CONFORMED COPY
AMENDMENT TO EXCHANGE AGREEMENT
THIS AMENDMENT TO EXCHANGE AGREEMENT (the "Amendment"), dated as of
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October 15, 1996, is made by and among The Times Mirror Company, a Delaware
corporation, Xxxxx-Year Book, Inc., a Missouri corporation, and The XxXxxx-Xxxx
Companies, Inc., a New York corporation.
WHEREAS, the parties hereto entered into an Exchange Agreement, dated
as of July 3, 1996 (the "Agreement"); and
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WHEREAS, the parties hereto desire to amend certain provisions of the
Agreement;
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall
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have the meaning ascribed to them in the Agreement.
2. Amendments to the Agreement.
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(a) Notwithstanding any provision of the Agreement to the contrary,
the parties have agreed that Times Mirror will cause the title to the
International Assets to be transferred to, and the International Liabilities (as
set forth in Schedules 2.02(a)(ii) and 2.02(b), respectively, along with any
increases and decreases therein in the ordinary course of business of the TMIP
Entities, as further reflected in the statement of assets conveyed and
liabilities assumed related to the International Assets and the International
Liabilities delivered pursuant to Section 7.01(a)(iii) as of June 30, 1996, and
such further increases and decreases therein in the ordinary course of business
that have occurred since June 30, 1996) to be assumed by, TMHE prior to the
Closing Date. For purposes of the Post-Closing Adjustment described in Section
9.01(a), this transfer shall be deemed to occur on the Closing Date and shall
have no impact upon such Post-Closing Adjustment.
(b) The definition of "College Publishing Business Employee" is hereby
amended to insert the words "on family leave," after the phrase "on any
authorized leave of absence," in subpart (ii) thereof.
(c) The definition of "Xxxxxxx'x Employee" is hereby amended to insert
the words "on family leave," after the phrase "on any authorized leave of
absence," in subpart (ii) thereof.
(d) Section 2.03 is hereby amended as set forth in the separate letter
agreement concerning Xxxxx X. Xxxxx dated October 14, 1996.
(e) The introductory paragraph to Section 3.01 is hereby amended to
read as follows:
The closing (the "Closing") of the purchase and sale of the
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Xxxxxxx'x Shares, the TMHE Shares and the Xxxxx Assets and the
assumption of the Xxxxx Liabilities shall be effective immediately
prior to 12:00 midnight on October 15, 1996. The date on which the
Closing shall be effective is hereinafter referred to as the "Closing
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Date." The Closing shall be held at the off ices of Wachtell, Lipton,
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Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx.
(f) Section 3.01(a) is hereby amended by deleting the words "and the
TMIP entities" from the parenthetical clause and by deleting the words "and the
International Liabilities."
(g) The first sentence of Section 3.01(e) is hereby amended to read as
follows:
Title to the International Assets shall be transferred to TMHE, and
the International Liabilities shall be assumed by TMHE, prior to the
Closing Date, but any tangible International Assets will be in
possession or control of the TMIP Entities on the Closing Date.
(h) Section 4.02(a)(ii) is hereby amended to read as follows:
XxXxxx-Xxxx shall have received from Times Mirror and Xxxxx
certificates issued by the appropriate governmental authority of the
jurisdiction of incorporation or organization, as the case may be, of
each of Times Mirror, TMHE, Xxxxx and, except to the extent that any
has been dissolved prior to the Closing, the corporations or other
entities set forth on Schedule 5.08, evidencing its good standing in
its respective jurisdiction of incorporation or organization as of a
date not more than ten days prior to the Closing Date, or to the
extent that any of the corporations or other entities set forth on
Schedule 5.08 has been
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dissolved prior to the Closing, evidence reasonably satisfactory to
XxXxxx-Xxxx and its counsel of such dissolution.
(i) Section 4.02(a)(iv) is hereby amended by deleting the words "The
TMIP Entities shall have executed and delivered the instruments of sale and
assignment referred to in Section 3.01(b) and."
(j) Section 4.02(a)(vi) is hereby amended by deleting the words "and
Times Mirror shall have caused TMIP to execute and deliver the TMIP Transition
Services Agreement."
(k) Section 4.03(a)(iv) is hereby amended by deleting the words "and
the International Liabilities."
(l) The final clause of Section 5.09(e) is hereby amended by replacing
the words "last paragraph of Section 9.01(a)(ii)" with the words "the paragraph
in Section 9.01(a) that begins with the words `The accrual of additional
reserves.'"
(m) The last sentence of the first paragraph of Section 5.12 is hereby
amended by adding the words "and as of the Closing Date TMHE will have good
title to the International Assets," immediately before the words "except for
inventory."
(n) Section 5.15(c) is hereby amended by deleting the comma and adding
the word "or" after the words "TMHE Subsidiaries" and deleting the words "or any
of the TMIP Entities (with respect to the International Assets)."
(o) Section 5.15(d) is hereby amended by adding the word "or"
immediately before the word "Xxxxx" each time it occurs, by deleting the words
"or the TMIP Entities, with respect to the International Assets and
International Liabilities" and by deleting the words "or any of the TMIP
Entities."
(p) Section 5.15(f) is hereby amended by adding the word "or"
immediately before the word "Xxxxx" and by deleting the words "or any of the
TMIP Entities (with respect to the International Assets)."
(q) Section 5.15(h) is hereby amended by adding the word "or"
immediately before the first occurrence of the word "Xxxxx" and by deleting the
words "or any of the TMIP Entities, with respect to the International
Liabilities."
(r) Section 5.15(i) is hereby amended by adding the word "or"
immediately before the word "Xxxxx" and by deleting
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the words "or any of the TMIP Entities (with respect to the International
Assets)."
(s) Section 5.15(j) is hereby amended by adding the word "or"
immediately before the word "Xxxxx" and by deleting the words "or any of the
TMIP Entities (with respect to the International Assets)."
(t) Section 5.15(l) is hereby amended by adding the word "or"
immediately before the first occurrence of the word "Xxxxx," by deleting the
words "or any of the TMIP Entities (with respect to the International Assets)"
and by deleting the words "or any of the International Assets" and the comma
preceding such phrase.
(u) Section 5.19(a) is hereby amended by adding the words "and
affecting" prior to the words "the International Assets."
(v) Clauses (b) through (e) of Section 5.20 are hereby amended by
adding the word "or" immediately before the word "Xxxxx" each time it appears
and by deleting the words "or any of the TMIP Entities (with respect to the
International Assets)" each time it appears.
(w) Section 5.22(a) is hereby amended to read as follows:
Except as set forth on Schedule 5.22(a), the International Assets do
not include nor is any International Asset affected by any exclusive
distribution agreement or arrangement having a term exceeding one
year, whether written or oral, with any entity or individual. With
respect to any such distribution agreement or arrangement, whether
written or oral, Schedule 5.22(a) sets forth the term thereof, the
territory and the works covered thereby.
(x) The first sentence of Section 7.01(a) is hereby amended by
replacing the reference to "August 31, 1996" by "August 15, 1996."
(y) Section 7.01(b) is hereby amended by replacing the reference to
"45" with "60."
(z) The first sentence of Section 7.01(c) is hereby amended to read as
follows:
As soon as practicable and in any event not later than 60 days after
the Closing Date, Times Mirror
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shall deliver to XxXxxx-Xxxx an unaudited balance sheet for each of
(1) TMHE and the TMHE Subsidiaries that exist on the Closing Date, on
a consolidating basis, (2) the International Assets and International
Liabilities, by legal entity that transferred the International Assets
and International Liabilities to TMHE pursuant to Section 3.01(e),
included in the TMHE balance sheet under Section 7.01(c)(1), and (3)
the Xxxxx Assets and the Xxxxx Liabilities, in each case as of the
Closing Date (the "College Publishing Business Closing Date Balance
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Sheets").
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(aa) Section 7.03(n) of the Agreement is hereby amended to read as
follows:
(n) Material Agreements. Enter into (i) any agreement, whether
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or not in the ordinary course of business, that calls for payments in
excess of $500,000 and will not be fully performed within 12 months,
(ii) any author contract calling for advances or pre-publication costs
in excess of $500,000 or (iii) any royalty guarantees; provided,
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however, that this Section 7.03(n) shall not be deemed to prohibit
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TMHE from entering into the agreement previously disclosed to XxXxxx-
Xxxx by Times Mirror between Xxxxxxx X. Xxxxx and Pennsylvania State
University, the execution and performance of which agreement is hereby
specifically consented to by XxXxxx-Xxxx.
(bb) Clause (d) of Section 7.03 is hereby amended by inserting the
words "College Publishing Business" immediately before the word "Plan."
(cc) Clause (o) of Section 7.03 is hereby amended by replacing the
words "last paragraph of Section 9.01(a)(ii)" with the words "the paragraph in
Section 9.01(a) that begins with the words `The accrual of additional
reserves.'"
(dd) Section 7.13(b) is hereby amended to read as follows:
In the event that the sale to Times Mirror of the Partnership Interest
pursuant to paragraph (a) of this Section 7.13 takes place, Times
Mirror will pay to XxXxxx-Xxxx at the closing of such purchase $3
million in immediately available funds.
(ee) The first sentence of Section 8.01(a) is hereby amended by
replacing the reference to "August 31, 1996" with
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"August 15, 1996" and by adding the words "shareholder's equity and cashflows"
immediately after the word "operations."
(ff) The first sentence of each of Sections 8.01(b) and 8.01(c) is
hereby amended by replacing the reference to "45" with "60."
(gg) Clause (d) of Section 8.03 is hereby amended to read as follows:
(d) Employee Matters. Adopt or amend in any material respect,
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with respect to Xxxxxxx'x, any XxXxxx-Xxxx Plan or collective
bargaining agreement, except as required by law;
(hh) Section 8.05 of the Agreement is hereby amended by inserting the
words "and all of the officers" immediately after the words "Board of
Directors."
(ii) Section 8.12 of the Agreement is hereby deleted.
(jj) Section 9.01(a) is hereby amended further by adding the following
immediately after the third paragraph:
Any cash on the books of TMHE at the close of business on June 30,
1996 and reflected as such on the June 30 Financial Statements shall
be considered, on that date, a debit to the intercompany account with
Times Mirror on the books of TMHE; any cash on the books of TMHE on
the Closing Date and reflected as such on the Closing Date Balance
Sheet shall be considered a debit on that date to the intercompany
account with Times Mirror on the books of TMHE and shall be paid by
XxXxxx-Xxxx to Times Mirror in addition to any amount determined under
Section 9.01(a)(ii) or 9.01(b)(i).
(kk) Section 9.01(b) is hereby amended further by adding the following
immediately after the third paragraph:
Any cash on the books of Xxxxxxx'x at the close of business on June
30, 1996 and reflected as such on the June 30 Financial Statements
shall be considered, on that date, a debit to the intercompany account
with XxXxxx-Xxxx on the books of Xxxxxxx'x; any cash on the books of
Xxxxxxx'x on the Closing Date and reflected as such on the Closing
Date Balance Sheet shall be considered a debit on that date to the
intercompany account with XxXxxx-Xxxx on the books of
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Xxxxxxx'x and shall be paid by Times Mirror to XxXxxx-Xxxx in addition
to any amount determined under Section 9.01(a)(i) or 9.01(b)(ii).
(ll) Section 9.02(a) is hereby amended by inserting the following
immediately after the first sentence:
In addition, Xxxxx grants to XxXxxx-Xxxx and TMHE the right to use
Xxxxx'x name on packaging materials, if any, included in the Xxxxx
Assets in the form it appears thereon on the Closing Date, and to
continue to use such packaging materials until all current suppliers
of such materials have been exhausted.
(mm) Section 9.02(b) is hereby amended by inserting the following
immediately after the first sentence:
In addition, Times Mirror grants to XxXxxx-Xxxx and TMHE the right to
use Times Mirror's name on packaging materials included in the College
Publishing Business in the form it appears thereon on the Closing
Date, and to continue to use such packaging materials until all
current supplies of such materials have been exhausted.
(nn) Section 9.02(c) is hereby amended by inserting the following
immediately after the first sentence:
In addition, XxXxxx-Xxxx grants to Times Mirror and Xxxxxxx'x the
right to use XxXxxx-Xxxx'x name on packaging materials included in the
assets of Xxxxxxx'x in the form it appears thereon on the Closing
Date, and to continue to use such packaging materials until all
current supplies of such materials have been exhausted.
(oo) Clause (i) of Section 9.06(a) is hereby amended to read as
follows:
Xxxxx may retain Records until the Termination Date of the Xxxxx
Transition Services Agreement (as such term is defined therein) to the
extent necessary or convenient for the performance of its obligations
thereunder;
(pp) Section 9.08 is hereby amended by adding the words "and
unaudited" immediately after the word "audited" each time it appears.
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(qq) A new Section 9.09 is hereby added to read as follows:
Section 9.09 TMIP Returns Procedures.
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(a) Processing of English-Language Returns. After the Closing
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Date, returns of English-language publications published by the
College Publishing Business of TMHE or any of the TMHE Subsidiaries or
by Xxxxx'x College Text Business that were sold out of consigned
inventory by the TMIP Entities prior to the Closing Date will be
processed by XxXxxx-Xxxx in accordance with the following procedures:
(i) XxXxxx-Xxxx will process all returns of all such
publications through XxXxxx-Xxxx affiliates located in the United
Kingdom, Canada, Singapore, Spain and Australia. Shortly after the
Closing Date, XxXxxx-Xxxx will issue instructions to all customers who
have purchased such publications through TMIP to the effect that all
returns shall be made to and processed by XxXxxx-Xxxx. Times Mirror
agrees that XxXxxx-Xxxx may establish any commercially reasonable
guidelines for acceptance of returns as XxXxxx-Xxxx determines. All
such returned publications shall be the property of XxXxxx-Xxxx.
(ii) If and to the extent that there is an outstanding
account receivable associated with any of such returned publications,
XxXxxx-Xxxx shall issue to the customer a credit document for the
amount to be credited to TMIP's customer's account.
(iii) If and to the extent that there is no outstanding
account receivable associated with any of such returned publications,
(A) XxXxxx-Xxxx shall issue to the customer a credit document for the
amount to be refunded to the customer (or credited to the customer's
account with respect to other publications of XxXxxx-Xxxx or any of
its subsidiaries) and (B) a receivable from the TMIP Entity that sold
the returned publications shall be established on the books of XxXxxx-
Xxxx in the amount of the customer credit, less the statutory price of
the returned publications previously paid to TMHE or Xxxxx. Times
Mirror or the relevant TMIP Entity shall pay such receivable to
XxXxxx-Xxxx within 30 days of invoicing by XxXxxx-Xxxx.
(b) Processing of Other Returns.
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(i) After the Closing Date, returns of adaptations,
translations or indigenous works included in the
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International Assets will be processed by XxXxxx-Xxxx and credits for
such returned publications shall be issued by XxXxxx-Xxxx to the
customer.
(ii) If and to the extent that there is an outstanding
account receivable associated with any of such returned publications,
XxXxxx-Xxxx shall issue to the customer a credit document for the
amount to be credited to TMIP's customer's account.
(iii) If and to the extent that there is no outstanding
account receivable associated with any of such returned publications,
(A) XxXxxx-Xxxx shall issue to the customer a credit document for the
amount to be refunded to the customer (or credited to the customer's
account with respect to other publications of XxXxxx-Xxxx or any of
its subsidiaries) and (B) a receivable from the TMIP Entity that sold
the returned publications shall be established on the books of XxXxxx-
Xxxx in the amount of the customer credit. Times Mirror or the
relevant TMIP Entity shall pay such receivable to XxXxxx-Xxxx within
30 days of invoicing by XxXxxx-Xxxx.
(iv) XxXxxx-Xxxx shall report to Times Mirror not later
than 30 days after the end of each month the quantity and title of
such publications returned to XxXxxx-Xxxx during the proceeding month
and will identify any such returned publications that XxXxxx-Xxxx
intends to retain for resale. A receivable shall be established on the
books of Times Mirror in the amount of the paper, printing and binding
cost of such returned publications as XxXxxx-Xxxx intends to retain
for resale and all other such returned publications shall be
destroyed. XxXxxx-Xxxx or the relevant XxXxxx-Xxxx subsidiary shall
pay such receivable to the relevant TMIP Entity within 30 days after
invoicing by the TMIP Entity.
(v) After the Closing Date, returns of any publications
of Xxxxx other than publications of Xxxxx'x College Text Business
received by XxXxxx-Xxxx or any of its affiliates will not be processed
by XxXxxx-Xxxx and will be forwarded to Xxxxx or to another Person
designated by Xxxxx at Xxxxx'x sole expense and risk.
(c) Returns Received by Times Mirror or any of the TMIP
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Entities. After the Closing Date, returns of the English-language
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publications published by the College Publishing Business of TMHE or
any of the TMHE Subsidiaries or by Xxxxx'x College Text Business that
were sold out of consigned inventory by the TMIP Entities prior to
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the Closing Date that are received by Times Mirror or any of the TMIP
Entities shall be forwarded to XxXxxx-Xxxx at XxXxxx-Xxxx'x sole
expense and risk.
(d) General Matters Regarding Returns. Times Mirror shall
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cause each of the TMIP Entities to provide to XxXxxx-Xxxx or to the
XxXxxx-Xxxx affiliate designated by XxXxxx-Xxxx, within 30 days after
the Closing Date, all original customer billing and account status
information as reasonably requested by XxXxxx-Xxxx. Times Mirror shall
designate certain employees of the TMIP Entities and/or Xxxxx to be
the primary contact for XxXxxx-Xxxx with respect to returns.
(e) Offsets. Each of the parties may offset amounts owed to
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any other party pursuant to this Section 9.09 against amounts owed by
such other party pursuant to this Section 9.09.
(rr) A new Section 9.10 is hereby added to read as follows:
Section 9.10 Costs of TMIP Receivables Collection. XxXxxx-Xxxx
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shall reimburse Times Mirror, within 90 days after invoice
therefor, for costs incurred by Times Mirror or the TMIP Entities
in connection with the collection by Times Mirror or by any of
the TMIP Entities of any accounts receivable with respect to
english-language publications published by the College Publishing
Business of TMHE or any of the TMHE Subsidiaries or by Xxxxx'x
College Text Business that were sold out of consigned inventory
by the TMIP Entities prior to the Closing Date. For purposes of
this Section, costs shall not exceed 2% of the share of such
receivables actually collected and paid over to XxXxxx-Xxxx or
TMHE.
(ss) The first four sentences of Section 10.01 are hereby amended
to read as follows:
Schedule 10.01(a), as updated to the Closing Date, contains a
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complete and accurate list of each Xxxxx'x College Text Business
employee who will be offered employment by XxXxxx-Xxxx on the
Closing Date (the "Xxxxx College Text Business Employees").
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On the Closing Date, XxXxxx-Xxxx shall offer employment to (or
cause TMHE to offer employment to) each Xxxxx'x College Text
Business Employee. Except as otherwise provided herein, on the
Closing Date, all College Publishing Business Employees (but
excluding any
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Xxxxx'x College Text Business Employee who has not accepted the
aforementioned offer of employment or any employee in Xxxxx'x
College Text Business who is not listed on Schedule 10.01(a)) who
are then (i) actively employed or (ii) carried on the payroll as
a result of being on an authorized leave of absence (other than a
short-term or long-term disability leave), family leave or
vacation leave (hereinafter, an "Employee-on-Leave") shall be
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employees of TMHE and XxXxxx-Xxxx (collectively, the "College
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Publishing Business Transferred Employees"). College Publishing
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Business Employees (but excluding any employee of Xxxxx'x College
Text Business who is not listed on Schedule 10.01(a)) who are on
short-term or long-term disability leave on the Closing Date
shall be offered employment with XxXxxx-Xxxx or TMHE following
the expiration of the leave of absence only to the extent that
Times Mirror, TMHE, a TMHE Subsidiary or Xxxxx was obligated to
offer employment to any such employee upon return to work
following such leave, and, as of the date of such employee's
acceptance of such offer of employment, such employee shall be
deemed a College Publishing Business Transferred Employee for
purposes of this Agreement, subject to the terms and conditions
set forth in this Article 10; provided, however, that XxXxxx-Xxxx
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and TMHE shall have no obligation to employ any employee
described in this sentence whose leave of absence does not end
prior to the first anniversary of the Closing Date. Times Mirror
shall retain the obligation to provide worker's compensation,
short-term disability, long-term disability and other benefits to
any employee described in the previous sentence until such time
as such employee becomes a College Publishing Business
Transferred Employee.
(tt) The sixth sentence of Section 10.01(a) is hereby amended by
deleting the first word thereof and replacing it with "Except as provided above
with respect to College Publishing Business Employees on short-term or long-term
disability leave on the Closing Date, for."
(uu) The proviso in Section 10.07(b) is hereby amended to read as
follows:
provided, however, that, in order for any College Publishing
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Business Transferred Employee to be eligible to participate in
any College Publishing Business Post-Retirement Plan, such
employee must expressly elect in writing to participate therein
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within 31 days following the Closing Date and must elect in
writing to commence coverage thereunder either effective as of
the Closing Date or effective as of the date of such employee's
retirement under the TM Pension Plan, if later.
(vv) The first three sentences of Section 10A.01 are hereby
amended to read as follows:
Except as otherwise provided herein, on the Closing Date, all
Xxxxxxx'x Employees who are then (i) actively employed or (ii)
carried on the payroll as a result of being on an authorized
leave of absence (other than a short-term or long-term disability
leave), family leave or vacation leave (hereinafter, an
"Employee-on-Leave") shall be employees of Xxxxxxx'x and Times
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Mirror (collectively, the "Xxxxxxx'x Transferred Employees").
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Xxxxxxx'x Employees who are on short-term or long-term disability
leave on the Closing Date shall be offered employment with Times
Mirror and Xxxxxxx'x following the expiration of the leave of
absence only to the extent that Xxxxxxx'x or XxXxxx-Xxxx was
obligated to offer employment to any such employee upon return to
work following such leave, and, as of the date of such employee's
acceptance of such offer of employment, such employee shall be
deemed a Xxxxxxx'x Transferred Employee for purposes of this
Agreement, subject to the terms and conditions set forth in this
Article 10A; provided, however, that Times Mirror or Xxxxxxx'x
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shall have no obligation to employ any employee described in this
sentence whose leave of absence does not end prior to the first
anniversary of the Closing Date. XxXxxx-Xxxx shall retain the
obligation to provide worker's compensation, short-term
disability, long-term disability and other benefits to any
employee described in the previous sentence until such time as
such employee becomes a Xxxxxxx'x Transferred Employee.
(ww) Section 10A.01 is further amended by inserting the following
at the end thereof:
XxXxxx-Xxxx shall pay and process the regular payroll for each
Xxxxxxx'x Transferred Employee on the scheduled payment date for
the bi-weekly or monthly payroll period that includes the Closing
Date (the "Transition Payroll Period"). Times Mirror shall
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promptly reimburse XxXxxx-Xxxx, within five days after receipt of
invoice from XxXxxx-Xxxx, for the portion of the gross employer
payroll for the Transition
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Payroll Period that relates to periods after the Closing Date,
and XxXxxx-Xxxx shall promptly remit to Times Mirror, in the
manner to be agreed by the parties, employee-paid payroll tax
withholdings in respect of such Xxxxxxx'x Transferred Employees
attributable to the portion of the Transition Payroll Period
occurring after the Closing Date, which shall be remitted when
due by Times Mirror to the appropriate governmental taxing
authority. For purposes of the previous sentence, "gross employer
payroll" means all gross wages, employer-paid payroll taxes and
any other employer-paid amounts. The portion of the Transition
Payroll Period amount that relates to periods after the Closing
Date and that is paid by Times Mirror to XxXxxx-Xxxx shall be
ignored for purposes of the Post-Closing Adjustment and shall not
be included in the change in the intercompany balance between
Xxxxxxx'x and XxXxxx-Xxxx for the period from July 1, 1996
through the Closing Date.
(xx) Clause (i) of the second sentence of Section 10A.07(b) is
hereby amended to read as follows:
(i) Xxxxxxx'x Transferred Employees who, as of the Closing Date,
(a) have either been credited with at least ten years of service
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under the applicable Xxxxxxx'x Post-Retirement Plan and attained
at least age 55 or have been credited with at least twenty years
--
of service under the applicable Xxxxxxx'x Post-Retirement Plan
and have attained age 50 and (b) are otherwise eligible for
benefits under the terms of the applicable Xxxxxxx'x Post-
Retirement Plan,
(yy) The proviso in Section 10A.07(b) is hereby amended to read
as follows:
provided, however, that, in order for any Xxxxxxx'x Transferred
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Employee to be eligible to participate in any Xxxxxxx'x Post-
Retirement Plan, such employee must expressly elect in writing to
participate therein within 31 days following the Closing Date and
must elect in writing to commence coverage thereunder effective
as of the Closing Date.
(zz) The final sentence of Section 12.06 is hereby amended to
read as follows:
Times Mirror, McGraw-Hill, Shepard's, TMHE and the TMHE
Subsidiaries shall cooperate with one another in a manner
comparable to that described in Section
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12.04 hereof to effect the purpose of this Section 12.06.
(aaa) The final sentence of Section 12A.06 is hereby amended to
read as follows:
Times Mirror, McGraw-Hill, Shepard's, TMHE and the TMHE
Subsidiaries shall cooperate with one another in a manner
comparable to that described in Section 12A.04 hereof to effect
the purpose of this Section 12A.06.
(bbb) The last two paragraphs of Schedule 4.02(a)(v) are hereby
amended to read as follows:
For purposes of computing the Post-Closing Adjustments
described in Section 9.01(a) hereof, the adjustment described
above with respect to reserves for uncollectible accounts and
returns will be treated as a pre-June 30, 1996 entry. As a
result, the pro-forma June 30, 1996 unaudited balance sheet or
statement of assets conveyed and liabilities assumed, as the case
may be, of TMHE and Xxxxx College Text Business will reflect
their appropriate share of this adjustment.
TMIP has other assets which will be transferred to Buyer
under the purchase agreements ("other TMIP assets"). These assets
consist of third party license agreements, prepaid expenses, and
inventory relating to indigenous works, including work in
progress. There are various liabilities relating to the other
TMIP assets recorded on the books of TMIP, including payables and
royalties payable. The other TMIP assets and the related
liabilities will be sold to TMHE prior to the Closing and will
therefore be sold to Buyers upon Closing.
(ccc) Schedule 10A.04 is hereby amended and updated to read as
set forth in Annex A to this Amendment.
(ddd) Schedule 2.02(a)(i) is hereby amended to read as set forth
in Annex B to this Amendment.
(eee) Schedule 5.03 is hereby amended to read as set forth in
Annex C to this Amendment.
(fff) Schedule 5.13(a) is hereby amended to read as set forth in
Annex D to this Amendment.
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(ggg) Schedule 5.15(a) is hereby amended by replacing tabs (A)
and (D) thereof with replacement tabs (A) and (D) as set forth in Annex E to
this Amendment.
(hhh) Schedule 5.15(c) is hereby amended to read as set forth in
Annex F to this Amendment.
(iii) Schedule 5.15(k) is hereby amended by replacing tab E
thereof with replacement tab E as set forth in Annex G to this Amendment.
(jjj) Schedule 5.15(l) is hereby amended to replace the first
page thereof to read as set forth in Annex H to this Amendment.
(kkk) Schedule 5.17(a) is hereby amended by replacing tabs (A)
and (B) as set forth in Annex I to this Amendment.
(lll) Schedule 5.22(a) is hereby amended to replace the first
page thereof to read as set forth in Annex J to this Amendment.
(mmm) Schedule 10.01(a) is hereby updated, as provided in
Section 10.01(a), to replace Schedule 10.01(a) to read as set forth in Annex K
to this Amendment.
(nnn) Schedule 10.04 is hereby amended by replacing tabs (A) and
(G) thereof with the replacement tabs (A) and (G) as set forth in Annex L.
(ooo) The Xxxxx Transition Services Agreement is hereby amended
to read as set forth in Annex M to this Amendment.
(ppp) Schedule 6.14(a) is hereby amended to read as set forth in
Annex N to this Agreement.
3. The parties agree that a full financial closing, with
appropriate cut-off procedures, is to be planned, executed and documented.
Because the agreed-upon closing date occurs on a date other than a fiscal month-
end, the parties, acknowledging that certain expenses and revenues are typically
budgeted and recorded on a full-fiscal-month basis, agree to the following in an
effort to facilitate the preparation of the Closing Date financial statements
and to ensure that the financial statements for Xxxxxxx'x, TMHE and Xxxxx are
prepared on a common, consistent basis:
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I. Certain expenses can be prorated for the period October 1 -October 15
as a percentage of the full month October amounts. The percentage to apply to
the full fiscal month October amounts to calculate the amount for the period
October 1 - 15 is either of the following two formulas:
Apportionment Method A. The percentage is calculated as: (Revenues for October
1 - 15) / (October fiscal month revenues) (revenues for purposes of this
apportionment are defined as operating revenues inclusive of the provision for
sale returns);
or
Apportionment Method B. The percentage is calculated as: (Business days for
October 1 - 15) / (October fiscal month business days).
The parties agree as follows:
Xxxxxxx'x TMHE and Xxxxx
Apportionment Apportionment
Method Method
------------- --------------
Prepublication amortization n/a A
Sales returns provision
(on a gross revenue basis) A A
Reserve Provisions A A
(inv. obsolescence,
bad debts, etc.)
Depreciation B B
Amortization of intangible
assets B B
Corporate or segment
allocations B n/a
Rent and occupancy expense B B
Vacation expense B B
Incentive compensation
expense B B
Monthly exempt payroll B B
(All other payrolls -- hourly, weekly, etc. -- will be cut-off on an actual
basis)
II. Revenue for subscription products will be prorated for the period
October 1 - October 15 as a percentage of the full month revenue amount. The
percentage is to be calculated as: (Business days for October 1 - October 15) /
(October fiscal month business days).
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III. All cash, intercompany accounts, accounts receivable, accounts
payable and other balance sheet account cut-offs are to be executed and
documented on a full closing basis, except that balance sheet accounts should
reflect apportionment amounts if called for by paragraph I. For all revenue
(other than revenue for subscription products) and for all expenses (other than
those prorated in accordance with paragraph I), cut-offs are to be executed and
documented on a full closing basis.
All standard account reconciliations and audit-verifiable documentation is to be
prepared for the mid-month closing. All revenues and expenses for October,
through the Closing, including monthly amounts prorated pursuant to paragraphs I
and II, shall be computed in a manner consistent with prior practice and without
regard to any revaluations resulting from the Exchange.
4. Times Mirror represents to XxXxxx-Xxxx that (i) notwithstanding
the statement to the contrary in the notes to the TMHE financial statements set
forth in Schedule 5.09(a), such statements did not include incremental editorial
and production expense of $666,000 and incremental plant amortization expense of
$1,074,000 and (ii) the absence of such amounts was offset by the overstatement
of certain other inventory related costs.
5. No Effect on Consistent Terms. All terms of the Agreement not
-----------------------------
inconsistent with this Amendment shall remain in place and in full force and
effect and shall be unaffected by this Amendment.
6. Headings. The headings contained in this Amendment are inserted
--------
for convenience of reference only and shall not affect the meaning or
interpretation of this Amendment.
7. Counterparts. This Amendment may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party.
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IN WITNESS WHEREOF, this Amendment has been signed by or on behalf of
each of the parties hereto as of the day first above written.
THE TIMES MIRROR COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President
XXXXX-YEAR BOOK, INC.
By: /s/ Xxxxx Xxxxxxxx
------------------------
Name: Xxxxx Xxxxxxxx
Title: Secretary
THE XXXXXX-XXXX COMPANIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
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