17,713,550 15,752,018
Capital stock in treasury, at cost (7,717,635) (7,717,635)
- -------------------------------------------------------------------------------
9,995,915 8,034,383
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $17,740,821 $15,714,349
===============================================================================
See accompanying notes.
<PAGE>
McCormick & Co., Inc.
Consolidated Statements of Income
==============================================================================
Year ended December 31,
1995 1994
- ------------------------------------------------------------------------------
Operating income:
Advertising, less discounts (1995 - $132,842
1994 - $128,002) $9,178,469 $8,882,442
Circulation 3,477,847 3,487,489
Graphics 4,495,383 4,747,025
Other 148,287 33,147
- ------------------------------------------------------------------------------
17,299,986 17,150,103
- ------------------------------------------------------------------------------
Operating expenses, including depreciation
(1995 - $1,096,644; 1994 - $1,280,632) 15,121,166 14,406,341
- ------------------------------------------------------------------------------
Operating income 2,178,820 2,743,762
Other income 586,894 185,621
Other expense (759,569) (609,547)
- ------------------------------------------------------------------------------
Income before income taxes 2,006,145 2,319,836
Income taxes 645,003 857,157
- ------------------------------------------------------------------------------
Net income $1,361,142 $1,462,679
==============================================================================
See accompanying notes.
<PAGE>
<TABLE>
McCormick & Co., Inc.
Consolidated Statements of Stockholders' Equity
<CAPTION>
==============================================================================================================
Capital Stock Treasury Stock
------------------------- Retained Unrealized -----------------------
Shares Amount Earnings Gains Shares Amount
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1994 4,000 $400,000 $13,985,747 (1,696) ($7,624,230)
Purchase of 15 shares of
treasury stock (15) (93,405)
Net income 1,462,679
Cash dividends declared -
$42.00 per share (96,408)
- --------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1994 4,000 400,000 15,352,018 (1,711) (7,717,635)
Adoption of SFAS No. 115,
net of income taxes
of $247,721 $413,574
Net income 1,361,142
Cash dividends declared -
$56.00 per share (128,184)
Change in net unrealized gains,
net of income taxes of $189,424 315,000
- --------------------------------------------------------------------------------------------------------------
BALANCES AT DECEMBER 31, 1995 4,000 $400,000 $16,584,976 $728,574 (1,711) ($7,717,635)
==============================================================================================================
See accompanying notes.
</TABLE>
<PAGE>
McCormick & Co., Inc.
Consolidated Statements of Cash Flows
================================================================================
Year ended December 31,
1995 1994
- --------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $1,361,142 $1,462,679
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,096,644 1,280,632
Deferred income taxes (15,235) 283,693
Pension income (243,828) (430,703)
Equity in undistributed loss of subsidiaries 13,439 16,028
Net realized gains on investment securities (130,995) 8,241
Net realized gains on investment in other
publications (198,000)
Contribution of land 259,048
Changes in operating assets and liabilities:
Trade accounts receivable 6,392 133,655
Income taxes 67,233 (226,687)
Inventories (73,513) (161,661)
Trade accounts payable and accrued expenses 63,027 170,037
Changes in other operating assets and liabilities 199,287 (122,734)
- -------------------------------------------------------------------------------
Net cash provided by operating activities 2,404,641 2,413,180
- -------------------------------------------------------------------------------
INVESTING ACTIVITIES
Payments on property, plant and equipment, including
deposits (309,498) (685,257)
Purchases of investment securities (467,513) 33,688
Proceeds from sale of investment securities 392,657 178,228
Change in investments in subsidiaries and insurance
policies 40,677 (48,261)
- -------------------------------------------------------------------------------
Net cash used in investing activities (343,677) (521,602)
- --------------------------------------------------------------------------------
FINANCING ACTIVITIES
Principal payments on long-term debt and capital lease
obligations (426,580) (1,245,091)
Cash dividends paid (109,872) (96,768)
Purchase of treasury stock (93,405)
- -------------------------------------------------------------------------------
Net cash used by financing activities (536,452) (1,435,264)
- -------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,524,512 456,314
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,186,884 730,570
- -------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $2,711,396 $1,186,884
===============================================================================
See accompanying notes.
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements
December 31, 1995
1. Significant Accounting Policies
Description of Business and Significant Accounting Policies
McCormick & Co., Inc. is engaged in two businesses: the publishing of a
daily newspaper, the Alexandria Daily Town Talk (the Town Talk), and
commercial publication printing. The Town Talk's circulation area is
concentrated in central Louisiana, particularly Rapides Parish.
Principles of Consolidation
The consolidated financial statements include the accounts of McCormick &
Co., Inc. (the Company) and its wholly owned subsidiary, McCormick
Graphics Co., Inc. (Graphics). All intercompany accounts and transactions
are eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements. Actual results could differ from those estimates.
Cash Equivalents
The Company considers all short-term, highly liquid investments with
maturities of three months or less when purchased to be cash equivalents.
Inventories
Inventories are stated at the lower of cost (specific identification
method) or market.
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements (continued)
1. Significant Accounting Policies (continued)
Corporate Stocks
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115 (Statement 115), Accounting for
Certain Investments in Debt and Equity Securities. The Company adopted
the provisions of this standard for its investments in corporate stocks
held as of or acquired after January 1, 1995. As a result, the beginning
balance of the Company's investment in corporate stocks increased by
$661,295, deferred income tax liabilities increased by $247,721 and
stockholders' equity increased by $413,574. These changes reflect the
unrealized holding gain on securities classified as available-for-sale
previously carried at lower of cost or market. Available-for-sale
securities are carried at fair value, with the unrealized gains and
losses reported in a separate component of stockholders' equity.
All of the Company's investments in corporate stock are equity securities
which are classified as available-for-sale. The cost of such securities
was $1,285,152 and $1,168,703 on December 31, 1995 and 1994, respectively.
The market value of such securities was $2,450,871 and $1,829,998 at
December 31, 1995 and 1994, respectively. Gain or loss is recognized on
the sale of stock based upon the cost of the specific security sold. The
Company had net realized gains of $130,995 in 1995 and net realized losses
of $8,241 in 1994. The Company had gross unrealized gains of $1,165,719
in 1995 and gross unrealized gains and losses, respectively, of $678,962
and $17,667 in 1994.
Property, Plant and Equipment
Property, plant and equipment is stated on the basis of cost. Plant and
equipment are depreciated by accelerated methods for the first half of
their estimated useful lives and by the straight-line method for the
second half of their estimated useful lives. Fully depreciated assets and
the related allowances for depreciation are eliminated from the accounts,
although the assets may still be in use.
Advance Subscription Payments
Payments received from subscribers are deferred and recognized as income
ratably over the subscription period.
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements (continued)
2. Income Taxes
The liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The
Company's deferred tax liability is primarily due to prepaid pension costs
and the unrealized gains on corporate stocks.
The components of the provision (benefit) for income taxes are as follows:
1995 1994
Current $660,238 $573,464
Deferred (15,235) 283,693
-------- --------
$645,003 $857,157
======== ========
The differences between federal income tax expense based on the U.S.
federal income tax rate and income taxes shown in the consolidated
statements of income are as follows:
1995 1994
Federal income tax
expense based on rate
of 34% $682,089 $788,744
Charitable contribution at
fair value in excess of
book value (54,740) --
Various, net (62,353) (11,974)
--------- ---------
Federal income taxes 564,996 776,770
State income taxes 80,007 80,387
--------- ---------
$645,003 $857,157
========= =========
The Company and its subsidiary file a consolidated federal income tax
return. Each company files a separate state income tax return. Federal
and state income taxes paid, net of refunds, were approximately
$615,000 in 1995 and $800,000 in 1994.
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements (continued)
3. Pension Plan
The Company has a noncontributory pension plan covering substantially all
employees who meet certain minimum age and length of service
requirements. The Plan provides monthly payments for life following
retirement, normally at age 65. Benefits are determined by a formula
based on years of service and the employee's compensation during the final
years of employment. The Company's funding policy is to contribute
annually the minimum required by the Employee Retirement Income Security
Act of 1974, plus additional amounts at the discretion of management.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
The Company uses an independent actuary to calculate the Plan's funded
status and net periodic pension income.
The components of net periodic pension income, included in the Company's
consolidated statements of income, were as follows:
1995 1994
Service cost-benefits earned
during the period $(226,000) $(233,000)
Interest cost on projected
benefit obligation (365,000) (318,000)
Actual return on plan assets 2,121,000 (472,000)
Net amortization and deferral (1,286,000) 1,454,000
---------- ---------
Net periodic pension income $244,000 $431,000
========== =========
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements (continued)
3. Pension Plan (continued)
The Plan's funded status and the amounts of prepaid pension costs
recognized in the Company's consolidated balance sheets were as follows:
1995 1994
Actuarial present value of
benefit obligations:
Accumulated benefit obligation,
including vested benefits of
$5,493,000 and $5,011,000,
respectively $5,536,000 $5,066,000
=========== ===========
Projected benefit obligation
for service rendered to date $(5,863,000) $(5,336,000)
Plan assets at fair value,
primarily equity and fixed
income securities 10,617,000 8,738,000
----------- -----------
Plan assets in excess of
projected benefit obligation 4,754,000 3,402,000
Unrecognized net gain from past
experience different from that
assumed and effects of changes
in assumptions (1,891,000) (637,000)
Unrecognized net transition asset (256,000) (402,000)
----------- -----------
Prepaid pension costs $2,607,000 $2,363,000
=========== ===========
The projected benefit obligation was determined using a discount rate
of 7% in 1995 and 1994 and an assumed rate of salary increase of 5% in
1995 and 1994. The expected long-term rate of return on plan assets
used to determine the amount of net periodic pension income was 8% in 1995
and 1994.
The Company also has a defined contribution savings plan available to
substantially all employees. Eligible employees may contribute up to 15%
of their compensation. The Company contributes an additional amount to
the plan equal to 50% of employee contributions, limited to contributions
up to 6% of their compensation. Company contributions were $72,507 in
1995 and $42,779 in 1994.
4. Long-Term Debt
In 1993, the Company acquired 1,251 shares of its common stock for
$7,100,000 from a trust. The Company financed this purchase through a
$2,100,000 bank loan and a $5,000,000 note signed in favor of the trust.
The bank loan has been paid in full.
<PAGE>
McCormick & Co., Inc.
Notes to Consolidated Financial Statements (continued)
4. Long-Term Debt (continued)
The $5,000,000 note signed in favor of the trust requires ten annual
principal payments of $500,000 beginning December 31, 1996. The
principal, or any part thereof, may be pre-paid at any time without
penalty. The shares purchased are being held by the trust as collateral
for this note. Interest accrues on the note at 7.5% per annum and is paid
quarterly. The Company also agreed that if a Recapture event, as defined
in the stock purchase agreement, were to occur prior to December 31, 1997,
the Company would pay additional consideration as follows:
If the Recapture Event Occurs Additional Consideration
----------------------------------------------------------
Prior to January 1, 1996 $2,176,740
During 1996 1,632,555
During 1997 1,088,370
As of December 31, 1995, no Recapture event had occurred. (See Note 6.)
Under the terms of the note to the trust, the Company must maintain
certain financial ratios. At December 31, 1995, the Company was in
compliance with all such requirements.
Interest expense was $433,090 in 1995 and $476,240 in 1994. Interest paid
was $429,801 in 1995 and $479,993 in 1994.
<PAGE>
McCormick & Co., Inc.
Notes to Financial Statements (continued)
5. Capital Leases
The Company has obligations under a capital lease arrangement. The asset
recorded under this capital lease totaled approximately $50,000, net of
accumulated amortization of approximately $174,000, at December 31,
1995. The asset is included in machinery and equipment in the balance
sheet and the related amortization is included in depreciation expense.
Future minimum lease payments related to this capital lease are as
follows:
1996 $47,388
1997 47,388
1998 47,388
1999 43,439
--------
Aggregate future minimum lease payments 185,603
Interest portion of lease payments (44,158)
--------
Capital lease obligations 141,445
Less current portion 28,994
--------
$112,451
========
6. Sale of Company
On January 10, 1996, the Company entered into an agreement to sell all of
its outstanding common stock to Central Newspapers, Inc., an Indianapolis
based company. The sale price of $62 million, adjusted for any changes to
the Company's stockholders' equity between October 31, 1995 and
February 29, 1996. The sale is expected to be completed on March 12,
1996. In connection with the sale, the shareholders have agreed to
reimburse the Company for any direct costs incurred by the Company in
connection with the sale. At December 31, 1995, $43,187 is recorded as a
receivable from the shareholders for such costs.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give
effect to the purchase by Central Newspapers, Inc. (the "Company") of all
of the issued and outstanding capital of McCormick & Company, Inc.
("McCormick") in the amount of approximately $62 million. The Company
utilized a portion of its existing investments in marketable
securities to acquire the outstanding capital stock. This transaction
will be accounted for using the purchase method of accounting.
The Unaudited Pro Forma Condensed Combined Balance Sheet presents the
financial position of the Company and McCormick as of December 31,
1995, assuming that the acquisition occurred as of that date. Such pro
forma information is based upon the audited historical balance sheets of
the Company and McCormick as of December 31, 1995.
As required by Rule 11-02 of Regulation S-X, the Unaudited Pro Forma
Combined Statement of Income has been prepared assuming that the
acquisition occurred as of the beginning of the period presented. The
Unaudited Pro Forma Condensed Combined Statement of Income reflects
the audited historical results of operations for the Company and McCormick
for their respective 1995 fiscal years.
The unaudited pro forma condensed combined financial statements give
effect to certain pro forma adjustments which are described in the notes
to these statements. Certain nonrecurring amounts, which principally
include legal and professional fees and other acquisition costs are not
included in the unaudited pro forma combined financial statements. The
Company does not believe that the aggregate after tax cost of such
nonrecurring items will be in excess of 5% of the purchase price.
These items are not of an operating nature but are directly attributable
to the acquisition and, as a result, will be considered an adjustment to
the purchase price in accordance with APB #16 "Business Combinations".
The Company does not believe that there will be any significant
additional nonrecurring operating costs of the combined entity which
are not reflected in the unaudited pro forma condensed combined
financial statements.
The unaudited pro forma condensed combined financial statements do not
reflect any cost savings or other synergies anticipated by the Company as
a result of the purchase.
The unaudited pro forma data is presented for informational purposes only
and is not necessarily indicative of the results of operations or
financial position which would have been achieved had the transaction been
completed as of the beginning of fiscal 1995, nor is it necessarily
indicative of the Company's future results of operations or financial
position.
The unaudited pro forma condensed combined financial statements should
be read in conjunction with the historical financial statements of the
Company and the related notes thereto.
<PAGE>
<TABLE>
CENTRAL NEWSPAPERS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
December 31, 1995
<CAPTION>
(In thousands)
Central McCormick Pro forma Pro forma
Newspapers, & Company Adjustments Combined
Inc. Inc.*
--------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $26,142 $2,711 ($1,633)(1) $27,220
Marketable securities 103,390 (62,000)(5) 41,390
Accounts receivable, net 62,355 1,387 63,742
Inventories, deferred income taxes and
other current assets 21,131 835 21,966
-------------------------------------- -------------
Total current assets 213,018 4,933 (63,633) 154,318
-------------------------------------- -------------
Property, Plant and Equipment, net 280,805 6,401 12,732 (2) 299,938
-------------------------------------- -------------
Other Assets
Goodwill and other intangibles 29,009 (12,732)(2)(5) 75,032
(8,363)(3)(5)
5,118 (4)(5)
62,000 (5)
Other 24,372 6,407 30,779
-------------------------------------- -------------
53,381 6,407 46,023 105,811
-------------------------------------- -------------
TOTAL ASSETS $547,204 $17,741 ($4,878) $560,067
====================================== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $19,122 $441 $19,563
Accrued compensation 17,172 83 17,255
Dividends payable 5,027 73 5,100
Accrued expenses and other liabilities 14,567 661 15,228
Federal and state income taxes 1,941 11 1,952
Deferred revenue 17,371 512 17,883
-------------------------------------- -------------
Total current liabilities 75,200 1,781 76,981
-------------------------------------- -------------
Deferred income taxes 23,009 1,352 $5,118 (4) 29,479
-------------------------------------- -------------
Long-term debt and capital lease obligations,
less current portion 2,678 4,612 7,290
-------------------------------------- -------------
Postretirement benefit obligation 79,327 79,327
-------------------------------------- -------------
Minority interest in subsidiary 8,249 8,249
-------------------------------------- -------------
Total Shareholders' Equity 358,741 9,996 (1,633)(1) 358,741
(8,363)(3)
-------------------------------------- -------------
358,741 9,996 (9,996) 358,741
-------------------------------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $547,204 $17,741 ($4,878) $560,067
====================================== =============
</TABLE>
* For comparability, McCormick amounts have been reclassified to conform with
Central Newspaper's presentation.
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE>
<TABLE>
CENTRAL NEWSPAPERS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1995
<CAPTION>
(In thousands, except per share data) McCormick
Central & Company Pro forma Pro forma
Newspapers,Inc Inc.* Adjustments Combined
-------------------------------------- -------------
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Advertising $446,693 $9,178 $455,871
Circulation 129,537 3,478 133,015
Other 3,671 4,644 8,315
-------------------------------------- -------------
579,901 17,300 597,201
-------------------------------------- -------------
OPERATING EXPENSES:
Operating, distribution and general 462,195 14,024 476,219
Depreciation 28,487 1,097 ($1,097)(1) 30,093
1,606 (2)
Work force reduction cost 3,328 3,328
-------------------------------------- -------------
494,010 15,121 509 509,640
-------------------------------------- -------------
OPERATING INCOME 85,891 2,179 (509) 87,561
OTHER INCOME 9,502 587 (4,811)(4) 5,278
OTHER EXPENSE (1,348) (760) (1,151)(3) (3,259)
-------------------------------------- -------------
INCOME BEFORE INCOME TAXES 94,045 2,006 (6,471) 89,580
PROVISION FOR INCOME TAXES 38,048 645 (1,948)(5) 36,745
-------------------------------------- -------------
INCOME BEFORE MINORITY INTEREST AND
EQUITY IN AFFILIATE 55,997 1,361 (4,523) 52,835
MINORITY INTEREST IN SUBSIDIARY (1,409) (1,409)
EQUITY IN AFFILIATE, NET OF TAX BENEFITS (590) (590)
-------------------------------------- -------------
NET INCOME $53,998 $1,361 ($4,523) $50,836
====================================== =============
NET INCOME PER COMMON SHARE $2.03 $1.91
AVERAGE COMMON SHARES OUTSTANDING 26,651 26,651
</TABLE>
* For comparability, McCormick amounts have been reclassified to conform with
Central Newspaper's presentation.
See accompanying notes to unaudited pro forma combined financial statements.
<PAGE>
NOTES TO HISTORICAL UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The Unaudited Pro Forma Condensed Combined Balance Sheet has been
prepared to reflect the acquisition of all of the outstanding capital
stock of McCormick & Company, Inc. ("McCormick") for an aggregate price
of approximately $62 million.
The Unaudited Pro Forma Condensed Combined Balance Sheet presents the
financial position of the Company and McCormick as of December 31,
1995 assuming that the transaction occurred as of December 31, 1995.
Such pro forma information is based on the historical balance sheets of
the Company and of McCormick as of December 31, 1995.
As required by Rule 11-02 of Regulation S-X, the Unaudited Pro Forma
Condensed Combined Statement of Income assumes that the transaction
occurred as of the beginning of fiscal 1995. The Unaudited Pro Forma
Condensed Combined Statement of Income reflects McCormick's historical
results of operations for the 12 month period ended December 31, 1995.
The Company believes that the assumptions used in preparing the unaudited
pro forma condensed combined financial statements provide a reasonable
basis for presenting all of the significant effects of the acquisition
(other than any synergies anticipated by the Company, nonrecurring charges
directly attributable to the purchase and nonrecurring charges that will
result from combining operations), and that the pro forma adjustments give
effect to those assumptions in the unaudited pro forma condensed combined
financial statements.
Note 2 - Pro forma Adjustments
A. Pro forma adjustments to the unaudited condensed combined balance
sheet are made to reflect the following:
(1) Adjustment to record the effects of a debt recapture event
upon the sale of McCormick.
(2) Adjustment to record the step-up in the basis of fixed assets
of McCormick to estimated fair value at the acquisition
date. The fair value of fixed assets was estimated using
certain information provided by McCormick, and in general
consideration of the age, condition and replacement value
of the assets. Estimated useful lives for depreciation
purposes have been assigned which give appropriate effect
to the age, condition and productivity of the assets.
(3) The elimination of the shareholders' equity accounts of
McCormick.
(4) Deferred income tax on step-up basis of fixed assets, using
the McCormick's combined federal and state tax rate of
40.2%.
(5) Adjustment to record the excess of acquisition cost over the
fair value of assets acquired (goodwill). For purposes of
the Unaudited Pro Forma Condensed Combined Statement of
Income, goodwill is being amortized over forty years.
B. Pro forma adjustments to the December 31, 1995 unaudited
Condensed Combined Statement of Income are made to reflect the
following:
(1) Elimination of McCormick's historical depreciation expense.
(2) Depreciation expense based on estimated fair market value
and useful lives of McCormick assets.
(3) Amortization expense on the estimated excess of acquisition
cost over fair value of assets, assuming a life of forty
years.
(4) Reduction in interest income in relation to consideration paid
($62 million). The rate used to calculate interest income,
7.76%, is based on the actual earnings from marketable
securities held by the Company in 1995.
(5) Record income tax effect of pro forma adjustments. The
effective tax rate on pro forma combined income before
taxes of 41.0% differs from the Company's statutory tax
rate of 35% due primarily to non-deductible goodwill and
state income taxes.
