<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
OCTOBER 30, 1997
SOURCE MEDIA, INC.
(Exact name of registrant as specified in is charter)
DELAWARE 0-21894 13-3700438
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5400 LBJ FREEWAY, SUITE 680
DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(972) 701-5400
<PAGE> 2
Item 7 Financial Statements and Exhibits
<TABLE>
(a) Historical Financial Statements.
<S> <C>
(i) Historical Financial Statements of Electronic Publishing Division of Brite Voice Systems, Inc.
Report of Independent Public Accountants
Statements of Assets, Liabilities and Divisional Equity at December 31, 1996 and 1995
Statements of Revenues and Expenses for the Years Ended December 31, 1996 and 1995
Statements of Changes in Divisional Equity For the Years Ended December 31, 1996 and 1995
Statements of Cash Flows For the Years Ended December 31, 1996 and 1995
Notes to Financial Statements
Statements of Assets, Liabilities and Divisional Equity at December 31, 1996 and June 30, 1997 (unaudited)
Statements of Revenues and Expenses for the Six Months Ended June 30, 1997 and 1996 (unaudited)
Statements of Changes in Divisional Equity For the Year Ended December 31, 1996 and Six Months Ended June
30, 1997 (unaudited)
Statements of Cash Flows For the Six Months Ended June 30, 1997 and 1996 (unaudited)
Condensed Notes to Financial Statements
(ii) Historical Financial Statements of Voice News Network, Inc.
Report of Independent Accountants
Balance Sheet at December 31, 1996
Statement of Operations For the year ended December 29, 1996
Statement of Cash Flows For the year ended December 29, 1996
Statement of Owner's Equity For the year ended December 29, 1996
Notes to Financial Statements
Balance Sheet at June 29, 1997 and June 30, 1996 (unaudited)
Statement of Operations For the six months ended June 29, 1997 and June 30, 1996 (unaudited)
Statement of Cash Flows For the six months ended June 29, 1997 and June 30, 1996 (unaudited)
Notes to Financial Statements
</TABLE>
2
<PAGE> 3
<TABLE>
<S> <C>
(b) Unaudited Pro Forma Condensed Consolidated Financial Statements.
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Year Ended December 31, 1996
Unaudited Pro Forma Condensed Consolidated Statement of Operations For the Six Months Ended June 30, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(c) Exhibits.
Exhibit 2.1* - Asset Purchase Agreement dated September 23, 1997 between IT Network, Inc. and
Brite Voice Systems, Inc.
Exhibit 2.2* - Amendment dated October 7, 1997 between IT Network, Inc. and Brite Voice Systems,
Inc. to Asset Purchase Agreement dated September 23, 1997 between IT Network, Inc. and
Brite Voice Systems, Inc.
Exhibit 2.3+ - Asset Purchase Agreement dated September 30, 1997 between Source Media, Inc. and IT
Network, Inc. and Voice News Network, Inc.
Exhibit 4.1* - Indenture dated as of October 30, 1997 between Source Media, Inc. and U.S. Trust
Company of Texas, N.A.
Exhibit 4.2* - Certificate of Designation for Senior PIK Preferred Stock
Exhibit 4.3* - Warrant Agreement dated as of October 30, 1997 between Source Media, Inc. And
ChaseMellon Shareholder Services
Exhibit 4.4* - Unit Agreement dated as of October 30, 1997 between Source Media, Inc. and ChaseMellon
Shareholder Services
Exhibit 10.1* - Exchange and Registration Rights Agreement for Senior Secured Notes dated as of
October 30, 1997 between Source Media, Inc. and certain of its subsidiaries and
NatWest Capital Markets Limited and Prudential Securities Incorporated
Exhibit 10.2* - Preferred Stock Registration Rights Agreement dated as of October 30, 1997 between
Source Media, Inc. and NatWest Capital Markets Limited and Prudential Securities
Incorporated.
Exhibit 10.3* - Common Stock Registration Rights Agreement dated as of October 30, 1997 by and among Source Media, Inc.
and NatWest Capital Markets Limited on Prudential Securities Incorporated.
</TABLE>
3
<PAGE> 4
<TABLE>
<S> <C>
Exhibit 23.1* - Consent of Arthur Andersen LLP
Exhibit 23.2* - Consent of Price Waterhouse LLP
</TABLE>
+ Filed herewith.
* Previously filed.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 25, 1997 SOURCE MEDIA, INC.
By: /s/ W. Scott Bedford
-----------------------------------------
W. Scott Bedford, Chief Operating Officer
5
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
Exhibit 2.1* - Asset Purchase Agreement dated September 23, 1997 between IT
Network, Inc. and Brite Voice Systems, Inc.
Exhibit 2.2* - Amendment dated October 7, 1997 between IT Network, Inc. and
Brite Voice Systems, Inc. to Asset Purchase Agreement dated
September 23, 1997 between IT Network, Inc. and Brite Voice
Systems, Inc.
Exhibit 2.3+ - Asset Purchase Agreement dated September 30, 1997 between
Source Media, Inc. and IT Network, Inc. and Voice News
Network, Inc.
Exhibit 4.1* - Indenture dated as of October 30, 1997 between Source Media,
Inc. and U.S. Trust Company of Texas, N.A.
Exhibit 4.2* - Certificate of Designation for Senior PIK Preferred Stock
Exhibit 4.3* - Warrant Agreement dated as of October 30, 1997 between Source
Media, Inc. And ChaseMellon Shareholder Services
Exhibit 4.4* - Unit Agreement dated as of October 30, 1997 between Source
Media, Inc. and ChaseMellon Shareholder Services
Exhibit 10.1* - Exchange and Registration Rights Agreement for Senior Secured
Notes dated as of October 30, 1997 between Source Media, Inc.
and certain of its subsidiaries and NatWest Capital Markets
Limited and Prudential Securities Incorporated
Exhibit 10.2* - Preferred Stock Registration Rights Agreement dated as of
October 30, 1997 between Source Media, Inc. and NatWest
Capital Markets Limited and Prudential Securities
Incorporated.
Exhibit 10.3* - Common Stock Registration Rights Agreement dated as of October
30, 1997 by and among Source Media, Inc. and NatWest Capital
Markets Limited on Prudential Securities Incorporated.
Exhibit 23.1* - Consent of Arthur Andersen LLP
Exhibit 23.2* - Consent of Price Waterhouse LLP
</TABLE>
+ Filed herewith.
* Previously filed.
<PAGE> 1
EXHIBIT 2.3
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED AS OF SEPTEMBER 30, 1997
BETWEEN
IT NETWORK, INC. AND SOURCE MEDIA, INC.
AND
VOICE NEWS NETWORK, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE
<S> <C> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1. Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2. Deposit of Shares Upon Execution of Agreement;
Payment of Purchase Price on the Closing Date . . . . . . . . . . . . 8
4.3. Buyer's Additional Deliveries . . . . . . . . . . . . . . . . . . . . 9
4.4. Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5. Deposit Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . 11
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.1. Organization of Seller . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2. Authority of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4. Availability of Assets . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5. Governmental Permits . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6. Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.7. Title to Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . 13
5.8. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . 14
5.9. Employee Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.10. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.11. Status of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.12. No Violation, Litigation or Regulatory Action . . . . . . . . . . . . . 15
5.13. Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.14. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.15. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . 16
6.1. Organization of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2. Authority of Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3. No Finder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.4. Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE . . . . . . . . . . . . . . . . . . . 18
7.1. Investigation of Seller by Buyer . . . . . . . . . . . . . . . . . . . 18
7.2. Preserve Accuracy of Representations and Warranties . . . . . . . . . . 18
7.3. Operations Prior to the Closing Date . . . . . . . . . . . . . . . . . 19
7.4. Notification by Seller of Certain Matters . . . . . . . . . . . . . . . 19
7.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VIII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.2. Discharge of VNN Business Liabilities . . . . . . . . . . . . . . . . . 21
8.3. VNN Business Employees . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
8.4. [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . 21
8.5. Contract Cancellations and Expirations . . . . . . . . . . . . . . . . 22
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER . . . . . . . . . . . . . 22
9.1. No Misrepresentation or Breach of Covenants
and Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER . . . . . . . . . . . . . 23
10.1. No Misrepresentation or Breach of Covenants
and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.2. No Restraint or Litigation . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
11.1. Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . 24
11.2. Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . 25
11.3. Notice of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
11.4. Third Person Claims . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2. Notice of Termination . . . . . . . . . . . . . . . . . . . . . . . . 28
12.3. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE XIII
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
- iii -
<PAGE> 5
<TABLE>
<S> <C>
13.1. Survival of Obligations . . . . . . . . . . . . . . . . . . . . . . . 28
13.2. Confidential Nature of Information . . . . . . . . . . . . . . . . . . 29
13.3. No Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . 29
13.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . 31
13.6. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . 31
13.7. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.8. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
13.9. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.10. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.11. Execution in Counterparts . . . . . . . . . . . . . . . . . . . . . . 32
13.12. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . 32
13.13. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SCHEDULES
Schedule 3.2 - Allocation of Purchase Price
Schedule 5.2 - Authority of Seller
Schedule 5.4 - Availability of Assets
Schedule 5.6 - Personal Property
Schedule 5.10 - Contracts
Schedule 5.11 - Status of Contracts
Schedule 5.12 - No Violation, Litigation or Regulatory Action
Schedule 5.13 - Software
EXHIBITS
Exhibit A - Instrument of Assignment
Exhibit B - Instrument of Assumption
Exhibit C - Transition Services Agreement
Exhibit D - Tribune Guaranty
Exhibit E - Registration Rights Agreement
</TABLE>
- iv -
<PAGE> 6
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of September 30, 1997, between
IT Network, Inc., a Texas corporation ("Buyer") and Source Media, Inc., a
Delaware corporation and parent of Buyer ("Source"), and Voice News Network,
Inc., a Delaware corporation ("Seller").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of providing
interactive telephone services through its Voice News Network business (the
"VNN Business");
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller certain assets utilized in connection with the VNN
Business, all on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, it is hereby agreed between Seller and Buyer
as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. In this Agreement, the following terms have
the meanings specified or referred to in this Section 1.1 and shall be equally
applicable to both the singular and plural forms. Any agreement referred to
below shall mean such agreement as amended, supplemented and modified from time
to time to the extent permitted by the applicable provisions thereof and by
this Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person.
<PAGE> 7
"ASSUMED LIABILITIES" has the meaning specified in Section 2.3.
"BUYER" has the meaning specified in the first paragraph of this
Agreement.
"BUYER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Buyer under this
Agreement or in connection herewith.
"BUYER GROUP MEMBER" means Buyer and its Affiliates and their
respective successors and assigns.
"CLAIM NOTICE" has the meaning specified in Section 11.3(a).
"CLOSING" means the closing of the transfer of the Purchased
Assets from Seller to Buyer.
"CLOSING DATE" has the meaning specified in Section 4.1.
"COMMON STOCK CLOSING PRICE" has the meaning specified in Section
4.2.
"COURT ORDER" means any judgment, order, award or decree of any
foreign, federal, state, local or other court or tribunal and any award in any
arbitration proceeding.
"CUSTOMER LIST" has the meaning specified in Section 2.1(e).
"DEPOSIT SHARES" has the meaning specified in Section 4.2.
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention
agreement, defect in title, covenant or other title restrictions of any kind.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
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<PAGE> 8
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCLUDED ASSETS" has the meaning specified in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning specified in Section 2.4.
"EXPENSES" means any and all reasonable expenses incurred in
connection with investigating, defending or asserting any claim, action, suit
or proceeding incident to any matter indemnified hereunder (including, without
limitation, court filing fees, court costs, arbitration fees or costs, witness
fees, and reasonable fees and disbursements of legal counsel, investigators,
expert witnesses, consultants, accountants and other professionals).
"FINANCIAL STATEMENTS" has the meaning specified in Section 7.5.
"GOVERNMENTAL BODY" means any foreign, federal, state, local or
other governmental authority or regulatory body.
"GOVERNMENTAL PERMITS" has the meaning specified in Section 5.5.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"INSTRUMENT OF ASSIGNMENT" means the Instrument of Assignment in
the form of Exhibit A.
"INSTRUMENT OF ASSUMPTION" means the Instrument of Assumption in
the form of Exhibit B.
"LOSSES" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines, penalties, damages,
deficiencies or other charges.
- 3 -
<PAGE> 9
"PERMITTED ENCUMBRANCES" means (a) liens for taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable and (c) other liens or imperfections on property
which are not material in amount or do not materially detract from the value of
or materially impair the existing use of the property affected by such lien or
imperfection.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PURCHASE PRICE" has the meaning specified in Section 3.1.
"PURCHASED ASSETS" has the meaning specified in Section 2.1.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement in the form of Exhibit E.
"REQUIREMENTS OF LAWS" means any foreign, federal, state and
local laws, statutes, regulations, rules, codes or ordinances enacted, adopted,
issued or promulgated by any Governmental Body or common law.
"SELLER" has the meaning specified in the first paragraph of this
Agreement.
"SELLER AGREEMENTS" has the meaning specified in Section 5.11.
"SELLER ANCILLARY AGREEMENTS" means all agreements, instruments
and documents being or to be executed and delivered by Seller under this
Agreement or in connection herewith.
"SELLER GROUP MEMBER" means Seller and its Affiliates and their
respective successors and assigns.
- 4 -
<PAGE> 10
"SELLER PLAN" has the meaning specified in Section 5.8(b).
"SOFTWARE" means computer software programs and software systems,
including, without limitation, all databases, compilations, tool sets,
compilers, decompilers, higher level or "proprietary" languages and related
documentation and materials, whether in source code, object code or human
readable form.
"TAX" means any federal, state, local or foreign net income,
alternative or add-on minimum, gross income, gross receipts, property, sales,
use, transfer, gains, license, excise, employment, payroll, withholding or
minimum tax, or any other tax custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any Governmental Body.
"TAX RETURN" means any return, report or similar statement
required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
"TRANSITION SERVICES AGREEMENT" means the Transition Services
Agreement in the form of Exhibit C.
"TRIBUNE GUARANTY" means the Guaranty executed by Tribune Media
Services, Inc., for the benefit of Buyer, in the form of Exhibit D.
"VNN BUSINESS" has the meaning specified in the first recital to
this Agreement.
ARTICLE II
PURCHASE AND SALE
2.1. PURCHASED ASSETS. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, Seller shall sell, transfer,
assign, convey and deliver to Buyer, and
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<PAGE> 11
Buyer shall purchase from Seller, free and clear of all Encumbrances (except
for Permitted Encumbrances), all right, title and interest of Seller in, to and
under the following assets of Seller related to the VNN Business as the same
shall exist on the Closing Date (herein collectively called the "Purchased
Assets"):
(a) all of the Seller's goodwill relating to the VNN Business as
a going concern;
(b) the equipment listed in Schedule 5.6;
(c) the contracts, agreements or understandings listed or
described in Schedule 5.10;
(d) the Software listed in Schedule 5.13;
(e) all mailing, subscription, customer, client or distribution
lists directly relating to the VNN Business (the "Customer List");
(f) all registered and unregistered trademarks, trade names,
service marks, copyrights and licenses directly relating to the VNN
Business, and all applications, renewals and extensions thereof,
including those containing the words "Voice News Network" or any
derivation thereof; and
(g) all books and records (including all data and other
information stored on discs, tapes or other media) of Seller
specifically relating to the Purchased Assets.
2.2. EXCLUDED ASSETS. Notwithstanding the provisions of Section
2.1, the Purchased Assets shall not include the following (herein referred to
as the "Excluded Assets"):
(a) any cash, cash equivalents, accounts receivable, bank
deposits, certificates of deposit, commercial paper, treasury notes or
other marketable securities of Seller;
(b) the names "Tribune Company," "Tribune Media Services" or
"Tribune" or any related or similar trade names, trademarks, service
marks or logos of Seller or its
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<PAGE> 12
Affiliates (other than the trade names, trademarks and service marks
included in the Purchased Assets);
(c) all of Seller's rights, claims or causes of action against
third parties relating to the Purchased Assets and/or the VNN Business
arising out of transactions occurring prior to the Closing Date;
(d) all of Seller's rights, claims or causes of action against
third parties relating to the Purchased Assets and/or the VNN Business
which may arise in connection with the discharge by Seller of the
Excluded Liabilities;
(e) all contracts of insurance relating to the Purchased Assets;
and
(f) any assets of Seller which do not relate exclusively to the
VNN Business.
2.3. ASSUMED LIABILITIES. On the Closing Date, Buyer shall
deliver to Seller the Instrument of Assumption pursuant to which Buyer shall
assume and agree to discharge the following obligations and liabilities of
Seller in accordance with their respective terms and subject to the respective
conditions thereof:
(a) all liabilities and obligations accruing and relating to
periods beginning on or after the Closing Date under the Seller
Agreements;
(b) all liabilities in respect of Taxes for which Buyer is
liable pursuant to Section 8.1; and
(c) all costs, fees and expenses incurred by Seller or any
affiliate of Seller in respect of any audit of the VNN Business
requested by Buyer.
All of the foregoing liabilities and obligations to be assumed by Buyer
hereunder (excluding any Excluded Liabilities) are referred to herein as the
"Assumed Liabilities."
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<PAGE> 13
2.4. EXCLUDED LIABILITIES. Buyer shall not assume or be
obligated to pay, perform or otherwise discharge any liability or obligation of
Seller, direct or indirect, known or unknown, absolute or contingent, not
expressly assumed by Buyer pursuant to the Instrument of Assumption (all such
liabilities and obligations not being assumed being herein called the "Excluded
Liabilities") and, notwithstanding anything to the contrary in Section 2.3,
none of the following shall be Assumed Liabilities for purposes of this
Agreement:
(a) all liabilities and obligations accruing prior to the
Closing Date under the Seller Agreements;
(b) any liabilities in respect of Taxes for which Seller is
liable pursuant to Section 8.1;
(c) any intercompany payables and other liabilities or
obligations of the VNN Business to Seller or any of its Affiliates;
(d) any costs and expenses incurred by Seller incident to its
negotiation and preparation of this Agreement and its performance and
compliance with the agreements and conditions contained herein;
(e) any liabilities or obligations in respect of any Excluded
Assets; and
(f) any liabilities in respect of the claims or proceedings
described in Schedule 5.12.
ARTICLE III
PURCHASE PRICE
3.1. PURCHASE PRICE. The purchase price for the Purchased
Assets (the "Purchase Price") shall be equal to $9,000,000 in cash.
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3.2. ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that
the Purchase Price plus Assumed Liabilities (to the extent treated as part of
Buyer's purchase price for federal or state income tax purposes) shall be
allocated to the Purchased Assets in accordance with Schedule 3.2. The parties
hereto acknowledge that the allocation was determined pursuant to arm's length
bargaining between the parties regarding the fair market values of the
Purchased Assets in accordance with Section 1060 of the Internal Revenue Code
of 1986. Buyer and Seller shall report (including with respect to the filing
of Form 8594 to the Internal Revenue Service) the sale and purchase of the
Purchased Assets for all income tax purposes in a manner consistent with such
allocation and will not, in connection with the filing of such returns, make
any allocation of the Purchase Price and Assumed Liabilities which is contrary
to the allocation.
ARTICLE IV
CLOSING
4.1. CLOSING DATE. The Closing shall be consummated at 10:00
A.M., local time, on the 60th calendar day after the date of this Agreement, or
(i) such earlier date as may be specified by Buyer or (ii)such other date as
may be agreed to by Buyer and Seller, in either case after the conditions set
forth in Articles IX and X have been satisfied, at the offices of Sidley &
Austin at One First National Plaza, Chicago, Illinois 60603, or at such other
place or at such other time as shall be agreed by Buyer and Seller. The time
and date on which the Closing is actually held are sometimes referred to herein
as the "Closing Date."
4.2. DEPOSIT OF SHARES UPON EXECUTION OF AGREEMENT; PAYMENT OF
PURCHASE PRICE ON THE CLOSING DATE. Upon the execution and delivery of this
Agreement, Source will (i) issue and deliver to Seller an amount of
unregistered shares of its common stock, par value $.001 per share ("Common
Stock"), equal to $2,000,000 divided by the closing price per share (the
"Common Stock Closing Price") of the Common Stock on the last trading day prior
to execution of this Agreement (the "Deposit Shares") and (ii) execute and
deliver to Seller the Registration Rights Agreement. For example, if the
Common Stock Closing Price were
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$10.00, then the number of shares of Common Stock issued and delivered to
Seller or its assigns would be 200,000. At Closing (i) Buyer shall pay to
Seller $9,000,000 in cash by wire transfer to the account specified by Seller
at least two business days prior to the Closing Date in satisfaction of the of
the Purchase Price and (ii) Seller shall return the Deposit Shares and the
Registration Rights Agreement to Buyer.
4.3. BUYER'S ADDITIONAL DELIVERIES. At Closing Buyer shall
deliver to Seller all the following:
(a) Copies of Buyer's Certificate of Incorporation certified as
of a recent date by the Secretary of State of the State of Texas;
(b) Certificate of good standing of Buyer issued as of a recent
date by the Secretary of State of the State of Texas;
(c) Certificate of the secretary or an assistant secretary of
Buyer, dated the Closing Date, in form and substance reasonably
satisfactory to Seller, as to (i) no amendments to the Certificate of
Incorporation of Buyer since a specified date; (ii) the By-laws of
Buyer; (iii) the resolutions of the Board of Directors of Buyer
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures of
the officers of Buyer executing this Agreement and any Buyer Ancillary
Agreement;
(d) The Instrument of Assumption duly executed by Buyer;
and
(e) The Transition Services Agreement duly executed by Buyer.
4.4. SELLER'S DELIVERIES. At Closing Seller shall deliver to
Buyer, or cause to be delivered to Buyer, all the following:
(a) Copies of the Certificate of Incorporation of Seller
certified as of a recent date by the Secretary of State of the State of
Delaware;
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(b) Certificate of good standing of Seller issued as of a recent
date by the Secretary of State of the State of Delaware;
(c) Certificate of the secretary or an assistant secretary of
Seller, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, as to (i) no amendments to the Certificate of
Incorporation of Seller since a specified date; (ii) the By-laws of
Seller; (iii) the resolutions of the Board of Directors of Seller
authorizing the execution and performance of this Agreement and the
transactions contemplated hereby; and (iv) incumbency and signatures of
the officers of Seller executing this Agreement and any Seller Ancillary
Agreement;
(d) The Instrument of Assignment duly executed by Seller;
(e) All consents, waivers or approvals obtained by Seller which
are necessary to transfer the Purchased Assets, except to the extent
that failure to obtain any such consent, waiver or approval would not
have a material adverse effect on the VNN Business;
(f) The Transition Services Agreement duly executed by Seller;
(g) The Tribune Guaranty;
(h) Such other bills of sale, assignments and other instruments
of transfer or conveyance as Buyer may reasonably request or as may be
otherwise necessary to evidence and effect the sale, assignment,
transfer, conveyance and delivery of the Purchased Assets to Buyer; and
(i) The Customer List.
4.5. DEPOSIT SHARES. (a) In the event that the transaction
contemplated hereby shall fail to close by reason of any of the conditions set
forth in Article X hereof not being satisfied or due to the termination of this
Agreement by Seller pursuant to Section 12.1(b) or 12.1(d), Seller as its sole
and
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exclusive remedy (at law or in equity) shall be entitled to retain the Deposit
Shares (and with respect thereto Seller shall further be entitled to all rights
under the Registration Rights Agreement, including, but not limited to, Section
6 thereof) as payment of liquidated damages for such failure to close or such
termination; provided, that, (i) in the event that the transaction contemplated
hereby shall fail to close due to the failure of Seller to satisfy the
condition set forth in Section 9.1 or shall be terminated by Buyer in
accordance with Section 12.1(c) (unless in each case due to a breach of the
representations and warranties set forth in Section 5.2(b), 5.3, 5.8 through
5.15, inclusive) and (ii) Seller shall not otherwise be entitled to terminate
this Agreement pursuant to Section 12.1(d), then Seller shall promptly return
the Deposit Shares and the Registration Rights Agreement to Buyer. Each party
acknowledges and agrees, after taking into account the terms of this Agreement
and all relevant circumstances at the date hereof, that the liquidated damages
payable under this Section 4.5(a) represent a reasonable and genuine pre-
estimate of the damages which would be suffered by Seller in the event of any
such failure to close or any such termination and does not constitute a
penalty.
(b) Buyer acknowledges that no filing, notice or application
is required to be made by Buyer under the HSR Act with respect to consummation
of the transactions contemplated hereby and that any filing, notice or
application made by Buyer, prior to Closing, under the HSR Act with respect to
any other transaction shall be made at the sole risk of Buyer. Accordingly, if
Buyer or any of its Affiliates shall have made any filing, notice or
application under the HSR Act with respect to any other transaction that
results in a review, a request for additional information or any extension of
any waiting period required by the HSR Act with respect to any other
transaction proposed to be entered into by Buyer or its Affiliates, the closing
condition of Buyer set forth in Section 9.2 shall be deemed satisfied in all
respects (notwithstanding any regulatory review, inquiry, restraint,
prohibition or challenge of the transactions contemplated hereby that may arise
out of any such filing, notice or application) on the 60th day following the
date hereof.
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<PAGE> 18
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller represents and warrants
to Buyer and agrees as follows:
5.1. ORGANIZATION OF SELLER. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Seller is duly qualified to transact business as a foreign
corporation in each jurisdiction in which the ownership or leasing of the
Purchased Assets or the conduct of the VNN Business requires such
qualification. Seller has full power and authority to own or lease and to
operate and use the Purchased Assets and to carry on the VNN Business as now
conducted.
5.2. AUTHORITY OF SELLER. (a) Seller has full power and
authority to execute, deliver and perform this Agreement and all of the Seller
Ancillary Agreements. The execution, delivery and performance of this
Agreement and the Seller Ancillary Agreements by Seller have been duly
authorized and approved by Seller's board of directors and do not require any
further authorization or consent of Seller or its stockholder. This Agreement
has been duly authorized, executed and delivered by Seller and is the legal,
valid and binding obligation of Seller enforceable in accordance with its
terms, and each of the Seller Ancillary Agreements has been duly authorized by
Seller and upon execution and delivery by Seller will be a legal, valid and
binding obligation of Seller enforceable in accordance with its terms.
(b) Except as set forth in Schedule 5.2, neither the execution
and delivery of this Agreement or any of the Seller Ancillary Agreements or the
consummation of any of the transactions contemplated hereby or thereby nor
compliance with or fulfillment of the terms, conditions and provisions hereof
or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of
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<PAGE> 19
acceleration, termination or cancellation or a loss of rights under, or
result in the creation or imposition of any Encumbrance upon any of the
Purchased Assets, under (1) the Certificate of Incorporation or By-laws
of Seller, (2) any other material note, instrument, agreement, mortgage,
lease, license, franchise, permit or other authorization, right,
restriction or obligation to which Seller is a party or any of the
Purchased Assets is subject or by which Seller is bound, (3) any Court
Order to which Seller is a party or any of the Purchased Assets is
subject or by which Seller is bound, or (4) any Requirements of Laws
affecting Seller or the Purchased Assets; or
(ii) require the approval, consent, authorization or act of, or
the making by Seller of any declaration, filing or registration with,
any Person.
5.3. TAXES. Seller has, in respect of the VNN Business, filed
all federal, state, county and local income, excise, withholding, property,
sales, use, franchise and other tax returns which are required to have been
filed by Seller under applicable law on or prior to the date of this Agreement
and paid all taxes which have become due pursuant to such returns or pursuant
to any assessment which has become payable. All monies required to be withheld
by Seller from employees of the VNN Business for income taxes, social security
and other payroll taxes have been collected or withheld, and either paid to the
respective governmental agencies, set aside in accounts for such purpose, or
accrued, reserved against and entered upon the books of Seller.
5.4. AVAILABILITY OF ASSETS. Except as set forth in Schedule
5.4 and except for the Excluded Assets, the Purchased Assets are in good
condition (subject to normal wear and tear) and serviceable condition and are
suitable for the uses for which intended.
5.5. GOVERNMENTAL PERMITS. Seller owns, holds or possesses all
licenses, franchises, permits, privileges, immunities, approvals and other
authorizations from a Governmental Body which are necessary to entitle it to
own or lease, operate and use the Purchased Assets and to carry on and conduct
the VNN
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<PAGE> 20
Business substantially as currently conducted (herein collectively called
"Governmental Permits"), except for such Governmental Permits as to which the
failure to so own, hold or possess would not have a material adverse effect on
the Purchased Assets or the VNN Business.
To the knowledge of Seller, Seller has (i) fulfilled and
performed its obligations under the Governmental Permits in all material
respects, and no event has occurred or condition or state of facts exists which
constitutes or, after notice or lapse of time or both, would constitute a
material breach or default under any Governmental Permit or which permits or,
after notice or lapse of time or both, would permit revocation or termination
of any Governmental Permit, or which might adversely affect the rights of
Seller under any Governmental Permit; and (ii) no notice of cancellation, of
default or of any dispute concerning any Governmental Permit, or of any event,
condition or state of facts described in the preceding clause, has been
received by, or is known to Seller, which would have a material adverse effect
on the Purchased Assets or the VNN Business.
5.6. PERSONAL PROPERTY. Schedule 5.6 contains a list of
equipment used by Seller in or relating to the VNN Business and which shall be
transferred and sold to Buyer pursuant hereto.
5.7. TITLE TO PURCHASED ASSETS. Seller has good and marketable
title to all of the Purchased Assets, free and clear of all Encumbrances,
except for Permitted Encumbrances. Upon delivery to Buyer on the Closing Date
of the instruments of transfer contemplated by Section 4.4, Seller will thereby
transfer to Buyer good and marketable title to the Purchased Assets, subject to
no Encumbrances, except for Permitted Encumbrances.
5.8. EMPLOYEE BENEFIT PLANS. With respect to any "Employee
Benefit Plan" (as defined in Section 3(3) of Employee Retirement Income
Security Act of 1974, as amended) or any other profit sharing, deferred
compensation, bonus, stock option, or other compensation plan of Seller or any
other plan or arrangement to benefit employees maintained or contributed to by
Seller and in which any of the current or former employees of Seller
participate or are eligible to participate (collectively
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<PAGE> 21
the "Seller Plans" and each individually a "Seller Plan"), no payments will be
required solely as a result of the transaction contemplated by this Agreement
for which Buyer will bear any liability and no additional amounts will become
payable thereunder upon a subsequent termination of employment by Buyer. No
funding deficiency exists or has existed with respect to any Seller Plan
covering any present or former employee of Seller which may cause or result in
an Encumbrance upon any of the Purchased Assets.
5.9. EMPLOYEE RELATIONS. Seller has complied in all material
respects of the VNN Business with all applicable laws, rules and regulations
which relate to prices, wages, hours, discrimination in employment and
collective bargaining and to the operation of the VNN Business and is not
liable for any arrears of wages or any taxes or penalties for failure to comply
with any of the foregoing. Seller is not a party to, and the VNN Business is
not affected by or threatened with, any dispute or controversy with a union or
with respect to unionization or collective bargaining involving the employees
of the VNN Business. Neither Seller nor the VNN Business is materially
affected by any dispute or controversy with a union or with respect to
unionization or collective bargaining involving any supplier of the VNN
Business.
5.10. CONTRACTS. Except as set forth in Schedule 5.10 or any
other Schedule hereto, Seller is not, with respect to the VNN Business, a party
to or bound by:
(i) any contract for the purchase or sale of real property;
(ii) any purchase order, agreement, contract for trade or barter
or commitment obligating Seller to purchase or sell any products,
publications or services;
(iii) any guarantee of the obligations of customers, suppliers,
officers, directors, employees, Affiliates or others;
(iv) any contract not made in the ordinary course; or
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<PAGE> 22
(v) any other contract, agreement, commitment, understanding or
instrument which individually is material to the VNN Business.
5.11. STATUS OF CONTRACTS. Except as set forth in Schedule 5.11
or in any other Schedule hereto, each of the contracts and other agreements
listed in Schedule 5.10 (collectively, the "Seller Agreements") constitutes a
valid and binding obligation of Seller, and, to the knowledge of Seller, the
other parties thereto and is in full force and effect and (except as set forth
in Schedule 5.2) may be transferred to Buyer pursuant to this Agreement and
will continue in full force and effect thereafter, in each case without
breaching the terms thereof or resulting in the forfeiture or impairment of any
rights thereunder and without the consent, approval or act of, or the making of
any filing with, any other party. Seller is not in, or alleged to be in,
breach or default under any of the Seller Agreements.
5.12. NO VIOLATION, LITIGATION OR REGULATORY ACTION. Except as
set forth in Schedule 5.12:
(i) to the knowledge of Seller, the Purchased Assets and their
uses comply in all material respects with all applicable Requirements of
Laws and Court Orders and as to which the failure to do so would have a
material adverse effect on the Purchased Assets or the VNN Business;
(ii) to the knowledge of Seller, Seller has complied in all
material respects with all Requirements of Laws and Court Orders which
are applicable to the Purchased Assets or the VNN Business and as to
which the failure to do so would have a material adverse effect on the
Purchased Assets or the VNN Business;
(iii) there are no lawsuits, claims, suits, proceedings or
investigations pending or, to the knowledge of Seller, threatened
against or affecting Seller in respect of the Purchased Assets or the
VNN Business and there are no lawsuits, suits or proceedings pending in
which Seller is the plaintiff or claimant and which relate to the
Purchased Assets or the VNN Business; and
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<PAGE> 23
(iv) there is no action, suit or proceeding pending or, to the
knowledge of Seller, threatened which questions the legality or
propriety of the transactions contemplated by this Agreement.
5.13. SOFTWARE. Schedule 5.13 contains a list and description
of all Software owned by or licensed to the Seller and which is material to the
operation of the VNN Business, other than Software licensed to Seller that is
available in consumer retail stores and subject to "shrink-wrap" license
agreements.
5.14. NO FINDER. Neither Seller nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
5.15. FINANCIAL STATEMENTS. The Financial Statements (i)
represent actual bona fide transactions, (ii) have been prepared from the books
and records of Seller in conformity with generally accepted accounting
principles applied on a basis consistent with preceding years throughout the
periods involved, and (iii) accurately, completely, and fairly present Seller's
financial position as of the respective dates thereof and its results of
operations and cash flows/changes in financial position for the periods then
ended. The statements of income included in the Financial Statements do not
contain any items of special or nonrecurring income, and the balance sheets
included in the Financial Statements do not reflect any write-up or revaluation
increasing the book value of any Purchased Assets, nor have there been any
transactions since the respective dates thereof giving rise to special or
nonrecurring income or any such write-up or revaluation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer hereby represents and
warrants to Seller and agrees as follows:
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<PAGE> 24
6.1. ORGANIZATION OF BUYER. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has full corporate power and authority to own or lease and to operate
and use its properties and assets and to carry on its business as now
conducted.
6.2. AUTHORITY OF BUYER. Buyer has full power and authority to
execute, deliver and perform this Agreement and all of the Buyer Ancillary
Agreements. The execution, delivery and performance of this Agreement and the
Buyer Ancillary Agreements by Buyer have been duly authorized and approved by
Buyer's board of directors and do not require any further authorization or
consent of Buyer or its stockholders. This Agreement has been duly authorized,
executed and delivered by Buyer and is the legal, valid and binding agreement
of Buyer enforceable in accordance with its terms, and each of the Buyer
Ancillary Agreements has been duly authorized by Buyer and upon execution and
delivery by Buyer will be a legal, valid and binding obligation of Buyer
enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement or any of
the Buyer Ancillary Agreements or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will:
(i) conflict with, result in a breach of the terms, conditions
or provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or cancellation or a
loss of rights under (1) the Certificate of Incorporation or By-laws of
Buyer, (2) any material note, instrument, agreement, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which Buyer is a party or any of its properties is subject
or by which Buyer is bound, (3) any Court Order to which Buyer is a
party or by which it is bound or (4) any Requirements of Laws affecting
Buyer; or
(ii) require the approval, consent, authorization or act of, or
the making by Buyer of any declaration, filing or registration with, any
Person.
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<PAGE> 25
6.3. NO FINDER. Neither Buyer nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
6.4. REGULATORY MATTERS. Buyer has not executed any agreement
nor has Buyer entered into any negotiations or discussion with any other Person
with respect to any such agreement or currently contemplates entering into any
other transaction prior to Closing that could result in any regulatory review
of the transactions contemplated hereby and which could limit the ability of
the parties hereto to consummate the transactions contemplated hereby.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date:
7.1. INVESTIGATION OF SELLER BY BUYER. Seller shall afford to
the officers, employees and authorized representatives of Buyer (including,
without limitation, independent public accountants and attorneys) reasonable
access during normal business hours to the offices, properties and business and
financial records (including computer files, retrieval programs and similar
documentation) of Seller to the extent Buyer shall deem necessary or desirable
and shall furnish to Buyer or its authorized representatives such additional
information concerning the VNN Business as shall be reasonably requested,
including all such information as shall be necessary to enable Buyer or its
representatives to verify the accuracy of the representations and warranties
contained in this Agreement, to verify that the covenants of Seller contained
in this Agreement have been complied with and to determine whether the
conditions set forth in Article IX have been satisfied; provided, however,
Buyer agrees that the foregoing rights to investigation shall not include any
rights in respect of the Customer List or other business or financial records
by which the identity of the Persons set forth on the Customer List might
reasonably be
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<PAGE> 26
ascertained. Buyer agrees that such investigation shall be conducted in such a
manner as not to interfere unreasonably with the operations of Seller. No
investigation made by Buyer or its representatives hereunder shall affect the
representations and warranties of Seller hereunder.
7.2. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each
of the parties hereto shall refrain from taking any action which would render
any representation or warranty contained in Article V or VI of this Agreement
inaccurate as of the Closing Date. Each party shall promptly notify the other
of any action, suit or proceeding that shall be instituted or threatened
against such party to restrain, prohibit or otherwise challenge the legality of
any transaction contemplated by this Agreement. Seller shall promptly notify
Buyer of any lawsuit, claim, proceeding or investigation that may be
threatened, brought, asserted or commenced against Seller which would have been
listed in Schedule 5.12 if such lawsuit, claim, proceeding or investigation had
arisen prior to the date hereof.
7.3. OPERATIONS PRIOR TO THE CLOSING DATE. Seller shall operate
and carry on the VNN Business only in the ordinary course and substantially as
presently operated. Consistent with the foregoing, Seller shall keep and
maintain the Purchased Assets in good operating condition and repair and shall
use commercially reasonable efforts to preserve the goodwill of the suppliers,
contractors, licensors, employees, customers, distributors and others having
business relations with the VNN Business.
7.4. NOTIFICATION BY SELLER OF CERTAIN MATTERS. During the
period prior to the Closing Date, Seller will promptly advise Buyer in writing
of (i) any material adverse change in the condition of the Purchased Assets or
the VNN Business and (ii) any notice or other communication from any third
Person alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement.
7.5. FINANCIAL STATEMENTS.
(a) Seller shall prepare, or cause the preparation of, in
accordance with generally accepted accounting principles ("GAAP") and
Regulation S-X under the Securities Act, and deliver
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to Buyer on or before September 30, 1997, (i) an audited balance sheet for the
Purchased Assets and the VNN Business (an "Acquired Business Balance Sheet") as
of December 31, 1996, an audited statement of operations for the Purchased
Assets and the VNN Business (an "Acquired Business Statement of Operations")
for the year ended December 31, 1996 and an audited statement of cash flows for
the Purchased Assets and the VNN Business (the "Acquired Business Statement of
Cash Flows") for the year ended December 31, 1996 together with the manually
signed accountants' report of Price Waterhouse covering such financial
statements, and (ii) an unaudited Acquired Business Balance Sheet as of June
30, 1997, an unaudited Acquired Business Statement of Operations for the six
month periods ended June 30, 1997 and 1996 and unaudited Acquired Business
Statement of Cash Flows for the six month periods ended June 30, 1997 and 1996.
The financial statements required to be delivered by Seller pursuant to this
Section 7.5(a) are the "Financial Statements".
(b) Seller shall use commercially reasonable efforts to prepare
or cause the preparation of, in accordance with GAAP, and deliver to Buyer
within 30 days following the Closing, such additional audited and unaudited
Acquired Business Balance Sheets, Acquired Business Statements of Operations
and Acquired Business Statements of Cash Flows as may be required to enable
Buyer to complete and file its Form 8-K under the Exchange Act relating to the
transactions contemplated by this Agreement, together with, in the case of any
audited Acquired Business Balance Sheet, Acquired Business Statements of
Operations and Acquired Business Statements of Cash Flows, the manually signed
accountants' report of Price Waterhouse covering such audited financial
statements.
(c) Seller shall use commercially reasonable efforts to cause
Price Waterhouse to execute and deliver to Buyer such consents as Buyer may
request relating to the inclusion of the reports of Price Waterhouse in any
filing made by Buyer under the Securities Act or the Exchange Act. Seller
shall also use commercially reasonable efforts to cause Price Waterhouse to
deliver to Buyer, Buyer's board of directors and any investment bank retained
by Buyer in connection with any financing engaged in relating to the
transactions contemplated by this Agreement one or more comfort letters in such
form and covering such items as are customary in transactions of this nature.
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<PAGE> 28
(d) The costs and expenses of Price Waterhouse relating to
professional services delivered pursuant to Sections 7.5(a), (b) and (c) shall
be borne by Buyer.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. TAXES. (a) Seller shall be liable for and shall pay all
Taxes (whether assessed or unassessed) applicable to the Purchased Assets,
attributable to periods (or portions thereof) ending on or prior to the Closing
Date. Buyer shall be liable for and shall pay all Taxes (whether assessed or
unassessed) applicable to the Purchased Assets, attributable to periods (or
portions thereof) beginning after the Closing Date. For purposes of this
paragraph (a), any period beginning before and ending after the Closing Date
shall be treated as two partial periods, one ending on the Closing Date and the
other beginning after the Closing Date except that Taxes (such as property
Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(b) Notwithstanding Section 8.1(a), any sales Tax, use Tax, real
property transfer or gains Tax, documentary stamp Tax or similar Tax
attributable to the sale or transfer of the Purchased Assets shall be paid by
Buyer.
(c) Seller or Buyer, as the case may be, shall provide
reimbursement for any Tax paid by one party all or a portion of which is the
responsibility of the other party in accordance with the terms of this Section
8.1. Within a reasonable time prior to the payment of any said Tax, the party
paying such Tax shall give notice to the other party of the Tax payable and the
portion which is the liability of each party, although failure to do so will
not relieve the other party from its liability hereunder.
8.2. DISCHARGE OF VNN BUSINESS LIABILITIES. Seller covenants
and agrees that it will pay and discharge, and hold Buyer harmless from, each
and every liability and obligation of Seller in respect of the VNN Business or
the Purchased Assets arising from events occurring on or prior to the Closing
Date, excepting only those liabilities and obligations expressly assumed by
Buyer at the Closing pursuant to instruments of
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assumption delivered to Seller at the Closing, it being understood and agreed
that Buyer is assuming no liabilities or obligations of Seller other than
liabilities and obligations so expressly assumed by Buyer.
8.3. VNN BUSINESS EMPLOYEES. (a) On or before the Closing Date,
Buyer agrees to interview for employment with Buyer each of the Persons set
forth on Seller's employee payroll on the date hereof. Any employee hired by
Buyer shall be terminated by Seller and all payments due under any employee
benefit plan shall be either paid in full by Seller to such employee or paid by
Seller as specified by such employee.
(b) No provision of this Section 8.3 shall create any
third-party beneficiary rights in any employee or former employee (including
any beneficiary or dependent thereof) of Seller, any of its Affiliates, Buyer
or any Affiliates of Buyer in respect of continued employment (or resumed
employment) for any specified period of any nature or kind whatsoever, and no
provision of this Section 8.3 shall create such third-party beneficiary rights
in any such persons in respect of any benefits that may be provided, directly
or indirectly, under any employee benefit plan or arrangement, including
Buyer's and Seller's currently existing employee benefit plans.
8.4. [INTENTIONALLY RESERVED]
8.5. CONTRACT CANCELLATIONS AND EXPIRATIONS. Buyer has informed
Seller that Buyer intends to make public disclosure, promptly following the
execution and delivery of this Agreement, of the entry into this Agreement and
of the nature of the transactions contemplated hereby. Buyer hereby
acknowledges that the public announcement or other disclosure of the
transactions contemplated by this Agreement may cause certain suppliers or
customers of the VNN Business to elect, prior to the Closing Date, to cancel,
terminate, not renew, request modification of or alter payment patterns with
respect to certain Seller Agreements to which they are party, and Buyer hereby
acknowledges and agrees that any and all such cancellations, terminations,
nonrenewals, requests or alterations shall not in any way relieve Buyer of its
obligation to close the acquisition of the Purchased Assets and perform its
obligations hereunder nor shall the existence or occurrence of any such
cancellation, termination, nonrenewal,
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request or alteration (or notice or threat to cancel, terminate, not renew,
request or alter) and any result or effect on Seller, Buyer, the Purchased
Assets or the VNN Business resulting therefrom constitute or be deemed to
constitute in any respect (i) a material adverse effect on, or change in, the
VNN Business, (ii) a breach by Seller of any of its representations and
warranties contained in Article V hereof or otherwise or (iii) a breach by
Seller of any of its covenants and obligations under Article VII hereof or
otherwise and that, in any event, all such loss or risk of any such
cancellation, termination, nonrenewal, request or alteration shall be assumed
by Buyer; provided, however, this Section 8.5 shall not relieve Seller of its
obligation under Section 7.3 to use commercially reasonable efforts to preserve
the goodwill of the suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the VNN Business;
provided, further, that under no circumstances shall commercially reasonable
efforts require Seller to make any payment, special concession or other
contractual modification with respect to the aforementioned.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at the
option of Buyer, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
9.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND WARRANTIES.
There shall have been no material breach by Seller in the performance of any of
its covenants and agreements herein; each of the representations and warranties
of Seller contained or referred to herein shall be materially true and correct
on the Closing Date as though made on the Closing Date, except for changes
therein specifically permitted by this Agreement or resulting from any
transaction expressly consented to in writing by Buyer and there shall have
been delivered to Buyer a certificate to such effect, dated the Closing Date,
signed on behalf of Seller by the President and Chief Executive Officer of
Seller.
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9.2. NO RESTRAINT OR LITIGATION. No action, suit or proceeding
by any Governmental Body shall have been instituted or threatened to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby other than any such action, suit or proceeding contemplated
by Section 4.5(b).
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall, at the
option of Seller, be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
10.1. NO MISREPRESENTATION OR BREACH OF COVENANTS AND
WARRANTIES. There shall have been no material breach by Buyer in the
performance of any of its covenants and agreements herein; each of the
representations and warranties of Buyer contained or referred to in this
Agreement shall be materially true and correct on the Closing Date as though
made on the Closing Date, except for changes therein specifically permitted by
this Agreement or resulting from any transaction expressly consented to in
writing by Seller or any transaction contemplated by this Agreement; and there
shall have been delivered to Seller a certificate to such effect, dated the
Closing Date and signed on behalf of Buyer by the President or any Vice
President of Buyer.
10.2. NO RESTRAINT OR LITIGATION. No action, suit or proceeding
by any Governmental Body shall have been instituted or threatened to restrain,
prohibit or otherwise challenge the legality or validity of the transactions
contemplated hereby.
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION BY SELLER. (a) Seller agrees to indemnify
and hold harmless each Buyer Group Member from and against any and all Loss and
Expense incurred by such Buyer Group Member in connection with or arising from:
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<PAGE> 32
(i) any breach by Seller of any of its covenants in this
Agreement or in any Seller Ancillary Agreement;
(ii) any failure of Seller to perform any of its obligations in
this Agreement or in any Seller Ancillary Agreement;
(iii) any breach of any warranty or the inaccuracy of any
representation of Seller contained or referred to in this Agreement or
any certificate delivered by or on behalf of Seller pursuant hereto; or
(iv) the failure of Seller to perform any Excluded Liability;
provided, however, that Seller shall be required to indemnify and hold harmless
under this Section 11.1 with respect to Loss and Expense incurred by Buyer
Group Members only to the extent that the aggregate amount of such Loss and
Expense exceeds $675,000; and provided, further, that the aggregate amount
required to be paid by Seller pursuant to this Section 11.1 shall not exceed
$4,500,000.
(b) The indemnification provided for in this Section 11.1 shall
terminate six months after the Closing Date (and no claims shall be made by any
Buyer Group Member under this Section 11.1 thereafter), except that the
indemnification by Seller shall continue as to:
(i) the obligations of Seller under the Instrument of
Assignment, as to which no time limitation shall apply;
(ii) the representation and warranty set forth in Section 5.7
and the covenants of Seller set forth in Sections 3.2, 8.1, 8.2, 13.2
and 13.12, as to each of which the applicable statute of limitations
shall apply; and
(iii) any Loss or Expense of which any Buyer Group Member has
notified Seller in accordance with the requirements of Section 11.3 on
or prior to the date such indemnification would otherwise terminate in
accordance with this Section 11.1, as to which the obligation of Seller
shall continue until the liability of Seller shall have been
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determined pursuant to this Article XI, and Seller shall have reimbursed
all Buyer Group Members for the full amount of such Loss and Expense in
accordance with this Article XI.
11.2. INDEMNIFICATION BY BUYER. (a) Buyer agrees to indemnify
and hold harmless each Seller Group Member from and against any and all Loss
and Expense incurred by such Seller Group Member in connection with or arising
from:
(i) any breach by Buyer of any of its covenants or agreements in
this Agreement or in any Buyer Ancillary Agreement;
(ii) any failure by Buyer to perform any of its obligations in
this Agreement or in any Buyer Ancillary Agreement; or
(iii) any breach of any warranty or the inaccuracy of any
representation of Buyer contained or referred to in this Agreement or in
any certificate delivered by or on behalf of Buyer pursuant hereto;
provided, however, that Buyer shall be required to indemnify and hold harmless
under this Section 11.2 with respect to Loss and Expense incurred by Seller
Group Members only to the extent that the aggregate amount of such Loss and
Expense exceeds $675,000; and provided, further, that the aggregate amount
required to be paid by Buyer pursuant to this Section 11.2 shall not exceed
$4,500,000.
(b) The indemnification provided for in this Section 11.2 shall
terminate six months after the Closing Date (and no claims shall be made by
Seller under this Section 11.2 thereafter), except that the indemnification by
Buyer shall continue as to:
(i) the covenants of Buyer set forth in Sections 3.2, 8.1, 13.2
and 13.12, as to each of which the applicable statute of limitation
shall apply; and
(ii) any Loss or Expense of which Seller has notified Buyer in
accordance with the requirements of Section 11.3 on or prior to the date
such indemnification would otherwise
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terminate in accordance with this Section 11.2, as to which the
obligation of Buyer shall continue until the liability of Buyer shall
have been determined pursuant to this Article XI, and Buyer shall have
reimbursed all Seller Group Members for the full amount of such Loss and
Expense in accordance with this Article XI.
11.3. NOTICE OF CLAIMS. (a) Any Buyer Group Member or Seller
Group Member (the "Indemnified Party") seeking indemnification hereunder shall
give to the party obligated to provide indemnification to such Indemnified
Party (the "Indemnitor") a notice (a "Claim Notice") describing in reasonable
detail the facts giving rise to any claim for indemnification hereunder and
shall include in such Claim Notice (if then known) the amount or the method of
computation of the amount of such claim, and a reference to the provision of
this Agreement or any other agreement, document or instrument executed
hereunder or in connection herewith upon which such claim is based; provided,
that a Claim Notice in respect of any action at law or suit in equity by or
against a third Person as to which indemnification will be sought shall be
given promptly after the action or suit is commenced; provided, further that
failure to give such notice shall not relieve the Indemnitor of its obligations
hereunder except to the extent it shall have been prejudiced by such failure.
(b) After the giving of any Claim Notice pursuant hereto, the
amount of indemnification to which an Indemnified Party shall be entitled under
this Article XI shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnitor; (ii) by a final judgment or decree of any
court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnitor shall agree. The judgment or decree of a
court shall be deemed final when the time for appeal, if any, shall have
expired and no appeal shall have been taken or when all appeals taken shall
have been finally determined. The Indemnified Party shall have the burden of
proof in establishing the amount of Loss and Expense suffered by it.
11.4. THIRD PERSON CLAIMS. (a) Subject to Section 11.4(b), the
Indemnified Party shall have the right to conduct and control, through counsel
of its choosing, the defense, compromise or settlement of any third Person
claim, action or
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suit against such Indemnified Party as to which indemnification will be sought
by any Indemnified Party from any Indemnitor hereunder, and in any such case
the Indemnitor shall cooperate in connection therewith and shall furnish such
records, information and testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be reasonably requested by the
Indemnified Party in connection therewith; provided, that the Indemnitor may
participate, through counsel chosen by it and at its own expense, in the
defense of any such claim, action or suit as to which the Indemnified Party has
so elected to conduct and control the defense thereof; and provided, further,
that the Indemnified Party shall not, without the written consent of the
Indemnitor (which written consent shall not be unreasonably withheld), pay,
compromise or settle any such claim, action or suit, except that no such
consent shall be required if, following a written request from the Indemnified
Party, the Indemnitor shall fail, within 14 days after the making of such
request, to acknowledge and agree in writing that, if such claim, action or
suit shall be adversely determined, such Indemnitor has an obligation to
provide indemnification hereunder to such Indemnified Party. Notwithstanding
the foregoing, the Indemnified Party shall have the right to pay, settle or
compromise any such claim, action or suit without such consent, provided that
in such event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless such consent is unreasonably withheld.
(b) If any third Person claim, action or suit against any
Indemnified Party is solely for money damages or, where Seller is the
Indemnitor, will have no continuing effect in any material respect on the VNN
Business or the Purchased Assets, then the Indemnitor shall have the right to
conduct and control, through counsel of its choosing, the defense, compromise
or settlement of any such third Person claim, action or suit against such
Indemnified Party as to which indemnification will be sought by any Indemnified
Party from any Indemnitor hereunder if the Indemnitor has acknowledged and
agreed in writing that, if the same is adversely determined, the Indemnitor has
an obligation to provide indemnification to the Indemnified Party in respect
thereof, and in any such case the Indemnified Party shall cooperate in
connection therewith and shall furnish such records, information and testimony
and attend such conferences, discovery proceedings, hearings, trials and
appeals as may be reasonably
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requested by the Indemnitor in connection therewith; provided, that the
Indemnified Party may participate, through counsel chosen by it and at its own
expense, in the defense of any such claim, action or suit as to which the
Indemnitor has so elected to conduct and control the defense thereof.
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such claim, action or suit, provided that in such
event the Indemnified Party shall waive any right to indemnity therefor
hereunder unless the Indemnified Party shall have sought the consent of the
Indemnitor to such payment, settlement or compromise and such consent was
unreasonably withheld, in which event no claim for indemnity therefor hereunder
shall be waived.
ARTICLE XII
TERMINATION
12.1. TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual consent of Buyer and Seller;
(b) by Seller if the Closing shall not have occurred on or
before the 60th calendar day;
(c) by Buyer in the event of any material breach by Seller of
any of Seller's agreements, representations or warranties contained
herein; or
(d) by Seller in the event of any material breach by Buyer of
any of Buyer's agreements, representations or warranties contained
herein.
12.2. NOTICE OF TERMINATION. Any party desiring to terminate
this Agreement pursuant to Section 12.1 shall give written notice of such
termination to the other party to this Agreement.
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12.3. EFFECT OF TERMINATION. In the event that this Agreement
shall be terminated pursuant to this Article XII, all further obligations of
the parties under this Agreement (other than Sections 4.5, 13.2 and 13.9) shall
be terminated without further liability of any party to the other, provided
that nothing herein shall relieve Seller from liability for its willful breach
of this Agreement.
ARTICLE XIII
GENERAL PROVISIONS
13.1. SURVIVAL OF OBLIGATIONS. All representations, warranties,
covenants and obligations contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement; provided,
however, that, except as otherwise provided in Article XI, the representations
and warranties contained in Articles V and VI shall terminate on the six month
anniversary of the Closing Date. Except as otherwise provided herein, no claim
shall be made for the breach of any representation or warranty contained in
Article V or VI after the date on which such representations and warranties
terminate as set forth in this Section.
13.2. CONFIDENTIAL NATURE OF INFORMATION. Each party agrees
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding the other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and
other related documents, and, in the event the transactions contemplated hereby
shall not be consummated, each party will return to the other party all copies
of documents and materials which have been furnished in connection therewith.
Such documents, materials and information shall not be communicated to any
third Person (other than, in the case of Buyer, to its counsel, accountants,
financial advisors or lenders, and in the case of Seller, to its counsel,
accountants or financial advisors). No other party shall use any confidential
information in any manner whatsoever except solely for the purpose of
evaluating the proposed purchase and sale of the Purchased
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Assets; provided, however, that after the Closing Buyer may use or disclose any
confidential information included in the Purchased Assets or otherwise related
to the VNN Business or the Purchased Assets, provided, further, that Buyer
shall not use or disclose any such confidential information that Buyer knows
would adversely effect any relationship of Seller with any of its customers.
The obligation of each party to treat such documents, materials and other
information in confidence shall not apply to any information which (i) is or
becomes available to such party from a source other than such party, (ii) is or
becomes available to the public other than as a result of disclosure by such
party or its agents, (iii) is required to be disclosed under applicable law or
judicial process, but only to the extent it must be disclosed, or (iv) such
party reasonably deems necessary to disclose to obtain any consents or
approvals contemplated hereby.
13.3. NO PUBLIC ANNOUNCEMENT. Neither Buyer nor Seller shall,
without the approval of the other, make any press release or other public
announcement concerning the transactions contemplated by this Agreement, except
as and to the extent that any such party shall be so obligated by law or the
rules of any stock exchange, in which case the other party shall be advised and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued; provided that the foregoing shall not preclude
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting, Securities and Exchange Commission
and NASDAQ National Market disclosure obligations.
13.4. NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally or when sent by registered or certified mail or by
private courier addressed as follows:
If to Buyer, to:
IT Network, Inc.
5601 Executive Drive
Irving, Texas 75038
Attention: Dan Maitland
Fax: 972/518-2855
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with a copy to:
Source Media, Inc.
Suite 1000
8140 Walnut Hill Lane
Dallas, Texas 75231
Attention: Maryann Walsh
Fax: 214/890-9099
If to Seller, to:
Tribune Media Services, Inc.
435 N. Michigan Avenue
Chicago, Illinois 60611
Attention: President and Chief Executive Officer
Tel: 312/222-4444
Fax: 312/222-8620
With a copy to:
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Attention: General Counsel
Tel: 312/222-2491
Fax: 312/222-4206
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Larry A. Barden
Tel: 312/853-7785
Fax: 312/853-7036
or to such other address as such party may indicate by a notice delivered to
the other party hereto.
13.5. SUCCESSORS AND ASSIGNS. (a) Following the Closing, either
party may assign any of its rights hereunder, but no such assignment shall
relieve it of its obligations hereunder.
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(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any Person other than the parties and successors and assigns
permitted by this Section 13.5 any right, remedy or claim under or by reason of
this Agreement.
13.6. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Exhibits and Schedules referred to herein and the documents delivered pursuant
hereto contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all prior
agreements, understandings or letters of intent between or among any of the
parties hereto. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each
of the parties hereto.
13.7. INTERPRETATION. Article titles and headings to sections
herein are inserted for convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this Agreement. The
Schedules and Exhibits referred to herein shall be construed with and as an
integral part of this Agreement to the same extent as if they were set forth
verbatim herein.
13.8. WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of
any breach of this Agreement shall be held to constitute a waiver of any other
or subsequent breach.
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13.9. EXPENSES. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and to
its performance and compliance with all agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses and disbursements of its counsel and accountants.
13.10. PARTIAL INVALIDITY. Wherever possible, each provision
hereof shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
13.11. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more counterparts, each of which shall be considered an
original instrument, but all of which shall be considered one and the same
agreement, and shall become binding when one or more counterparts have been
signed by each of the parties hereto and delivered to each of Seller and Buyer.
13.12. FURTHER ASSURANCES. From time to time following the
Closing, Seller shall execute and deliver, or cause to be executed and
delivered, to Buyer such other instruments of conveyance and transfer as Buyer
may reasonably request or as may be otherwise reasonably necessary to more
effectively convey and transfer to, and vest in, Buyer and put Buyer in
possession of, any part of the Purchased Assets, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases,
easements and other commitments included in the Purchased Assets which cannot
be transferred or assigned effectively without the consent of third parties
which consent has not been obtained prior to the Closing, to cooperate with
Buyer at its request in endeavoring to obtain such consent promptly.
Notwithstanding anything in this Agreement to the contrary, this Agreement
shall not constitute an agreement to assign any license, certificate, approval,
authorization, agreement, contract, lease, easement or other commitment
included in the
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<PAGE> 42
Purchased Assets if an attempted assignment thereof without the consent of a
third party thereto would constitute a breach thereof.
13.13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Illinois.
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<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed the day and year first above written.
IT NETWORK, INC.
By: /s/ WILLIAM S. BEDFORD
______________________________
Name: William S. Bedford
Title: Chief Operating Officer
SOURCE MEDIA, INC.
By: /s/ TIMOTHY P. PETERS
______________________________
Name: Timothy P. Peters
Title: Chairman and CEO
VOICE NEWS NETWORK, INC.
By: /s/ DAVID WILLIAMS
______________________________
Name: David Williams
Title: President
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