EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is entered into as
of February 24, 2003 by and among EMP Group L.L.C., a Delaware limited liability
company (the "Company"), and EMP Merger Corporation, a Delaware corporation
("Merger Corp"). Capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to them in the EMP Group L.L.C. Fourth
Amended and Restated Limited Liability Company Agreement and Investors Rights
Agreement dated as of January 23, 2003 (the "Current LLC Agreement").
WHEREAS, the parties to this Agreement desire to effect a
recapitalization of the Company in which, upon the terms and subject to the
conditions set forth herein and, in accordance with the Delaware Limited
Liability Company Act (as amended, the "LLC Act") and the Delaware General
Corporation Law (as amended, the "DGCL"), Merger Corp will merge with and into
the Company (the "Merger"), with the Company surviving the Merger, and each of
the Units shall be converted into the right to receive the consideration set
forth in Section 2 of this Agreement;
WHEREAS, the Board of Managers of the Company has approved and declared
the Merger advisable and the Evercore Member and any other necessary Members
pursuant to Section 4.1 of the Current LLC Agreement have adopted this Agreement
and the Amended LLC Agreement (as defined below) and approved the Merger and the
other transactions contemplated hereby;
WHEREAS, the Board of Directors of Merger Corp has approved and declared
the Merger advisable and the sole stockholder holding voting securities of
Merger Corp has adopted this Agreement and approved the Merger and the other
transactions contemplated hereby;
WHEREAS, Xxxxx X. Xxxxxx ("DJP"), the Chief Executive Officer of
American Media, Inc., a Delaware corporation and a wholly owned subsidiary of
the Company ("AMI"), and AMI have entered into an Amended and Restated
Employment Agreement as of the date hereof, pursuant to which, upon the terms
and subject to the conditions set forth therein, among other things, the
Employment Term (as defined therein) shall be extended in the manner set forth
therein; and
WHEREAS, Xxxxxx X. Xxx Equity Fund V, L.P. and certain of its Affiliates
(as defined below), Evercore Capital Partners II L.P. and certain of its
Affiliates, DJP and the parties set forth on the signature pages thereto have
executed and delivered on the date hereof that certain Contribution Agreement
attached hereto as Exhibit F (the "Contribution Agreement"), pursuant to which,
upon the terms and subject to the conditions set forth therein, such Transferors
(as defined in the Contribution Agreement) will contribute certain Units or cash
to Merger Corp immediately prior to the Merger in consideration for the issuance
by Merger Corp to such Transferors of shares of Class B Common Stock, par value
$0.01 per share, of Merger Corp ("Merger Corp Common Stock").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
mutual receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby
covenant and agree as follows:
1. The Merger.
1.1 The Merger. Upon the terms and subject to satisfaction
or waiver of the conditions set forth in this Agreement, and in accordance with
the LLC Act and the DGCL, at the Effective Time (as defined below), Merger Corp
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of Merger Corp shall cease at the Effective Time
and the Company shall continue as the surviving limited liability company of the
Merger (the "Surviving Company").
1.2 Effective Time. Subject to the satisfaction or, if
permissible, waiver of the conditions set forth in Section 6 hereof, on the
Closing Date (as defined below), the parties hereto shall cause the Merger to be
consummated by filing a certificate of merger (the "Certificate of Merger") with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of, the LLC Act and the
DGCL (the date and time of such filing, or if another date and time is
permissible under the LLC Act and the DGCL and agreed to by Merger Corp and the
Company, and specified in such filing, such specified date and time, being the
"Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided herein and in the applicable provisions of
the LLC Act and the DGCL. Without limiting the generality of the foregoing, at
the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, powers and franchises of the Company and Merger Corp shall
vest in the Surviving Company, and all debts, liabilities and duties of the
Company and Merger Corp shall become the debts, liabilities and duties of the
Surviving Company.
1.4 Limited Liability Company Agreement. At the Effective
Time, the Current LLC Agreement shall be amended, restated and replaced in its
entirety by the EMP Group L.L.C. Fifth Amended and Restated Limited Liability
Company Agreement and Investors Rights Agreement attached hereto as Exhibit A
(the "Amended LLC Agreement"), which shall be the limited liability company
agreement of the Surviving Company. Each Transferor shall execute a counterpart
to the Amended LLC Agreement and shall be admitted to the Company as a member of
the Company and shall be bound by the Amended LLC Agreement as of the Effective
Time. At the Effective Time, Members of the Company holding Class B Units
immediately prior to the Merger (other than the Merger Corp) will automatically
continue as members of the Company and will be bound by the Amended LLC
Agreement, without any further action, subject to Section 2.2(c) hereof.
1.5 Board of Managers and Officers. The Board of Managers of
the Surviving Company at the Effective Time shall be as set forth in the Amended
LLC Agreement, each such member of the Board of Managers to hold office in
accordance with the Certificate of Formation and the Amended LLC Agreement of
the Surviving Company until the earlier of such member's resignation or removal,
or until such member's respective successors are duly elected and qualified, as
the case may be. The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Company, each to hold office
in accordance
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with the Certificate of Formation and Amended LLC Agreement of the
Surviving Company until the earlier of such officer's resignation or removal, or
until such officer's respective successors are duly elected and qualified, as
the case may be.
1.6 Closing. Unless this Agreement shall have been earlier
terminated in accordance with Section 7.1 hereof, the consummation of the
transactions contemplated by this Agreement (the "Closing") shall, subject to
the satisfaction or waiver (by the parties entitled to the benefits thereof) of
the conditions set forth in Section 6 hereof, take place at the offices of Weil,
Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on a day
selected by the parties that is no later than forty-five (45) days after the day
on which the conditions set forth in Sections 6.1(b), (c), and (e) are satisfied
or waived, but in no event later than June 30, 2003, unless the parties hereto
agree to another date (such date, the "Closing Date").
2. Conversion of Securities.
2.1 Capital Stock of Merger Corp. As of the Effective Time,
by virtue of the Merger and without any action on the part of the holder of any
capital stock or equity interests of the Company or Merger Corp, (i) each share
of Class A Common Stock, $0.01 par value per share, of Merger Corp (the "Class A
Common Stock") issued and outstanding shall be converted into the right to
receive in cash from Merger Corp, without interest, an amount equal to $0.10
(the "Class A Common Stock Consideration"), and (ii) each share of issued and
outstanding Merger Corp Common Stock shall be converted into one (1) Class A
Unit (as defined in the Amended LLC Agreement and referred to herein as a "New
Class A Unit") of the Surviving Company, such conversion to be reflected in
Annex A of the Amended LLC Agreement. All such shares of Class A Common Stock
and Merger Corp Common Stock converted pursuant to this Section 2.1 shall
thereafter no longer be issued and outstanding and shall automatically be
canceled and retired and cease to exist after the Effective Time.
2.2 Units of the Company. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
capital stock or equity interests of the Company or Merger Corp:
(a) each of the Class A Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class A Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $1,605.272 (the "Class A Units Consideration") and all such
Class A Units converted pursuant to this Section 2.2(a) shall thereafter no
longer be issued and outstanding and shall automatically be canceled and retired
and cease to exist after the Effective Time;
(b) each of the Class A-1 Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class A-1 Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from
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Merger Corp, without interest, an amount equal to $1,605.272 (the "Class A-1
Units Consideration") and all such Class A-1 Units converted pursuant to this
Section 2.2(b) shall thereafter no longer be issued and outstanding and shall
automatically be canceled and retired and cease to exist after the Effective
Time;
(c) each of the Class B Units of the Company issued and
outstanding immediately prior to the Effective Time, if any, shall be shall be
converted into 0.913 New Class A Units, such conversion to be reflected in Annex
A of the Amended LLC Agreement, and all such Class B Units converted pursuant to
this Section 2.2(c) shall thereafter no longer be issued and outstanding and
shall automatically be canceled and retired and cease to exist after the
Effective Time;
(d) each of the Class C Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class C Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $1,726.37 (the "Class C Units Consideration") and all such
Class C Units converted pursuant to this Section 2.2(d) shall thereafter no
longer be issued and outstanding and shall automatically be canceled and retired
and cease to exist after the Effective Time;
(e) each of the Class D Units of the Company issued and
outstanding immediately prior to the Effective Time, if any, shall be shall be
canceled and retired, without any consideration therefor, and cease to exist
after the Effective Time;
(f) each of the Class E Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class E Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $913.10 (the "Class E Units Consideration") and all such
Class E Units converted pursuant to this Section 2.2(f) shall thereafter no
longer be issued and outstanding and shall automatically be canceled and retired
and cease to exist after the Effective Time;
(g) each of the Class F Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class F Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $1,751.138 (the "Class F Units Consideration") and all such
Class F Units converted pursuant to this Section 2.2(g) shall thereafter no
longer be issued and outstanding and shall automatically be canceled and retired
and cease to exist after the Effective Time;
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(h) each of the Class G Units of the Company issued and
outstanding immediately prior to the Effective Time, if any, shall be shall be
canceled and retired, without any consideration therefor, and cease to exist
after the Effective Time;
(i) each of the Class H Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Class H Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $1,683.803 (the "Class H Units Consideration") and all such
Class H Units converted pursuant to this Section 2.2(i) shall thereafter no
longer be issued and outstanding and shall automatically be canceled and retired
and cease to exist after the Effective Time; and
(j) each of the Profits Units of the Company issued and
outstanding immediately prior to the Effective Time (other than Profits Units,
if any, held by Merger Corp, which shall be canceled and retired and no payment
shall be made or consideration delivered in respect thereof), if any, shall be
converted into the right to receive in cash from Merger Corp, without interest,
an amount equal to $314.649 (the "Profits Units Consideration," and together
with the Class A Units Consideration, the Class A-1 Units Consideration, the
Class C Units Consideration, the Class F Units Consideration and the Class H
Units Consideration, the "Cash Merger Consideration") and all such Profits Units
converted pursuant to this Section 2.2(j) shall thereafter no longer be issued
and outstanding and shall automatically be canceled and retired and cease to
exist after the Effective Time.
2.3 Payments of Cash Merger Consideration. As of the
Effective Time, subject to Section 2.4 hereof, Merger Corp shall remit to each
Member that is entitled to receive Cash Merger Consideration pursuant to Section
2.2, in immediately available funds, the amount of Cash Merger Consideration due
to such Member pursuant to Section 2.2, by wire transfer to such respective
account as such Member shall have notified to the Company for such purpose at
least seven (7) days prior to the Closing Date and otherwise by mailing a check
in such amount to such Member's address set forth on Annex A of the Current LLC
Agreement (or such other address furnished by the Member to the Company in
writing at least seven (7) days prior to the Closing Date), provided, however
that such remitted Cash Merger Consideration shall be net of the outstanding
principal amount and accrued but unpaid interest thereon through and including
the Closing Date with respect to those loans outstanding on the Closing Date
(such amount to be determined by the Company and delivered by written notice to
such Member two (2) days prior to the Closing Date) from the Company or any of
its Subsidiaries to such Member as set forth on Schedule 2.3 attached hereto and
the corresponding promissory note or notes with respect to such loans shall be
cancelled and no longer outstanding, provided, further that each such Member
shall have furnished to the Company a W-9 or W-8 (if applicable). As of the
Effective Time, subject to Section 2.4 hereof, Merger Corp shall remit to the
holder of all of the issued and outstanding shares of the Class A Common Stock
entitled to receive Class A Common Stock Consideration pursuant to Section 2.1,
in immediately available funds by check, the amount of Class A Common Stock
Consideration due to such holder pursuant to Section 2.1. At the Effective Time,
the amounts held in the Merger Corp's account set forth on Exhibit A to the
Contribution Agreement representing the aggregate amount of Cash Contributions
(as defined in the Contribution Agreement) shall be transferred to an account
for the benefit of the holders of
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the Class A Units, the Class A-1 Units, Class C Units, the Class E Units, the
Class F Units, the Class H Units and the Profit Units for purposes of disbursing
the Class A Units Consideration, the Class A-1 Units Consideration, Class C
Units Consideration, the Class E Units Consideration, the Class F Units
Consideration, the Class H Units Consideration and the Profits Units
Consideration in accordance with Section 2.2 hereof. The Company shall provide
the wiring instructions for such account to Merger Corp at least seven (7) days
prior to the Closing Date.
2.4 Withholding from Cash Merger Consideration. Merger Corp
and the Surviving Company shall be entitled to deduct and withhold from the Cash
Merger Consideration otherwise payable pursuant to this Agreement to any holder
of Units such amounts as the Surviving Company is required to deduct and
withhold under the Code (as defined below), or any provision of state, local or
foreign tax law, with respect to the making of such payment. To the extent that
amounts are so withheld by the Surviving Company, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Units in respect of whom such deduction and withholding was made by the
Surviving Company, and the Surviving Company shall provide receipts or similar
evidence of such withholding to such holders of Units.
3. Representations and Warranties by the Company. The Company
hereby represents and warrants to Merger Corp, as of the date hereof, except as
set forth in the Company Disclosure Schedules attached hereto, as follows:
3.1 Organization.
(a) Each of the Company and its Subsidiaries (as defined
below) is (a) duly organized, validly existing and in good standing under the
laws of its state of incorporation or formation, and (b) has all requisite
organizational power and authority to carry on its business as it is currently
conducted and to own, lease and operate its properties where such properties are
now owned, leased or operated. Each of the Company and its Subsidiaries is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or license necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed or in good standing would not, individually or in the aggregate, have a
Material Adverse Effect. For purposes of this Agreement, the term "Material
Adverse Effect" means any material adverse change, event, circumstance or
development with respect to, or material adverse effect on, (i) the business,
assets, liabilities, capitalization, financial condition, or results of
operations of the Company and its Subsidiaries, taken as a whole, or (ii) the
ability of the Company to consummate the transactions contemplated by this
Agreement, in each case other than effects due to (A) general economic, market
or political conditions, (B) matters generally affecting the industry in which
the Company operates or (C) any matters resulting from the execution, delivery,
performance or announcement of this Agreement and the other agreements described
herein and the transactions contemplated hereby and thereby. For the avoidance
of doubt, the terms "material", "materially" or "materiality" as used in this
Agreement with an initial lower case "m" shall have their respective customary
and ordinary meanings, without regard to the meanings ascribed to Material
Adverse Effect in the second to last sentence of this Section 3.1(a).
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(b) The Company has made available to Merger Corp complete
and accurate copies of the Certificate of Formation of the Company and of the
charter, bylaws or other organizational documents, each as amended to date, of
each Subsidiary of the Company.
3.2 Capitalization, Equity Ownership.
(a) Immediately following consummation of the transactions
contemplated hereby, the Surviving Company's total outstanding limited liability
company interests will consist solely of the New Class A Units issued in the
Merger in accordance with Section 2.2 hereof and 65,368.857 new Class B Units
(the "New Class B Units," and together with the New Class A Units, the "New
Units"), in each case, issued and outstanding as set forth in more detail on
Schedule 3.2(a) of the Company Disclosure Schedules; all of the foregoing
securities of the Surviving Company will have been duly authorized and will be
validly issued and fully paid and non-assessable, and none of them will be
issued in violation of any preemptive or similar right; and, except as
contemplated in this Agreement, the Amended LLC Agreement or the other
agreements, instruments or documents delivered in connection with the
transactions contemplated hereby, neither the Company nor any of its
Subsidiaries will be a party to, or bound by, any contract, agreement or
arrangement to issue, sell or otherwise dispose of or redeem, purchase or
otherwise acquire any membership interest or any other security of the Company
or any other security exercisable or exchangeable for or convertible into any
membership interest or any other security of the Company, and there will not be
any outstanding option, warrant, or other right to subscribe for or purchase, or
contract, agreement or arrangement with respect to, any membership interest or
any other security of the Company or any other security exercisable or
convertible into any membership interest or any other security of the Company.
Except as set forth in this Agreement or in the Amended LLC Agreement, there are
no outstanding stock appreciation rights, phantom stock, profit participation,
performance units or similar rights with respect to the Company or voting
trusts, proxies, or other agreements or understandings with respect to the Units
or New Units to which the Company is party.
(b) Schedule 3.2(b) of the Company Disclosure Schedules sets
forth for each of the Company's Subsidiaries (i) its name and jurisdiction of
organization, (ii) its form of organization and (iii) the authorized capital
stock, if applicable, and the capital stock or limited liability company
interests held by the Company, directly or indirectly, in such Subsidiary
immediately following the consummation of the transactions contemplated hereby.
The Company and/or one or more wholly-owned Subsidiaries of the Company are the
sole beneficial and record owners of the outstanding shares of capital stock or
other interests in each of its Subsidiaries, free and clear of all liens, except
(x) for Permitted Encumbrances (as defined below) and (ii) as set forth on
Schedule 3.2(b) of the Company Disclosure Schedules. All of the outstanding
shares of capital stock and limited liability company interests of the Company's
Subsidiaries have been duly authorized and validly issued and are fully paid and
nonassessable, and free and clear of all liens and none of them has been issued
in violation of any preemptive or similar right, except (1) for Permitted
Encumbrances and (2) as set forth on Schedule 3.2(b) of the Company Disclosure
Schedules. Except as contemplated in this Agreement or the other agreements,
instruments or documents delivered in connection with the transactions
contemplated hereby, neither the Company nor any of its Subsidiaries will be a
party to, or bound by, any contract, agreement or arrangement to issue, sell or
otherwise dispose of or
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redeem, purchase or otherwise acquire any membership interest or any other
security of any of the Company's Subsidiaries or any other security exercisable
or exchangeable for or convertible into any membership interest or any other
security of any of the Company's Subsidiaries, and there will not be any
outstanding options, warrants, or other rights to subscribe for or purchase, or
any contract, agreement or arrangement with respect to, any membership interest
or any other security of any of the Company's Subsidiaries or any other security
exercisable or convertible into any membership interest or any other security of
any of the Company's Subsidiaries. Except as set forth on Schedule 3.2(b) of the
Company Disclosure Schedules or in this Agreement, there are no (i) outstanding
stock appreciation, phantom stock, profit participation, performance units or
similar rights with respect to any of the Company's Subsidiaries, or (ii) voting
trusts, proxies, or other agreements or understandings with respect to the
voting of capital stock or limited liability company interests to which any of
the Company's Subsidiaries is party. As used in this Agreement, "Permitted
Encumbrance" shall mean (a) tax liens with respect to taxes not yet due and
payable or which are being contested in good faith and for which appropriate
reserves have been established in accordance with generally accepted accounting
principles, consistently applied; (b) deposits or pledges made in connection
with, or to secure payment of, utilities or similar services, workers'
compensation, unemployment insurance, old age pensions, or other social security
obligations; (c) purchase money security interests in any assets or property
acquired by the Company or any of its Subsidiaries; (d) interests or title of a
lessor under any lease under which the Company or any of its Subsidiaries is the
lessee; (e) mechanics', materialmen's or contractors' liens or encumbrances or
any similar lien or restriction; (f) easements, rights of way, restrictions, and
other similar charges and encumbrances not interfering with the ordinary conduct
of the business of the Company or detracting from the value of the assets of the
Company or any of its Subsidiaries in any material respect; (g) liens
outstanding on the date hereof pursuant to agreements which will be satisfied as
of the Closing; and (h) pledges, mortgages, security interests and other liens
securing indebtedness under the Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of January 23, 2003, by and among AMI, American
Media Operations, Inc. ("AMO"), the Lenders a party thereto and XX Xxxxxx Chase
Bank, as Administrative Agent, and the Guarantors a party thereto, as amended.
(c) There are no obligations, contingent or otherwise, of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock, limited liability company interests or any other
security of the Company or any of its Subsidiaries, or to provide funds to or
make any material investment in the Company or any of its Subsidiaries or any
other entity except as set xxxx on Schedule 3.2(c) of the Company Disclosure
Schedules.
(d) Except as set forth on Schedule 3.2(b) of the Company
Disclosure Schedules, neither the Company nor any of its Subsidiaries directly
or indirectly owns any equity, membership, partnership or similar interest in,
or any interest convertible into or exchangeable or exercisable for any equity,
membership, partnership or similar interest in, any corporation, partnership,
joint venture, limited liability company or other business association or
entity, whether incorporated or unincorporated, and neither the Company, nor any
of its Subsidiaries, is a general partner or managing member of any general
partnership, limited partnership, limited liability company or other entity. As
used in this Agreement, the term "Subsidiary" means, with respect to a party,
any corporation, partnership, joint venture, limited liability company or other
business association or entity, whether incorporated or
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unincorporated, of which (i) such party or any other Subsidiary of such party is
a general partner or a managing member, (ii) such party and/or one or more of
its Subsidiaries holds voting power to elect a majority of the board of
directors or other governing body performing similar functions, or (iii) such
party and/or one or more of its Subsidiaries, directly or indirectly, owns or
controls more than fifty percent (50%) of the equity, membership, partnership or
similar interests.
3.3 Authority. The Company has the power to enter into this
Agreement and all other agreements, instruments and documents executed and
delivered by the Company pursuant to this Agreement (collectively, the "Company
Delivered Documents") and to perform its respective obligations thereunder. The
execution, delivery and performance of the Company Delivered Documents and the
consummation of the transactions contemplated thereby have been duly authorized
by the Company and the required Members of the Company and no other proceeding
or approval on the part of the Company is necessary to authorize the execution
and delivery of the Company Delivered Documents or the performance of any of the
transactions contemplated thereby. Assuming due authorization, execution and
delivery of the Company Delivered Documents by the other parties thereto, the
Company Delivered Documents will be legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms.
3.4 No Violation. Neither the execution, delivery or
performance of any of the Company Delivered Documents nor the consummation on
the Closing Date of any of the transactions contemplated thereby (i) will
violate or conflict with the Certificate of Formation of the Company or the
Amended LLC Agreement, (ii) will result in any breach of, or default under, any
provision of any Material Contract (as defined below), (iii) except for the
Required Filings (as defined below), is prohibited by, or requires the Company
to obtain or make, any consent, authorization, approval, registration or filing
under any statute, law, ordinance, regulation, rule, judgment, decree or order
of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, (iv) will cause any acceleration of maturity
of any note, instrument or other obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or with respect to which the Company or any of its Subsidiaries is an
obligor or guarantor, or (v) will result in the creation or imposition of any
lien, claim, charge, restriction, equity, tax or encumbrance of any kind or
description (collectively "Encumbrances" and individually an "Encumbrance") upon
or give to any other person any interest or right (including any right of
termination or cancellation) in or with respect to the equity or any of the
properties, assets, business, agreements or contracts of the Company, except (a)
with respect to each of the foregoing, as set forth on Schedule 3.4 of the
Company Disclosure Schedules and (b) with respect to the immediately foregoing
clauses (ii), (iii), (iv) and (v), as would not, individually or in the
aggregate, have a Material Adverse Effect.
3.5 Undisclosed Liabilities. Since December 31, 2002 (except
(i) for the transactions contemplated by this Agreement and (ii) as set forth on
Schedule 3.5 of the Company Disclosure Schedules), neither the Company nor any
of its Subsidiaries has incurred any liability or obligation (absolute, accrued,
contingent, or otherwise) of any nature affecting the Company or any of its
Subsidiaries or any of their properties or assets, other than (x) liabilities
and obligations incurred in the ordinary course of business, that would properly
be reflected or reserved against in a balance sheet prepared in accordance with
generally accepted
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accouting principles in accordance with the Company's historical practices and
(y) such other liabilities and obligations that would not, individually or in
the aggregate, have a Material Adverse Effect.
3.6 Absence of Certain Changes. Since December 31, 2002
(except (i) for the negotiation execution and delivery of this Agreement and the
other Company Delivered Documents, (ii) as contemplated by this Agreement and
the other agreements contemplated herein and (iii) as set forth on Schedule 3.6
of the Company Disclosure Schedules):
(a) no Material Adverse Effect has occurred;
(b) neither the Company nor any of its Subsidiaries has
issued, sold or otherwise disposed of, or agreed to issue, sell or otherwise
dispose of, any equity interests or any other security of the Company or any of
its Subsidiaries or granted or agreed to grant any option, warrant or other
right to subscribe for or to purchase any equity interests or any other security
of the Company or any of its Subsidiaries;
(c) no material property or asset of the Company or any of
its Subsidiaries has been sold, transferred, or otherwise disposed of, and
neither the Company nor any of its Subsidiaries has agreed to sell, transfer, or
otherwise dispose of any of their respective properties or assets, except with
respect to each of the foregoing in the ordinary course of business; and
(d) There has not been any amendment to, or termination of,
any contract, agreement or license that would reasonably be expected to have a
Material Adverse Effect.
3.7 Title to and Condition of Properties and Assets. Except
as set forth on Schedule 3.7 of the Company Disclosure Schedules, the Company
and each of its Subsidiaries have good and marketable title to all of their
respective owned assets and properties, subject to no Encumbrances (other than
Permitted Encumbrances). The Company's and its Subsidiaries' facilities,
machinery, furniture, office, and other equipment are in good operating
condition and repair, subject only to ordinary wear and tear, and neither the
Company nor any of its Subsidiaries nor any of their respective assets or
properties is in violation of any applicable ordinance, regulation, or building,
zoning, environmental or other law in respect thereof, except with respect to
each of the foregoing as would not, individually or in the aggregate, have a
Material Adverse Effect. The assets of the Company consist solely of capital
stock of AMI, and the assets of AMI consist solely of capital stock of AMO.
3.8 Property. Attached hereto as Schedule 3.8 of the Company
Disclosure Schedules is a true and complete list of all real property owned and
real and material personal property leased by the Company and each of its
Subsidiaries. Each lease set forth on Schedule 3.8 of the Company Disclosure
Schedules pursuant to which the Company or any of its Subsidiaries leases any
real property or personal property is in full force and effect and is valid and
enforceable in accordance with its terms, except as enforceability may be (i)
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditor's rights (ii) subject to general principles of equity.
There is not under any such lease any default by the
10
Company or any of its Subsidiaries or any event that with notice or lapse of
time or both would constitute such a default by the Company or any of its
Subsidiaries and with respect to which the Company or any of its Subsidiaries
has not taken adequate steps to prevent such default from occurring, except for
any such defaults and events as would not, individually or in the aggregate,
have a Material Adverse Effect. To the Company's Knowledge, there is not under
any such lease any default by any other party thereto or any event that with
notice or lapse of time or both would constitute such a default thereunder by
such party, except for such defaults and events as would not, individually or in
the aggregate, have a Material Adverse Effect.
3.9 Material Contracts. All Material Contracts (as defined
below) to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries is bound are listed on Schedule 3.9 of
the Company Disclosure Schedules. Except as disclosed on Schedule 3.9 of the
Company Disclosure Schedules, each Material Contract is valid and subsisting,
and the Company or any of its Subsidiaries, as applicable, has duly performed in
all material respects all its obligations under each such Material Contract to
which it is party to the extent that such obligations to perform have accrued,
and no breach or default or, to the Company's Knowledge, any other party or
obligor thereunder, has occurred. For purposes hereof, a "Material Contract" of
the Company or any of its Subsidiaries means any agreement, arrangement, bond,
commitment, indemnity, lease or license to which such person is a party that (a)
by its terms obligates such person to pay an amount in excess of $1,000,000 per
year and which cannot be terminated or canceled by such person without liability
or penalty upon ninety (90) days' or less prior notice, (b) limits or restricts
the ability of such person to compete or to conduct its business in any manner
or place, (c) is a credit agreement, note, bond, mortgage, deed of trust, or
indenture evidencing any indebtedness of such person for borrowed money, (d) is
a guaranty or obligation, other than pursuant to the Plans, of any affiliate,
officer, or director of such person, from or to such person, (e) provides for
the purchase and sale of any business, corporation, partnership, limited
liability partnership, limited liability company, joint venture, association or
other business organization, or (f) would be required to be required to be filed
by the Company pursuant to Item 601(10) of Regulation S-K of the Rules and
Regulations promulgated by the Securities and Exchange Commission pursuant to
the Securities Act of 1933 and the Securities Exchange Act of 1934, provided,
however, that "Material Contracts" shall not mean or include any of the Employee
Benefit Plans.
3.10 Litigation. Except as set forth on Schedule 3.10 of the
Company Disclosure Schedules, there are no actions, suits, proceedings, or
investigations, either at law or in equity, or before any commission or other
administrative authority in any jurisdiction, of any kind now pending or, to the
Company's Knowledge, threatened which (i) are reasonably likely to result in any
liability for the Company or any of its Subsidiaries in excess of $100,000,
either individually or in the aggregate, (ii) questions the validity of any
Company Delivered Document or (iii) seeks to delay, prohibit or restrict in any
manner any action taken or contemplated to be taken by the Company or any of its
Subsidiaries under any Company Delivered Document. None of the Company or its
Subsidiaries has received any written notice of any material violation of any
laws or any investigation of any such violation from any governmental authority,
commission or other administrative authority in any jurisdiction, of any kind.
11
3.11 Patents, Copyrights and Trademarks.
(a) Schedule 3.11 of the Company Disclosure Schedules sets
forth a complete list of all material trade names, trademarks and service marks
(collectively, the "Trademarks"), and all domain names owned or held by the
Company and its Subsidiaries and used in the conduct of their respective
businesses. Except as set forth in Schedule 3.11 of the Company Disclosure
Schedules, (i) each of the Company and its Subsidiaries owns, possesses, or
licenses all Intellectual Property Rights (as defined below) necessary for the
conduct of the business of the Company and its Subsidiaries as currently
conducted and (ii) the Trademarks for all of the publication titles that are
published as of the date hereof by the Company and its Subsidiaries, and, to the
Company's Knowledge, all of the other Intellectual Property Rights owned or held
by the Company and its Subsidiaries and used in the conduct of their respective
businesses, are free of any adverse ownership claims, including without
limitation, claims by current and former employees, freelance authors or
independent contractors. Except as set forth on Schedule 3.11 of the Company
Disclosure Schedules, there is no claim challenging the scope, validity, or
enforceability of any of the Intellectual Property Rights owned or held by the
Company and its Subsidiaries and used in the conduct of their respective
businesses. To the Company's Knowledge, neither the Company nor any of its
Subsidiaries is infringing or is subject to any unfair competition claim with
respect to any Intellectual Property Rights of any person or entity, and neither
the Company nor any of its Subsidiaries has received any such claim or other
notice of any such violation or infringement. Except as set forth on Schedule
3.11 of the Company Disclosure Schedules, to the Company's Knowledge, no person
is infringing upon any of the Intellectual Property Rights owned or held by the
Company and its Subsidiaries and used in the conduct of their respective
businesses. For purposes of this Agreement, "Intellectual Property Rights"
includes all copyrights, patents, Trademarks, domain names, whether registered
or at common law, all applications therefor, and all other proprietary or
intellectual property rights.
(b) The Company and each of its Subsidiaries have taken
reasonable precautions to (i) protect the confidentiality, integrity and
security of all software, databases, systems, networks and Internet sites and
all information stored or contained therein or transmitted thereby ("Software")
from any unauthorized use, access, interruption or modification by third
parties; (ii) comply with all applicable laws with respect to the privacy of all
on-line users and customers and any information related thereto; (iii) maintain
the security and integrity of transactions executed through its Software; (iv)
verify the correct identity of its users and customers; and (v) ensure the
enforceability of any transactions executed through its Internet web sites.
3.12 Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with, and the execution and delivery of this
Agreement and the other Company Delivery Documents and the consummation by the
Company of the transactions contemplated hereby and thereby, will comply with,
all federal, state and local statutes, laws, ordinances, regulations, rules,
permits, judgments, orders or decrees applicable to the Company and each of its
Subsidiaries, and there does not exist any basis for any claim of default under
or violation of any such statute, law, ordinance, regulation, rule, judgment,
order or decree, in each case, except such non-compliance, defaults or
violations, if any, that would not, individually or in the aggregate, have a
Material Adverse Effect. The Company and each of its Subsidiaries are in
compliance with (i) all applicable requirements of all state, local and foreign
governmental
12
authorities with respect to environmental protection, including, without
limitation, regulations establishing quality criteria and standards for air,
water, land and hazardous materials, (ii) all applicable requirements of the
Occupational Safety and Health Act of 1970 and all rules, regulations and orders
thereunder, and (iii) all applicable laws and related rules and regulations of
all jurisdictions affecting labor union activities, civil rights, or employment,
including, without limitation, in the United States, the Civil Rights Act of
1964, the Age Discrimination in Employment Act of 1967, the Equal Employment
Opportunity Act of 1972, the Employee Retirement Income Security Act of 1974,
the Equal Pay Act and the National Labor Relations Act, in each case, other than
any such non-compliance that would not, individually or in the aggregate, have a
Material Adverse Effect.
3.13 Governmental Authorizations and Regulations. Each
material license, franchise, permit and other governmental authorization held by
the Company or its Subsidiaries is valid, and neither the Company nor any of its
Subsidiaries has received any notice that any governmental authority intends to
cancel, terminate or not renew such material license, franchise, permit or other
governmental authorization. After the Closing, the Company or any of its
Subsidiaries will continue to hold all material licenses, franchises, permits
and other governmental authorizations necessary to the conduct of their
respective businesses as currently conducted. Except for (i) compliance with any
applicable requirements of the Securities Act of 1933 and the rules and
regulations promulgated thereunder, as amended, and state blue sky or securities
laws and (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware (the foregoing, collectively, the "Required
Filings"), no consent of, or filing with, any governmental authority is required
to be obtained or made by the Company or any of its Subsidiaries in connection
with the execution and delivery of this Agreement and the other Company
Delivered Documents and the consummation of the transactions contemplated hereby
and thereby.
3.14 Labor Matters. No employees of the Company or any of its
Subsidiaries are currently represented by a labor union or labor organization,
no labor union or labor organization has been certified or recognized as a
representative of any such employees, and neither the Company nor any of its
Subsidiaries has any obligation under any collective bargaining agreement or
other agreement with any labor union or labor organization that, in any way,
affects the Company or any of its Subsidiaries. To the Company's Knowledge,
there are not any activities or efforts of any labor union or labor organization
(or representative thereof) to organize any employees of the Company or any of
its Subsidiaries or of any demands for recognition or collective bargaining, nor
of any strikes, slowdowns, work stoppages, or lock-outs of any kind, or threats
thereof, by or with respect to any employees of the Company or any of its
Subsidiaries or any actual or claimed representative thereof, and no such
activities, efforts, demands, strikes, slowdowns, work stoppages or lock-outs
occurred during the three-year period preceding the date hereof. Neither the
Company nor any of its Subsidiaries is involved in any dispute or negotiation
regarding a claim of material importance with any labor union or labor
organization concerning any employee of the Company or any of its Subsidiaries
and there are no controversies, claims, demands or grievances of material
importance pending or, to the Company's Knowledge, threatened, between the
Company or any of its Subsidiaries and any of their respective employees or any
actual or claimed representative thereof.
13
3.15 Relationships. To the Company's Knowledge, the
relationships of each of the Company's Subsidiaries' with material suppliers,
distributors, dealers, sales representatives, customers and others having
business relationships with them are generally satisfactory, and there is no
indication of any intention by any party thereto to terminate or modify the
terms of any of such relationships, except for any termination or modification
which would not reasonably be expected to have a Material Adverse Effect.
3.16 Employees. Except as set forth on Schedule 3.16 of the
Company Disclosure Schedules, as of the date hereof, there has been no
resignation or termination of employment of any officer of the Company or any of
the following officers of any of the Company and its Subsidiaries: (i) Executive
Vice President/Editorial Director Tabloids; (ii) Senior Vice President/Group
Editorial Director of Shape, Fit Pregnancy and Natural Health; (iii) Executive
Vice President/Chief Financial Officer; (iv) Executive Vice President/Chief
Marketing Officer; (v) the president/Chief Executive Officer of Distribution
Services, Inc.; (vi) the Senior Vice President of Manufacturing and (vii) the
Senior Vice President and General Counsel. Except as set forth on Schedule 3.16
of the Company Disclosure Schedules, neither the Company nor any of its
Subsidiaries has entered into any currently effective severance or similar
arrangement in respect of any of their respective present or former employees
that will result in any obligation (absolute or contingent) of the Company or
any of its Subsidiaries to make any payment to any present or former employees
following termination of employment.
3.17 Compliance With Legislation Regulating Environmental
Quality. Except as would not, individually or in the aggregate, have a Material
Adverse Effect, there are no toxic wastes or other toxic or hazardous substances
or materials being stored or otherwise held on or under any of the real
properties owned, leased or used by the Company or any of its Subsidiaries
(collectively, the "Facilities"). Except as would not, individually or in the
aggregate, have a Material Adverse Effect, the Company and each of its
Subsidiaries have maintained the Facilities in compliance in all material
respects with all federal, state and local environmental protection,
occupational, health and safety or similar laws, ordinances, restrictions,
licenses and local environmental protection, occupational, health and safety or
similar laws, ordinances, restrictions, licenses and regulations. Except as set
forth on Schedule 3.17 of the Company Disclosure Schedules and except as would
not, individually or in the aggregate, have a Material Adverse Effect, (i) none
of the Company and its Subsidiaries has received any written communication that
remains outstanding and alleges that any of such entities is not in compliance
with, or is subject to liability under any Environmental Laws (as defined
below); (ii) the current and former operations of the Company and its
Subsdiaries are, and were at all times, in compliance with all Environmental
Laws; (iii) none of the Company and its Subsidiaries has received written notice
of or entered into any judgment, decree or order issued by any governmental
authority relating to compliance with or liability under any Environmental Law
or to any investigation or cleanup of hazardous materials under any
Environmental Law; (iv) each of the Company and its Subsidiaries has all permits
required under applicable Environmental Laws for the operation of its business
as presently conducted; and (v) hazardous materials have not been generated,
transported, treated, stored, disposed of, arranged to be disposed of, released
or threatened to be released at, on, from or under any of the Facilities or in a
manner or to a location that could give rise to liability under, any
Environmental Laws. "Environmental Laws" means any applicable law that deals
with (i) pollution or protection of natural resources or the environment or (ii)
exposure of persons to toxic or hazardous substances, raw materials or
14
chemicals, including any law relating to worker safety or product liability
matters to the extent it relates to such matters.
3.18 Brokers. Except as set forth on Schedule 3.18 of the
Company Disclosure Schedules, there are no claims for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon the Company or any of its Subsidiaries.
3.19 Payments. To the Company's Knowledge, neither the
Company nor any of its Subsidiaries has, directly or indirectly, paid or
delivered any fee, commission, or other sum of money or item or property,
however characterized, to any finder, agent, government official, or other
party, which is in any manner related to the business or operations of the
Company or any of its Subsidiaries which was illegal under any federal, state or
local laws of the United States or any other country having jurisdiction.
3.20 Tax Matters. The Company and each of its Subsidiaries
(hereinafter referred to in this Section 3.20 collectively as the "Taxpayers")
have duly filed all material federal, state, local and foreign tax returns and
reports, and all such tax returns and reports were correct and complete in all
material respects. The Taxpayers have paid in full all material taxes required
to be paid by such Taxpayers before such payment became delinquent. The
Taxpayers have made adequate provision in its most recent financial statements,
in conformity with generally accepted accounting principles consistently
applied, for the payment of all taxes which are not yet due. All material taxes
which any Taxpayer has been required to collect or withhold have been duly
collected or withheld and, to the extent required when due, have been or will be
duly paid to the proper taxing authority. Except as set forth on Schedule 3.20
of the Company Disclosure Schedules, there are no audits known by the Taxpayers
to be pending of any of the Taxpayers' material tax returns, and there are no
disputes or claims which have been asserted relating to any of the Taxpayers'
material tax returns filed for any year which if determined adversely would
result in the assertion by any governmental agency of any material deficiency.
There have been no waivers of statutes of limitations by any of the Taxpayers.
None of the Taxpayers has filed a statement under Section 341(f) of the Internal
Revenue Code of 1986, as may be amended from time to time (the "Code") (or any
comparable state income tax provision) consenting to have the provisions of
Section 341(f)(2) (collapsible corporations provisions) of the Code (or any
comparable state income tax provision) apply to any disposition of any of the
Taxpayers' assets or property. No property of the Taxpayers is property which
the Company or any of its Subsidiaries is or will be required to treat as owned
by another person pursuant to the provisions of Section 168(f)(8) (safe harbor
leasing provisions) of the Internal Revenue Code of 1954, as amended and in
effect prior to the enactment of the Tax Reform Act of 1986. Except as set forth
on Schedule 3.20 of the Company Disclosure Schedules, none of the Taxpayers is a
party to any material tax-sharing agreement or similar arrangement with any
other party. The assets of the Company and each of its Subsidiaries are free and
clear of all liens for material taxes that arose in connection with any failure
to pay any tax, except for liens for taxes not yet due and payable. For the
purpose of this Agreement, any federal, state, local or foreign income, sales,
use, transfer, payroll, personal property, occupancy or other tax, levy, impost,
fee, imposition, assessment or similar charge, together with any related
addition to tax, interest or penalty thereon, is referred to as a "tax" and
shall include any transferee or successor liability of any tax (whether by
contract or otherwise) and any liability in respect of any tax as a result of
15
being a member of an affiliated group within the meaning of Section 1504 of the
Code (or any consolidated, combined group defined under a similar provision of
state, local or foreign law). The Company is, and at all times has been,
properly treated as a partnership, and not as a corporation, an association or a
publicly traded partnership for federal income tax purposes.
3.21 Affiliate Arrangements. There are no agreements between
or among the Company or any of its Subsidiaries, on the one hand, and any
Affiliate (as defined below) of the Company or any of its Subsidiaries, on the
other hand, except as set forth on Schedule 3.21 of the Company Disclosure
Schedules. For purposes of this Agreement, the term "Affiliates" when used with
respect to any party shall mean any person who is an "affiliate" of that party
within the meaning of Rule 405 promulgated under the 1933 Act, provided,
however, the term "Affiliate" when used with respect to the Company shall mean
any business entity in which the Company owns directly or indirectly fifty
percent (50%) or more of the total voting power.
3.22 Certain Information.
(a) Audit Reports and Publishers' Statements. To the
Company's Knowledge, the number of paid purchasers of the periodicals of the
Company and its Subsidiaries for the last issue sold prior to February 22, 2003
for Audit Bureau of Circulations ("ABC") purposes was not less in any material
respect than the number of subscribers for such issue set forth on Schedule
3.22(a) of the Company Disclosure Schedules. To the Company's Knowledge, the
information submitted by the Company or its Subsidiaries to ABC for the
twelve-month period ended December 31, 2002 for each of the periodicals of the
Company and each of its Subsidiaries and the 2001 Publishers' Statements is true
and correct in all material respects.
(b) Subscription and Circulation Information. The Company
has heretofore provided to Merger Corp a true, complete and correct copy of the
most recent ABC reports with respect to subscription and circulation data
relating to the periodicals of the Company and each of its Subsidiaries.
Schedule 3.22(b) of the Company Disclosure Schedules is a summary of the most
current available subscription and circulation estimates with respect to the
periodicals of the Company and each of its Subsidiaries. Other than as reflected
on Schedule 3.22(b) of the Company Disclosure Schedules, all current
subscriptions to the periodicals of the Company and each of its Subsidiaries
have been sold in material compliance with the ABC rules and regulations for
qualified circulation.
(c) Advertising Contracts. The Company has heretofore
delivered to the New Investors a complete and correct list for each of the
periodicals of the Company and each of its Subsidiaries of the largest (in terms
of each of pages and advertising revenue) ten (10) advertisers for the twelve
(12) months ended December 31, 2002. Except as set forth and described on
Schedule 3.22(c) of the Company Disclosure Schedules, no advertiser which was
one of the largest (in terms of pages and/or advertising revenue) twenty (20)
advertisers for fiscal year 2002 for any of the periodicals of the Company and
each of its Subsidiaries has given notification to the Company or such
Subsidiary of its intent to cancel advertising placed or to suspend, modify in a
manner materially adverse to the Company and each of its Subsidiaries or
otherwise terminate its relationship with such publication.
16
(d) Rate Cards. All rate cards currently in effect with
respect to the periodicals of the Company and each of its Subsidiaries have been
previously delivered to the New Investors, and all material changes proposed to
be made to any current rate card rates are set forth in Schedule 3.22(d) of the
Company Disclosure Schedules.
3.23 Employee Benefits.
(a) Schedule 3.23 of the Company Disclosure Schedules lists
each material Employee Benefit Plan (as defined below).
(b) Each such Employee Benefit Plan complies and has been
maintained in all material respects in accordance with its terms, except where
the failure to so comply would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Employee Benefit Plans intended to qualify
under Section 401 of the Code has either received a current and valid
determination letter (or opinion letter if applicable) from the Internal Revenue
Service or the remedial amendment period with respect to such Employee Benefit
Plan has not yet expired and nothing has occurred, whether by action or failure
to act, that could reasonably be expected to cause the loss of such
qualification.
(c) The Company has delivered or made available to the New
Investors correct and complete copies of each material Employee Benefit Plan
and, to the extent applicable, a favorable determination letter (or opinion
letter if applicable) from the Internal Revenue Service.
(d) Except as set forth on Schedule 3.23 of the Company
Disclosure Schedules:
(i) None of the Company and its Subsidiaries, nor
any entity which is treated as a single employer with the Company or any
of its Subsidiaries for purposes of Code Section 414 (each an "ERISA
Affiliate") of each maintains any Employee Pension Benefit Plan (as
defined in ERISA Section 3(2)) subject to Title IV of ERISA or Section
412 of the Code or has any liability under any such Employee Pension
Benefit Plan that remains unsatisfied.
(ii) None of the Company and its Subsidiaries or any
ERISA Affiliate contributes to any Multiemployer Plan (as defined in
ERISA Section 3(37)) or has any liability (including withdrawal
liability) under any Multiemployer Plan.
(iii) None of the Company and its Subsidiaries
maintains or contributes to any Employee Welfare Benefit Plan (as
defined in ERISA Section 3(1)) providing medical, health, or life
insurance or other welfare-type benefits for current or future retired
or terminated employees of such Company or Subsidiary or, their spouses,
or their dependents (other than in accordance with Part 6 of Title I of
ERISA or Code Section 4980B).
(e) Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby (whether alone or in
connection with a subsequent event) will result in the acceleration of the time
of payment or vesting of any material compensation or
17
employee benefits under any Employee Benefit Plans, whether or not any such
payment, right or benefit would constitute a parachute payment within the
meaning of Section 280G of the Code.
(f) "Employee Benefit Plan" means all "employee benefit
plans," as defined in ERISA Section 3(3), including, without limitation,
multiemployer plans within the meaning of ERISA Section 3(37), and any stock
purchase, stock option, severance pay, employment, change-in-control, fringe
benefit, collective bargaining, vacation pay, company awards, salary
continuation, sick leave, excess benefit, supplemental retirement, deferred
compensation, bonus or other incentive compensation, stock purchase, life
insurance, and all other employee benefit plans, contracts, programs, policies
or other arrangements, whether or not subject to ERISA, whether formal or
informal, material oral or written, under which any present or former employee
of the Company and each of its Subsidiaries has any present or future right to
benefits sponsored or maintained by the Company or any of its Subsidiaries and
under which the Company or any of its Subsidiaries has any present or future
liability.
3.24 Financial Statements. Set forth on Schedule 3.24 of the
Company Disclosure Schedules are (i) an audited balance sheet of AMO and its
consolidated Subsidiaries as of March 31, 2002 and as of March 31, 2001, and the
related consolidated statements of income, stockholders' equity and cash flow
for the fiscal year ended March 31, 2002 and the fiscal year ended March 31,
2001, and (ii) an unaudited combined balance sheet of AMO and its consolidated
Subsidiaries as of December 31, 2002, and the related combined consolidated
statements of income, stockholders' equity and cash flow for the nine (9) months
ended December 31, 2002 (collectively, the "Financial Statements"). Except as
set forth therein, the Financial Statements present fairly, in all material
respects, the combined and/or the consolidated financial position, results of
operations, changes in stockholders' equity and cash flows of AMO and its
Subsidiaries at the respective dates set forth therein and for the respective
periods covered thereby, and were prepared in accordance with generally accepted
accounting principles (except, in the case of the interim financial statements,
for the absence of footnotes and any year-end adjustments), consistently applied
in accordance with past practice (except to the extent set forth therein). The
Financial Statements have been prepared from the books of account and financial
records of AMO and its Subsidiaries.
3.25 Disclaimer of Other Representations and Warranties. The
Company does not make, and has not made, any representations or warranties in
connection with the Merger and the transactions contemplated hereby other than
those expressly set forth herein. Except as expressly set forth herein, no
person or entity has been authorized by the Company to make any representation
or warranty relating to the Company or any of its Subsidiaries or their
respective businesses, or otherwise in connection with the Merger and the
transactions contemplated hereby and, if made, such representation or warranty
may not be relied upon as having been authorized by the Company.
4. Representations and Warranties by Merger Corp. Merger Corp
represents and warrants to the Company, as of the date hereof, except as set
forth in the Merger Corp Disclosure Schedule, as follows:
18
4.1 Organization. Merger Corp is a corporation duly
incorporated, validly existing, and in good standing under the laws of the state
of Delaware and has the power and authority to carry on its business as now
being conducted.
4.2 Authority.
(a) Merger Corp has the power to enter into this Agreement
and all other agreements, instruments, and documents executed and delivered by
it pursuant to this Agreement (collectively, the "Merger Corp Delivered
Documents") and to perform its obligations hereunder and thereunder. The
execution, delivery and performance of the Merger Corp Delivered Documents and
the consummation of the transactions contemplated thereby have been duly
authorized by Merger Corp, and no other proceeding on the part of Merger Corp is
necessary to authorize the execution and delivery of the Merger Corp Delivered
Documents or the performance of any of the transactions contemplated thereby.
Assuming due authorization, execution and delivery of the documents by the other
parties thereto, the Merger Corp Delivered Documents will be legal, valid, and
binding obligations of Merger Corp enforceable against Merger Corp in accordance
with their respective terms.
(b) Merger Corp has been formed solely as a transitory
entity for the purpose of facilitating the acquisition of the New Units by the
Transferors making Cash Contributions (as defined in the Contribution Agreement)
to Merger Corp pursuant to the terms of the Contribution Agreement, effecting a
recapitalization of the Company and engaging in the transactions contemplated by
this Agreement. Except for liabilities incurred by Merger Corp in connection
with its incorporation or organization and the transactions contemplated by this
Agreement and except for this Agreement, Merger Corp has not incurred, directly
or indirectly, through any Subsidiary, any liability or engaged in any business
activities of any type or kind whatsoever or entered into any agreement or
arrangements with any person. Merger Corp has no Subsidiaries.
4.3 No Violation. Neither the execution, delivery or
performance of any documents required to be delivered hereunder by Merger Corp
nor consummation of any of the transactions contemplated thereby (i) will
violate or conflict with the certificate of incorporation or bylaws of Merger
Corp, (ii) will result in any breach of or default under any provision of any
contract or agreement to which Merger Corp is bound or to which any property or
assets of Merger Corp is subject, (iii) is prohibited by or requires Merger Corp
to obtain or make any consent, authorization, approval, registration or filing
under any statute, law, ordinance, regulation, rule, judgment, decree or order
of any court or governmental agency, board, bureau, body, department or
authority, or of any other person, (iv) will cause any acceleration of maturity
of any note, instrument or other obligation to which Merger Corp is bound or
with respect to which Merger Corp is an obligor or guarantor, or (v) will result
in the creation or imposition of any Encumbrance upon or give to any other
person any interest or right (including any right of termination or
cancellation) in or with respect to any of the equity or any of the properties,
assets, business, agreements, or contracts of Merger Corp, except, with respect
to the immediately foregoing clauses (ii), (iii), (iv) and (v), as would not,
individually or in the aggregate, have a material adverse effect on the ability
of Merger Corp to consummate the transactions contemplated by this Agreement.
19
4.4 Litigation. There are no actions, suits, proceedings or
investigations, either at law or in equity, or before any commission or other
administrative authority in any United States or foreign jurisdiction, of any
kind now pending or, to the knowledge of Merger Corp, threatened or proposed in
any manner, or any circumstances which should or could reasonably form the basis
of any such action, suit, proceeding or investigation, involving such Investor
or any of its properties or assets that (i) questions the validity of this
Agreement or the agreements contemplated hereby or (ii) seeks to delay, prohibit
or restrict in any manner any action taken or contemplated to be taken by Merger
Corp under this Agreement.
4.5 Brokers. There are no claims for brokerage commissions,
finders' fees, or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement binding
upon Merger Corp.
4.6 Knowledge; Access. Merger Corp represents that it has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its execution and delivery of the Merger
Corp Delivered Documents and the consummation of the transactions contemplated
thereby. Merger Corp further represents that it has had access to, and prior to
its execution of this Agreement, the opportunity to ask questions of, and
receive answers from, the Company and its respective officers concerning the
terms and conditions of the transactions contemplated hereby and to obtain
additional information (to the extent that the Company possessed such
information (or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or to which
it had access.
4.7 Disclaimer of Other Representations and Warranties.
Merger Corp does not make, and has not made, any representations or warranties
in connection with the Merger and the transactions contemplated hereby other
than those expressly set forth herein. Except as expressly set forth herein, no
person or entity has been authorized by Merger Corp to make any representation
or warranty relating to Merger Corp or otherwise in connection with the Merger
and the transactions contemplated hereby and, if made, such representation or
warranty may not be relied upon as having been authorized by Merger Corp.
5. Covenants.
5.1 Conduct of the Business. The Company covenants and
agrees that, except as otherwise contemplated by this Agreement (including the
Exhibits hereto and the Company Disclosure Schedules), during the period
commencing on the date hereof and ending on the Closing Date, the Company shall,
and shall cause each of its Subsidiaries to, conduct its business in the
ordinary course consistent with past practices, and use its commercially
reasonable efforts to keep available the services of the employees of the
Company and its Subsidiaries, to preserve the relationships of the Company and
its Subsidiaries with their customers, suppliers, advertisers, distributors and
other persons with which the Company and its Subsidiaries have significant
relations, and to maintain and preserve intact the business of the Company and
its Subsidiaries in all material respects with a view toward preserving to and
after the Closing Date the business and the assets and the goodwill of the
Company and the Subsidiaries. Until the Closing, except as otherwise
contemplated by this Agreement (including the Exhibits hereto and the Company
Disclosure Schedules) or any Company Delivered Document, required by any change
in
20
applicable law or otherwise approved in writing by Merger Corp, the Company
shall not, and shall cause each of its Subsidiaries not to, (a) take any action
that under the terms of the Amended LLC Agreement or applicable law would
require the consent of the Company's Board of Managers or Members or (b) agree,
whether in writing or otherwise, to do any of the foregoing.
5.2 Access to Information; Confidentiality. Prior to the
Closing Date, or, if earlier, the date this Agreement is terminated pursuant to
Section 7.1, Merger Corp may make or cause to be made such investigation of the
business and properties of the Company and of its Subsidiaries and of their
respective financial and legal condition as Merger Corp deems reasonably
necessary. The Company shall, and shall cause its Subsidiaries to, permit Merger
Corp and its authorized agents or representatives, including its independent
accountants, to have reasonable access to the properties, books and records of
the Company and its Subsidiaries during normal business hours to review
information and documentation relative to the properties, books, contracts,
commitments and other records of the Company and its Subsidiaries; provided,
that such investigation shall not unreasonably disrupt personnel and operations
of the business and shall be at Merger Corp's sole cost and expense. All
requests for access to the offices, properties, books and records of the Company
and its Subsidiaries shall be made to such representatives of the Company or its
Subsidiaries as the Company shall designate, who shall be solely responsible for
coordinating all such requests and all access permitted hereunder.
5.3 Assistance Regarding Financing. The Company shall
provide, and will cause each Subsidiary and their respective officers and
employees to provide, all necessary cooperation in connection with the
arrangement and obtaining of any co-investment financing contemplated by the
Contribution Agreement as may be reasonably requested by Merger Corp, including,
without limitation, facilitating customary due diligence and arranging senior
officers, as selected by Merger Corp, assisting in the preparation of
presentations, offering memoranda, private placement memoranda and similar
documents and meeting with prospective investors in customary presentations for
such types of investments.
5.4 Commercially Reasonable Efforts. Subject to the terms
and conditions of this Agreement and applicable law, each of the parties hereto
shall use its commercially reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under applicable laws and regulations or otherwise to consummate
and make effective the transactions contemplated by this Agreement as soon as
practicable, including such actions or things as any other party hereto may
reasonably request in order to cause any of the conditions to such other party's
obligation to consummate such transactions specified in Section 6 to be fully
satisfied. Without limiting the generality of the foregoing, the parties shall
(and shall cause their respective directors, officers and Subsidiaries, and use
their reasonable best efforts to cause their respective Affiliates, employees,
agents, attorneys, accountants and representatives, to) consult and fully
cooperate with and provide reasonable assistance to each other in (i) obtaining
all necessary consents or other permission or action by, and giving all
necessary notices to and making all necessary filings with and applications and
submissions to, any governmental authority or other person, and (ii) in general,
consummating and making effective the transactions contemplated hereby;
provided, however, that in order to obtain any consent, approval, waiver,
license, permit, authorization, registration, qualification, or other permission
or action, no party, without the consent of the
21
other parties, shall pay any consideration, divest itself of any of, or
otherwise rearrange the composition of, its assets or to agree to any conditions
or requirements which, individually or in the aggregate, would have a Material
Adverse Effect or materially adversely affect the benefits of the transactions
contemplated by this Agreement to such party.
5.5 Public Announcements. Except to the extent otherwise
required by applicable law, neither of the parties will issue any press release
or make any other public announcements concerning the transactions contemplated
hereby or the contents of this Agreement without the prior written consent of
the other party.
5.6 Activities of Merger Corp. Merger Corp shall execute and
deliver Instruments of Accessions to the Contribution Agreement with existing
Members of the Company acceptable to the Evercore Members from time to time
prior to April 9, 2003. Other than as contemplated in the Contribution
Agreement, in the immediately preceding sentence and in that certain letter
between Merger Corp and the Evercore Members dated as of the date herof, Merger
Corp will not agree to any amendment or modification or, waiver under, the
Contribution Agreement without the prior written approval of the Company.
Immediately prior to the Merger, Merger Corp will enforce the Contribution
Agreement to the fullest extent permitted by applicable laws. Merger Corp will
not engage in any business or activity other than in connection with, or as
contemplated by, this Agreement.
5.7 Board Observer Right. From the date hereof through the
earlier of (i) the Effective Time or (ii) the termination of this Agreement
pursuant to Section 7.1 hereof, Xxxxxxx X. XxXxxx shall have the right to attend
all meetings of the Company's Board of Directors in a non-voting observer
capacity, and in connection therewith, the Company shall give Xx. XxXxxx,
concurrently with the distribution of such materials to members of its Board of
Directors, copies of all notices, minutes, consents and other materials,
financial or otherwise, which the Company provides to members of its Board of
Directors; provided, that Xx. XxXxxx may be excluded from attending any meeting
(or portion thereof) or receiving any information in either case relating to any
matter with respect to which, if Xx. XxXxxx were a director, he would otherwise
be excluded from attending or receiving in order to avoid any conflict of
interest.
5.8 Tax Covenant. The Company covenants that, for the
Company's taxable year in which the Merger occurs, it will have in effect, and
shall take all actions in order to effect, a valid election under Section 754 of
the Code, which election shall be effective with respect to the Merger.
6. Closing Conditions.
6.1 Conditions to Obligations of the Company and Merger
Corp. The obligations of each of the Company and Merger Corp to consummate this
Agreement and the transactions contemplated hereby are subject to the
fulfillment (or waiver by both the Company and Merger Corp), prior to or at the
Closing, of the following conditions precedent:
(a) No decision shall have been rendered by, any court or
other governmental authority or arbitrator which restrains, prevents or
prohibits, or could result in the rescission of the transactions contemplated by
this Agreement.
22
(b) All material consents and approvals of governmental
authorities necessary for consummation of the transactions contemplated hereby
shall have been obtained.
(c) The Credit Agreement shall have been amended in the
manner set forth in Schedule 6.1 of the Company Disclosure Schedules.
(d) The transactions set forth in the Contribution Agreement
shall have been consummated in the manner set forth therein.
(e) The limited partnership agreements of Evercore Capital
Partners L.P., Evercore Capital Partners (NQ) L.P., Evercore Capital Offshore
Partners L.P. and Evercore Capital Partners II L.P. each shall have been amended
in such a manner to permit the transactions contemplated hereby and by the
Contribution Agreement.
(f) The Amended LLC Agreement shall have been executed and
delivered by the parties to the Contribution Agreement.
6.2 Conditions to Obligations of the Company. The
obligations of the Company to consummate this Agreement and the transactions
contemplated hereby are subject to the fulfillment (or waiver by the Company),
prior to or at the Closing, of the following conditions precedent:
(a) The representations and warranties of Merger Corp shall
have been true and correct on the date hereof, except for such failure to be
true and correct that would not, individually or in the aggregate, have a
material adverse effect on the ability of Merger Corp to consummate the
transactions contemplated by this Agreement, and Merger Corp shall have
performed each of its obligations under this Agreement and the other documents
which by the terms hereof are to be performed on or before the Closing Date,
except to the extent that any such failure of performance would not,
individually or in the aggregate, have a material adverse effect on the ability
of Merger Corp to consummate the transactions contemplated by this Agreement.
(b) Merger Corp's President shall have delivered an executed
certification confirming the matters set xxxx in Section 6.2(a).
6.3 Conditions to Obligations of Merger Corp. The
obligations of Merger Corp to consummate this Agreement and the transactions
contemplated hereby are subject to the fulfillment (or waiver by Merger Corp),
prior to or at the Closing, of the following conditions precedent:
(a) The representations and warranties of the Company shall
have been true and correct on the date hereof, except for such failure to be
true and correct that would not, individually or in the aggregate, have a
Material Adverse Effect, and the Company shall have performed each of its
obligations under this Agreement and the other documents which by the terms
hereof are to be performed on or before the Closing Date, except to the extent
that any such failure of performance would not, individually or in the
aggregate, have a Material Adverse Effect.
23
(b) AMI and Evercore Advisors L.P. ("Evercore Advisors")
shall have terminated that certain Management Agreement dated as of May 7, 1999
by and between AMI and Evercore Advisors pursuant to a termination agreement in
the form attached hereto as Exhibit B.
(c) AMI shall have executed and delivered to THL Managers V,
LLC ("THL Managers") and Evercore Advisors a Management Agreement in the form
attached hereto as Exhibit C, and AMI shall have paid all amounts due to THL
Managers and Evercore Advisors at the Closing thereunder by wire transfer of
immediately available funds to the accounts set forth therein.
(d) AMI shall have executed and delivered side letters in
the form attached hereto as Exhibit D providing for the payment of certain
bonuses to members of AMI's management selected mutually by AMI's Board of
Directors and DJP in the amounts set forth therein; provided that the amounts of
such bonuses do not exceed an aggregate of $710,000.
(e) The Company shall have executed and delivered a
management rights letter (the "Management Rights Letter") to each of Evercore
Capital Partners L.P., Evercore Capital Partners (NQ) L.P. and Evercore Capital
Partners II L.P., Xxxxxx X. Xxx Equity Fund V, L.P., Xxxxxx X. Xxx Parallel Fund
V, L.P., and Xxxxxx X. Xxx Equity (Cayman) Fund V, L.P. in the form attached
hereto as Exhibit E.
7. Termination.
7.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) By mutual consent of the Company and Merger Corp;
(b) By the Company, if there has been a material violation
or breach by Merger Corp of any agreement contained in this Agreement which has
rendered the satisfaction of any condition to the obligations of the Company
impossible and such violation or breach has not been waived by the Company;
(c) By Merger Corp, if there has been a material violation
or breach by the Company of any agreement contained in this Agreement which has
rendered the satisfaction of any condition to the obligations of Merger Corp
impossible and such violation or breach has not been waived by Merger Corp; or
(d) By either the Company or Merger Corp on and after July
1, 2003 if the Closing shall not have previously occurred.
7.2 Procedure and Effect of Termination. In the event of
termination of this Agreement pursuant to Section 7.1, written notice thereof
shall forthwith be given to the other parties and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned, without further
action by any of the parties hereto. If this Agreement is terminated as provided
herein, this Agreement shall forthwith become null and void, without any
liability on the part of any party hereto, or any subsidiaries or affiliates of,
or any officers, directors or
24
employees of, any party. Nothing contained in this Section 7.2 shall relieve any
party for any intentional breach of any covenant, agreement, representation or
warranty contained in this Agreement.
8. Miscellaneous.
8.1 Non-Survival of Representations, Warranties and
Covenants Release Upon Closing. None of the representations or warranties in
this Agreement shall survive the Closing. Following consummation of the Closing,
any breach of representations or warranties by any party shall be deemed to be
waived by all other parties, and such other parties shall be deemed to fully
release and forever discharge the breaching party on account of any and all
claims, demands or charges, known or unknown with respect to the same, except
that nothing in this Section 8.1 shall be construed so as to limit the ability
of any party to bring a claim or action against any other person for fraud
committed directly by such person. The foregoing provision shall not limit any
covenant or agreement of any of the parties set forth in Section 5.8 or
otherwise which by its terms contemplates performance after the Closing.
8.2 Assignment. Neither this Agreement nor any of the rights
or obligations hereunder may be assigned by either party hereto without the
prior written consent of the other party hereto. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and no other person shall have any
right, benefit or obligation hereunder.
8.3 Notices. Unless otherwise provided herein, any notice,
request, instruction or other document to be given hereunder by any party to the
others shall be in writing and delivered in person or by courier, by facsimile
transmission, or mailed by certified or registered mail, postage prepaid, return
receipt requested, and shall be deemed to have been given when delivered
personally to the recipient, one business day after being sent to the recipient
by reputable overnight courier service (charges prepaid for overnight delivery)
or five business days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid, as follows:
(a) If to the Company EMP Group L.L.C.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
with a copy to: American Media, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx Xxxx.
Xxxx Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
25
with a copy to: Evercore Partners Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; and
with a copy to: Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; and
(b) If to Merger Corp: EMP Merger Corp.
c/o Xxxxxx X. Xxx Partners, L.P.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx XxXxxx
Xxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
with a copy to: Evercore Partners Inc.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
Xxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; and
with a copy to: Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
8.4 Choice of Law. This Agreement shall be construed,
interpreted, and the rights of the parties determined in accordance with the
laws of the State of New York except with respect to matters of law concerning
the internal corporate or organizational affairs of any corporate or other
entity which is a party to or the subject of this Agreement, and as to those
26
matters the law of the jurisdiction under which the respective entity derives
its powers shall govern.
8.5 No Third Party Rights. Except as otherwise specifically
provided herein, nothing in this Agreement shall be construed to give any person
or entity other than the Company and Merger Corp any legal or equitable right,
remedy or claim under this Agreement. Except as otherwise provided herein, this
Agreement shall be for the sole and exclusive benefit of the foregoing parties
and their respective permitted successors, assigns, heirs and personal
representatives.
8.6 Entire Agreement; Amendments and Waivers. This
Agreement, together with all exhibits and schedules hereto, and the other
agreements and documents contemplated hereby constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations, and discussions, whether oral or
written, of the parties. No supplement, modification, or waiver of this
Agreement shall be binding unless executed in writing by each of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
8.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.8 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or of any other such instrument.
8.9 Headings. The headings of the 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.
8.10 Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to any other available remedy.
8.11 Remedies. All rights, remedies, undertakings,
obligations, options, covenants, conditions and agreements contained in this
Agreement or provided by law shall be cumulative, and no one of them shall be
exclusive of any other.
8.12 Further Assurances. The parties agree to cooperate and
take such further action and execute such documents, instruments and
certificates as may reasonably be required in order to more effectively carry
out the terms of this Agreement and the intentions of the parties.
27
8.13 Company's Knowledge. For purposes of this Agreement,
"Company's Knowledge" or "Knowledge of the Company" shall mean the actual
knowledge of any of Xxxxx X. Xxxxxx, Xxxx Xxxxx, Xxxxxxx X. Xxxxxx and Xxxxxxxx
Xxxxxxxxx.
28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.
EMP GROUP L.L.C.
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
--------------------------------
Title: Authorized Person
--------------------------------
EMP MERGER CORPORATION
By: /s/ Xxxxxxx X. XxXxxx
--------------------------------
Name: Xxxxxxx X. XxXxxx
--------------------------------
Title: President
--------------------------------
EXHIBIT A
AMENDED LLC AGREEMENT
[Separate Attachment]
EXHIBIT B
FORM OF TERMINATION AGREEMENT
EVERCORE ADVISORS INC.
[____________] [__], 2003
American Media, Inc.
0000 Xxxxxxxxx Xxxxxx Xxxxx Xxxx.
Xxxx Xxxxx, XX 00000
Ladies and Gentlemen:
American Media, Inc. (the "Company") and Evercore Advisors Inc.
("Evercore") hereby agree that the Management Agreement, dated May 7, 1999,
between the Company and Evercore (the "Original Management Agreement") is hereby
terminated in its entirety and, subject to the provisions herein and therein
with respect to the survival of certain provisions following such termination,
shall be of no further force and effect. Notwithstanding the foregoing, Section
5 of the Original Management Agreement shall remain in effect with respect to
Out-of-Pocket Expenses (as defined in the Original Management Agreement)
incurred prior to the date hereof, and the provisions of Sections 6, 8 and 10 of
the Original Management Agreement and otherwise as the context so requires shall
survive the termination of the Original Management Agreement.
This letter agreement is binding and enforceable against the Company and
Evercore. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed therein. This letter agreement may be signed in one or more
counterparts by different parties with the same effect as if all parties had
signed the same instrument. This letter agreement may not be modified or
amended, nor will any consent, waiver or approval contemplated hereunder be
effective, unless expressly agreed to in writing by the Company and Evercore.
IN WITNESS WHEREOF, the parties have executed this letter agreement as
of the day and year first above written.
THE COMPANY:
AMERICAN MEDIA, INC.
By:
------------------------------
Name:
Title:
EVERCORE ADVISORS INC.
By:
------------------------------
Name:
Title:
EXHIBIT C
FORM OF MANAGEMENT AGREEMENT
[Separate Attachment]
EXHIBIT D
FORM OF SIDE LETTER
AMERICAN MEDIA, INC.
[___________] [__], 2003
[Manager]
[Address of Manager]
Dear [Manager]:
Reference is made to that certain Agreement and Plan of Merger, dated
February 24, 2003, by and among EMP Group L.L.C. and EMP Merger Corporation (the
"Agreement"). Capitalized terms used herein and not otherwise defined shall have
the meanings given to them in the Agreement. In furtherance of the Agreement and
in consideration of the mutual covenants and agreements contained therein and in
the exhibits thereto, American Media, Inc. (the "Company") agrees to pay
[Manager] (the "Manager") a one-time transaction bonus in the amount of
$[_______]. Such payment is expressly contingent upon consummation of the Merger
and shall be made no later than thirty (30) days following the Closing in
immediately available funds to an account designated by the Manager or in such
form mutually agreed to by the Company and Manager.
This letter agreement is binding and enforceable against the Company and
the Manager. This letter agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to contracts made
and to be performed therein. This letter agreement may be signed in one or more
counterparts by different parties with the same effect as if all parties had
signed the same instrument. This letter agreement may not be modified or
amended, nor will any consent, waiver or approval contemplated hereunder be
effective, unless expressly agreed to in writing by the Company and the Manager.
[Remainder of Page Intentionally Blank]
IN WITNESS WHEREOF, the parties have executed this letter agreement as
of the day and year first above written.
THE COMPANY:
AMERICAN MEDIA, INC.
By:
------------------------------
Name:
Title:
Agreed to and Acknowledged as
of the date first set forth above:
[Insert Manager's signature block]
EXHIBIT E
MANAGEMENT RIGHTS AGREEMENT
[_____________] [__], 2003
[Sponsor]
[Address]
Re: Management Rights
To Whom It May Concern:
In consideration of the acquisition of units issued by EMP Group L.L.C.
(the "Company") as of the date hereof, the Company hereby agrees that [Sponsor]
(the "Investor") has the following rights so long it owns any units issued by
the Company:
1. If the Investor is not represented by a designee on the
Company's Board of Managers or other similar governing board, the right
to receive the same information as is provided to members of the Board
of Managers of the Company.
2. Upon the reasonable request of the Investor from time to
time, a representative of the Investor will be entitled to meet and
consult with the senior executive management team of the Company to
discuss the Company's quarterly and annual business plans and to review
the Company's progress in achieving its plans. The Company will notify
the Investor of any significant business issues or initiatives affecting
the Company, such as: changes in the Company's capital structure;
incurrence of any significant indebtedness; significant business
acquisitions, dispositions or similar transactions; developments or
proposals entailing a potentially significant liability; nomination of
directors; appointment or election of senior management personnel; and
adoption of contracts, plans or other compensation arrangements covering
senior management personnel. Whenever reasonably possible, such notice
will be provided to the Investor in a manner that affords the Investor
an opportunity to consult with the Company prior to the Company taking
any significant action on such issues or initiatives.
3. Upon the reasonable request of the Investor, a
representative of the Investor will be entitled to inspect the books and
records of the Company and the facilities of the Company, and to request
and receive reasonable information regarding the Company's financial
condition and operations. Without limiting the foregoing, the Company
shall deliver to the Investor:
(a) as soon as available and in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each
fiscal year of the Company, consolidated balance sheets of the Company
and its subsidiaries as of the end of such period, and the consolidated
statements of income and cash flows of the Company and its subsidiaries
for the period then ended prepared in conformity with generally accepted
accounting
principles applied on a consistent basis, except as otherwise noted
therein, and subject to the absence of footnotes and to year-end
adjustments;
(b) as soon as available and in any event within 120 days
after the end of each fiscal year of the Company, a consolidated balance
sheet of the Company and its subsidiaries as of the end of such year,
and the consolidated statements of income and cash flows of the Company
and its subsidiaries for the year then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein, together with an auditor's report
thereon of a firm of established national reputation; and
(c) to the extent the Company is required by law or pursuant
to the terms of any outstanding indebtedness of the Company to prepare
such reports, any annual reports, quarterly reports and other periodic
reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, actually prepared by the Company as soon as
available.
The above-mentioned rights are intended to satisfy the requirement of
management rights for purposes of qualifying the Investor's ownership of units
as a venture capital investment for purposes of the Department of Labor "plan
asset" regulation, 29 C.F.R. Section 2510.3-101, and in the event such rights
are not satisfactory for such purpose, the Company and the Investor shall
reasonably cooperate in good faith to agree upon mutually satisfactory
management rights which satisfy such regulation. Notwithstanding the foregoing,
in the event that the Investor's equity interests in the Company are exchanged,
converted or transferred in any manner for or into equity interests in any other
corporation, organization, or similar entity pursuant to any recapitalization of
the Company, including, without limitation, any merger of the Company with and
into any of its subsidiaries, the Company shall use its best efforts to provide
that a Management Rights Letter in form and substance similar to this letter be
executed and delivered to the Investor by such successor company.
COMPANY:
EMP GROUP L.L.C.
By:
-------------------------------
Name:
Title:
EXHIBIT F
CONTRIBUTION AGREEMENT
[Separate Attachment]
