ACQUISITION AGREEMENT
FOR
XXX ENTERPRISES, INCORPORATED,
XXXXXX PUBLICATIONS, INC.
AND
XXXXXX ENERGY CO., INC.
February 11, 2002
ACQUISITION AGREEMENT
FOR
XXX ENTERPRISES, INCORPORATED,
XXXXXX PUBLICATIONS, INC.
AND
XXXXXX ENERGY CO., INC.
TABLE OF CONTENTS
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Section Page
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ARTICLE 1
DEFINITIONS
1.1. Certain Definitions..........................................
1.2. Certain Additional Definitions...............................
ARTICLE 2
PURCHASE AND SALE
2.1. The Stock Purchase and HPI Redemption........................
2.2. Consideration for HPI Common Stock...........................
2.3. Escrow.......................................................
2.4. Cash Amount and Capital Expenditure Adjustment...............
2.5. Further Assurances...........................................
ARTICLE 3
THE CLOSING
3.1. The Closing..................................................
3.2. Closing Deliveries of the HPI Stockholders...................
3.3. Closing Deliveries of the Purchaser..........................
3.4. Closing Deliveries of HPI....................................
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE HPI INDEMNIFYING STOCKHOLDERS
4.1. Organization.................................................
4.2. Authority and No Violation; Ownership........................
4.3. Capitalization, Subsidiaries and Charter.....................
4.4. Government Consents..........................................
4.5. Tangible Property............................................
4.6. Intellectual Property and Proprietary Rights.................
4.7. Acquired Companies' Contracts................................
4.8. Licenses.....................................................
4.9. Employees....................................................
4.10. Employee Benefit Plans.......................................
4.11. Sufficiency of Assets........................................
4.12. Financial Statements.........................................
4.13. No Undisclosed Liabilities...................................
4.14. Litigation; Governmental Orders..............................
4.15. Compliance with Laws.........................................
4.16. Environmental Matters........................................
4.17. Insurance....................................................
4.18. Transactions with Affiliates.................................
4.19. Taxes........................................................
4.20. Labor Controversies..........................................
4.21. Inventories; Receivables; Payables...........................
4.22. Advertisers and Suppliers....................................
4.23. Brokers......................................................
4.24. Full Disclosure..............................................
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
5.1. Organization.................................................
5.2. Authority....................................................
5.3. No Violation.................................................
5.4. Governmental Consents........................................
5.5. Brokers......................................................
5.6. Funding......................................................
5.7. Investment Representation; Business Investigation............
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1. Conduct of Business..........................................
6.2. Access and Information.......................................
6.3. Confidentiality..............................................
6.4. Further Actions..............................................
6.5. Fulfillment of Conditions by the HPI Stockholders, HEC and
the Acquired Companies.....................................
6.6. Fulfillment of Conditions by the Purchaser...................
6.7. Publicity....................................................
6.8. Transaction Costs............................................
6.9. Employees and Employee Benefit Matters.......................
6.10. Interdivisional Agreements...................................
6.11. Schedules....................................................
6.12. Retention of and Access to Records...........................
6.13. Tax Matters..................................................
6.14. Interim Financial Statements.................................
6.15. Audited Financial Statements.................................
6.16. No Solicitation..............................................
6.17. Investments..................................................
6.18. Certain Assets...............................................
6.19. Discharge of HPI Excluded Liabilities........................
6.20. Sioux City...................................................
6.21. Additional Covenants of the HPI Stockholders and HEC.........
6.22. Advertising Contracts........................................
ARTICLE 7
CLOSING CONDITIONS
7.1. Conditions to Obligations of the Purchaser...................
7.2. Conditions to Obligations of the HPI Stockholders............
ARTICLE 8
INDEMNIFICATION
8.1. Obligations of the HPI Stockholders and HEC..................
8.2. Obligations of the Purchaser.................................
8.3. Procedure for Indemnification................................
8.4. Sole Remedy..................................................
8.5. Limitations on Indemnification; Exclusive Remedy.............
8.6. Survival.....................................................
ARTICLE 9
TERMINATION
9.1. Termination..................................................
9.2. Effect of Termination........................................
ARTICLE 10
MISCELLANEOUS
10.1. Notices......................................................
10.2. Actions of the HPI Stockholders Representative...............
10.3. Amendments and Waiver........................................
10.4. Assignment...................................................
10.5. Entire Agreement.............................................
10.6. Representations and Warranties Complete......................
10.7. Third Party Beneficiaries....................................
10.8. Governing Law................................................
10.9. Jurisdiction.................................................
10.10. WAIVER OF JURY TRIAL.........................................
10.11. Neutral Construction.........................................
10.12. Severability.................................................
10.13. Headings; Interpretation; Schedules and Exhibits.............
10.14. Counterparts.................................................
10.15. Cooperation..................................................
10.16. Specific Performance.........................................
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is made and entered into
as of February 11, 2002 by and among Xxx Enterprises, Incorporated, a Delaware
corporation ("Xxx" or the "Purchaser"), Xxxxxx Publications, Inc., a Delaware
corporation ("HPI"), Xxxxxx Energy Co., Inc., a Delaware corporation ("HEC"),
and those persons named in Schedule I attached hereto (the "HPI Stockholders"
and, each individually, an "HPI Stockholder").
WITNESSETH:
WHEREAS, the HPI Stockholders own all of the issued and outstanding
shares of capital stock of HPI;
WHEREAS, HPI owns and operates, directly or through wholly-owned
subsidiaries, the publications listed in Schedule II attached hereto and owns
7,200 Class A non-voting shares of Sioux City Newspapers, Inc., an Iowa
corporation ("Sioux City") and 7,500 Class B voting shares of Sioux City, which
publishes the Sioux City Journal (each an "Acquired Publication" and,
collectively, the "Acquired Publications") (each of HPI, its subsidiaries listed
in Schedule II and Sioux City, an "Acquired Company" and, collectively, the
"Acquired Companies");
WHEREAS, the Purchaser desires to acquire from the HPI Stockholders,
and the HPI Stockholders desire to sell to the Purchaser, certain of the issued
and outstanding shares of capital stock of HPI owned by them and specified as
Purchased HPI Stock in Schedule III attached hereto, upon the terms and subject
to the conditions set forth herein; and
WHEREAS, contemporaneously with the closing of the Stock Purchase (as
hereinafter defined), HPI desires to redeem from the HPI Stockholders the
remainder of the issued and outstanding shares of capital stock of HPI owned by
them and specified as Redeemed HPI Stock in Schedule III attached hereto in
consideration for the delivery by HPI of all of the issued and outstanding
shares of HEC, which such HPI Stockholders agree to accept in exchange for the
capital stock of HPI so redeemed, all upon the terms and subject to the
conditions set forth herein.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises, the mutual
covenants, promises and agreements hereinafter set forth, the mutual benefits to
be gained by the performance of such covenants, promises and agreements, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged and accepted, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1. Certain Definitions. For all purposes of and under this Agreement,
the following terms shall have the respective meanings set forth below:
(1) "Acquired Company" or "Acquired Companies" has the meaning
specified in the second recital of this Agreement.
(2) "Acquired Publication" or "Acquired Publications" has the meaning
specified in the second recital of this Agreement.
(3) "Acquisition Transaction" has the meaning specified in Section
6.16.
(4) "Action" means any claim, written demand, action, suit or
proceeding, arbitral action, governmental inquiry or criminal prosecution by or
before any Governmental Authority.
(5) "Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. "Control" means the possession of the power, directly or
indirectly, to direct or cause the direction of the management and policies of a
Person whether through the ownership of voting securities, contract or
otherwise.
(6) "Audited Financial Statements" has the meaning specified in Section
4.12.
(7) "Benchmark Date Working Capital of HPI" means an amount equal to
$2,929,388.
(8) "Benefit Plans" has the meaning specified in Section 4.10(a).
(9) "Business Day" means any weekday (Monday through Friday) on which
commercial banks in Chicago, Illinois are open for business.
(10) "Capital Program" has the meaning specified in Section
1.1(18)(ii).
(11) "Cash Adjustments" has the meaning specified in Section 1.1(12).
(12) "Cash Amount" means the sum of: (1) $50,000,000; (2) all cash
dividends paid in respect of HPI's 50% ownership of Sioux City from December 31,
2001 to the Closing Date; and (3) all cash proceeds received from the conversion
of Principal Financial Group and Liberty Mutual Insurance Company to stock form
from mutual insurance companies (with clauses (2) and (3) being the "Cash
Adjustments").
(13) "Cash Equivalents" means the dollar value reflected in the books
and records of the Acquired Companies (other than Sioux City) for the cash, U.S.
Treasury securities and Other Cash Equivalents held by the Acquired Companies
immediately before the Closing.
(14) "Cash Payment" means $699,000,000.
(15) "Claimant" has the meaning specified in Section 8.3(a).
(16) "Closing" has the meaning specified in Section 3.1.
(17) "Closing Date" has the meaning specified in Section 3.1.
(18) "Closing Working Capital of HPI" means, as of the close of
business on the Closing Date, the amount calculated as follows:
(i) the dollar value reflected in the books and records of the Acquired
Companies for the current assets of the Acquired Companies (other than (1) cash,
(2) U.S. Treasury securities, (3) Other Cash Equivalents, (4) postal deposits,
(5) any capital stock of Principal Financial Group and Liberty Mutual Insurance
Company owned of record and beneficially by the Acquired Companies and (6) any
current asset related to a dividend declared in respect of HPI's 50% ownership
interest in Sioux City, but not paid as of the Closing); minus,
(ii) the dollar value reflected in the books and records of the
Acquired Companies for the current liabilities of the Acquired Companies (other
than (1) HPI Excluded Liabilities (with Excluded Liabilities solely for this
purpose determined, however, without regard to any Liabilities in respect of
Taxes), (2) accrued liabilities and accounts payable relating to the Acquired
Companies' capital expenditure program described in Schedule 1.1(18) hereto (the
"Capital Program"), (3) any liability for transaction costs and expenses for
which the HPI Stockholders are liable under Section 6.8 hereof, (4) any Taxes
for which the Purchaser is liable under this Agreement (determined without
regard to clause (I) of the definition of Excluded Taxes set forth in Section
6.13(a)) and (5) any liability related to Taxes other than for current Taxes
payable); plus,
(iii) an amount equal to the Cash Adjustments.
The foregoing amounts shall be determined in accordance with GAAP
applying the accounting policies and principles used in the preparation of the
Audited Financial Statements, including the methods of inventory valuation
(including exclusion of ink and plate inventory) used by the Acquired Companies.
(19) "COBRA" has the meaning specified in Section 4.10(a).
(20) "Code" means the Internal Revenue Code of 1986, as amended, any
successor statute thereto, and the rules and regulations promulgated thereunder.
(21) "Confidentiality Agreement" means the letter agreement between
HPI, certain of the HPI Stockholders, and the Purchaser, dated as of October 9,
2001.
(22) "Contract" means any contract, agreement, indenture, note, bond,
instrument, lease, conditional sales contract, mortgage, license, franchise
agreement, concession or royalty agreement, insurance policy or guaranty,
whether written or oral.
(23) "CST" has the meaning specified in Section 3.1.
(24) "Employee" or "Employees" has the meaning specified in Section
4.9.
(25) "Encumbrance" means any security interest, pledge, mortgage, lien,
charge, adverse claim of ownership or use, restriction on transfer (such as a
right of first refusal or other similar right), defect of title, or other
encumbrance of any kind or character.
(26) "Environmental Law(s)" means any Law relating to the regulation or
protection of the environment, or to emissions, discharges, releases or
threatened releases of Hazardous Material into the environment (including,
without limitation, ambient air, soil, surface water, groundwater, wetlands,
land or subsurface strata), or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemicals or Hazardous Material or any Hazardous Material Activity
(including Remedial Action).
(27) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, any successor statute thereto, and the rules and regulations
promulgated thereunder.
(28) "Escrow Agent" has the meaning specified in Section 2.3.
(29) "Escrow Agreement" has the meaning specified in Section 2.3.
(30) "Escrow Amount" has the meaning specified in Section 2.3.
(31) "Excess Capital Expenditure Amount" has the meaning specified in
Section 2.2(a)(iv).
(32) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, any successor statute thereto, and the rules and regulations
promulgated thereunder.
(33) "Excluded Taxes" has the meaning specified in Section 6.13(a).
(34) "Final Determination" means the final resolution of liability for
any Tax for a Taxable Period, including any related interest or penalties, that
is final and nonappealable, including by reason of the expiration of the
applicable statute of limitations.
(35) "Financial Statements" has the meaning specified in Section 4.12.
(36) "Funded Debt" means all indebtedness for borrowed money, all notes
payable and drafts accepted representing extensions of credit and any guarantee
obligation with respect to any of the foregoing, as applied to any Acquired
Company.
(37) "GAAP" means generally accepted accounting principles in the
United States on the date of this Agreement.
(38) "Governmental Authority" means any government, any governmental
entity, department, commission, board, agency or instrumentality, and any court,
tribunal, or judicial body, in each case whether federal, state, county,
provincial, local or foreign.
(39) "Governmental Order" means any statute, rule, regulation, order,
judgment, injunction, decree, stipulation or determination issued, promulgated
or entered by or with any Governmental Authority of competent jurisdiction.
(40) "Xxxxxxxx" has the meaning specified in Section 6.20.
(41) "Hazardous Material" means any waste, pollutant, contaminant,
toxic substance, special waste or hazardous substance regulated by any
Environmental Law, including petroleum products (including crude oil or any
fraction thereof), any radioactive material (including any source, special
nuclear or by-product material as defined at 42 U.S.C. section 2011 et. seq., as
in effect on the date hereof), polychlorinated biphenyls, radon gas and asbestos
in any form or condition.
(42) "Hazardous Materials Activity" means the handling, transportation,
transfer, recycling, storage, use, treatment, manufacture, investigation,
removal, remediation, release or exposure of others to any Hazardous Material.
(43) "HEC" has the meaning specified in the first paragraph of this
Agreement.
(44) "HEC Agreed Value" has the meaning specified in Section
6.13(a)(vi).
(45) "HPI" has the meaning specified in the first paragraph of this
Agreement.
(46) "HPI Assumed Liabilities" means all Liabilities of the Acquired
Companies immediately preceding the Closing, including (A) all Liabilities
included in the final Statement of Closing Working Capital, (B) Liabilities
under Contracts and Licenses of any of the Acquired Companies attributable to
any period after the Closing that relate to an Acquired Publication or the
operation of an Acquired Publication, (C) all Actions listed in Schedule 4.14
and Actions to the extent they relate to an Acquired Publication or the
operations of an Acquired Publication, (D) any liabilities and obligations
related to, associated with or arising out of (i) the occupancy, operation, use
or control of any Owned Real Property or Leased Real Property and (ii) the
operation of the Acquired Publications, in each case incurred or imposed by any
Environmental Law (including any release of any Hazardous Material on, at or
from (1) any Owned Real Property or Leased Real Property, including all
facilities, improvements, structures and equipment thereon, surface water
thereon or adjacent thereto and soil or groundwater thereunder, or any condition
whatsoever on, under or in the vicinity of such real property and (2) any real
property or facility owned by a third Person to which Hazardous Materials
generated by any Acquired Publication were sent prior to the Closing Date), (E)
the obligations of the Acquired Companies attributable to any period after the
Closing that relate to an Acquired Publication or the operation of an Acquired
Publication, (F) without limitation or expansion by the other provisions in this
Section 1.1(46) or by the provisions of Section 1.1(48), all Liabilities in
respect of Taxes for which the Purchaser is liable pursuant to Section 6.13 and
(G) all Liabilities in respect of the scholarship program for carriers of the
Acquired Companies referred to in Schedule 4.13 (it being understood that the
Purchaser shall have no obligation to continue such program after the Closing
except to the extent required by Law or Contract), excluding, however (1) any
Liabilities of HEC or any Subsidiary thereof, (2) any Liabilities not related to
an Acquired Publication or the operation of an Acquired Company, (3) any Funded
Debt, (4) any Liability arising under any Contracts or Licenses to the extent
they do not relate to an Acquired Publication or the operation of an Acquired
Publication, (5) any Liability arising under any Contracts or Licenses required
by this Agreement to be terminated at or prior to Closing, (6) any Liability
arising under any Benefit Plans of the Acquired Companies (including (i) any
claim arising under any Benefit Plan in connection with termination of any
Employee before, upon or after Closing, (ii) termination of any Benefit Plan,
(iii) termination of any Employee's participation in any Benefit Plan or (iv)
withdrawal of any Acquired Company from any Benefit Plan) other than liabilities
thereunder included in the final Statement of Closing Working Capital, (7) all
bonuses, payments or other benefits payable pursuant to any Benefit Plan or
otherwise for Employees, former Employees or directors of any Acquired Company
or any independent contractors of any Acquired Company conditioned upon or
payable in connection with or as a result of the transactions that occur upon
and by reason of the Closing, under any agreement, or calculated with reference
to the financial terms, of the transactions contemplated by this Agreement and
(8) any Liability required under GAAP to be reflected on a balance sheet as a
long-term liability (other than any Liability described in clauses (A) through
(G) above). The inclusion of a Liability as an HPI Assumed Liability shall not
limit the Purchaser's right to indemnification under Section 8.1(a) for any Loss
incurred due to the inaccuracy of a representation or breach of a warranty made
in Article 4 hereof.
(47) "HPI Common Stock" has the meaning specified in Section 4.3(a).
(48) "HPI Excluded Liabilities" means all Liabilities of the Acquired
Companies as of the Closing, other than the HPI Assumed Liabilities, including
(A) any Liabilities of HEC or any Subsidiary thereof, (B) any Liabilities not
related to an Acquired Publication or the operation of an Acquired Company, (C)
any Funded Debt, (D) any Liability arising under any Contracts or Licenses to
the extent they do not relate to an Acquired Publication or the operation of an
Acquired Publication, (E) any Liability arising under any Contracts or Licenses
required by this Agreement to be terminated at or prior to Closing, (F) any
Liability arising under any Benefit Plans of the Acquired Companies (including
(i) any claim arising under any Benefit Plan in connection with termination of
any Employee before, upon or, in the case of any Benefit Plan that is not a
Sioux City Benefit Plan, after Closing, (ii) termination of any Benefit Plan
other than a Sioux City Benefit Plan, (iii) termination of any Employee's
participation in any Benefit Plan (except terminations from Sioux City Benefit
Plans after the Closing) or (iv) withdrawal of any Acquired Company from any
Benefit Plan that is not a Sioux City Benefit Plan, other than Liabilities
thereunder included in the final Statement of Closing Working Capital, (G) all
bonuses, payments or other benefits payable pursuant to any Benefit Plan or
otherwise for Employees, former Employees or directors of any Acquired Company
or any independent contractors of any Acquired Company conditioned upon or
payable in connection with or as a result of the transactions that occur upon
and by reason of the Closing, under any agreement, or calculated with reference
to the financial terms, of the transactions contemplated by this Agreement and
(H) without limitation or expansion by the provisions of Section 1.1(46) or the
other provisions in this Section 1.1(48), all Liabilities in respect of Taxes
for which the HPI Indemnitors are liable pursuant to Section 6.13.
(49) "HPI Indemnifying Stockholders" means Xxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx.
(50) "HPI Indemnitors" means, with respect to any indemnification
pursuant to Section 8.1(a), the HPI Indemnifying Stockholders and, with respect
to any indemnification pursuant to Section 8.1(b) or (c), HEC and the HPI
Indemnifying Stockholders, in each case in accordance with Section 8.5(g).
(51) "HPI Lease" means the office lease between Safety Syringes Inc.
and HPI substantially in the form of Exhibit A attached hereto.
(52) "HPI Redemption" has the meaning specified in Section 2.1(b).
(53) "HPI Stock Certificates" has the meaning specified in Section
3.2(b).
(54) "HPI Stockholder" or "HPI Stockholders" has the meaning specified
in the first paragraph of this Agreement.
(55) "HPI Stockholder Documents" means, collectively, the (i) HPI Stock
Certificates, and (ii) any other document executed and delivered at the Closing
pursuant to this Agreement by or on behalf of HPI Stockholders or any of the
Acquired Companies.
(56) "HPI Stockholders Representative" means Xxxxxx X. Xxxxxx until
such time as he is unwilling or unable to serve as representative of the HPI
Stockholders, after which time it shall mean Xxxxxxx X. Xxxxxx, and any
successor to either of the foregoing designated in accordance with the
provisions of Section 10.2.
(57) "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, any successor statute thereto, and the rules and
regulations promulgated thereunder.
(58) "Income Tax" means any federal or state income, franchise,
business profits or other similar Tax, any estimated Tax related thereto, any
interest and penalties (civil or criminal) thereon or additions thereto.
(59) "Indemnitor" has the meaning specified in Section 8.3(a).
(60) "Independent Accountant" has the meaning specified in Section
2.2(b)(iii).
(61) "Intellectual Property" means any (i) United States and foreign
patents, patent applications, patent disclosures and improvements thereto, (ii)
United States, state or foreign trademarks, service marks, trade dress, logos,
trade names and corporate names, the goodwill associated therewith, and the
registrations and applications for registration thereof, (iii) United States and
foreign copyrights, and the registrations and applications for registration
thereof, and (iv) domain names.
(62) "Interest Rate" has the meaning specified in Section 2.2(b)(ii).
(63) "Interim Financial Statements" has the meaning specified in
Section 4.12.
(64) "Knowledge of" means the actual knowledge of (i) with respect to
each Acquired Company: Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx,
Xxxxxxxx Xxxx and each publisher of an Acquired Publication (other than the
Sioux City Journal); and (ii) with respect to the Purchaser: Xxxx X. Xxxxx,
Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx, Xxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxx.
(65) "Law" means any federal, state, county, provincial, local or
foreign statute, law, ordinance, regulation, rule, code or rule of common law.
(66) "Leased Assets" has the meaning specified in Section 4.5(a).
(67) "Leased Real Property" has the meaning specified in Section
4.5(a).
(68) "Xxx" has the meaning specified in the first paragraph of this
Agreement.
(69) "Liability" means any direct or indirect debt, obligation or
liability of any kind or nature, whether accrued or fixed, absolute or
contingent, determined or determinable, matured or unmatured, and whether due or
to become due, asserted or unasserted, or known or unknown, and regardless of
whether required by GAAP to be reflected in a balance sheet or disclosed in the
related notes.
(70) "License" means any franchise, approval, permit, order,
authorization, consent, license, registration or filing, certificate, variance
and any other similar right obtained from or filed with any Governmental
Authority.
(71) "Lien" means any adverse claim, restriction on voting or transfer
or pledge, lien, charge or Encumbrance.
(72) "Loss" or "Losses" means any claims, demands, Liabilities, losses,
damages, deficiencies, assessments, judgments, Remedial Actions and costs or
expenses (including reasonable attorneys', consultants' and experts' fees and
expenses but excluding punitive and consequential damages and lost profits other
than punitive and consequential damages and lost profits paid or payable in
connection with a third Person Action).
(73) "Material Adverse Effect" means any change or effect that results
in or gives rise to a materially adverse effect on the assets, properties,
operations, business, financial condition or results of operations of any of the
Acquired Companies, except for any such change or effect arising directly or
indirectly from (i) this Agreement or the transactions contemplated by this
Agreement, (ii) the announcement or other disclosure of this Agreement or the
transactions contemplated by this Agreement, (iii) any changes in conditions
generally applicable to the newspaper industry, or (iv) any changes in the
financial markets or general United States or global economic conditions.
(74) "Material Contract" or "Material Contracts" has the meaning
specified in Section 4.7(a).
(75) "Multiemployer Plan" has the meaning specified in Section 4.10(a).
(76) "Ordinary Course of Business" when referring to an action taken by
a Person shall mean such action is consistent with the past practices of such
Person and is taken in the ordinary course of the operations of such Person.
(77) "Other Cash Equivalent" means a current asset of the type
classified as a "cash equivalent" in the preparation of the Audited Financial
Statements other than cash and U.S. Treasury securities.
(78) "Owned Real Property" has the meaning specified in Section 4.5(a).
(79) "Permitted Encumbrances" means (i) Encumbrances of landlords and
Encumbrances of mechanics, materialmen, repairmen, warehousemen and carriers
arising in the Ordinary Course of Business securing amounts not in default, (ii)
Encumbrances for Taxes and other Liabilities not yet due and payable, and for
Taxes and other Liabilities being contested in good faith, (iii) Encumbrances
securing liabilities shown on the Financial Statements and (iv) Encumbrances on
property and imperfections of title the existence of which do not, and would not
reasonably be expected as of the date hereof to, materially detract from the
value of, interfere with, the use and enjoyment of the property subject thereto
or affected thereby.
(80) "Person" means any individual, general or limited partnership,
firm, corporation, limited liability company, association, trust, unincorporated
organization or other entity.
(81) "Potential Contributor" has the meaning specified in Section
8.3(g).
(82) "Proprietary Rights" means (i) Intellectual Property, (ii) trade
secrets and confidential business information (including ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, research and development information, software,
drawings, specifications, designs, plans, proposals, technical data, financial,
marketing and business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information), (iii) copies
and tangible embodiments thereof (in whatever form or medium), (iv) licenses
granting any rights with respect to any of the foregoing, and (v) paid
subscriber lists, commercial advertiser lists, distributor lists, carrier lists,
route representative lists, single copy dealer lists, transient or private party
advertiser lists and commercial printing customer lists.
(83) "Purchased HPI Stock" has the meaning specified in Section 2.1(a).
(84) "Purchased HPI Stock Certificates" has the meaning specified in
Section 3.2(a)(i).
(85) "Purchaser" has the meaning specified in the first paragraph of
this Agreement.
(86) "Purchaser's Benefit Programs" has the meaning specified in
Section 6.9(b).
(87) "Purchaser Documents" means, collectively, the documents executed
and delivered at the Closing pursuant to this Agreement by or on behalf of the
Purchaser.
(88) "Redeemed HPI Stock" has the meaning specified in Section 2.1(b).
(89) "Redeemed HPI Stock Certificates" has the meaning specified in
Section 3.2(b).
(90) "Remedial Action" means actions required to (1) investigate, clean
up, remove, treat or in any other way address Hazardous Material in the
environment; (2) prevent the release or threat of release or minimize the
further release of Hazardous Material; or (3) perform pre-remedial studies and
investigations and post remedial care, all as required by Environmental Law.
(91) "Schedules" has the meaning specified in Section 6.11.
(92) "Securities Act" means the Securities Act of 1933, as amended, any
successor statute thereto, and the rules and regulations promulgated thereunder.
(93) "Short Term Agreement" has the meaning specified in Section
4.7(a).
(94) "Sioux City" has the meaning specified in the second recital of
this Agreement.
(95) "Sioux City Benefit Plans" has the meaning specified in Section
6.9(a).
(96) "Software" has the meaning specified in Section 4.6(c).
(97) "Statement of Closing Working Capital" has the meaning specified
in Section 2.2(b)(i).
(98) "Stock Purchase" has the meaning specified in Section 2.1(a).
(99) "Stock Purchase Notice of Disagreement" has the meaning specified
in Section 2.2(b)(iii).
(100) "Stock Purchase Price" has the meaning specified in Section
2.2(a).
(101) "Straddle Period" means any taxable year or period beginning on
or before, and ending after, the Closing Date.
(102) "Subsidiary" means, unless otherwise indicated with respect to a
Person, any other Person in which such Person has a direct or indirect equity
interest or other ownership interest in excess of fifty percent (50%).
(103) "Survival Period" has the meaning specified in Section 8.6.
(104) "Tax" means any federal, state, county, provincial, local or
foreign income, gross receipts, sales, use, ad valorem, employment, severance,
transfer, gains, profits, excise, franchise, property, capital stock, premium,
minimum and alternative minimum or other similar taxes, fees, levies, duties,
assessments or charges of any kind or nature whatsoever imposed by any
Governmental Authority (whether payable directly or by withholding), together
with any interest, penalties (civil or criminal), additions to, or additional
amounts imposed by, any Governmental Authority with respect thereto, and any
expenses incurred in connection with the determination, settlement or litigation
of any Liability therefor.
(105) "Tax Package" has the meaning specified in Section 6.13(e).
(106) "Tax Return" means a report, return or other information
(including attachment schedules) required to be supplied to a Governmental
Authority with respect to any Tax including any information return, claim for
refund, amended return or declaration of estimated Tax.
(107) "Taxable Period" means any taxable year or any other period that
is treated as a taxable year with respect to which any Tax may be imposed under
any applicable statute, rule or regulation.
(108) "Termination Date" has the meaning specified in Section 9.1(b).
1.2. Certain Additional Definitions. Other terms are defined elsewhere
in this Agreement and, for purposes of this Agreement, shall have the respective
meanings ascribed thereto in the respective sections of this Agreement unless
the context requires otherwise.
ARTICLE 2
PURCHASE AND SALE
2.1. The Stock Purchase and HPI Redemption.
(a) The Stock Purchase. Upon the terms and subject to the conditions
set forth herein, at the Closing the HPI Stockholders shall transfer, assign and
deliver to the Purchaser, and the Purchaser shall purchase from each HPI
Stockholder, certain shares of HPI Common Stock as determined in accordance with
Section 2.1(c) (the "Purchased HPI Stock") owned by such HPI Stockholders (the
"Stock Purchase").
(b) The HPI Redemption. Upon the terms and subject to the conditions
set forth herein, contemporaneously with (and as part of the same overall plan
that includes) the closing of the Stock Purchase, HPI shall redeem from the HPI
Stockholders the issued and outstanding shares of capital stock of HPI owned by
them but not acquired by the Purchaser in the Stock Purchase as determined in
accordance with Section 2.1(c) (the "Redeemed HPI Stock"), in consideration for
the delivery by HPI of all of the then issued and outstanding shares of HEC,
which such HPI Stockholders agree to accept in exchange for the capital stock of
HPI so redeemed (the "HPI Redemption").
(c) (i) Schedule I hereto sets forth, as of the date hereof, the name,
address and social security or employer identification number of each record or
beneficial owner of HPI Common Stock, as specified in Section 4.2(d). At the
Closing, the HPI Stockholders shall deliver to the Purchaser and HPI a Schedule
III to be attached hereto showing, with respect to each class of HPI Common
Stock held by each HPI Stockholder listed on Schedule I, the portion of such HPI
Stockholder's HPI Common Stock which constitutes Purchased HPI Stock and the
portion of such HPI Stockholder's HPI Common Stock which constitutes Redeemed
HPI Stock, determined in accordance with Section 2.1(c)(ii) below.
(ii) The portion of a class of a HPI Stockholder's HPI Common
Stock designated as Purchased HPI Stock shall equal a fraction, the
numerator of which is the sum of the Cash Payment plus the Escrow
Amount deposited with the Escrow Agent at Closing pursuant to Section
2.3, and the denominator of which is such amount plus the HEC Agreed
Value. The portion of a class of a HPI Stockholder's HPI Common Stock
designated as Redeemed HPI Stock shall equal the portion of such class
which is not Purchased HPI Stock.
(iii) Such Schedule III shall also set forth the capitalization of
HEC as of the time immediately prior to the HPI Redemption as well as,
for each HPI Stockholder: (i) the number of shares of HEC capital stock
(by class, if relevant) to be delivered to such HPI Stockholder in the
HPI Redemption, and (ii) the Redeemed HPI Stock (by class, if relevant)
to be delivered by such HPI Stockholder to HPI in exchange for such HEC
capital stock.
2.2. Consideration for HPI Common Stock.
(a) Consideration. The purchase price for the HPI Common Stock acquired
by the Purchaser pursuant to Section 2.1(a) (the "Stock Purchase Price") shall
be:
(i) $699,000,000; plus, amounts distributed to the HPI
Stockholders pursuant to the Escrow Agreement; plus,
(ii) in the event Cash Equivalents exceeds the Cash Amount, the
amount of such excess; minus,
(iii) in the event the Cash Amount exceeds Cash Equivalents, the
amount of such excess; minus,
(iv) in the event $7,544,405 exceeds the amount disbursed on the
Capital Program between October 31, 2001 and the Closing Date, the
amount of such excess (the "Excess Capital Expenditure Amount"); plus,
(v) any amount payable by the Purchaser to the HPI Stockholders
pursuant to Section 2.2(b)(ii); minus,
(vi) any amount payable by the HPI Stockholders pursuant to
Section 2.2(b)(ii).
(b) Closing Working Capital.
(i) As promptly as practicable, but in any event within ninety
(90) calendar days following the Closing, the Purchaser shall cause to
be prepared and delivered to the HPI Stockholders a further
determination and statement (the "Statement of Closing Working
Capital") setting forth the Closing Working Capital of HPI. The
Statement of Closing Working Capital shall include line items
substantially consistent with those in the consolidated balance sheet
included in the Audited Financial Statements.
(ii) Within thirty (30) calendar days following delivery of the
Statement of Closing Working Capital pursuant to Section 2.2(b)(i)
hereof or, if applicable, such later date determined in accordance with
Section 2.2(b)(iii), (1) the HPI Stockholders shall pay to the
Purchaser the amount, if any, by which the Closing Working Capital of
HPI shown on the Statement of Closing Working Capital of the Acquired
Companies is less than the Benchmark Date Working Capital of HPI, or
(2) the Purchaser shall pay to the HPI Stockholders the amount, if any,
by which the Closing Working Capital of HPI shown on the Statement of
Closing Working Capital is more than the Benchmark Date Working Capital
of HPI. Any and all payments made pursuant to this Section 2.2(b)(ii)
shall bear interest at the three (3) month London Inter-Bank Offered
Rate published in the Wall Street Journal on the Closing Date (the
"Interest Rate") for the period commencing on the Closing Date and to
but not including the date of payment, and shall be made by wire
transfer of immediately available funds to an account designated in
writing by the party to receive such payment.
(iii) If the HPI Stockholders Representative disagrees in good
faith with the Statement of Closing Working Capital, then the HPI
Stockholders Representative shall notify the Purchaser in writing (the
"Stock Purchase Notice of Disagreement") of such disagreement within
thirty (30) calendar days following delivery of the Statement of
Closing Working Capital. The Stock Purchase Notice of Disagreement
shall set forth in reasonable detail the basis for the disagreement
described therein. Thereafter, the HPI Stockholders Representative and
the Purchaser shall attempt in good faith to resolve and finally
determine the amount of the Closing Working Capital of HPI, which
amount shall not be less than the amount thereof shown in the HPI
Stockholders Representative's calculations contained in the Stock
Purchase Notice of Disagreement nor more than the amount thereof shown
in the Purchaser's calculations contained in the Statement of Closing
Working Capital. If the HPI Stockholders Representative and the
Purchaser are unable to resolve the disagreement within thirty (30)
calendar days following delivery of the Stock Purchase Notice of
Disagreement, then the HPI Stockholders Representative and the
Purchaser shall retain the services of Ernst & Young LLP (the
"Independent Accountant") to resolve the disagreement and make a
determination with respect thereto. Such determination will be made,
and written notice thereof given to the HPI Stockholders and the
Purchaser, within thirty (30) calendar days after such selection. The
determination by the Independent Accountant shall be final, binding and
conclusive upon the HPI Stockholders and the Purchaser. The scope of
the Independent Accountant's engagement (which will not be an audit)
shall be limited to the resolution of the disputed items described in
the Stock Purchase Notice of Disagreement, and the recalculation, if
any, of the Statement of Closing Working Capital of HPI in light of
such resolution. If an Independent Accountant is engaged pursuant to
this Section 2.2(b)(iii), the fees and expenses of the Independent
Accountant shall be borne (i) by the Purchaser if the difference
between the Closing Working Capital of HPI and the Purchaser's
calculation of Closing Working Capital of HPI contained in the
Statement of Closing Working Capital is greater than the difference
between the Closing Working Capital of HPI and the HPI Stockholders
Representative's calculation of Closing Working Capital of HPI
contained in the Stock Purchase Notice of Disagreement, (ii) by the HPI
Stockholders if the first such difference is less than the second such
difference, and (iii) otherwise equally by the Purchaser and the HPI
Stockholders. Within ten (10) calendar days after delivery of a notice
of determination by the Independent Accountant as described above, any
payment required by Section 2.7(b)(ii) hereof shall be paid based upon
such determination, together with interest at the Interest Rate for the
period commencing on the Closing Date and to but not including the date
of payment.
(iv) Any payment to be made to or by the HPI Stockholders pursuant
to this Section 2.2(b) shall be allocated among the HPI Stockholders
pro rata based on their ownership as of the Closing of shares of HPI
Common Stock.
2.3. Escrow. At the Closing, in addition to delivering or causing to be
delivered to the HPI Stockholders the Cash Payment pursuant to Section 3.3, the
Purchaser shall deposit $50,000,000 (the "Escrow Amount") with a commercial bank
mutually agreeable to the Purchaser and the HPI Stockholders Representative (the
"Escrow Agent") pursuant to an escrow agreement, substantially in the form of
Exhibit B attached hereto and by reference made a part hereof (the "Escrow
Agreement"), which may be used solely to satisfy amounts payable by the HPI
Indemnifying Stockholders to the Purchaser pursuant to Article 8 hereof. The
parties hereto acknowledge and agree that if the HPI Indemnifying Stockholders
are obligated to make any payment pursuant to Section 8.1 hereof at such time as
any portion of the Escrow Amount is then held by the Escrow Agent and otherwise
available for such payment, the Purchaser shall (in the case of Section 8.1(a))
or may (in the case of Section 8.1(b) or (c)), prior to seeking satisfaction
directly from any HPI Indemnifying Stockholder, seek to satisfy such payment out
of the Escrow Amount until no further amount is available from the Escrow Amount
to satisfy such obligation pursuant to the terms of the Escrow Agreement, it
being understood that, to the extent any other provision of this Agreement
provides that the Escrow Amount is the exclusive source of payment for any
obligation, neither this sentence nor any other provision of this Agreement
shall give rise to any further recourse against the HPI Stockholders for payment
thereof.
2.4. Cash Amount and Capital Expenditure Adjustment. Within five (5)
calendar days following the Closing Date, the Purchaser and the HPI Stockholders
Representative shall mutually agree upon the Cash Amount, the Cash Equivalents
and the Excess Capital Expenditure Amount. Within ten (10) calendar days
following the Closing Date, (1) the HPI Stockholders shall pay to the Purchaser
the amount, if any, by which the Cash Equivalents is less than the sum of (a)
the Cash Amount and (b) the Excess Capital Expenditure Amount, or (2) the
Purchaser shall pay to the HPI Stockholders the amount, if any, by which the
Cash Equivalents is more than the sum of (a) the Cash Amount and (b) the Excess
Capital Expenditure Amount. Any and all payments made pursuant to this Section
2.4 shall bear interest at the Interest Rate for the period commencing on the
Closing Date and to but not including the date of payment, and shall be made by
wire transfer of immediately available funds to an account designated in writing
by the party to receive such payment. Any payment to be made to or by the HPI
Stockholders pursuant to this Section 2.4 shall be allocated among the HPI
Stockholders pro rata based on their ownership as of the Closing of shares of
HPI Common Stock.
2.5. Further Assurances. At and after the Closing, subject to the terms
and conditions herein provided, each of the Purchaser, HEC and the HPI
Stockholders covenants and agrees to use reasonable efforts to take, or cause to
be taken, all action, or do, or cause to be done, all things, necessary, proper
or advisable under applicable Laws to consummate and make effective the
transactions contemplated by this Agreement.
ARTICLE 3
THE CLOSING
3.1. The Closing. The consummation of the transactions contemplated
hereby shall take place at a closing (the "Closing") to be held at 10:00 a.m.,
Central Standard Time ("CST"), on March 31, 2002 or, if on such date all
conditions set forth in Article 7 and have not been satisfied or waived, then on
such later date as all the conditions set forth in Article 7 have been satisfied
or waived (the "Closing Date"), at the offices of Xxxxx, Xxxxxxxxx & Mines,
P.S., Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000, 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx,
unless another time, date or place is mutually agreed upon in writing by the HPI
Stockholders and the Purchaser.
3.2. Closing Deliveries of the HPI Stockholders. At the Closing, the
HPI Stockholders shall deliver, or cause to be delivered, to the Purchaser (or,
to the extent so indicated, HPI) the following instruments, certificates and
other documents, dated as of the Closing Date (except as otherwise provided
below), in order to effect the transfer of the Purchased HPI Stock specified in
Schedule III to the Purchaser pursuant to Section 2.1(a) hereof and the transfer
of the Redeemed HPI Stock specified in Schedule III to HPI pursuant to Section
2.1(b) hereof:
(a) The Stock Purchase. (i) stock certificates representing the issued
and outstanding shares of HPI specified as Purchased HPI Stock in Schedule III
duly endorsed or accompanied by duly executed stock powers in blank (the
"Purchased HPI Stock Certificates");
(ii) stock certificates representing all of the issued and
outstanding shares of each of the other Acquired Companies other than
Sioux City and, as to Sioux City, HPI's Class A and Class B shares in
Sioux City;
(iii) the Escrow Agreement duly executed by the HPI Stockholders
and the HPI Lease duly executed by Safety Syringes Inc.;
(iv) resignations of all directors and officers of the Acquired
Companies other than Sioux City and, as to Sioux City, HPI's directors
and officers thereof, shall have been delivered to the Purchaser,
effective upon the Closing;
(v) the stock book, stock ledger, and minute book of each of the
Acquired Companies other than Sioux City;
(vi) short-form certificates of good standing with respect to each
Acquired Company issued as of a recent date by the Secretary of State
of its incorporation and for each state in which an Acquired Company is
qualified to do business as a foreign corporation; and
(vii) all other documents, instruments and certificates required
to be delivered by the HPI Stockholders pursuant to this Agreement or
reasonably requested by the Purchaser.
(b) The HPI Redemption. The HPI Stockholders shall deliver, or cause to
be delivered, to HPI in connection with the HPI Redemption stock certificates
representing the issued and outstanding shares of HPI specified as Redeemed HPI
Stock in Schedule III, duly endorsed or accompanied by duly executed stock
powers in blank (the "Redeemed HPI Stock Certificates" and, together with the
Purchased HPI Stock Certificates, the "HPI Stock Certificates").
(c) Closing Certificates.
(i) an officer's certificate of HPI and HEC in a form reasonably
acceptable to the parties;
(ii) a secretary's certificate of HPI and HEC in a form reasonably
acceptable to the parties; and
(iii) a certificate of each HPI Stockholder in form reasonably
acceptable to the Purchaser, stating under penalty of perjury the
United States taxpayer identification number of the party in question
and that such person is not a foreign person, which complies with the
requirements of Section 1445 of the Internal Revenue Code.
(d) Legal Opinions. Legal opinions of Sidley Xxxxxx Xxxxx & Xxxx and
Xxxxx, Xxxxxxxxx & Mines, P.S., outside counsel for the Acquired Companies,
substantially in the form attached hereto as Exhibit C.
3.3. Closing Deliveries of the Purchaser. At the Closing, the Purchaser
shall deliver, or cause to be delivered, to the HPI Stockholders the following
instruments, certificates and other documents, dated as of the Closing Date
(except as otherwise provided below), in order to pay for the HPI Common Stock.
(a) (i) Cash Payment. An amount in cash equal to the Cash Payment,
payable by wire transfer of immediately available funds on the Closing Date to
an account designated in writing by the HPI Stockholders Representative at least
two (2) Business Days prior to the Closing Date, and for the benefit of each of
the HPI Stockholders in the respective amount shown on Schedule 3.3;
(ii) the Escrow Agreement, duly executed by the Purchaser, and the
HPI Lease, duly executed by HPI;
(iii) evidence that the Purchaser has deposited the Escrow Amount
pursuant to the Escrow Agreement; and
(iv) all other documents, instruments or certificates required to
be delivered by the Purchaser pursuant to this Agreement or reasonably
requested by the HPI Stockholders.
(b) Closing Certificates.
(i) an officer's certificate of the Purchaser in a form reasonably
acceptable to the parties; and
(ii) a secretary's certificate of the Purchaser in a form
reasonably acceptable to the parties.
(c) Legal Opinion. A legal opinion of Lane & Xxxxxxxx, outside counsel
for the Purchaser, substantially in the form attached hereto as Exhibit D.
3.4. Closing Deliveries of HPI. At the Closing, HPI shall deliver, or
cause to be delivered, to the HPI Stockholders the following instruments,
certificates and other documents, dated as of the Closing Date (except as
otherwise provided below), in connection with the HPI Redemption.
(a) stock certificates representing all of the issued and outstanding
shares of HEC, as specified in Schedule III; and
(b) all other documents or instruments reasonably requested by the HPI
Stockholders.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE HPI INDEMNIFYING STOCKHOLDERS
The HPI Indemnifying Stockholders jointly and severally represent and
warrant to the Purchaser as follows:
4.1. Organization. HEC and each Acquired Company is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
such company's incorporation, and has all requisite corporate power and
authority to own, operate or lease the assets and properties now owned, operated
or leased by it, and to conduct its operation as presently conducted by such
company. Each Acquired Company is duly authorized, qualified or licensed to do
business as a foreign corporation, and is in good standing, under the Laws of
each state or other jurisdiction in which the character of such company's
properties owned, operated or leased, or the nature of such company's
activities, makes such qualification necessary, except in those states and
jurisdictions where the failure to be so qualified or in good standing would not
reasonably be expected, as of the date hereof, to have a Material Adverse
Effect. Corporate minutes of each Acquired Company for the five years ended on
the date hereof and the stock records of each Acquired Company (other than Sioux
City) have been delivered to the Purchaser. Complete and accurate records with
respect to the issuance, transfer, redemption and cancellation of shares of
capital stock of each Acquired Company are contained in each Acquired Company's
stock records.
4.2. Authority and No Violation; Ownership.
(a) The HPI Stockholders have all requisite power, authority and legal
capacity to enter into this Agreement and the HPI Stockholders Documents, to
perform their respective obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. This Agreement has been duly,
and at the Closing the HPI Stockholder Documents will be, executed and delivered
by, or on behalf of, the HPI Stockholders and, assuming the due authorization,
execution and delivery of this Agreement by the Purchaser, this Agreement
constitutes, and at the Closing the HPI Stockholder Documents will constitute, a
legally valid and binding obligation of the HPI Stockholders, enforceable
against the HPI Stockholders in accordance with their respective terms, and
subject to (i) the effect of any applicable Laws of general application relating
to bankruptcy, reorganization, insolvency, moratorium or similar Laws affecting
creditors' rights and relief of debtors generally, and (ii) the effect of rules
of Law and general principles of equity, including rules of Law and general
principles of equity governing specific performance, injunctive relief and other
equitable remedies (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) HPI and HEC have all requisite corporate power and authority to
enter into this Agreement, to perform such company's obligations hereunder, and
to consummate the transactions contemplated hereby. The execution and delivery
by HPI and HEC of this Agreement, the performance by HPI and HEC of their
obligations hereunder, and the consummation by HPI and HEC of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of HPI and HEC. This Agreement has been duly executed and delivered
by HPI and HEC and, assuming the due authorization, execution and delivery of
this Agreement by the Purchaser, this Agreement constitutes a legally valid and
binding obligation of HPI and HEC, enforceable against HPI and HEC in accordance
with its terms, and subject to (i) the effect of any applicable Laws of general
application relating to bankruptcy, reorganization, insolvency, moratorium or
similar Laws affecting creditors' rights and relief of debtors generally, and
(ii) the effect of rules of Law and general principles of equity, including
rules of Law and general principles of equity governing specific performance,
injunctive relief and other equitable remedies (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) Assuming that all consents, waivers, approvals, orders and
authorizations set forth in Schedule 4.4 hereto have been obtained and all
registrations, qualifications, designations, declarations or filings with any
Governmental Authorities set forth in Schedule 4.4 hereto have been made, and
except as set forth in Schedule 4.2 hereto, the execution and delivery by HPI,
HEC and the HPI Stockholders of this Agreement and the HPI Stockholder
Documents, the performance by HPI, HEC and the HPI Stockholders of their
respective obligations hereunder or thereunder, and the consummation by each
party of the transactions contemplated hereby, will not conflict with or violate
in any material respect, constitute a material default (or event which with the
giving of notice or lapse of time, or both, would become a material default)
under, give rise to any right of termination, amendment, modification,
acceleration or cancellation of any material obligation or loss of any material
benefit under, result in the creation of any material Encumbrance on any assets
or properties of such company, or require such company to obtain any consent,
waiver or approval of, make any filing with, or give any notice to any Person as
a result or under, the terms and provisions of (i) the respective charter or the
respective bylaws of such company, (ii) any Contract to which such Person is a
party or by which any of the assets of such Person is bound, or (iii) any Law
applicable to such Person or assets of such Person, or any Governmental Order
issued by a Governmental Authority by which such Person or any of the assets of
such Person is in any way bound or obligated, except, in the case of clauses
(ii) and (iii) of this Section 4.2, as would not, in any individual case, have a
Material Adverse Effect.
(d) Except as set forth in Schedule 4.2, each HPI Stockholder is the
record and beneficial owner of the HPI Common Stock indicated as being owned by
such on Schedule I hereto, free and clear of any and all Liens (other than
limitations on voting rights on the Class A shares of HPI Common Stock).
Schedule I hereto sets forth, as of the date hereof, the name, address and
social security or employer identification number of each record or beneficial
owner of HPI Common Stock. Each HPI Stockholder has the power and authority to
sell, transfer, assign and deliver such shares of HPI Common Stock as provided
in this Agreement, and such delivery will convey to the Purchaser good and
marketable title to such shares, free and clear of any and all Liens (other than
limitations on voting rights on the Class A shares of HPI Common Stock).
4.3. Capitalization, Subsidiaries and Charter. The authorized capital
stock of HPI consists of four hundred seventy-five thousand shares (475,000)
shares of Class A common stock with a par value of $10.00 per share and
twenty-five thousand (25,000) shares of Class B common stock with a par value of
$10.00 per share (collectively, the "HPI Common Stock"). There are three hundred
seventy-five thousand (375,000) Class A shares of HPI Common Stock issued and
outstanding and twenty-five thousand (25,000) Class B shares of HPI Common Stock
issued and outstanding. One hundred ninety-two thousand, two hundred sixty-seven
(192,267) Class A shares of HPI Common Stock and four thousand seven hundred
fifty (4,750) Class B shares of HPI Common Stock are held by HPI in its
treasury. All of the issued and outstanding shares of HPI Common Stock are
validly issued, fully paid and nonassessable. There are no securities of HPI
outstanding which are convertible into or exchangeable or exercisable for any
shares of HPI Common Stock, there are not now, nor at the Closing will there be,
any outstanding or authorized subscriptions, options, warrants, calls, rights,
commitments or any other agreements of any character obligating HPI to issue,
sell or transfer any additional shares of HPI Common Stock or any securities
convertible into or evidencing the right to subscribe for any shares of HPI
Common Stock except as set forth in Schedule 4.3.
(a) Schedule 4.3 hereto sets forth the name, date and jurisdiction of
incorporation, and the outstanding shares of capital stock of each Acquired
Company other than HPI, and each Subsidiary thereof (other than HEC and its
Subsidiaries). Each Subsidiary listed on Schedule 4.3 hereto is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and lawful authority
to own, lease and operate its assets, properties and business and to carry on
its business as now being and as heretofore conducted. Each Subsidiary listed on
Schedule 4.3 hereto is duly qualified or otherwise authorized as a foreign
corporation to transact business and is in good standing in all jurisdictions in
which the nature of the activities conducted by it or the character of the
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not, in any
individual case, reasonably be expected as of the date hereof to have a Material
Adverse Effect. All of the issued and outstanding shares of such company are
validly issued, fully paid and nonassessable. All shares of each Acquired
Company other than HPI, and each Subsidiary thereof (other than HEC and its
Subsidiaries) are owned beneficially and of record by the corporation specified
as the owner in Schedule 4.3 hereto, free and clear of all Liens, except for
Encumbrances for Taxes not yet due and payable or being contested in good faith
and the shares of Sioux City not owned by HPI. There are no securities of any
company listed in Schedule 4.3 hereto presently outstanding, nor at the Closing
will there be, which are convertible into or exchangeable or exercisable for any
shares of such company, and there are no outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments or any other
agreements of any character obligating such company to issue, sell or transfer
any additional shares or any securities convertible into or evidencing the right
to subscribe for any shares of such company.
(b) Except as set forth in Schedule 4.3 hereto, neither HPI nor any
other Acquired Company has any Subsidiaries (other than HEC and its direct and
indirect Subsidiaries), and, except for HEC and its direct and indirect
Subsidiaries, does not own any direct or indirect equity or debt interest in any
other Person, including any interest in a corporation, partnership or joint
venture, and is not obligated or committed to acquire any such interest, in any
case in which the Subsidiary, interest or other Person relates primarily to HPI
or the Acquired Companies.
(c) HPI and each company listed on Schedule 4.3 hereto has heretofore
delivered to the Purchaser true and complete copies of its respective charter
documents and by-laws or comparable instruments of such company as in effect on
the date hereof.
(d) As of the date hereof, the authorized capital stock of HEC consists
of four hundred seventy-five thousand (475,000) shares of Class A common stock
and twenty-five thousand (25,000) shares of Class B common stock. As of the date
hereof, there are one hundred eighty-two thousand, seven hundred thirty-three
(182,733) shares of Class A common stock and twenty thousand, two hundred fifty
(20,250) shares of Class B common stock issued and outstanding. All of the
issued and outstanding shares of HEC common stock are validly issued, fully paid
and nonassessable. HPI is the legal and beneficial owner of record of all the
HEC common stock outstanding, free and clear of all Liens, other than Liens for
Taxes not yet due and payable or being contested in good faith. There are no
securities of HEC outstanding which are convertible into or exchangeable or
exercisable for any shares of HEC common stock and, except as may exist in
connection with the recapitalization of HEC in anticipation of the HPI
Redemption, there are not now, nor at the Closing will there be, any outstanding
or authorized subscriptions, options, warrants, calls, rights, commitments or
any other agreements of any character obligating HEC to issue, sell or transfer
any additional shares of HEC common stock or any securities convertible into or
evidencing the right to subscribe for any shares of HEC common stock.
4.4. Government Consents. No material consent, waiver, approval, order
or authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Authority is required on the part of HPI or HEC in
connection with the execution and delivery by such companies of this Agreement
or the HPI Stockholder Documents, the performance by the HPI Stockholders, HPI
and HEC of their respective obligations hereunder or thereunder, or the
consummation by the HPI Stockholders, HPI and HEC of the transactions
contemplated hereby or thereby, including the sale and transfer of the HPI
Common Stock to the Purchaser or connection with the HPI Redemption, except as
set forth in Schedule 4.4 hereto.
4.5. Tangible Property.
(a) Schedule 4.5(a) hereto contains a true, correct and complete list
of the following to the extent owned, used or held for use by any Acquired
Company in the operation of each Acquired Company, as the case may be: (i) each
parcel of real property owned, as of the date hereof, by such company (as
designated on Schedule 4.5(a), the "Owned Real Property"), (ii) each parcel of
real property leased from or to a third party, as of the date hereof, by such
company (as designated on Schedule 4.5(a), the "Leased Real Property"), the name
of the third party lessor(s) or lessee(s) thereof, as the case may be, the date
of the lease contract relating thereto and all amendments thereof, and (iii) a
list of all material fixed assets owned by such company (other than Sioux City)
as of the date set forth therein (excluding therefrom such fixed assets with an
original cost of less than $10,000 or which have been fully depreciated). Except
as set forth in Schedule 4.5(a) hereto, each Acquired Company does not own, or
have a contractual obligation to purchase or otherwise acquire any material
interest in, any parcel of real property which would be used or held for use
primarily in the operation of the Acquired Company. All of the tangible assets
and properties used by the Acquired Companies pursuant to a lease or license to
which an Acquired Company is a party (other than the Leased Real Property) shall
be referred to herein, collectively, as "Leased Assets."
(b) Except as set forth in Schedule 4.5(a) hereto, each Acquired
Company has insurable (at ordinary rates) fee simple title to all of their
respective Owned Real Property and to all of the related buildings, structures
and other improvements thereon. As of the Closing Date, the Owned Real Property
shall be free and clear of all Liens except for Permitted Encumbrances.
(c) Except as set forth in Schedule 4.5(a) hereto, each Acquired
Company has the right to quiet enjoyment of all the Leased Real Property for the
full term of each such lease. All public utilities, including water, sewer, gas,
electric, telephone and drainage facilities, give adequate service to the Owned
Real Property and Leased Real Property, and the Owned Real Property and Leased
Real Property have access to and from publicly dedicated streets. Except as
otherwise provided in this Agreement, the Purchaser acknowledges and agrees that
the Purchaser shall accept the Owned Real Property and Leased Real Property "as
is, where is, with all faults," and without any express or implied warranties,
guaranties, statements, representations or information pertaining to the Owned
Real Property or Leased Real Property. The representations and warranties
contained in Sections 4.5(b) and (c) shall be solely for the benefit of the
Purchaser, its successors and assigns and may not be relied upon by Chicago
Title Insurance Company (or any other title insurance company) or an affiliate
or agent thereof and neither Chicago Title Insurance Company (or any other title
insurance company), any affiliate or agent thereof, nor any co-insurers, or
re-insurers may be subrogated to any rights of the Purchaser under this
Agreement.
4.6. Intellectual Property and Proprietary Rights.
(a) Schedule 4.6(a) hereto contains a true, correct and complete list
of all material Intellectual Property owned by each Acquired Company (other than
Sioux City) as of the date hereof. A true and complete copy of all material
documentation relating to each item of Intellectual Property set forth in
Schedule 4.6(a) hereto has been made available to the Purchaser and its agents
and representatives.
(b) Each Acquired Company owns or has a valid right to use all material
Proprietary Rights used by such company to conduct its operations as currently
conducted by such company, without, to its Knowledge, materially infringing upon
the material rights of any other Person and, to its Knowledge, there are no such
claims pending or threatened alleging such infringement. To the Knowledge of
each Acquired Company, no other Person is materially infringing upon the
material rights of such company in or to any of the Intellectual Property set
forth in Schedule 4.6(a) hereto.
(c) Schedule 4.6(c) contains a complete and correct description of all
material computer software owned, licensed or used by an Acquired Company (other
than Sioux City) other than software subject to shrink wrap or click-wrap
agreements (the "Software"). Each Acquired Company is in substantial compliance
with all material provisions of any license or other agreement pursuant to which
it has the right to use any licensed Software and any software subject to shrink
wrap or click-wrap agreements. To the Knowledge of each Acquired Company, it is
not infringing on any Intellectual Property rights of any other Person with
respect to its use of the Software. The Software operates without material
operating defects.
4.7. Acquired Companies' Contracts.
(a) Except for Short Term Agreements (as defined below), Schedule
4.7(a) hereto contains a list of the following Contracts (including all
amendments thereto) to which any Acquired Company (other than Sioux City) is a
party as of the date hereof: (i) any Contract involving an executory obligation
of any such Acquired Company of more than $25,000 in any twelve-month period,
(ii) leases relating to all Leased Real Property of the Acquired Companies;
(iii) capital or operating leases or conditional sales agreements to which an
Acquired Company is a party (other than Short Term Agreements), in each case
involving monthly payments in excess of $10,000; (iv) noncompetition or other
agreements restricting the ability of any Acquired Company to engage in the
newspaper business in any location; (v) employment, consulting, separation,
collective bargaining or other labor agreements; (vi) agreements under which any
Acquired Company is obligated to indemnify, or entitled to indemnification from,
any other Person, other than an agreement entered into in the Ordinary Course of
Business or that requires indemnification solely in connection with or as a
result of a breach of, or inaccuracy contained in, such agreement or agreements
disclosed in this Agreement or any Schedule hereto; (vii) the newsprint purchase
agreements of each Acquired Company; (viii) any royalty agreement involving an
executory obligation of any such Acquired Company of more than $10,000 in an
twelve-month period; (ix) advertising "trade-out" or similar agreements having
payment obligations in excess of $25,000 in any twelve-month period; (x)
material distribution agreements with dealers and bundle haulers having payment
obligations in excess of $50,000 in any twelve-month period; and (xi) any
Contract that is otherwise material to any such Acquired Company (the Contracts
referred to in clauses (i) through (xi) referred to individually as a "Material
Contract" or collectively the "Material Contracts"). For all purposes of and
under this Agreement, the term "Short Term Agreement" shall mean an agreement
entered into in the Ordinary Course of Business that is terminable by any
Acquired Company upon ninety (90) days or less notice without penalty or
cancellation fee or charge. Accurate and complete copies of all Material
Contracts as of the date hereof listed in Schedule 4.7(a) have been or will be
provided to the Purchaser.
(b) Each Acquired Company has made available to the Purchaser a copy or
summary of each written Material Contract and a written summary of each oral
Material Contract. Except as set forth in Schedule 4.7(b) hereto, (i) each
Material Contract is in full force and effect and represents a valid, binding
and enforceable obligation of such company in accordance with the respective
terms thereof and, to the knowledge of each Acquired Company represents a valid,
binding and enforceable obligation of each of the other parties thereto; and
(ii) there exists no material breach or material default (or event that with
notice or the lapse of time, or both, would constitute a material breach or
material default) on the part of any Acquired Company, as the case may be, or,
to the knowledge of each Acquired Company on the part of any other party under
any Material Contract, in any individual case which has had or could reasonably
be expected, as of the date hereof, to have a Material Adverse Effect.
4.8. Licenses. Each Acquired Company owns or possesses all right, title
and interest in and to all the Licenses under its respective name which are
necessary to conduct the business of each Acquired Company as conducted as of
the date hereof, except for such Licenses as to which the failure to so own,
hold or possesses would not have a Material Adverse Effect. No loss or
expiration of any License is pending or, to the Knowledge of each Acquired
Company, as the case may be, threatened, other than the expiration of any
License in accordance with the terms thereof or a loss or expiration that could
not reasonably be expected to have a Material Adverse Effect.
4.9. Employees.
(a) Schedule 4.9 hereto contains a true, correct and complete list of
all employees of any Acquired Company (other than Sioux City) who, as of
December 31, 2001, have duties principally related to the newspaper operations
of an Acquired Company and have an annual salary in excess of $5,000, not
including any employee who is an inactive employee on unpaid leave of absence,
and indicating compensation for the year ended December 31, 2001. Each employee
who has duties principally related to the newspaper operations of an Acquired
Company and who remains employed by each Acquired Company immediately prior to
the Closing (whether actively or inactively), and each additional employee who
is hired to work by each Acquired Company following the date hereof and prior to
the Closing who remains employed by such respective company immediately prior to
the Closing (whether actively or inactively), shall be referred to herein
individually as an "Employee" and, collectively, as the "Employees."
(b) Except as set forth in Schedule 4.9, each Acquired Company has
complied in all material respects with all applicable Laws which relate to
public or employee safety and health and is not liable for any arrears of wages
or any taxes or penalties for failure to comply with any of the foregoing. Each
Acquired Company is in compliance with the requirements of the Workers
Adjustment and Retraining Notification Act ("WARN") and has no liabilities
pursuant to WARN.
4.10. Employee Benefit Plans.
(a) Schedule 4.10(a) hereto lists all current or terminated bonus,
deferred compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock and
stock option plans, all employment, completion, change of control or severance
contracts, health, medical, vision, and dental insurance plans, life insurance
and accident and disability insurance plans, leave of absence, layoff, vacation,
day or dependent care, legal services, education assistance, cafeteria (within
the meaning of Code Section 125), flexible spending and other employee benefit
plans, policy contracts, agreements or arrangements (including any collective
bargaining agreement), whether written or if material, oral, which cover
Employees, former Employees, directors, or independent contractors, of each
Acquired Company or with respect to which each Acquired Company has any material
Liability, including "employee benefit plans" within the meaning of Section 3(3)
of ERISA (collectively, the "Benefit Plans"). Except as set forth in Schedule
4.10(a) hereto, no Benefit Plan is a multiemployer plan (as defined in Section
3(37) of ERISA (a "Multiemployer Plan"), and, except as set forth in Schedule
4.10(a) hereto, no Benefit Plan provides health or other welfare benefits to
former Employees other than to the extent necessary to comply with Part 6 of
Title I of ERISA or Section 4980B of the Code or similar state Law ("COBRA").
True and complete copies of the Benefit Plans have been made available to the
Purchaser.
(b) Each Benefit Plan has been maintained and administered in
compliance in all material respects with the applicable provisions of ERISA, the
Code and any other Laws (including compliance in all material respects with all
reporting and disclosure obligations). Each Benefit Plan (other than any Benefit
Plan that is a Multiemployer Plan) which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter that it
is so qualified; to the extent that there have been any amendments to such
Benefit Plan after the most recent favorable determination letter, an
application for a determination letter has been filed with the Internal Revenue
Service by the date of this Agreement with respect to such amendments.
(c) No Acquired Company has any material Liability under Title IV of
ERISA (other than for the payment of premiums, none of which are overdue) in
respect of any Benefit Plan other than a Multiemployer Plan. Except as disclosed
in Schedule 4.10(c), no Acquired Company has Knowledge of any facts or
circumstances that reasonably could be expected to give rise to any material
Liability of any Acquired Company under Title IV of ERISA. Except as disclosed
in Schedule 4.10(c), no Acquired Company or any ERISA Affiliate thereof has
incurred or expects to incur material Liability in connection with an
"accumulated funding deficiency" within the meaning of Section 412 of the Code,
whether or not waived. No Acquired Company has incurred any material Liability
or penalty under Section 4975 of the Code or Section 502(i) of ERISA with
respect to any Benefit Plan. Each Benefit Plan has been maintained and
administered in all material respects in compliance with its terms. There is no
pending, nor has any Acquired Company received notice of, any threatened Action
against or otherwise involving any of the Benefit Plans other than claims for
benefits in the Ordinary Course of Business. All contributions required to be
made by Law, Contract or other document as of the date of this Agreement to the
Benefit Plans have been made or provided for as of the date of this Agreement.
No payment that is owed by or may become due pursuant to any Benefit Plan as in
effect on or before the Closing Date will be non-deductible to the Acquired
Companies under Section 280G of the Code as a result of the transactions
contemplated by this Agreement nor will any Acquired Company be required to
compensate any Person because of the imposition of the Tax imposed by Section
4999 of the Code on such a payment.
(d) No Multiemployer Plan subject to Title IV of ERISA to which an
Acquired Company is required to contribute is in reorganization status (as
defined in Section 4241 of ERISA) or is insolvent (as defined in Section 4245 of
ERISA). No Acquired Company has withdrawn from any Multiemployer Plan subject to
Title IV of ERISA with respect to which there is any outstanding withdrawal
liability (within the meaning of Section 4201 of ERISA) as of the date of this
Agreement. Except as disclosed in Schedule 4.10(d) in the event that any
Acquired Company were to make a complete withdrawal as of the date of this
Agreement from any Benefit Plan that is a Multiemployer Plan subject to Title IV
of ERISA, to the Knowledge of the Acquired Companies no Acquired Company would
have any material withdrawal liability (within the meaning of Section 4201 of
ERISA). Notwithstanding any provision of this Agreement to the contrary, to the
extent any representation contained in Section 4.10(a), 4.10(b), 4.10(c) or this
Section 4.10(d) applies or relates to a Benefit Plan that is a Multiemployer
Plan, such representation is limited to the Knowledge of the Acquired Companies.
(e) Each Acquired Company has complied in all material respects with
the requirements of COBRA.
(f) Except as set forth on Schedule 4.10(f) hereto, no individual is
entitled to or currently being provided post-employment medical benefits or
other post-employment welfare benefits coverage by an Acquired Company.
4.11. Sufficiency of Assets.
(a) Except as set forth on Schedule 4.11, as of the date hereof the
assets and properties (including tangible, intangible, personal, real or mixed)
of the Acquired Companies, including the assets listed on Schedule 4.5(a)
hereto, together with such fixed assets of the Acquired Companies with an
original cost of less than $10,000 or which have been fully depreciated, as the
case may be (including the licenses or leasehold interests in or relating to the
Leased Assets), constitute all of the material assets, properties and rights
necessary for the conduct of the operations of each Acquired Company, in each
case in the manner consistent with past practice.
(b) Each of the Acquired Companies owns all of its owned tangible
personal property free and clear of all Liens except for Permitted Encumbrances.
(c) The tangible property included in the assets of the Acquired
Companies listed on the depreciation schedules set forth in Schedule 4.5(a)
hereto or the Leased Assets are in such condition and repair (ordinary wear and
tear excepted) suitable for operation of the business of the Acquired Companies
for property of comparable type, age and usage, except for tangible personal
property that is obsolete, depleted or worn out and no longer used in the
operations of each Acquired Company.
4.12. Financial Statements. Attached as Schedule 4.12 hereto are true
and complete copies of (i) the consolidated unaudited balance sheet of the
Acquired Companies, and the unaudited balance sheet of each Acquired Company
individually, as of, and the consolidated unaudited statement of income of the
Acquired Companies, and the unaudited statement of income for each Acquired
Company (other than Sioux City) individually, for the fiscal period ended,
October 31, 2001 or, in the case of the unaudited balance sheet of Sioux City,
as of December 31, 2001 (the "Interim Financial Statements"), and (ii) the
consolidated and consolidating balance sheets, the consolidated and
consolidating statement of income, and the consolidated statements of cash flows
and stockholder equity, of HPI as of and for the periods ended April 30, 2001
and April 30, 2000, together with (other than in the case of the consolidating
balance sheets and the consolidating statements of income) the opinion thereon
of Deloitte & Touche, LLP, independent auditors of HPI (the "Audited Financial
Statements" and, collectively, with the Interim Financial Statements, the
"Financial Statements"). The Interim Financial Statements have been prepared
from the books and records of each Acquired Company and the Financial Statements
present fairly the financial position and results of operations of HPI as of the
date and for the period indicated, in each case in conformity with GAAP, except
that the Interim Financial Statements are summary in nature and do not include
the statements of cash flows and stockholder equity or notes and related
disclosures required by GAAP and do not contain normal year-end adjustments,
which are set forth in Schedule 4.12.
4.13. No Undisclosed Liabilities. No Acquired Company has any
liabilities other than (i) the liabilities reflected on the Financial Statements
(including the notes thereto), (ii) the liabilities incurred in the Ordinary
Course of Business after the date of the Financial Statements, none of which is
material to the assets, properties, business, results of operation or condition
(financial or otherwise) of any Acquired Company, (iii) the liabilities set
forth in Schedule 4.13 hereto and (iv) the liabilities reflected in the final
Statement of Closing Working Capital. This representation and warranty shall not
be deemed to be a representation or warranty with respect to matters dealt with
more specifically in other Sections of this Article 4 (including intellectual
property, employee benefit plan, environmental and Tax matters).
4.14. Litigation; Governmental Orders.
(a) Except as set forth in Schedule 4.14 hereto, as of the date hereof,
there are no pending or, to the Knowledge of each Acquired Company threatened
Actions by any Person or Governmental Authority against or relating to such
company with respect to any Acquired Company, their assets or properties (other
than Actions that may be pending or threatened against HEC and its Subsidiaries
or which involve less than $10,000 or would be reasonably expected to result in
a Loss of less than $10,000).
(b) To the Knowledge of each Acquired Company, no Acquired Company is
subject to or bound by any adverse Governmental Order specifically directed to
any Acquired Company and not of general applicability to a group of Persons.
4.15. Compliance with Laws. Except as set forth in Schedule 4.15
hereto, to the Knowledge of each Acquired Company, each is in compliance in all
material respects with, and no such company has received any written claim or
notice that it is in noncompliance with, any material Law or Governmental Order
applicable to any Acquired Company.
4.16. Environmental Matters. Except as disclosed in the environmental
site assessments identified in Schedule 4.16 hereto, all of which have been made
available to the Purchaser:
(a) to the Knowledge of each Acquired Company there has not been any
release of any Hazardous Material in violation of Environmental Law into the
environment on the Owned Real Property or formerly Owned Real Property of any
Acquired Company;
(b) no Acquired Company has operated in or is in violation of any
Environmental Law in any material respect;
(c) no Acquired Company has received any directive, order or written
notice from any Governmental Authority or any other Person alleging any
violation of or failure to comply with any Environmental Law at the Owned Real
Property, nor has any Acquired Company received any directive, order or written
notice from any Government Authority or any other Person alleging that such
company is actually or potentially liable under any Environmental Law for the
costs of environmental investigation or Remedial Action of the Owned Real
Property, any Formerly Owned Real Property, or any off-site disposal site;
(d) there is not now and, to the Knowledge of the Acquired Companies
there has never been any underground storage tank located on the Owned Real
Property or formerly Owned Real Property of any Acquired Company;
(e) with respect to the Owned Real Property, a copy of all material
environmental inspections, studies, audits, tests, reviews or analysis conducted
by each Acquired Company or any consultant engaged by such company within the
last five (5) years, has been previously provided or made available to the
Purchaser; and
(f) no Acquired Company has operated in or is in violation of any
Environmental Law in any material respect and each Acquired Company has obtained
all Licenses necessary for its operation under Environmental Laws and each
Acquired Company is in material compliance with all terms and conditions of such
Licenses.
4.17. Insurance.
(a) Each Acquired Company and its Affiliates, directly or through HPI,
maintains insurance coverage of the type and in amounts customarily carried by
private companies conducting businesses similar to those of the Acquired
Companies.
(b) Schedule 4.17 lists and briefly describes each insurance policy
(other than policies that are part of a Benefit Plan) maintained by or on behalf
of an Acquired Company, each of which, except as set forth in Schedule 4.17
hereto, is in full force and effect on the date of this Agreement, and an
insurance claims history for the preceding two (2) years.
4.18. Transactions with Affiliates. Except as set forth in Schedule
4.18 hereto, no shareholder, officer, director or Employee of any Acquired
Company or any of its Affiliates has (a) an outstanding loan from, or an
outstanding loan to, the Acquired Company which will remain outstanding as of
the Closing (other than for reimbursement of expenses arising in the Ordinary
Course of Business and advances to Employees of amounts less than $1,000), (b)
except as set forth in Schedule 4.14 hereto or with respect to any Employee, any
material contractual or other claim, express or implied, of any kind whatsoever
which has been asserted or, to the Knowledge of any Acquired Company,
threatened, (c) any interest in any Acquired Company's common stock, except for
HPI Common Stock, or (d) engaged in any other material transaction with an
Acquired Company other than in such person's capacity as an employee, officer or
director of such respective company or transactions engaged in by Employees.
4.19. Taxes. Except as set forth in Schedule 4.19 hereto:
(a) Each Acquired Company (i) has filed (or caused to be filed) all Tax
Returns required to be filed by such company prior to the date of this
Agreement, except for those Tax Returns for which requests for extensions have
been timely filed, and all such Tax Returns are accurate and complete in all
material respects, (ii) has paid all Taxes shown to be due and payable on such
Tax Returns and (iii) has accrued on the Interim Financial Statements (or caused
to be accrued), in accordance with the rules and methodology used in preparing
such Interim Financial Statements, all Taxes determined under such rules and
methodology to be unpaid for all taxable years or periods ending on or prior to
the date of the Interim Financial Statements of such company. No Acquired
Company or its Affiliates have incurred any liability for Taxes subsequent to
the date of the Interim Financial Statements of such company and prior to the
date of this Agreement other than in the Ordinary Course of Business or pursuant
to the transactions contemplated by this Agreement.
(b) There are no Liens for Taxes on the assets of any Acquired Company
except for Permitted Encumbrances, and, to the Knowledge of any Acquired
Company, there is no pending Tax audit, examination, refund, litigation or
adjustment in controversy with respect to the Tax liability of any Acquired
Company.
(c) Notwithstanding anything to the contrary in this Agreement, nothing
in this Section 4.19 shall cause an HPI Indemnitor, HEC or any HPI Stockholder
to be liable for any Taxes for which it is not expressly liable pursuant to
Section 6.13 (relating to Tax matters).
4.20. Labor Controversies.
(a) Except as set forth on Schedule 4.20 hereto, with respect to any
Acquired Company, no such company is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor union organization. No labor organization or group of employees
of any Acquired Company has made a pending demand for recognition, and there are
no representation proceedings or petitions seeking a representation proceeding
presently pending or, to the Knowledge of each Acquired Company, threatened to
be brought or filed, with the National Labor Relations Board or other labor
relations tribunal. There is no organizing activity involving any Acquired
Company pending or, to the knowledge of each Acquired Company, threatened by any
labor organization or group of Employees of any Acquired Company.
(b) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances, unfair labor practice charges or other
labor disputes pending or, to the Knowledge of each Acquired Company, threatened
against or involving any Acquired Company.
4.21. Inventories; Receivables; Payables.
(a) Except as set forth on Schedule 4.21(a) hereto, the newsprint
inventories of each Acquired Company are in good and marketable condition, and
are of a quality useable in the Ordinary Course of Business. All newsprint
inventories have been procured in the Ordinary Course of Business and consistent
with anticipated requirements as of the time commitments were made, and the
volume of use of newsprint has not been reduced or increased in anticipation of
the transactions contemplated by this Agreement
(b) The accounts receivable of each Acquired Company have arisen from
bona fide transactions in the Ordinary Course of Business. All such receivables
as of the date hereof are currently due and payable and not subject to any
express performance obligations by an Acquired Company prior to collection, and
all such receivables as of the Closing Date will on the Closing Date be
currently due and payable and not subject to express performance obligations by
an Acquired Company prior to collection, in each case other than in the Ordinary
Course of Business.
(c) The accounts payable of each Acquired Company reflected in the
Financial Statements or arising after the date thereof are the result of bona
fide transactions in the Ordinary Course of Business. Notwithstanding the
foregoing, in the event an account payable is included as a liability in the
final Closing Working Capital of HPI or as an HPI Excluded Liability, the
Purchaser and its Affiliates shall have no right to claim indemnification for a
breach of the representation and warranty contained in this Section 4.21(c).
4.22. Advertisers and Suppliers. Schedule 4.22 sets forth a list of the
fifteen (15) largest advertisers and the fifteen (15) largest suppliers of each
Acquired Company (other than Sioux City), as measured by the dollar amount of
purchases therefrom or thereby, during the fiscal year ended April 30, 2001, and
for the nine-month period ended December 31, 2001, showing the approximate total
sales by each Acquired Company to each such advertiser and the approximate total
purchases by each Acquired Company from each such supplier, during such period.
To the Knowledge of each Acquired Company, except as set forth on Schedule 4.22
hereto, no Acquired Company has received notice from any such advertiser that
(i) the advertiser has a material dispute with or claim against an Acquired
Company or (ii) the advertiser plans to materially reduce over the long term the
volume of its business with the Acquired Company.
4.23. Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the HPI Stockholders
directly with the Purchaser without the intervention of any Person in such
manner as to give rise to any claim by any Person against the Purchaser for a
finder's fee or brokerage commission.
4.24. Full Disclosure. To the Knowledge of each Acquired Company, none
of the representations and warranties made by the HPI Stockholders, HPI and HEC
in this Agreement or the Schedules or Exhibits hereto contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained therein or herein not misleading.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the HPI Stockholders as
follows:
5.1. Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
5.2. Authority. The Purchaser has all requisite corporate power and
authority to enter into this Agreement and the Purchaser Documents, to perform
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Purchaser of
this Agreement and the Purchaser Documents, the performance by the Purchaser of
its obligations hereunder and thereunder, and the consummation by the Purchaser
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary corporate action on the part of the Purchaser. This Agreement
has been, and at the Closing the Purchaser Documents will be, duly executed and
delivered by the Purchaser and, assuming the due authorization, execution and
delivery of this Agreement by the HPI Stockholders, HPI, and HEC, as the case
may be, this Agreement and the Purchaser Documents constitute the legally valid
and binding obligations of the Purchaser, enforceable against the Purchaser in
accordance with their respective terms, and subject to (i) the effect of any
applicable Laws of general application relating to bankruptcy, reorganization,
insolvency, moratorium or similar Laws affecting creditors' rights and relief of
debtors generally, and (ii) the effect of rules of law and general principles of
equity, including rules of law and general principles of equity governing
specific performance, injunctive relief and other equitable remedies (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
5.3. No Violation. Assuming that all consents, waivers, approvals,
orders and authorizations set forth in Schedule 5.4 hereto have been obtained
and all registrations, qualifications, designations, declarations or filings
with any Governmental Authorities set forth in Schedule 5.4 hereto have been
made, and except as set forth in Schedule 5.3 hereto, the execution and delivery
by the Purchaser of this Agreement and the Purchaser Documents, the performance
by the Purchaser of its obligations hereunder and thereunder, and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby, will not conflict with or violate in any material respect, constitute a
material default (or event which with the giving of notice or lapse of time, or
both, would become a material default) under, give rise to any right of
termination, amendment, modification, acceleration or cancellation of any
material obligation or loss of any material benefit under, result in the
creation of any material Encumbrance on any assets or properties of the
Purchaser, or require the Purchaser to obtain any consent, waiver or approval
of, make any filing with, or give any notice to any Person as a result or under,
the terms or provisions of (i) the organizational documents of the Purchaser,
(ii) any Contract to which the Purchaser is a party or is bound, or (iii) any
Law applicable to the Purchaser, or any Governmental Order issued by a
Governmental Authority by which the Purchaser is in any way bound or obligated,
except, in the case of clauses (ii) and (iii) of this Section 5.3, as would not,
in any individual case, have a material adverse effect on the ability of the
Purchaser to perform its obligations under this Agreement and the Purchaser
Documents or to consummate the transactions contemplated hereby or thereby.
5.4. Governmental Consents. No material consent, waiver, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any Governmental Authority is required on the part
of the Purchaser in connection with the execution and delivery by the Purchaser
of this Agreement and the Purchaser Documents, the performance by the Purchaser
of its obligations hereunder and thereunder, and the consummation by the
Purchaser of the transactions contemplated hereby and thereby, except as set
forth in Schedule 5.4 hereto.
5.5. Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Purchaser directly
with the HPI Stockholders without the intervention of any Person on behalf of
the Purchaser in such manner as to give rise to any claim by any Person against
the HPI Stockholders, HPI, HEC, or any other Acquired Company for a finder's fee
or brokerage commission .
5.6. Funding. The Purchaser will have borrowing facilities which,
together with its available cash, will be sufficient to enable it to consummate
the transactions contemplated by this Agreement and pay all related fees and
expenses for which the Purchaser will be responsible at the Closing.
5.7. Investment Representation; Business Investigation. The Purchaser
is acquiring the HPI Common Stock for its own account or investment purposes
only and not with a view to the distribution of the shares of such common stock.
The Purchaser acknowledges that none of the HPI Common Stock has been registered
under the Securities Act or any state securities Law in reliance upon an
exemption therefrom for non-public offerings, that shares of common stock must
be held indefinitely unless the sale thereof is registered under the Securities
Act or such state securities law, or an exemption therefrom for such
registration is available under Rule 144, promulgated under the Securities Act,
or otherwise. The Purchaser (a) has such knowledge, sophistication and
experience in business and financial matters that it is capable of valuing an
investment in the shares of the HPI Common Stock, (b) has conducted an
examination of the reports and other materials relating to each Acquired Company
prepared by HPI, (c) fully understands the nature, scope and duration of the
limitations on transfer applicable to the shares of the HPI Common Stock and (d)
can bear the economic risk of an investment in the shares of the HPI Common
Stock and can afford a complete loss of such investment.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1. Conduct of Business.
(a) At all times during the period commencing upon the execution and
delivery hereof by each of the parties hereto and terminating upon the earlier
to occur of the Closing or the termination of this Agreement pursuant to and in
accordance with the terms of Section 9.1 hereof, unless the Purchaser shall
otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed), and except as otherwise set forth in Schedule 6.1 hereto, HPI
shall, and shall cause each of the other Acquired Companies, as the case may be,
to (i) conduct the operations of the Acquired Companies in the Ordinary Course
of Business, (ii) use commercially reasonable efforts to preserve intact the
goodwill of the Acquired Companies and the current relationships of each
Acquired Company with its officers, employees, customers, suppliers and others
with significant and recurring business dealings with each Acquired Company,
(iii) use commercially reasonable efforts to maintain all of the Insurance
Policies (including those relating to libel) and all of the Licenses that are
necessary for each Acquired Company to carry on its respective business
operations in the manner conducted by such company as of the date hereof, (iv)
maintain the books of account and records of each Acquired Company in the usual,
regular and ordinary manner and consistent with past practices, and (v) not take
any action that would result in a breach of any of the representations and
warranties of each Acquired Company contained in Article 4 hereof.
(b) At all times during the period commencing upon the execution and
delivery hereof by each of the parties hereto and terminating upon the earlier
to occur of the Closing or the termination of this Agreement pursuant to and in
accordance with the terms of Section 9.1 hereof, unless the Purchaser shall
otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed), and except as otherwise set forth in, or contemplated by, this
Agreement or in Schedule 6.1 hereto, HPI shall not, and shall cause each of the
other Acquired Companies not to, take, or cause to be taken, any of the
following actions:
(i) merge with or into, or consolidate with, any other Person;
(ii) adopt, enter into or amend any arrangement which is, or would
be, a Benefit Plan of any Acquired Company except for any amendment to
any Benefit Plan offered to all Employees of the Acquired Company or
unless otherwise required by applicable Law or this Agreement;
(iii) make any material change in the accounting methods or
practices of such company, or make any changes in depreciation or
amortization policies or rates adopted by such company, in connection
with the preparation of its books and records, Tax Returns (except to
the extent required by law) or otherwise;
(iv) increase any wage, salary, bonus or other direct or indirect
compensation payable or to become payable to any of the Employees, or
make any accrual for or commitment or agreement to make or pay the
same, other than increases in wages, salary, bonuses or other direct or
indirect compensation required by any existing Contract or Law or
annual compensation increases of up to three (3) percent in the
Ordinary Course of Business;
(v) enter into any transactions with any of its shareholders,
officers, directors or employees, or any Affiliate of any of the
foregoing, other than in the Ordinary Course of Business or
transactions taken to allow for, or in connection with, the HPI
Redemption;
(vi) make any payment or commitment to pay any severance or
termination pay to any Employee or any independent contractor,
consultant, agent or other representative of any Acquired Company,
other than payments or commitments to pay such Employees permitted
under clause (v) above;
(vii) (1) enter into any real property lease (as lessor or
lessee); (2) sell, lease, license, abandon or make any other
disposition of, or agree to sell, lease, license, abandon or make any
other disposition of, any of the physical assets or properties of such
company other than in the Ordinary Course of Business; or (3) grant or
incur any Encumbrance on any of the assets or properties of such
company other than Permitted Encumbrances or Encumbrances not exceeding
$10,000 individually or $50,000 in the aggregate;
(viii) except for short-term indebtedness for borrowed money
incurred in the Ordinary Course of Business and except for Excluded
Liabilities of HPI, incur or assume any Funded Debt pursuant to a
Material Contract;
(ix) make any acquisition of all or any part of the capital stock
or all or substantially all of the assets, properties or business of
any other Person;
(x) enter into any commitments to make capital expenditures except
as provided in the Capital Program and except for expenditures that do
not exceed $25,000 individually or $200,000 in the aggregate;
(xi) amend the charter or the bylaws of any Acquired Company;
(xii) issue, transfer, sell or dispose of, authorize or agree to
the issuance, transfer, sale or disposition of (whether through the
issuance or granting of options, rights, warrants, or otherwise), any
shares of capital stock or any voting securities of HEC or any Acquired
Company or any options, rights, warrants or other securities
convertible into or exchangeable or exercisable for any such shares of
capital stock or voting securities of HEC or such Acquired Company
(unless such recipient, transferee or purchaser consents in writing to
be bound by the terms of this Agreement) or amend any of the terms of
any securities or agreements relating to such capital stock or voting
securities outstanding on the date hereof;
(xiii) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial
portion of the assets of, any business or any Person or otherwise
acquire or agree to acquire any materials assets, in any such case,
except in the Ordinary Course of Business;
(xiv) enter into or renew any contract or agreement to provide or
grant any party with a non-terminable right to develop, host, provide
or operate any Acquired Company e-mail or internet site or portion
thereof; or
(xv) voluntarily enter into any collective bargaining agreement
applicable to any employees of any Acquired Company or otherwise
voluntarily recognize any union as the bargaining representative of any
such employees.
(c) Notwithstanding anything to the contrary set forth in this Section
6.1 or elsewhere in this Agreement, each Acquired Company shall be permitted,
without obtaining the consent or other approval of the Purchaser, to declare,
issue, make or pay any dividend or other distribution of cash, U.S. Treasury
securities or Other Cash Equivalents to its stockholders prior to the Closing,
make a dividend or distribution to its stockholders of any intercompany
receivables (other than a non-current asset) between HPI, on the one hand, and
any of the Acquired Companies on the other, or cancel or repay any intercompany
indebtedness prior to the Closing.
(d) At all times during the period commencing upon the execution and
delivery hereof by each of the parties hereto and terminating upon the earlier
to occur of the Closing or the termination of this Agreement pursuant to and in
accordance with the terms of Section 9.1 hereof, unless the HPI Stockholder
Representative shall otherwise consent in writing, the Purchaser shall not enter
into an agreement relating to any acquisition, merger, consolidation or purchase
that would reasonably be expected to (1) impose any material delay in the
obtaining of, or significantly increase the risk of not obtaining, any
Authorizations, consents, orders, declarations or approvals of any Governmental
Entity necessary to consummate the transactions contemplated by this Agreement
or the expiration or termination of any applicable waiting period, (2)
materially increase the risk of any Governmental Entity entering an order
prohibiting the consummation of the transactions contemplated by this Agreement,
or (3) significantly increase the risk of not being able to remove any such
order on appeal or otherwise.
6.2. Access and Information. Subject to the terms of the
Confidentiality Agreement, at all times during the period commencing upon the
execution and delivery hereof by each of the parties hereto and terminating upon
the earlier to occur of the Closing or the termination of this Agreement
pursuant to and in accordance with the terms of Section 9.1 hereof, HPI shall
permit, and the HPI Stockholders and HPI shall cause each Acquired Company to
permit, the Purchaser and its authorized agents and representatives to have
reasonable access, upon reasonable notice and during normal business hours, to
all of the Employees, assets and properties and all relevant books, records and
documents of or relating primarily to each Acquired Company and the assets of
any Acquired Company, and shall furnish to the Purchaser such information and
data, financial records and other documents relating thereto as the Purchaser
may reasonably request, subject, in each case, to the terms of any applicable
confidentiality agreement. Each Acquired Company shall permit the Purchaser and
its agents and representatives reasonable access to such company's accountants,
auditors and suppliers for reasonable consultation or verification of any
information obtained by the Purchaser during the course of any investigation
conducted pursuant to this Section 6.2, and shall use reasonable efforts to
cause such Persons to cooperate with the Purchaser and its agents and
representatives in such consultations and in verifying such information. If the
Purchaser desires to perform any invasive testing at the Owned Real Property,
the Purchaser (or its agents) shall do so only after notifying HPI and obtaining
HPI's prior written consent thereto, which consent may not be unreasonably
withheld or delayed, but which may be subject to any terms and conditions
reasonably imposed by HPI, including the prompt restoration of the Owned Real
Property to its condition prior to any such inspections or tests, at the
Purchaser's sole cost and expense. Neither the Purchaser nor its agents shall
perform any testing on any property of a landlord on any Leased Real Property,
nor shall they take any action which may cause a default under the terms of any
lease. Any investigation pursuant to this Section 6.2 shall be conducted in such
manner as not to interfere unreasonably with the conduct of the business of the
Acquired Companies.
6.3. Confidentiality. The terms of the Confidentiality Agreement are
hereby incorporated herein by reference and shall continue in full force and
effect from and after the Closing in accordance with the terms thereof, such
that the information obtained by any party hereto, or its officers, employees,
agents or representatives, during any investigation conducted pursuant to
Section 6.2 hereof, in connection with the negotiation, execution and
performance of this Agreement or the consummation of the transactions
contemplated hereby, shall be governed by the terms set forth in the
Confidentiality Agreement.
6.4. Further Actions.
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including the terms of Section 6.4(b) hereof), the HPI Stockholders,
each Acquired Company and the Purchaser shall each use their respective
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, and to assist and cooperate with the
other parties hereto in doing, all things necessary, proper or advisable under
applicable Laws to consummate the transactions contemplated hereby, including:
(i) obtaining all necessary Material Licenses, actions or
nonactions, waivers, consents, approvals, authorizations,
qualifications and other orders of any Governmental Authorities with
competent jurisdiction over the transactions contemplated hereby;
(ii) obtaining all necessary consents, approvals or waivers from
third parties;
(iii) defending any lawsuits or other Actions challenging this
Agreement or the consummation of the transactions contemplated hereby,
including seeking to have vacated or reversed any stay or temporary
restraining order entered by any Governmental Authority prohibiting or
otherwise restraining the consummation of the transactions contemplated
hereby; and
(iv) executing and delivering any additional instruments,
certificates and other documents necessary or advisable to consummate
the transactions contemplated hereby and to fully carry out the
purposes of this Agreement.
(b) Without limiting the generality of the foregoing, the HPI
Stockholders, each Acquired Company and the Purchaser hereby agree to proceed
diligently to prepare and to file, no later than ten (10) days after the date of
this Agreement:
(i) any notification, transfer application and report form and
related material required under the HSR Act and to provide promptly to
Governmental Authorities with regulatory jurisdiction over enforcement
of any applicable antitrust Laws all information and documents
requested by any such Governmental Authorities or necessary, proper or
advisable to permit consummation of the transactions contemplated
hereby; and
(ii) any notification, transfer application and report form and
related material required under applicable Law and to provide promptly
to Governmental Authorities with regulatory jurisdiction over
enforcement of any applicable Laws all information and documents
requested by any such Governmental Authorities or necessary, proper or
advisable to permit consummation of the transactions contemplated
hereby.
The Purchaser, the HPI Stockholders, HEC and each Acquired Company hereby
further agree to use their respective commercially reasonable best efforts to
(1) respond to any request of any Governmental Authority for information, (2)
contest and resist any Action, including any legislative, administrative or
judicial Action, and have vacated, lifted, reversed or overturned, any
Governmental Order (whether temporary, preliminary or permanent) that restricts,
prevents or prohibits the consummation of the transactions contemplated hereby,
including by using all legal efforts to vigorously pursue all available avenues
of administrative and judicial appeal and all available legislative action, and
(3) in the event that any permanent or preliminary injunction or other
Governmental Order is entered or becomes reasonably foreseeable to be entered in
any proceeding that would make consummation of the transactions contemplated
hereby in accordance with the terms of this Agreement unlawful or that would
prohibit, prevent, delay or otherwise restrain the consummation of the
transactions contemplated hereby, to cause the relevant Governmental Authorities
to vacate, modify or suspend such injunction or order so as to permit the
consummation of the transactions contemplated hereby prior to the Termination
Date.
6.5. Fulfillment of Conditions by the HPI Stockholders, HEC and the
Acquired Companies. The HPI Stockholders, HEC and each Acquired Company shall
not knowingly take or cause to be taken, or fail to take or cause to be taken,
any action that would cause the conditions to the obligations of such person or
the Purchaser to consummate the transactions contemplated hereby to fail to be
satisfied or fulfilled at or prior to the Closing, including by taking or
causing to be taken, or failing to take or cause to be taken, any action that
would cause the representations and warranties made by each company in Article 4
hereof to fail to be true and correct as of the Closing in all material
respects. The HPI Stockholders, HEC and each Acquired Company shall take, or
cause to be taken, all actions within their or its power to cause to be
satisfied or fulfilled, at or prior to the Closing, the conditions precedent to
the Purchaser's obligations to consummate the transactions contemplated hereby
as set forth in Section 7.1 hereof.
6.6. Fulfillment of Conditions by the Purchaser. The Purchaser shall
not knowingly take or cause to be taken, or fail to take or cause to be taken,
any action that would cause the conditions to the obligations of the HPI
Stockholders, HEC and each Acquired Company or the Purchaser to consummate the
transactions contemplated hereby to fail to be satisfied or fulfilled, including
by taking or causing to be taken, or failing to take or cause to be taken, any
action that would cause the representations and warranties made by the Purchaser
in Article 5 hereof to fail to be true and correct as of the Closing in all
material respects. The Purchaser shall take, or cause to be taken, all actions
within its power to cause to be satisfied or fulfilled, at or prior to the
Closing, the conditions precedent to the obligations of such company to
consummate the transactions contemplated hereby as set forth in Section 7.2
hereof.
6.7. Publicity. The HPI Stockholders, HEC and any Acquired Company and
the Purchaser shall cooperate with each other in the development and
distribution of all news releases and other public disclosures relating to the
transactions contemplated by this Agreement. Neither of the HPI Stockholders,
HEC or each Acquired Company nor the Purchaser shall issue or make, or allow to
have issued or made, any press release or public announcement concerning the
transactions contemplated by this Agreement without the consent of the other
party hereto, except as otherwise required by applicable Law or, as to the
Purchaser, the New York Stock Exchange rules, but in any event only after giving
the other party hereto a reasonable opportunity to comment on such release or
announcement in advance, consistent with such applicable legal requirements.
6.8. Transaction Costs. The Purchaser shall pay all transaction costs
and expenses (including legal, accounting and other professional (including
environmental consultants and title companies) fees and expenses and other fees
described in Section 5.5 hereof) that it incurs in connection with the
negotiation, execution and performance of this Agreement and the consummation of
the transactions contemplated hereby. The HPI Stockholders shall pay (except to
the extent paid by any Acquired Company prior to the Closing) all transaction
costs and expenses (including legal, accounting and other professional fees and
expenses and other fees described in Section 4.23 hereof) that they or any of
HEC or any Acquired Company incur in connection with the negotiation, execution
and performance of this Agreement and the consummation of the transactions
contemplated hereby. Responsibility for such payment shall be allocated among
the HPI Stockholders pro rata based on their ownership as of the Closing of
shares of HPI Common Stock. Notwithstanding the foregoing and anything to the
contrary contained in this Agreement, HPI and the Purchaser shall share equally
any filing fees in connection with the HSR Act, which filing fees will be paid
prior to the Closing.
6.9. Employees and Employee Benefit Matters.
(a) Except as provided in Section 6.9(b), immediately prior to the
Closing Date, HPI shall cease, and shall cause each of the Acquired Companies to
cease, to be a participating employer under, and terminate its sponsorship of,
each Benefit Plan other than such plans sponsored by, contributed to or
otherwise covering employees (or their dependents or beneficiaries) of Sioux
City (the "Sioux City Benefit Plans"). Except as provided in Section 6.9(b), HEC
shall pay, discharge, or assume and be solely responsible for, the sponsorship
of all Benefit Plans and all Liabilities which arise or become payable under any
Benefit Plan before, upon or with respect to Benefit Plans other than the Sioux
City Benefit Plans, after Closing, except to the extent any such Liabilities are
included in the Statement of Closing Working Capital. The Purchaser shall, or
shall cause the Acquired Companies to pay, discharge and be solely responsible
for all Liabilities which arise or become payable as a result of or in
connection with the employment by the Purchaser or the Acquired Companies of any
Employees for periods after Closing, including, without limitation, all
severance or termination pay and all accrued vacation, salary, wages and other
compensation payments or benefits under or pursuant to any employee benefit plan
of the Purchaser, the Sioux City Benefit Plans or under any employee benefit
plans established by the Acquired Companies after the Closing Date, as the case
may be. The Purchaser shall not assume or be obligated to pay or perform any
Liabilities under any Benefit Plans other than the Sioux City Benefit Plans
(including any stay bonus or severance policy, plan, arrangement or benefit),
except that the Purchaser shall provide vacation pay to Employees to the extent
such vacation pay is accrued and included in the Statement of Closing Working
Capital.
(b) Notwithstanding the foregoing, the other provisions of this Section
6.9 other than subsections (h), (i), (j), and (l) shall not apply with respect
to a Benefit Plan to the extent the Acquired Company is required to sponsor,
maintain, or participate in such plan under the terms of a collective bargaining
agreement covering employees of the Acquired Company and each Acquired Company
shall continue to sponsor, maintain, or be a participating employer under such a
Benefit Plan to the extent necessary to accomplish the foregoing. To the extent
any Benefit Plan is both attributable to a collective bargaining agreement
covering employees of an Acquired Company and not attributable to such a
collective bargaining agreement, HEC shall spin-off the portion of such Benefit
Plan attributable to a collective bargaining agreement covering employees of an
Acquired Company as directed by the Purchaser before, on, or after the Closing,
and the Purchaser shall cause such Acquired Company to assume sponsorship and
all liabilities in respect thereof. The provisions of Section 6.9 (other than
the first sentence of this Section 6.9(b)) shall apply to the portion of any
Benefit Plan that an Acquired Company is not required to sponsor, maintain, or
participate in under the terms of any collective bargaining agreement.
(c) For a period commencing on the Closing Date and ending on the
earlier of (i) the first anniversary of the Closing Date or (ii) the Employee's
termination of employment with an Acquired Company or the Purchaser, the
Purchaser shall provide or cause the Acquired Companies to provide to each
Employee medical benefits subject to COBRA and disability benefits
(collectively, "Purchaser's Benefit Programs"). With respect to any Employees
covered by any of the Purchaser's Benefit Programs, service through the Closing
Date with the Acquired Companies or their Affiliates shall be taken into account
for all purposes under the Purchaser's Benefit Programs as if such service had
been with the Purchaser or its Affiliates.
(d) The Purchaser shall cause the Acquired Companies to provide and
recognize all accrued but unused vacation as of the Closing Date.
(e) HEC and the HPI Stockholders shall be responsible for payment of
all covered medical, dental, life insurance and long-term disability claims or
expenses incurred by any Employee prior to the Closing Date, and the Purchaser
shall not assume nor shall any Acquired Company or any of their respective
Subsidiaries (other than HEC) be responsible for any liability with respect to
such claims. For this purpose, a long-term disability claim shall be treated as
incurred prior to the Closing Date if such long-term disability immediately
follows a short-term disability that arose on or before the Closing Date. Any
preexisting condition clause in any of the welfare plans (including medical,
dental and disability coverage) included in the Purchaser's Benefit Programs
shall be waived for any Employees who are covered by such plans. The Purchaser
shall cause the Purchaser's Benefit Programs to credit such Employees with any
amounts shown on records provided by HEC for this purpose as paid under the
Benefit Plans prior to the Closing Date toward satisfaction of applicable
deductibles or out-of-pocket maximums under the corresponding Purchaser Benefit
Programs. and HEC shall provide accurate records for this purpose. The Purchaser
shall provide to HEC documents necessary to enroll Employees in such Purchaser's
Benefit Programs, and HEC shall cooperate in distributing such documents to the
Employees with the intent that such enrollments be effective immediately after
the Closing.
(f) The Purchaser shall cause the Acquired Companies to be responsible
for providing any Employee (and such employees' "qualified beneficiaries" within
the meaning of Section 4980B(f) of the Code) who has a "qualifying event,"
within the meaning of Section 4980B(f) of the Code, after the Closing Date with
the continuation of group health coverage required by COBRA to the extent
required by law.
(g) With respect to the Employees, after the Closing, the Purchaser and
the Acquired Companies shall have the liability and obligation for, and neither
HEC, the HPI Stockholders nor any of their respective Affiliates shall have any
liability or obligation for: (1) short-term disability and sick pay or salary
continuation benefit claims incurred after the Closing; and (2) any medical,
dental, life insurance, long-term disability or other welfare benefit claims
incurred after the Closing, but only under the terms of the Purchaser's Benefit
Programs or the Sioux City Benefit Plans and only to the extent the Employees
are covered under such programs or plans. For this purpose, claims other than
medical or dental claims shall be treated as incurred after the Closing only if
such claims are attributable to an event, e.g., disability, which arises after
the Closing.
(h) The Purchaser and the Acquired Companies shall be responsible for
all liabilities or obligations under the Worker Adjustment and Restraining
Notification Act and similar state and local rules, statutes and ordinances
resulting from the actions of the Purchaser or the Acquired Companies after the
Closing.
(i) HEC shall be liable for any workers' compensation or similar
workers' protection claims of any Employee incurred on or prior to the Closing
Date to the extent not covered by insurance of the Acquired Companies. The
Purchaser and the Acquired Companies shall be liable for any workers'
compensation or similar workers' protection claims of any Employee incurred
after the Closing Date. For this purpose, claims shall be treated as incurred
after the Closing Date only if such claims are attributable to an event which
occurred after the Closing Date.
(j) Subject to applicable law, HEC shall provide to the Purchaser, upon
its request, demographic information regarding each Employee, including rate of
pay, age, date of birth, date of employment and accrued vacation.
(k) Notwithstanding any other provision in this Agreement, the
Purchaser acknowledges and agrees that neither it nor any Acquired Company shall
have any interest in, or right to, any asset associated with any Benefit Plan
after the Closing.
(l) The covenants and agreements set forth in this Section 6.9 shall be
solely for the benefit of, and shall only be enforceable by, the parties to this
Agreement and their permitted assigns. Without limiting the generality of the
foregoing, nothing in this Agreement shall provide or be construed to provide
any Employees with any rights under this Agreement, and no Person, other than
the parties to this Agreement, is or shall be entitled to bring any action to
enforce any provision of this Agreement.
6.10. Interdivisional Agreements. Unless otherwise requested by the
Purchaser in writing, prior to Closing, each Acquired Company shall terminate,
without any continuing Liability to the Acquired Company resulting therefrom,
all agreements between any division, Affiliate or Subsidiary of such company
other than HEC, on the one hand, and HEC or any division, Affiliate or
Subsidiary thereof, all of which are described in Schedule 6.10 hereto.
6.11. Schedules. The HPI Stockholders and each Acquired Company shall
have the right from time to time after the date hereof to deliver written
updates of the Schedules attached hereto (the "Schedules") to reflect matters
that existed, occurred or arose prior to the date hereof and were not included
on the Schedules attached hereto but should have been so included (the updated
Schedules being referred to as the "Updated Schedules" and such matters being
referred to as the "Update Matters"). The parties shall use reasonable best
efforts to identify any items on the Updated Schedules that are not
appropriately responsive to the applicable representations and warranties and to
eliminate any such items from the Updated Schedules. If the Purchaser's good
faith estimate, based on all information then reasonably available to the
Purchaser, of the aggregate Loss for which indemnification would be required
pursuant to Article 8 hereof (without taking into account the limitations
contained in Section 8.5(b)) with respect to the Update Matters (other than
those eliminated pursuant to the efforts referred to in the immediately
preceding sentence) exceeds $3,000,000, then the Purchaser or the HPI
Stockholders Representative shall be entitled to terminate this Agreement under
Section 9.1(e). If the Closing occurs, then, subject to all of the limitations
and conditions contained in Article 8 (including, without limitation, the
threshold and deductible contained in Section 8.5(b)) the Purchaser shall be
entitled to indemnification in respect of Losses relating to the Update Matters
(other than any eliminated or disregarded as aforesaid) to the same extent that
the Purchaser would have been entitled to such indemnification in the absence of
the delivery of the Updated Schedules, and, except as otherwise provided in this
sentence with respect to indemnification, the Updated Schedules (absent any
portion thereof relating to an Update Matter eliminated as aforesaid) shall
constitute the final Schedules for purposes of this Agreement.
6.12. Retention of and Access to Records. From and after the Closing,
the Purchaser shall preserve, in accordance with HPI's normal document retention
policy, all books and records transferred by each Acquired Company to the
Purchaser pursuant to this Agreement. As soon as practicable following the
Closing, the Purchaser shall deliver a copy of such books and records of each
Acquired Company in the possession of the Purchaser pursuant hereto to the HPI
Stockholders which are reasonably necessary to enable the HPI Stockholders to
prepare all Tax Returns of HPI and each other Acquired Company relating to
periods ending on or prior to the Closing Date. In addition to the foregoing,
from and after the Closing, the Purchaser shall afford to the HPI Stockholders,
and their counsel, accountants and other authorized agents and representatives,
during normal business hours, reasonable access to the employees, books, records
and other data relating to each Acquired Company with respect to periods prior
to the Closing, and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting party (a)
to facilitate the investigation, litigation and final disposition of any claims
which may have been or may be made against any such party or Person, or its
Affiliates, (b) for the preparation of Tax Returns and audits, and (c) for any
other reasonable business purpose.
6.13. Tax Matters.
(a) Liability for Taxes.
(i) To the extent provided in Section 8.1, and pursuant to Article
8 (and subject to the limitations thereof), the HPI Indemnitors agree
to and shall indemnify and hold the Purchaser, and its directors,
officers, employees, Affiliates (including HPI and any of the Acquired
Companies if the Closing occurs), agents and assigns harmless from and
against any and all Losses resulting from, based upon or arising out
of, directly or indirectly: (A) Taxes imposed on any Acquired Company
(other than Sioux City) for any taxable year or period that ends on or
before the Closing Date and, with respect to any Straddle Period, the
portion of such Straddle Period ending on and including the Closing
Date, (B) Taxes imposed on or related to HEC for any taxable year or
period and (C) Taxes imposed on any Acquired Company as a result of the
HPI Redemption; provided, however, that no HPI Indemnitor shall be
liable for or pay, and no HPI Indemnitor shall indemnify or hold
harmless any Person from and against, (I) any Taxes taken into account
as a liability or reserve (whether taken into account as a liability or
reserve, as an offset to an asset, or otherwise) in determining the
final Closing Working Capital of HPI, (II) any Taxes that result from
any actual or deemed election under Section 338 of the Code or any
similar provisions of state, local or foreign law as a result of the
purchase or redemption of the HPI Common Stock or the deemed purchase
of shares of any Acquired Company or that result from the Purchaser,
any Affiliate of the Purchaser, or the Purchaser or any Acquired
Company engaging in any activity or transaction that would cause the
transactions contemplated by this Agreement to be treated as a purchase
or sale of assets of any Acquired Company for federal, state, local or
other Tax purposes, (III) any Taxes imposed on any Acquired Company or
for which any Acquired Company may otherwise be liable as a result of
transactions occurring on the Closing Date that are properly allocable
(based on, among other relevant factors, factors set forth in Treas.
Xxx.xx. 1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date
after the Closing, (it being understood and agreed that in no event
shall the HPI Redemption be regarded as a transaction described in this
clause (III)), (IV) Taxes imposed as a result of or in connection with
(i) any dividends paid by Sioux City to HPI on or after December 31,
2001, (ii) the conversion of Principal Financial Group or Liberty
Mutual Insurance Company to stock form from mutual insurance companies,
or (iii) the sale of HPI's capital stock in Sioux City pursuant to an
exercise by Xxxxxxxx of its rights under the Buy and Sell Agreement,
dated as of March 1, 1992, (V) any Taxes resulting from a sale of any
Acquired Company by the Purchaser or any Affiliate of the Purchaser
(Taxes described in this proviso, hereinafter "Excluded Taxes"). Except
to the extent taken into account as an asset (whether taken into
account as an asset, as an offset to a liability or reserve, or
otherwise) in determining the final Closing Working Capital of HPI, or
except as provided in the last sentence of paragraph (a)(ii) of this
Section 6.13, the HPI Stockholders shall be entitled to any refund of
(or credit for) Taxes for which any HPI Indemnitor is liable under this
Agreement (including, without limitation, any refund of, or credit for,
Taxes of HEC or any Acquired Company due to the overpayment of such
Taxes prior to the Closing Date).
(ii) To the extent provided in Section 8.2, and pursuant to
Article 8 (and subject to the limitations thereof), the Purchaser
agrees to indemnify and hold the HPI Stockholders and their respective
directors, officers, employees, Affiliates, agents and assigns harmless
(after the Closing) from and against any and all Losses of the HPI
Stockholders resulting from, based upon or arising out of, directly or
indirectly: (A) Taxes imposed on any Acquired Company (other than Sioux
City) for any taxable year or period that begins after the Closing Date
and, with respect to any Straddle Period, the portion of such Straddle
Period beginning after the Closing Date and (B) Excluded Taxes. Except
as otherwise provided herein, the Purchaser shall be entitled to any
refund of (or credit for) Taxes for which the Purchaser is liable under
this Agreement. With the express written consent of the HPI
Stockholders Representative, which consent shall be given or withheld
in the HPI Stockholders Representative's sole discretion, the Purchaser
may cause an Acquired Company to elect to carry back losses from a
taxable year or period that begins after the Closing Date to a taxable
year or period that ends on or before the Closing Date and the
Purchaser shall be entitled to any actual refund of (or credit for)
Taxes that would not have arisen but for such carryback.
(iii) For purposes of paragraphs (a)(i) and (a)(ii), whenever it
is necessary to determine the liability for Taxes of any Acquired
Company for a Straddle Period, the determination of the Taxes of the
Acquired Company for the portion of the Straddle Period ending on and
including, and the portion of the Straddle Period beginning after, the
Closing Date shall be determined by assuming that the Straddle Period
consisted of two taxable years or periods, one which ended at the close
of the Closing Date and the other which began at the beginning of the
day following the Closing Date, and items of income, gain, deduction,
loss or credit of the Acquired Company shall be allocated between such
two taxable years or periods on a "closing of the books basis" by
assuming that the books of the Acquired Company were closed at the
close of the Closing Date, provided, however, that (I) transactions
occurring on the Closing Date that are properly allocable (based on,
among other relevant factors, factors set forth in Treas. Xxx.xx.
1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date after the
Closing shall be allocated to the taxable year or period that is deemed
to begin at the beginning of the day following the Closing Date (it
being understood and agreed that in no event shall the HPI Redemption
be regarded as a transaction described in this clause (I)), and (II)
exemptions, allowances or deductions that are calculated on an annual
basis, such as the deduction for depreciation, shall be apportioned
between such two taxable years or periods on a daily basis.
Notwithstanding the foregoing provisions of this paragraph (a)(iii), if
the transactions contemplated by this Agreement result in the
reassessment of the value of any property owned by the Acquired Company
for property Tax purposes, or the imposition of any property Taxes at a
rate which is different than the rate that would have been imposed if
such transactions had not occurred, then (y) the portion of such
property Taxes for the portion of the Straddle Period ending on and
including the Closing Date shall be determined on a daily basis, using
the assessed value and Tax rate that would have applied had such
transactions not occurred, and (z) the portion of such property Taxes
for the portion of such Straddle Period beginning after the Closing
Date shall be the total property Taxes for the Straddle Period minus
the amount described in clause (y) of this sentence.
(iv) (A) If, as a result of any action, suit, investigation,
audit, claim, assessment or amended Tax Return of an Acquired Company
for a taxable year or period on or prior to the Closing Date, there is
any change after the Closing Date in an item of income, gain, loss,
deduction, credit or amount of Tax that results in an increase in a Tax
liability for which any HPI Indemnitor would otherwise be liable
pursuant to paragraph (a)(i) of this Section 6.13, and such change
results in or will result in a decrease in the Tax liability of the
Purchaser, HPI or any other Acquired Company (or any Affiliate or
successor of any thereof) for any taxable year or period beginning
after the Closing Date or for the portion of any Straddle Period
beginning after the Closing Date, no HPI Indemnitor shall be liable
pursuant to such paragraph (a)(i) with respect to such increase to the
extent of such decrease (and, to the extent such increase in Tax
liability is paid to a taxing authority by any HPI Indemnitor or any
Affiliate thereof, the Purchaser shall pay the relevant HPI Indemnitor
an amount equal to the present value of such decrease). All
calculations shall be made at the time of the relevant indemnification
payment using reasonable assumptions (as agreed to by the indemnifying
and indemnified party) and present value concepts (using a discount
rate equal to the applicable federal rate in effect at the time of the
change in Tax liability (based on the Federal mid-term rate) using
semi-annual compounding plus four (4) percentage points).
(B) If, as a result of any action, suit, investigation, audit,
claim, assessment or amended Tax Return of an Acquired Company for a
taxable year or period after the Closing Date, there is any change
after the Closing Date in an item of income, gain, loss, deduction,
credit or amount of Tax that results in an increase in a Tax liability
for which the Purchaser would otherwise be liable pursuant to paragraph
(a)(ii) of this Section 6.13, and such change results in or will result
in a decrease in the Taxes of HEC or any HPI Stockholder payable to any
Governmental Authority for any taxable year or period ending on or
before the Closing Date or for the portion of any Straddle Period
ending on and including the Closing Date, the Purchaser shall not be
liable pursuant to such paragraph (a)(ii) with respect to such increase
to the extent of such actual decrease (and, to the extent such increase
in Tax liability is paid to a taxing authority by the Purchaser, the
HPI Indemnitors shall pay the Purchaser an amount equal to the present
value of such actual decrease). Nothing in this paragraph (B) shall
require HEC or any HPI Stockholder to file an amended Tax Return, and
nothing in this paragraph (B) shall be construed in a manner
inconsistent with Section 6.13(d). All calculations shall be made at
the time of the relevant indemnification payment using reasonable
assumptions (as agreed to by the indemnifying and indemnified party)
and present value concepts (using a discount rate equal to the
applicable federal rate in effect at the time of the change in Tax
liability (based on the Federal mid-term rate) using semi-annual
compounding plus four (4) percentage points).
(v) Notwithstanding anything herein to the contrary, the
Purchaser, on the one hand, and the HPI Indemnitors, on the other hand,
shall each pay one-half of any real property transfer or gains Tax,
sales Tax, use Tax, stamp Tax, stock transfer Tax, or other similar Tax
imposed on the transactions contemplated by this Agreement (other than
the HPI Redemption). Prior to the Closing, the Purchaser shall deliver
to the HPI Stockholders Representative its good faith determination of
the fair market value (or other applicable tax base) of property giving
rise to taxes described in the preceding sentence (except to the extent
related to the HPI Redemption).
(vi) For federal income tax purposes, the parties agree to treat
the HPI Redemption as a taxable distribution by HPI governed by Section
311 of the Code and a taxable exchange by the HPI Stockholders governed
by Section 302(a) of the Code, and in each case by other applicable
provisions of the Code not inconsistent with such treatment. Prior to
the Closing, the HPI Stockholders Representative shall send to the
Purchaser a notice setting forth its good faith determination of the
value of the HEC capital stock to be distributed to the HPI
Stockholders in connection with the HPI Redemption (the "HEC Agreed
Value"). The Purchaser and each HPI Stockholder agrees not to take any
position for federal, state, local or other Tax purposes inconsistent
with such treatment and the HEC Agreed Value; provided, however, that
the Purchaser otherwise makes no representation or warranty as to the
correctness of such treatment or the HEC Agreed Value.
(b) Tax Returns.
(i) The HPI Stockholders Representative shall prepare (or cause to
be prepared) all Tax Returns that are required to be filed by or with
respect to the Acquired Companies for taxable years or periods ending
on or before the Closing Date (in the case of Tax Returns relating to
federal and state Income Taxes) or due on or before the Closing Date
(in the case of other Tax Returns). With respect to Tax Returns to be
prepared by the HPI Stockholders pursuant to the preceding sentence
that are required to be filed prior to the Closing Date, the HPI
Stockholders Representative shall timely file or cause to be timely
filed (at past venues for filing such Tax Returns) such Tax Returns and
timely remit or cause to be timely remitted the Taxes shown to be due
on such Tax Returns. With respect to Tax Returns to be prepared by the
HPI Stockholders Representative pursuant to the second preceding
sentence that are not required to be filed prior to the Closing Date,
portions of such Tax Returns shall be submitted to the Purchaser as
early as practicable prior to the due date for filing such Tax Returns
and, in all events, complete Tax Returns shall be submitted to the
Purchaser not later than five (5) days prior to the due date for filing
such Tax Returns and the Purchaser shall sign (or caused to be signed
by the appropriate Person) and timely file or cause to be timely filed
(at past venues for filing such Tax Returns except with the written
consent, not to be unreasonably withheld, of the HPI Stockholders
Representative) such Tax Returns and timely remit the amount of Taxes
shown to be due on such Tax Returns. All Tax Returns required to be
prepared by the HPI Stockholders Representative pursuant to this
Section 6.13(b) shall be prepared and filed in a manner consistent with
past practice and no position shall be taken, election made or method
adopted that is inconsistent with positions taken, elections made or
methods used in prior periods in preparing and filing such Tax Returns
(including, without limitation, positions which would have the effect
of deferring income to periods for which the Purchaser is liable or
accelerating deductions to periods for which any HPI Indemnitor is
liable). For purposes of determining when any Tax Return is required to
be filed and whether any Tax Return is timely filed, there shall be
taken into account applicable extensions properly obtained.
(ii) The Purchaser shall prepare (or cause to be prepared) all
other Tax Returns that are required to be filed by or with respect to
the Acquired Companies, and the Purchaser shall timely file or cause to
be timely filed such Tax Returns when due and the Purchaser shall remit
or cause to be remitted any Taxes due in respect of such Tax Returns.
With respect to Tax Returns to be filed by the Purchaser pursuant to
the preceding sentence that relate to taxable years or periods ending
on or before the Closing Date (x) such Tax Returns shall be prepared
and filed in a manner consistent with past practice (including at the
past venues for filing, except with the written consent, not to be
unreasonably withheld, of the HPI Stockholders Representative) and no
position shall be taken, election made or method adopted that is
inconsistent with positions taken, elections made or methods used in
prior periods in preparing and filing such Tax Returns (including
positions which would have the effect of accelerating income to periods
for which any HPI Indemnitor is liable or deferring deductions to
periods for which the Purchaser is liable) and (y) such Tax Returns
shall be submitted to the HPI Stockholders Representative not later
than five (5) days prior to the due date for filing such Tax Returns
(or, if such due date is within five (5) days following the Closing
Date, as promptly as practicable following the Closing Date) for review
and approval by the HPI Stockholders Representative, which approval may
not be unreasonably withheld, but may in all cases be withheld if such
Tax Returns were not prepared in accordance with clause (x) of this
sentence. For purposes of determining when any Tax Return is required
to be filed and whether any Tax Return is timely filed, there shall be
taken into account applicable extensions properly obtained.
(c) Reimbursement. The HPI Indemnitors, on the one hand, and the
Purchaser, on the other hand, shall reimburse the other party for Taxes for
which any HPI Indemnitor or the Purchaser, respectively, is liable pursuant to
paragraph (a) of this Section 6.13 but which are shown to be due on and required
to be remitted with respect to any Tax Return to be filed by the Purchaser or
the HPI Stockholders Representative, respectively, pursuant to Section 6.13(b)
in accordance with Section 8.3(h).
(d) Amended Tax Returns. None of the Purchaser or any Affiliate of the
Purchaser shall (or shall cause or permit any Acquired Company to) amend, refile
or otherwise modify (or grant an extension of any statute of limitation with
respect to) any Tax Return relating in whole or in part to HEC or any Acquired
Company with respect to any taxable year or period ending on or before the
Closing Date (or with respect to any Straddle Period) without the prior written
consent of the HPI Stockholders Representative, which consent may be withheld in
the sole discretion of the HPI Stockholders Representative.
(e) Tax Package. The Purchaser shall promptly cause the Acquired
Companies to prepare and provide to HPI Stockholders Representative a package of
Tax information materials, including, without limitation, schedules and work
papers (the "Tax Package") required by HPI Stockholders Representative to enable
HPI Stockholders Representative to prepare and file all Tax Returns required to
be prepared and filed by it pursuant to paragraph (b)(i). The Tax Package shall
be completed in accordance with past practice, including past practice as to
providing such information and as to the method of computation of separate
taxable income or other relevant measure of income of the Acquired Companies.
The Purchaser shall cause the Tax Package to be delivered to the HPI
Stockholders Representative not later than fifteen (15) days following the
Closing Date.
(f) Contest Provisions. The Purchaser shall promptly notify the HPI
Stockholders Representative in writing upon receipt by the Purchaser, any of its
Affiliates, or any of the Acquired Companies of notice of any pending or
threatened federal, state, local or foreign Tax audits, examinations or
assessments which might affect the Tax liabilities for which any HPI Indemnitor
may be liable pursuant to paragraph (a) of this Section 6.13. The HPI
Stockholders Representative shall have the sole right to represent HEC's and
each Acquired Company's interests in any Tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Closing Date or
otherwise relating to Taxes for which any HPI Indemnitor may be liable pursuant
to Section 6.13, and to employ counsel of its choice at its expense. In the case
of a Straddle Period of any Acquired Company, the HPI Stockholders
Representative shall be entitled to participate at its expense in any Tax audit
or administrative or court proceeding relating (in whole or in part) to Taxes
attributable to the portion of such Straddle Period ending on and including the
Closing Date and, with the written consent of the Purchaser, and at the HPI
Stockholders Representative's sole expense, may assume the entire control of
such audit or proceeding. None of the Purchaser, any of its Affiliates, or any
Acquired Company may settle any Tax claim for any Taxes for which any HPI
Indemnitor may be liable pursuant to Section 6.13, without the prior written
consent of the HPI Stockholders Representative, which consent may be withheld in
the reasonable discretion of the HPI Stockholders Representative.
(g) Assistance and Cooperation. After the Closing Date, each of the HPI
Stockholders Representative and the Purchaser shall (and cause their respective
Affiliates to):
(i) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with
paragraph (b) of this Section 6.13 or with respect to HEC;
(ii) cooperate fully in preparing for any audits of, or disputes
with taxing authorities regarding, any Tax Returns of HEC or any
Acquired Company or HEC;
(iii) make available to the other and to any taxing authority as
reasonably requested all information, records, and documents relating
to Taxes of any Acquired Company;
(iv) provide timely notice to the other in writing of any pending
or threatened Tax audits or assessments of any Acquired Company or HEC
for taxable periods for which the other may have a liability under this
Section 6.13;
(v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period;
(vi) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to, Taxes
described in paragraph (a)(v) of this Section 6.13 (relating to sales,
transfer and similar Taxes); and
(vii) timely provide to the other powers of attorney or similar
authorizations necessary to carry out the purposes of this Section
6.13.
6.14. Interim Financial Statements. For the period commencing as of
November 1, 2001 and ending on the Closing Date, HPI shall deliver to the
Purchaser, promptly after the end of each month in such period, updated
individual unaudited financial statements for each Acquired Company for the
portion of the fiscal year ended as of the end of such month. All such
statements shall be prepared on a modified cash basis.
6.15. Audited Financial Statements. The HPI Stockholders recognize that
the Purchaser is a publicly reporting company and agree that the Purchaser shall
be entitled at the Purchaser's expense to cause certain financial statements to
be prepared and filed with the Securities and Exchange Commission, as required
by Law applicable to the Purchaser as a publicly reporting company or
registrant; provided that prior to the Closing, the Purchaser shall not file
with the Securities and Exchange Commission any financial statements relating to
the Acquired Companies without the written consent of the HPI Stockholders
Representative (which consent shall not be unreasonably withheld or delayed if
such filing is required by Law). HPI agrees to cooperate with the Purchaser and
its auditing accountants as reasonably requested by the Purchaser in connection
with the preparation and filing of such financial statements, including
providing a customary management representation letter in the form prescribed by
generally accepted auditing standards and shall assist the Purchaser in
obtaining the consent of HPI's independent accounting firm to permit the
Purchaser and the Purchaser's auditors to have access to such firm's work papers
and to include its report on the Audited Financial Statements in any filing with
any Governmental Authority by the Purchaser. Any and all costs and expenses
reasonably incurred by HPI pursuant to this Section 6.15 shall be reimbursed by
the Purchaser prior to the Closing.
6.16. No Solicitation. For the period from the date hereof until the
date of termination of this Agreement in accordance with Section 9.1 hereof,
neither the HPI Stockholders nor any Acquired Company will, or will cause to
permit any Acquired Company or HEC to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of all or any significant part of the assets (other than sales of inventory in
the ordinary course) or capital stock or other equity interest in any Acquired
Company or Sioux City other than the transactions contemplated by this Agreement
or a sale of Sioux City pursuant to the Buy and Sell Agreement dated March 1,
1992 (an "Acquisition Transaction"), (ii) facilitate, encourage, solicit or
initiate discussions, negotiations or submissions of proposals or offers in
respect of an Acquisition Transaction, (iii) furnish or cause to be furnished,
to any Person, any information concerning the business, operations, properties
or assets of any Acquired Company in connection with an Acquisition Transaction,
or (iv) otherwise cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other Person to do or seek
any of the foregoing. The HPI Stockholders will inform the Purchaser promptly
following the receipt by any of them, any Acquired Company or HEC, or any of
their or any Acquired Company's representatives, of any bona fide proposal or
inquiry in respect of any Acquisition Transaction.
6.17. Investments. HPI shall take such commercially reasonable actions
to assure that its investment securities held at the Closing Date will be
readily convertible to immediately available funds without loss at the Closing
Date.
6.18. Certain Assets. The Purchaser agrees that on or prior to the
Closing, HPI may transfer and assign, for no consideration, the personal
property set forth on Schedule 6.18 to Safety Syringes Inc. and the real
property set forth in Schedule 6.18 to HEC, and such property shall be owned by
Safety Syringes Inc. and HEC, respectively, after the Closing.
6.19. Discharge of HPI Excluded Liabilities. HEC covenants and agrees
that it will pay, discharge or otherwise satisfy each and every HPI Excluded
Liability as such liabilities become due and payable (except for such
liabilities as are being contested in good faith); provided that the foregoing
shall not limit the Purchaser's right to make a claim for indemnification
pursuant to Section 8.1(c) hereof. Notwithstanding the foregoing, the HPI
Indemnifying Stockholders acknowledge and agree that pursuant to Section 8.5(g)
they shall be severally liable for the HPI Excluded Liabilities to the extent
indemnification is not available from HEC.
6.20. Sioux City. HPI agrees to immediately notify the Purchaser if
Xxxxxxxx Investment Co. ("Xxxxxxxx") gives any written notice of its exercise of
its buy or sell right under the Buy and Sell Agreement, dated March 1, 1992. If
HPI receives such a written notice from Xxxxxxxx, HPI agrees to obtain the
Purchaser's approval (which approval shall not be unreasonably withheld or
delayed) prior to making an election to sell its shares in Sioux City or to buy
Xxxxxxxx'x shares in Sioux City. If HPI elects to buy Xxxxxxxx'x shares in Sioux
City and such transaction closes prior to the Closing, then the parties agree
that the Cash Amount shall be reduced by any cash paid to Xxxxxxxx by HPI and
any liability for amounts owed to Xxxxxxxx related to HPI's election to pay for
the shares on an installment basis shall not be included in current liabilities
in determining the Closing Working Capital of HPI. If HPI elects to sell its
shares in Sioux City and such transaction closes prior to the Closing, then the
parties agree that the Cash Amount shall be increased by any cash paid to HPI by
Xxxxxxxx and any asset for amounts owed by Xxxxxxxx to HPI related to Xxxxxxxx'x
election to pay for the shares on an installment basis shall not be included in
current assets in determining the Closing Working Capital of HPI. If HPI sells
it shares in Sioux City prior to the Closing, all references to Acquired
Companies shall be deemed not to include Sioux City and all references to
Acquired Publications shall be deemed not to include the Sioux City Journal and
any and all obligations of HPI to make any deliveries or take any action on
behalf of Sioux City shall be eliminated. Notwithstanding any other provision of
this Agreement, except as provided in this Section 6.20, the Purchaser agrees
that the exercise by Xxxxxxxx of its rights under the Buy and Sell Agreement,
dated March 1, 1992, and any transaction related to such exercise, shall not
provide the Purchaser with a basis to terminate this Agreement or to receive any
adjustment to the Stock Purchase Price.
6.21. Additional Covenants of the HPI Stockholders and HEC.
(a) Each of the persons listed in Schedule 6.21 hereto agrees that, for
a period of three years (the "Restricted Period"), following the date of the
Closing, he or she shall not in any manner, directly or indirectly (whether
alone or as principal, independent contractor, partner, associate, consultant,
owner, manager, agent or co-venturer of any other Person, employer, proprietor,
stockholder or other holder or any equity or equity-like stake, director or in
any other capacity) own, manage, operate, control, participate in, produce,
develop, market, distribute and/or sell or otherwise carry on, without the
Purchaser's prior written consent, during the Restricted Period within or
primarily related to any community within the Audit Bureau of Circulation City
Zone and Retail Trading Zone for any of the Acquired Publications as of the
Closing (collectively, the "Restricted Area"): (i) any newspaper publishing
business (including any daily, weekly, agricultural, "shopper", "want ads" or
"TMC" newspaper, classified advertising or specialty publication medium),
"yellow pages" or directory, community information guide or site, whether in
print, electronic medium, or digital format, including on any portion of the
Internet; commercial printing business; or any broadcast media business,
including commercial radio and television, (ii) directly or indirectly solicit,
induce or attempt to solicit or induce any customer, licensee or other business
relation of any Acquired Company, any Subsidiary thereof or their assigns to
alter its relationship with or cease doing business with such Acquired Company,
any Subsidiary thereof or their assigns, or intentionally interfere with any
such business relation of any Acquired Company, any Subsidiary thereof or their
assigns, (iii) solicit or accept for publication or distribution within the
Restricted Area advertising, in any form, from any customer or account
(including national accounts) of any Acquired Company, any Subsidiary thereof or
their assigns, or (iv) solicit, hire, attempt to solicit or hire, or participate
in any attempt to solicit or hire any person who was an Employee of an Acquired
Company, any of Subsidiary thereof or their assigns immediately after the
Closing (other than any persons whose employment is terminated by such Acquired
Company, subsidiary or assign); provided, that nothing set forth in this Section
6.21 shall prohibit such persons from owning any security that is publicly
traded and listed on any national stock exchange or on the NASDAQ National
Market System so long as such security does not represent in excess of 5% in the
aggregate of the voting capital stock of such corporation.
(b) The HPI Stockholders and HEC recognize that the Purchaser's and its
assigns' business interests require the fullest practical protection and
confidential treatment of all information not generally known within the
relevant trade group or by the public, including all documents, writings,
memoranda, business plans, illustrations, designs, plans, processes, programs,
inventions, computer software, reports, customer lists, trade secrets and all
other valuable or unique information and techniques acquired, developed or used
by any Acquired Company, any Subsidiary thereof or their assigns relating to
their respective business, operations, employees and customers (hereinafter
collectively termed "Protected Information"). The HPI Stockholders and HEC
expressly acknowledge and agree that the Protected Information constitutes trade
secrets and confidential and proprietary business information of the Purchaser
and its assigns. Protected Information shall not include information which is or
becomes part of the public domain through no breach of this Agreement by the HPI
Stockholders or HEC. Accordingly, the HPI Stockholders and HEC agree to hold
such Protected Information secret and confidential and to take reasonable
precautions such that no other Person shall, and not knowingly permit any other
Person to, directly or indirectly, appropriate, divulge, disclose or otherwise
disseminate to any other Person nor use in any manner for the HPI Stockholders',
HEC's or any other Person's purposes or benefit any Protected Information, and
not to use or aid others in using any such Protected Information in competition
with the Purchaser or its assigns, except to the extent that disclosure is
required by law; provided, that the HPI Stockholders and HEC shall provide the
Purchaser and its permitted assigns with notice as far in advance of any
required disclosure as is reasonably practicable under the circumstances in
order for the Purchaser and its assigns to obtain an order or other assurance
that any information required to be disclosed will be treated as Protected
Information and the HPI Stockholders and HEC shall use all reasonable efforts to
cooperate with the Purchaser and its assigns in connection therewith and in
furtherance thereof. This obligation of non-disclosure of information shall
continue to exist for so long as such information remains Protected Information.
The Purchaser agrees that the foregoing shall not apply to the performance by
HPI, the HPI Stockholders and HEC of their respective obligations under this
Agreement.
(c) If, at the time of enforcement of this Section 6.21, a court holds
that the restrictions stated herein are unreasonable under circumstances then
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law.
(d) The Restricted Period shall be tolled, with respect to any HPI
Stockholder or HEC, on a day-to-day basis during which any HPI Stockholder or
HEC is engaged, or participating in an activity prohibited herein.
6.22. Advertising Contracts. HPI covenants and agrees that it will
provide to the Purchaser within fifteen (15) days after the date of this
Agreement true and complete copies of the fifteen (15) largest Contracts for the
sale or exchange of advertising in any Acquired Publication.
ARTICLE 7
CLOSING CONDITIONS
7.1. Conditions to Obligations of the Purchaser. The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction or fulfillment at or prior to the Closing of the
following conditions, any of which may be waived in whole or in part by the
Purchaser in writing:
(a) All representations and warranties of the HPI Indemnifying
Stockholders contained in this Agreement shall be true and correct in all
respects at and as of the Closing with the same effect as though such
representations and warranties were made at and as of the Closing (except for
changes permitted or contemplated by this Agreement and except for any
representation or warranty that is expressly made as of a specified date, which
shall be true and correct in all respects as of such specified date only), in
each case with only such exceptions as would not in the aggregate reasonably be
expected to have a materially adverse effect on the assets, properties,
operations, business, financial condition or results of operations of the
Acquired Companies, taken as a whole, except for any such change or effect
arising directly or indirectly from (i) this Agreement or the transactions
contemplated by this Agreement, (ii) the announcement or other disclosure of
this Agreement or the transactions contemplated by this Agreement, (iii) any
changes in conditions generally applicable to the newspaper industry, or (iv)
any changes in the general United States or global economic conditions.
(b) Each of the HPI Stockholders, HPI and HEC shall have performed and
complied in all material respects with all the covenants and agreements required
by this Agreement to be performed or complied with by it at or prior to the
Closing.
(c) All applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated.
(d) There shall be in effect no Law or injunction issued by a court of
competent jurisdiction making illegal or otherwise prohibiting or restraining
the consummation of the transactions contemplated by this Agreement.
(e) HEC and each Acquired Company shall have delivered to the Purchaser
all of the certificates, instruments and other documents required to be
delivered by such company at or prior to the Closing pursuant to Section 3.2
hereof.
7.2. Conditions to Obligations of the HPI Stockholders. The obligations
of the HPI Stockholders, HPI and HEC to consummate the transactions contemplated
by this Agreement are subject to the satisfaction or fulfillment at or prior to
the Closing of the following conditions, any of which may be waived in whole or
in part by the HPI Stockholders Representative in writing:
(a) All representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing with the same effect as though such representations and warranties
were made at and as of the Closing (except for changes permitted or contemplated
by this Agreement and except for any representation or warranty that is
expressly made as of a specified date, which shall be true and correct in all
material respects as of such specified date only).
(b) The Purchaser shall have performed and complied in all material
respects with the covenants and agreements required by this Agreement to be
performed or complied with by it at or prior to the Closing.
(c) All applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated.
(d) There shall be in effect no Law or injunction issued by a court of
competent jurisdiction making illegal or otherwise prohibiting or restraining
the consummation of the transactions contemplated by this Agreement.
(e) The Purchaser shall have delivered to the HPI Stockholders the Cash
Payment and all of the certificates, instruments and other documents required to
be delivered by the Purchaser at or prior to the Closing pursuant to Section 3.3
hereof.
ARTICLE 8
INDEMNIFICATION
8.1. Obligations of the HPI Stockholders and HEC. Subject to the
limitations set forth herein and in accordance with Section 8.5(g), the HPI
Indemnitors agree to and shall indemnify and hold the Purchaser, and its
directors, officers, employees, Affiliates (including HPI and any of the
Acquired Companies if the Closing occurs), agents and assigns harmless from and
against any and all Losses resulting from, based upon or arising out of,
directly or indirectly:
(a) Any breach of any representation or warranty made by the HPI
Indemnifying Stockholders in or pursuant to this Agreement (without regard to
the materiality thereof); or
(b) Any nonfulfillment or breach of any covenant or agreement of the
HPI Stockholders, HPI or HEC under this Agreement or the Escrow Agreement;
provided that with respect to HPI, only to the extent such nonfulfillment or
breach occurs prior to the Closing; or
(c) Any HPI Excluded Liabilities.
8.2. Obligations of the Purchaser. Subject to the limitations set forth
herein, the Purchaser agrees to indemnify and hold the HPI Stockholders and
their respective directors, officers, employees, Affiliates, agents and assigns
harmless (after the Closing) from and against any and all Losses of the HPI
Stockholders, resulting from, based upon or arising out of, directly or
indirectly:
(a) Any breach of any representation or warranty made by the Purchaser
in or pursuant to this Agreement; or
(b) Any non-fulfillment or breach of any covenant or agreement of the
Purchaser in this Agreement or other document delivered pursuant to this
Agreement or the Escrow Agreement; or
(c) Any HPI Assumed Liabilities; or
(d) Any Liability to the extent relating to and arising out of the
operation of HPI or any Acquired Company following the Closing, excluding,
however, all HPI Excluded Liabilities.
8.3. Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party or parties claiming indemnification (the "Claimant")
shall give written notice to the party from which indemnification is sought (the
"Indemnitor") reasonably promptly after the Claimant learns of any claim or
proceeding covered by the foregoing agreements to indemnify and hold harmless,
but failure to provide prompt notice shall not be deemed to jeopardize the
Claimant's right to demand indemnification if the Indemnitor is not materially
prejudiced by the delay in receiving notice. If the Indemnitor is materially
prejudiced, the Claimant's right to indemnification shall be reduced according
to the extent of the actual Loss or prejudice which Indemnitor can demonstrate
was caused by the delay. The Purchaser shall not be deemed to have notice of any
claim or proceeding by reason of any knowledge acquired on or before the Closing
Date by an Employee, independent contractor or other agent of any Acquired
Company.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have 30 days to make
any investigation of the claim that the Indemnitor deems necessary or desirable,
or such lesser time if a 30 day period would jeopardize any rights of the
Claimant to oppose or protest the claim. For the purpose of this investigation,
the Claimant agrees to make available to the Indemnitor and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the 30-day period, or lesser period if required by
this Section (or any mutually agreed upon extension hereof) the Claimant may
seek appropriate legal remedies.
(c) The Indemnitor shall have the right to undertake, by counsel or
other representatives of its own choosing, the defense of such claim. In the
event that the Indemnitor shall elect not to undertake such defense, or within
30 days after notice of such claim from the Claimant shall fail to defend, the
Claimant shall have the right to undertake the defense, compromise or settlement
of such claim, by counsel or other representatives of its own choosing (which
counsel or other representatives shall be reasonably acceptable to the
Indemnitor), on behalf of or for the account and risk of the Indemnitor.
Anything in this Section 8.3 to the contrary notwithstanding, (i) if there is a
reasonable probability that a claim may materially and adversely affect the
Claimant other than as a result of money damages or other money payments, the
Claimant shall have the right, at the cost and expense of the Claimant, to
participate in the defense, compromise or settlement of the claim, (ii) the
Indemnitor shall not, without the Claimant's written consent (such consent not
to be unreasonably withheld or delayed), settle or compromise any claim or
consent to entry of any judgment which does not include as an unconditional term
thereof the giving by the plaintiff to the Claimant of a release from all
Liability in respect of such claim, and (iii) in the event that the Indemnitor
undertakes defense of any claim consistent with this Section, the Claimant, by
counsel or other representative of its own choosing and at the reasonable cost
and expense of the Claimant, shall have the right to consult with the Indemnitor
and its counsel or other representatives concerning such claim and the
Indemnitor and the Claimant and their respective counsel or other
representatives shall cooperate with respect to such claim. The Claimant shall
not, without the Indemnitor's written consent (such consent not to be
unreasonably withheld or delayed), settle or compromise any claim or consent to
entry of any judgment, except to the extent it releases the Indemnitor for any
and all liability related to the Loss incurred with such claim. If any
disagreement arises in the handling of the claim, the Indemnitor shall have the
right to make the final determination consistent with the requirements of this
Section.
(d) If there shall be any conflicts between the provisions of Section
8.3(c) and Section 6.13(f) (relating to Tax contests), the provisions of Section
6.13(f) shall control with respect to Tax contests.
(e) The HPI Stockholders and HEC waive and release, effective as of the
Closing Date, all claims against any of the Acquired Companies for any right to
contribution or indemnification for any indemnity payments made by the HPI
Stockholders or HEC after the Closing Date pursuant to this Agreement.
(f) The Claimant shall use reasonable efforts to collect any amounts
available under insurance coverage, or from any other Person alleged to be
responsible, for any Loss payable under Article 8. If the Claimant receives any
amounts under applicable insurance policies, or from any other Person alleged to
be responsible for any Loss, subsequent to an indemnification payment by the
Indemnitor, then such Claimant shall promptly reimburse the Indemnitor for any
payment made or expense incurred by such Indemnitor in connection with providing
such indemnification payment up to the amount received by the Claimant, net of
any expenses incurred by such Claimant in collecting such amount.
(g) If the Claimant receives any payment from the Indemnitor in respect
of any Loss pursuant to Article 8 and the Claimant could have recovered all or a
part of such Loss from a third party other than an Acquired Company (a
"Potential Contributor") based on the underlying Loss asserted against the
Indemnitor, the Claimant shall assign such of its rights to proceed against the
Potential Contributor as are necessary to permit the Indemnitor to recover from
the Potential Contributor the amount of such payment.
(h) The HPI Indemnitors, on the one hand (in accordance with Section
8.5(g)), and the Purchaser, on the other hand, shall reimburse the other party
for the Taxes for which any HPI Indemnitor or the Purchaser, respectively, is
liable pursuant to Section 6.13(a) but which are shown to be due on and required
to be remitted with respect to any Tax Return to be filed by the Purchaser or
the HPI Stockholders Representative, respectively, pursuant to Section 6.13(b)
upon the written request of the party entitled to payment, setting forth in
detail the computation of the amount owed by the other party, but in no event
shall payment be required earlier than five (5) days prior to the due date for
remitting such Taxes. This Section 8.3(h) shall apply only in the context of
filing Tax Returns for current Taxes payable pursuant to Section 6.13(b), and
shall not apply in the case of amounts payable by the HPI Indemnitors to the
Purchaser, or the Purchaser to the HPI Indemnitors, as the case may be, as a
result of an action, suit, investigation, audit, claim, assessment, amended Tax
Return, or other similar context, which in general shall be governed by Section
6.13 (other than Section 6.13(c)) and by this Section 8.3 (other than this
Section 8.3(h)).
8.4. Sole Remedy. Each party agrees that the sole Liability and
obligations of the other party and the sole right, remedy and entitlement of
each party for recovery of any monetary claim with respect to or in connection
with this Agreement or any of the transactions contemplated by this Agreement
shall be limited to indemnification under this Article 8, and all such parties
hereby waive any and all other statutory and common law rights and remedies
(including rights of indemnification and contribution) which it has or may
hereafter have against any other party, provided such waiver (i) shall not be
construed to prevent any party hereto from seeking specific performance or other
equitable relief or remedies and (ii) shall not terminate or release any right
to indemnification any HPI Stockholder may have against any Acquired Company
relating to such HPI Stockholder serving as a director, officer or employee of
such Acquired Company. If the Closing occurs, the rights and claims waived by
the Purchaser include claims for contribution or other rights of recovery
arising out of or relating to any Environmental Law, claims for breach of
contract, breach of representation or warranty, negligent misrepresentation and
all other claims for breach of duty.
8.5. Limitations on Indemnification; Exclusive Remedy.
(a) No claim for indemnification under Section 8.1(a) or Section 8.2(a)
for breach of any representation or warranty shall be valid unless made within
the applicable Survival Period as defined in Section 8.6.
(b) No party shall be obligated to indemnify any other party or parties
under Section 8.1(a) or Section 8.2(a) unless the Claimant's aggregate amount of
Losses as to which a right of indemnification is provided under Section 8.1(a)
or Section 8.2(a) shall exceed $3,000,000, in which event $2,000,000 plus all of
such Losses above $3,000,000 shall be indemnifiable; provided that the
Purchaser's right to recover under Section 8.1(a) for breach of any
representation or warranty contained in Sections 4.1, 4.2 or 4.3 shall not be
subject to such limitation.
(c) No individual breach of any such representation or warranty shall
be deemed to have occurred unless the actual Loss incurred as a result thereof
is in excess of $3,000. In no event shall the aggregate liability of the HPI
Indemnitors pursuant to Section 8.1(a) exceed $50,000,000, which amount shall be
reduced on the date that is six (6) days after the six-month anniversary of the
Closing Date to $35,000,000 and reduced on the date that is the eighteen-month
anniversary of the Closing Date to $15,000,000 except that the reduction of the
aggregate liability limit on the six-month and eighteen-month anniversaries
shall not otherwise limit the Purchaser's entitlement to indemnification for any
Loss for which a proper notice of claim for indemnification under Section 8.1(a)
was given prior to the six-month or eighteen-month anniversary, as applicable,
but which remained unresolved at the time the liability limit was reduced
(provided that the HPI Indemnitors' liability for breach of any representation
or warranty contained in Sections 4.1, 4.2, 4.3, 4.5(b), 4.11(b), 4.16 or,
subject to Section 4.19(c), 4.19 shall not be subject to such limitation). In no
event shall the aggregate liability of the HPI Indemnitors pursuant to this
Agreement exceed the Stock Purchase Price less the Cash Amount and the aggregate
liability of the Purchaser pursuant to this Agreement exceed the Stock Purchase
Price less the Cash Amount.
(d) The indemnity payment hereunder with respect to any Loss shall be
calculated on an "After-Tax Basis", which shall mean an amount which is
sufficient to compensate the Claimant for the event giving rise to such Loss
(the "Indemnified Event"), determined after taking into account (1) all
increases in federal, state, local or other Taxes (including estimated Taxes)
payable by the Claimant as a result of the receipt of the indemnity payment (as
a result of the indemnity payment being included in income but not as a result
of a reduction of tax basis); provided, however, that for all federal and state
Income Tax purposes, the Purchaser and the HPI Stockholders agree to report each
indemnification payment made by or to either of them in respect of a Loss as an
adjustment to the Stock Purchase Price, and the parties hereto agree to report
each indemnification payment to the Purchaser by HEC in respect of a Loss as a
decrease in the amount realized by the HPI Stockholders in the HPI Redemption,
unless there is a Final Determination to the contrary affecting the Claimant (it
being understood that if any reporting position is later disallowed as a result
of a Final Determination, the Indemnitor shall indemnify the Claimant for the
effects of such disallowance, and it being further understood that the
obligations under this parenthetical clause shall remain in effect without
limitation as to time), (2) to the extent not previously taken into account in
computing the amount of such Loss, all increases in federal, state, local and
other Taxes (including estimated Taxes) payable by the Claimant for all affected
taxable years or periods ending on or before the Closing Date and, with respect
to any Straddle Period, the portion of the Straddle Period ending on and
including the Closing Date as a result of the Indemnified Event, and (3) to the
extent not previously taken into account in computing the amount of the such
Loss, all reductions in federal, state, local and foreign Taxes (including
estimated Taxes) realized by the Claimant for all affected taxable years and
periods as a result of the Indemnified Event. All calculations shall be made at
the time of the relevant indemnification payment using reasonable assumptions
(as agreed to by the indemnifying and indemnified party) and present value
concepts (using a discount rate equal to the applicable federal rate in effect
at the time of the Indemnified Event (based on the Federal mid-term rate) using
semi-annual compounding plus four (4) percentage points).
(e) With respect to any claims for indemnification arising from or
related to Environmental Law or Hazardous Materials Activity, the HPI
Indemnitors shall have no liability under this Article 8 if any such claim is
triggered by an environmental investigation undertaken by the Purchaser (other
than an investigation undertaken in connection with a financing or sale of a
property), or any notification by the Purchaser (or its affiliates) to any
Governmental Authority, unless such investigation or notification is required by
Environmental Law. If any Remedial Action is required by Environmental Law in
order to correct or cure a violation of any Environmental Law or any third party
demand, the Purchaser shall promptly notify the HPI Stockholders Representative
after acquiring knowledge of such requirement and shall present a remediation
plan to the HPI Stockholders Representative at least ninety (90) days prior to
performing such Remedial Action (unless a Governmental Authority requires that
the Purchaser or an Acquired Company take such action in a shorter period). The
remediation plan shall be designed to minimize the remediation cost to the
extent feasible while providing for a reasonable and customary level of clean-up
in compliance with applicable Environmental Law. Unless the Purchaser is ordered
to perform such remediation or other work by any Governmental Authority, the HPI
Stockholders Representative shall have thirty (30) days to review and approve
the remediation plan, the approval of which cannot be unreasonably withheld or
delayed.
(f) If the Purchaser acquires Knowledge prior to Closing that any
representation, warranty, covenant or agreement of the HPI Stockholders, HPI or
HEC contained in this Agreement or any of the Schedules attached hereto has been
breached, is false or requires modification or amendment to be correct, the
Purchaser shall notify in writing the HPI Stockholders, HPI or HEC (as
applicable) as soon as practicable, but in any event within five (5) Business
Days after acquiring such Knowledge. Subject to Section 6.11, if the Purchaser
acquires Knowledge prior to Closing that any representation, warranty, covenant
or agreement of the HPI Stockholders, HPI or HEC contained in this Agreement or
any of the Schedules attached hereto has been breached, is false or requires
modification or amendment to be correct and the Purchaser has failed to notify
the HPI Stockholders of such Knowledge prior to the Closing, then the Purchaser
shall have no right or remedy after the Closing with respect to such inaccuracy
or breach and shall be deemed to have waived its rights to indemnification in
respect thereof and any Loss in respect thereof shall be disregarded for
purposes of the threshold and deductible contained in Section 8.5(b).
(g) With respect to any indemnification pursuant to Section 8.1(a),
indemnification by the HPI Indemnifying Stockholders shall be several in the
proportions set forth in Schedule 8.5(g) and not joint. The Purchaser
acknowledges and agrees that the exclusive source of any amounts determined to
be payable to it for an inaccuracy of a representation or breach of a warranty
pursuant to Section 8.1(a) hereof (other than liability for breach of any
representation or warranty contained in Sections 4.1, 4.2, 4.3, 4.5(b), 4.11(b),
4.16 and, subject to Section 4.19(c), 4.19, which shall not be subject to such
limitation) shall be the Escrow Amount, pursuant to the terms of the Escrow
Agreement. With respect to any indemnification pursuant to Section 8.1(b) or
(c), the Purchaser shall first seek indemnification from HEC. To the extent HEC
fails to satisfy its indemnification obligations in respect thereof, the HPI
Indemnifying Stockholders shall severally and not jointly indemnify for Losses
incurred pursuant to Sections 8.1(b) and (c) in the proportions set forth in
Schedule 8.5(g).
(h) The Indemnitor shall not be liable under Article 8 for any (1) Loss
relating to any matter to the extent that there is included in the calculation
of Closing Working Capital of HPI a specific liability or reserve relating to
such matter, but only to the extent of such reserve, (2) consequential or
punitive Loss (other than a consequential or punitive Loss payable in connection
with a third Person Action), or (3) Loss for lost profits (other than lost
profits payable in connection with a third Person Action).
(i) The parties hereto acknowledge and agree that, in the case of the
breach of any representation or warranty, covenant or agreement with respect to
any asset, obligation, liability or other condition of Sioux City, the Loss for
which the HPI Indemnitors shall be required to indemnify pursuant to Article 8,
subject to all of the other limitations and conditions contained in this Article
8, shall not exceed 50% (i.e., the ownership percentage of HPI, direct and
indirect, in Sioux City) of the Loss incurred by Sioux City by reason of such
breach.
(j) The Purchaser acknowledges and agrees that, except as provided in
Section 6.11, no item disclosed to the Purchaser in any closing certificate
delivered to the Purchaser or otherwise in respect of Section 7.1(a) shall be
the subject of indemnification under this Article 8 and any Loss incurred in
respect thereof shall be disregarded for purposes of the threshold and
deductible contained in Section 8.5(b).
8.6. Survival. Subject to the provisions of Section 8.5(f), all
representations, warranties, covenants and agreements of the parties made in
this Agreement or the Escrow Agreement shall survive the Closing regardless of
any investigation or inquiry on the part of any party, and the Closing shall not
be deemed a waiver by any party of the representations, warranties, covenants or
agreements of any other party in this Agreement or the Escrow Agreement;
provided, however, that the period of survival shall (i) with respect to the
representations and warranties in Sections 4.1, 4.2, 4.3, 4.5(b), 5.1, 5.2 and
5.3, continue indefinitely; (ii) with respect to the representations and
warranties in Section 4.19, but subject to Section 4.19(c), continue for the
applicable statutory limitation period; (iii) with respect to the
representations and warranties in Sections 4.11(b) and 4.16, end five (5) years
after the Closing Date; and (iv) in the case of any other representation and
warranty, end three (3) years after the Closing Date (in each case, the
"Survival Period"). No claim for breach of any representation or warranty may be
brought under this Agreement unless written notice describing in reasonable
detail the nature and basis of such claim is given on or prior to the last day
of the applicable Survival Period. In the event such notice of such a claim is
so given, the right to indemnification with respect to such claim shall survive
the applicable Survival Period until the claim is finally resolved and any
obligations with respect to the claim are fully satisfied. All covenants and
agreements under this Agreement and the Escrow Agreement shall survive the
Closing for the applicable statutory limitation period.
ARTICLE 9
TERMINATION
9.1. Termination. This Agreement may be terminated:
(a) By either the HPI Stockholders Representative, acting in his own
right or on behalf of HEC or each Acquired Company, or the Purchaser at any time
prior to the Closing with the mutual written consent of the other party hereto;
(b) Unless the Closing has not occurred as a result of a material
breach of this Agreement by the party seeking such termination or any of its
Affiliates, by either the HPI Stockholders Representative or the Purchaser if
the Closing has not occurred on or prior to 5:00 p.m. CST on the date which is
three (3) months following the date of this Agreement (the "Termination Date");
provided, however, that either the HPI Stockholders Representative or the
Purchaser in his or its sole discretion may elect to extend the Termination Date
until 5:00 p.m. (CST time) on the date which is four (4) months following the
date of this Agreement by written notice to the other at least ten (10) calendar
days prior to the initial Termination Date;
(c) By either the HPI Stockholders Representative or the Purchaser if
any Governmental Authority with jurisdiction over such matters shall have issued
a final and nonappealable Governmental Order permanently restraining, enjoining
or otherwise prohibiting the consummation of the transactions contemplated by
this Agreement; provided, however, that neither the HPI Stockholders
Representative nor the Purchaser may terminate this Agreement pursuant to this
Section 9.1(c) unless the party seeking to so terminate this Agreement has used
with its Affiliates all commercially reasonable best efforts to oppose any such
Governmental Order or to have such Governmental Order vacated or made
inapplicable to the transactions contemplated by this Agreement, but nothing
contained in this Section 9.1(c) shall prevent a party that is otherwise
entitled to terminate this Agreement pursuant to Section 9.1(b) or 9.1(d) from
doing so;
(d) If the Closing has not occurred, by either the HPI Stockholders
Representative or the Purchaser, if such party and its Affiliates are not then
in material breach of this Agreement, if the other party or any of its
Affiliates has continued in material breach of this Agreement for thirty (30)
days after receipt of written notice of such breach from the terminating party,
and such breach is not cured within such thirty (30) day period; provided,
however, that if a party or any of its Affiliates has undertaken but is not able
to cure such breach within thirty (30) days, despite its good faith efforts, the
party and its Affiliates shall have such additional time as may be reasonably
necessary to effectuate a cure if such breach is capable of being cured, but in
no event more than an additional sixty (60) days; or
(e) By the Purchaser or the HPI Stockholders Representative if entitled
to do so under Section 6.11.
9.2. Effect of Termination. If this Agreement is terminated pursuant to
Section 9.1 hereof, neither party hereto shall have any further Liability
hereunder except that (i) the provisions of Sections 6.7 and 6.8, and Articles 9
and 10 shall remain in full force and effect, and (ii) each party hereto shall
remain liable to each other party hereto for any breach of its obligations under
this Agreement prior to such termination.
ARTICLE 10
MISCELLANEOUS
10.1. Notices. All notices that are required or may be given pursuant
to this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this Section
10.1):
if to the Purchaser, to: with copies to:
---------------------------------- ---------------------------------
Xxx Enterprises, Xxxxxxxxxxxx Xxxx & Xxxxxxxx
000 Xxxxxx Xxxxxxxx 000 X. Xxxx Xx., Xxxxx 000
000 X. Xxxx Xx. Xxxxxxxxx, XX 00000
Xxxxxxxxx, XX 00000 Attn: C. Xxxx Xxxxxxxx III, Esq.
Attn: Xxxx X. Xxxxx
Chairman, President and CEO
if to the HPI Stockholders, HPI,
----------------------------------
HEC or the HPI Stockholders Representative, with copies to:
------------------------------------------- ---------------------------------
to:
----
Xxxxxx Energy Co., Inc.
00000 Xxxx Xxx Xxxxx, Xxxxx 0000 Xxxxxx Xxxxxx Xxxxx & Xxxx
Xxxxxxxx Xxxx, XX 00000 Bank One Plaza
Xxxxxxx Xxxxxxx 00 X. Xxxxxxxx Xxxxxx
Telephone No.: (000) 000-0000 Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000 Attn: Xxxxxxxxx X. Xxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
- and -
Xxxxx, Xxxxxxxxx & Mines, P.S.
Xxx Xxxxxxxxxx Xxxxx, Xxxxx 0000
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy (receipt confirmed) or, if mailed, when actually received.
10.2. Actions of the HPI Stockholders Representative.
(a) Any and all actions to be taken under or in connection with this
Agreement and the HPI Stockholder Documents by or on behalf of the HPI
Stockholders may be so taken by the HPI Stockholders Representative as
attorney-in-fact for the HPI Stockholders. Any action so taken by the HPI
Stockholders Representative shall be deemed to have been taken, and the
Purchaser may rely on any such action as having been taken, by the HPI
Stockholders. Each HPI Stockholder hereby appoints the HPI Stockholders
Representative as such HPI Stockholder's true and lawful attorney authorized on
behalf of such HPI Stockholder and in such HPI Stockholder's name, place and
stead, acting jointly or severally, to amend and update this Agreement and to
complete, date, execute, deliver, amend and update each HPI Stockholder Document
and each other document or instrument contemplated by the HPI Stockholder
Document, and otherwise to act as attorney-in-fact for such HPI Stockholder in
connection with the transactions contemplated by this Agreement. Each HPI
Stockholder agrees that the power of attorney created by this Section 10.2 is
irrevocable and will not be modified in a manner which is inconsistent with the
preceding sentences of this Section 10.2 without the prior written consent of
all the HPI Stockholders.
(b) It is understood and agreed by the Purchaser that the HPI
Stockholders Representative is acting solely as a representative of the HPI
Stockholders and, when acting in such capacity, has no liability or obligation
with respect to any representation, warranty, covenant or agreement of the
Acquired Companies, the HPI Stockholders or HEC in this Agreement or any of the
HPI Stockholder Documents, or with respect to any action taken or omitted to be
taken in connection with the transactions contemplated herein and therein.
(c) If neither Xxxxxx X. Xxxxxx nor Xxxxxxx X. Xxxxxx is able or
willing to act as the HPI Stockholders Representative, then Xxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx by majority vote shall appoint another HPI
Stockholder as the HPI Stockholders Representative to act as the HPI
Stockholders Representative pursuant to the terms of this Agreement. Such Person
shall thereafter be referred to as the HPI Stockholders Representative for
purposes of this Agreement.
10.3. Amendments and Waiver. This Agreement may not be modified or
amended except in writing signed by the party against whom enforcement is
sought. The terms of this Agreement may be waived only by a written instrument
signed by the party waiving compliance. No waiver of any provision 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 provided. No delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. Unless otherwise
provided in this Agreement, the rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies which the parties
hereto may otherwise have at law or in equity. Whenever this Agreement requires
or permits consent by or on behalf of a party, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 10.3.
10.4. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned or delegated by the HPI
Stockholders or the Purchaser without the prior written consent of the other
party and any purported assignment or delegation in violation hereof shall be
null and void; provided, however, that the Purchaser may assign this Agreement
or any or all rights or obligations hereunder (including, without limitation,
the Purchaser's rights to purchase, the HPI Common Stock and the Purchaser's
rights to seek indemnification hereunder) to any wholly-owned corporate
subsidiary of the Purchaser formed under the laws of any state in the United
States of America and any HPI Stockholder may transfer to another HPI
Stockholder shares of HPI Common Stock; provided, further, that any assignment
by the Purchaser shall not release the Purchaser from any liabilities or
obligations under this Agreement. Upon any such permitted assignment by the
Purchaser, the references in this Agreement to the Purchaser shall also apply to
any such assignee unless the context otherwise requires.
10.5. Entire Agreement. This Agreement, the Confidentiality Agreement
and the related documents contained as Exhibits and Schedules hereto or
expressly contemplated hereby (including the Escrow Agreement) contain the
entire understanding of the parties relating to the subject matter hereof and
supersede all prior written or oral and all contemporaneous oral agreements and
understandings relating to the subject matter hereof. The Exhibits and Schedules
to this Agreement are hereby incorporated by reference into and made a part of
this Agreement for all purposes.
10.6. Representations and Warranties Complete. The representations,
warranties, covenants and agreements set forth in this Agreement, the Escrow
Agreement and the Confidentiality Agreement constitute all the representations,
warranties, covenants and agreements of the parties hereto and their respective
shareholders, directors, officers, employees, Affiliates, advisors (including
financial, legal and accounting), agents and representatives and upon which the
parties have relied.
10.7. Third Party Beneficiaries. This Agreement is made for the sole
benefit of the parties hereto, their respective successors and permitted
assigns, and nothing contained herein, express or implied, is intended to or
shall confer upon any other Person any third party beneficiary right or any
other legal or equitable rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
10.8. Governing Law. This Agreement will be governed by and construed
and interpreted in accordance with the substantive laws of the State of
Illinois, without giving effect to any conflicts of law rule or principle that
might require the application of the Laws of another jurisdiction.
10.9. Jurisdiction. Except as otherwise expressly provided in this
Agreement, the parties hereto agree that any suit, action or proceeding seeking
to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in any Federal or any state court sitting in Chicago, so long as one of
such courts shall have subject matter jurisdiction over such suit, action or
proceeding, and that any cause of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of Illinois,
and each of the parties hereby irrevocably consents to the jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of the venue
of any suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any court. Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 10.1 shall be deemed effective
service of process on such party.
10.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
10.11. Neutral Construction. The parties to this Agreement agree that
this Agreement was negotiated fairly between them at arms' length and that the
final terms of this Agreement are the product of the parties' negotiations. Each
party represents and warrants that it has sought and received legal counsel of
its own choosing with regard to the contents of this Agreement and the rights
and obligations affected hereby. The parties agree that this Agreement shall be
deemed to have been jointly and equally drafted by them, and that the provisions
of this Agreement therefore should not be construed against a party or parties
on the grounds that the party or parties drafted or was more responsible for
drafting the provision(s).
10.12. Severability. In the event that any one or more of the
provisions or parts of a provision contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement or any other
jurisdiction, but this Agreement shall be reformed and construed in any such
jurisdiction as if such invalid or illegal or unenforceable provision or part of
a provision had never been contained herein and such provision or part shall be
reformed so that it would be valid, legal and enforceable to the maximum extent
permitted in such jurisdiction.
10.13. Headings; Interpretation; Schedules and Exhibits.
(a) The descriptive headings of the several Articles and Sections of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement. References to Sections or Articles, unless otherwise indicated,
are references to Sections and Articles of this Agreement. The word "including"
means including without limitation. Words (including defined terms) in the
singular shall be held to include the plural and vice versa and words of one
gender shall be held to include the other gender as the context requires. The
terms "hereof," "herein" and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole
(including all of the Schedules and Exhibits hereto) and not to any particular
provision of this Agreement unless otherwise specified. It is understood and
agreed that neither the specifications of any dollar amount in this Agreement
nor the inclusion of any specific item in the Schedules or Exhibits is intended
to imply that such amounts or higher or lower amounts, or the items so included
or other items, are or are not material, and no party shall use the fact of
setting of such amounts or the fact of the inclusion of such item in the
Schedules or Exhibits in any dispute or controversy between the parties as to
whether any obligation, item or matter is or is not material for purposes
hereof.
(b) Whenever an Acquired Company is called upon to list any contracts
or agreements, there shall be deemed excluded from the applicable representation
or warranty any agreement where the obligations of all the parties thereto have
been performed or will be performed before the Closing Date. Whenever a
representation or warranty is made regarding an Acquired Company, unless the
context otherwise requires, such representation and warranty shall be deemed to
be only with respect to the Acquired Company and not any Subsidiary of the
Acquired Company.
(c) Certain matters and items disclosed in any Schedule or Exhibit may
not be required to be disclosed therein, but may be disclosed therein for
informational purposes only, and no such disclosure shall constitute an
indication or admission of the materiality thereof or create a standard of
disclosure.
(d) If any fact or item is included on a Schedule referenced by a
particular section in this Agreement and the existence of the fact or item or
its contents is relevant to any other section in this Agreement, the fact or
item shall be deemed to be disclosed with respect to such other section whether
or not an explicit cross-reference appears in the Schedules if such relevance is
readily apparent from examination of the Schedules.
10.14. Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto each of which shall be
deemed an original and all of which together will constitute one and the same
instrument. Signatures to faxed copies of this Agreement shall be binding so
long as original counterparts thereof are provided to the other party via
overnight delivery service received within three (3) business days thereafter.
10.15. Cooperation. From and after the Closing, the Purchaser will
cooperate with the HPI Stockholders and HEC in the investigation, defense or
prosecution of any Action which is pending or threatened against an Acquired
Company or any of its Affiliates, whether or not any party has notified the
other of a claim for indemnity with respect to such matter. Without limiting the
generality of the foregoing, the Purchaser will make available its Employees
employed by the Purchaser to give depositions or testimony and will furnish all
documentary or other evidence in each case as the HPI Stockholders and HEC may
reasonably request. The HPI Stockholders and HEC shall reimburse the Purchaser
for all reasonable and necessary out-of-pocket expenses incurred in connection
with the performance of their obligations under this Section 10.15.
10.16. Specific Performance. The HPI Stockholders, HPI and HEC
acknowledge that each of the Acquired Companies is of a special, unique and
extraordinary character, and that damages alone are an inadequate remedy for a
breach of this Agreement by the HPI Stockholders, HPI or HEC. Accordingly, as an
alternative to termination of this Agreement under Section 9.1, if the Purchaser
is not then in material default hereunder, the Purchaser shall be entitled, in
the event of breach of this Agreement by any of the HPI Stockholders, HPI or
HEC, to enforcement of this Agreement (subject to obtaining any required
approval under the HSR Act) by a decree of specific performance or injunctive
relief requiring any of the HPI Stockholders, HPI or HEC to fulfill their or its
obligations under this Agreement. Such right of specific performance or
injunctive relief shall be in addition to, and not in lieu of, the Purchaser's
right to recover damages and to pursue any other remedies available to the
Purchaser for any such breach. In any action to specifically enforce the
obligation of any of the HPI Stockholders, HPI or HEC to close the transactions
contemplated by this Agreement, the HPI Stockholders, HPI and HEC shall waive
the defense that there is an adequate remedy at law or in equity and agrees that
the Purchaser shall be entitled to obtain specific performance of the obligation
to close without being required to prove actual damages. As a condition to
seeking specific performance, the Purchaser shall not be required to tender the
Cash Payment but shall be required to demonstrate that the Purchaser is ready,
willing and able to tender the Cash Payment as prescribed in this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the date first above written.
XXX ENTERPRISES, INCORPORATED XXXXXX PUBLICATIONS, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------ ----------------------------
Xxxx X. Xxxxx Xxxxxxx X. Xxxxxx
Chairman, President and CEO President
XXXXXX ENERGY CO., INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
President
HPI STOCKHOLDERS
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxxxx Xxx Xxxxxx
----------------------------------- --------------------------------
Xxxxx X. Xxxxxx Xxxxxxxxx Xxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx Xxxxxxxxx XXxxxx
----------------------------------- --------------------------------
Xxxxxxx X. Xxxxxx Xxxx Xxxxxxxxx Xxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxx Trust
/s/ Xxxxxxx X. Xxxxxx
----------------------------------- By: /s/ Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx ----------------------------
Trustee
/s/ Xxxx Xxxxxx /s/ Xxxx Xxxxxx, Xx.
----------------------------------- --------------------------------
Xxxx Xxxxxx Xxxx Xxxxxx, Xx.
/s/ C. Xxxxxxx Xxxxxx /s/ Xxxx Xxxxxx, Xx.
----------------------------------- --------------------------------
C. Xxxxxxx Xxxxxx Xxxx Xxxxxx, Xx., Trustee fbo
Xxxxxxxx Xxxxxx Xxxxxx
/s/ Xxxx Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxxx Xxxxxx
----------------------------------- --------------------------------
Xxxx Xxxxx Xxxxxx Xxxxxxx Xxxxxx Xxxxxx
/s/ Xxxxxxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
----------------------------------- --------------------------------
Xxxxxxxxx X. Xxxxxx Xxxxx Xxxxxx
/s/ Xxxxxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
----------------------------------- --------------------------------
Xxxxxxxxx Xxxxxx Xxxxxxxxx Xxxxx Xxxxxx, Trustee fbo
Alyssa Xxxxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
----------------------------------- --------------------------------
Xxxxxx Xxxxxx Xxxxxx Xxxxx Xxxxxx, Trustee fbo
Xxxxx Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx /s/ Xxxxx Xxxxxx
----------------------------------- --------------------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxx, Trustee fbo
Xxxxx Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Trustee fbo
Xxxx Xxxxxxxxx Xxxxxx
/s/ X.X. Xxxxxx /s/ X.X. Xxxxxx
------------------------------------ --------------------------------
X.X. Xxxxxx, Trustee fbo X.X. Xxxxxx, Trustee fbo
Xxxxx Xxxxxx Xxxxxx Alyssa Xxxxxxxxx Xxxxxx
/s/ G.A. Xxxxxxxxx /s/ G.A. Xxxxxxxxx
------------------------------------ --------------------------------
G.A. Xxxxxxxxx, Trustee fbo G.A. Xxxxxxxxx, Trustee fbo
Xxxxx Xxxxxx Xxxxxx Alyssa Xxxxxxxxx Xxxxxx
/s/ X.X. Xxxxxx
------------------------------------ Xxxxxxx X. Xxxxxxxx Irrevocable
X.X. Xxxxxx, Trustee fbo Trust 11/2/95
Xxxxx Xxxxxx Xxxxxx
/s/ G.A. Xxxxxxxxx
------------------------------------ By: /s/ Xxxxxx X. Xxxx
G.A. Xxxxxxxxx, Trustee fbo ----------------------------
Xxxxx Xxxxxx Xxxxxx Xxxxxx X. Xxxx, Trustee
/s/ Xxxxxx X. Xxxxxx
------------------------------------ Xxxxxxx X. Xxxxxxxx Irrevocable
Xxxxxx X. Xxxxxx Trust 11/2/95
/s/ Xxxxxxx X. Xxxxxxxx
------------------------------------ By: /s/ Xxxxxx X. Xxxx
Xxxxxxx X. Xxxxxxxx ----------------------------
Xxxxxx X. Xxxx, Trustee
Xxxxxxxxx X. Xxxxxxxx Revocable Trust Xxxxxx X. Xxxxxxxx Irrevocable
u/a/d 9/20/94 Trust 11/2/95
By /s/ Xxxxxxxxx X. Xxxxxxxx By /s/ Xxxxxx X. Xxxx
---------------------------------- -----------------------------
Trustee Xxxxxx X. Xxxx, Trustee
Xxxxx X. Xxxxxxxx Revocable Trust Xxxxxx Charitable Foundation
u/a/d 9/20/94
By /s/ Xxxxxx X. Xxxxxx
By /s/ Xxxxx X. Xxxxxxxx -----------------------------
----------------------------------- Xxxxxx X. Xxxxxx, President
Trustee
Xxxxxx X. Xxxxxx Trust
Xxxxxx X. Xxxxxx Trust
By /s/ Xxxxxx X. Xxxxxx
By /s/ Xxxxxx X. Xxxxxx -----------------------------
----------------------------------- Trustee
Trustee
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the date first above written.
XXX ENTERPRISES, INCORPORATED XXXXXX PUBLICATIONS, INC.
By: /s/ Xxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------ ----------------------------
Xxxx X. Xxxxx Xxxxxx X. Xxxxxx
Chairman, President and CEO President
XXXXXX ENERGY CO., INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
President
