THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
186 P.C.N.A. PARKWAY
LAKE HELEN, FL 32744-0280
April 14, 1998
College Directory Publishing, Inc.
1000 Conshohocken Road, 4th Floor
Conshohocken, PA 19428
Attn: Mr. Michael Paul,
Chief Executive Officer
M G Management, Inc.
1070 West Morse Blvd.
Winter Park, FL 32789
Attn: Mr. Mark Golden, President
Dear Mr. Paul and Mr. Golden:
The following represents the agreement among The Publishing Company of
North America, Inc. (the 'Company'), College Directory Publishing, Inc. ('CDP')
and M G Management, Inc. (the 'Acquiror') subject to the terms and conditions
set forth below, the Company agrees to cause CDP to merge into the Acquiror:
1. THE MERGER. At the closing (the 'Closing'), CDP shall merge into
the Acquiror which shall be the surviving corporation and shall
change its name to College Directory Publishing, Inc.
2. MERGER CONSIDERATION. The merger consideration which shall be paid
to the Company at Closing shall be $1,400,000 cash (of which
$1,100,000 shall consist of the repayment of the outstanding
$1,100,000 loans from the Company to CDP), a $100,000 note (the
'Note') and $200,000 of convertible preferred stock of the Acquiror
(the 'Preferred Stock'). The Note shall pay 5% per annum interest,
require annual interest payments which are due on December 31st of
each year and shall be due upon the earlier of: (i) the closing of
the Acquiror's initial public offering ('IPO'), or (ii) December
15, 1999. The Preferred Stock shall have a $200,000 liquidation
preference which liquidation preference shall be equal to all other
classes of preferred stock of the Acquiror and shall be convertible
into a number of shares of the Acquiror's common stock equal to
$1,000,000 in IPO value (the 'Value'). The Value shall be
determined based upon the offering price per share of the
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Acquiror's common stock in connection with a future IPO (with no
consideration given to any warrants included in any units). If CDP
becomes public as a result of a merger or similar transaction into
or with a public company (a 'Public Company Merger'), Value shall
be based upon the first to occur of the following: (i) the
offering price of any securities offering by such public company of
common stock or securities convertible to common stock (with no
consideration given to any warrants included in any units), or (ii)
the average closing price of such common stock over the first 30
trading days. The Preferred Stock shall automatically be
convertible upon the Closing of the IPO or at such time following a
Public Company Merger as the conversion price is fixed. As part of
the merger consideration, the Company also shall receive the
750,000 shares of common stock referred to in Section 8 (below).
3. LOCK-UP AGREEMENT. At or before such time as the Preferred Stock
is converted to common stock of the Acquiror or a public company,
the Company and/or any transferee shall execute any lock-up
agreement requested by the managing underwriter of any IPO or
offering for the public company as long as all officers and
directors of the Acquiror enter into similar lock-up agreements.
If any such lock-up agreements provide that the consent to future
transfers shall not be unreasonably withheld and any officers or
directors of the Acquiror receive such consent to future transfer,
the Acquiror must notify the Company and/or its transferee and
release from the lock-up agreement(s) the same number of shares of
common stock as are being released for such officers and/or
directors.
4. CLOSING. The Closing shall occur within 49 days from the date of
this agreement at the offices of the Company unless any lending
institution which provides financing through the Acquiror which
requires that the Closing occurs at its offices in which case the
Closing shall occur at the offices of the lending institution.
5. ADJUSTMENTS AT CLOSING.
A. At the Closing, the Company agrees to pay to Messrs. Michael
Paul and John Rafanello an aggregate of approximately $19,500
representing 1998 additional consideration as defined in that
certain Agreement and Plan of Merger among The Publishing
Company of North America, Inc., New College Directory
Publishing, Inc. and College Directory Publishing, Inc. dated
July 1, 1997 ('the Merger Agreement'), which sum shall be on
account of and subject to the settlement of the Directory
Printing litigation (as referenced in Sections 6(e)(iii)(D)
and 6(f)(i) of the Merger Agreement). If such settlement is
not consummated by the Closing, the Company shall pay to
Messrs. Paul and Rafanello any sum due under the Merger
Agreement within five business days after CDP presents to the
Company a copy of the final court order approving the
settlement for which the time to appeal from such order has
elapsed.
B. At the Closing, the Company shall pay to CDP the sum of the
lesser of (i) $51,500, or (ii) one-half of certain state and
local taxes paid by CDP on or before April 15, 1998.
6. RIGHTS AND RESPONSIBILITIES UNDER OTHER AGREEMENTS. If the
transactions contemplated by this Agreement are not consummated,
then the Merger Agreement shall remain in force and effect and all
rights, claims and responsibilities of the parties under the Merger
Agreement shall remain unaffected.
7. BINDING AGREEMENT. This agreement is a binding agreement and not
subject to any additional agreements. The only closing contingency
is the ability of the Acquiror to obtain the $1,400,000
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which CDP and the Acquiror shall use their best efforts to obtain.
If the Acquiror fails to close the transaction pursuant to this
agreement within the time frame set forth in Section 4 (above), the
Company may cancel this agreement by giving written notice to CDP
and the Acquiror. The Acquiror represents and warrants that its
shareholder has approved the terms of the merger and the Company
represents and warrants that its board of directors has approved
the terms of the merger.
8. ACTIONS PENDING CLOSING. Prior to the Closing, the Company
consents to the transfer to the Acquiror of 750,000 shares of its
common stock currently held by Messrs. Michael Paul, John
Rafanello, Alan Frank and Lance Rosen. Such shares shall not be
otherwise transferrable without the written consent of the Company;
such consent shall not be unreasonably withheld.
9. NO REPRESENTATIONS OR WARRANTIES. Except for the representations
and warranties concerning shareholder and board approval set forth
above, none of the parties to this agreement has made any
representations or warranties to the other parties.
10. FUTURE ASSURANCES. In order to consummate the merger, the parties
to this agreement shall execute such merger certificates and other
documents and take such steps as may be reasonably necessary in
order to accomplish the merger.
11. RESTRICTIVE COVENANTS. For a period of three years following the
Closing, the Company shall not, directly or indirectly, engage in
the business of publishing university and college directories. For
a period of three years following the Closing, the Acquiror shall
not, directly or indirectly, engage in the business of publishing
membership directories for state or local bar associations, or for
state, county or local medical associations or societies. The term
'medical' refers to doctors of medicine and/or osteopathy. In
addition, for a period of three years following the Closing, the
Acquiror shall not, directly or indirectly, publish or solicit the
publication of any directories for the National Association of Bar
Executives.
12. NO HIRING OF EMPLOYEES. For a period of two years following the
Closing, the Company on one hand and the Acquiror on the other hand
agree not to, directly or indirectly, solicit, hire or retain any
person currently employed by the other party or employed by the
other party during the restrictive period or during the six months
immediately preceding the Closing. For the purposes of this
agreement, the reference to employees also includes independent
contractors who devote substantially all of their time to the
business of the Company, CDP or the Acquiror.
13. EQUITABLE RELIEF. The Company, CDP and the Acquiror recognize that
the agreements contained herein concerning non-competition and not
hiring of employees are special, unique and of extraordinary
character, and that in the event of a breach by any party of either
or both of such agreements, the affected party will be entitled to
institute and prosecute proceedings to obtain equitable relief from
the American Arbitration Association as set forth in Section 13
hereof or, if the American Arbitration Association has not adopted
rules or procedures permitting a panel to issue temporary or
preliminary injunctive relief, the affected party may bring an
action in a court of competent jurisdiction to enjoin the breaching
party(ies) from breaching the foregoing non-compete provisions or
hiring of any employees. In such action, the affected party will
not be required to plead or prove irreparable harm or lack of an
adequate remedy at law. Nor shall the affected party be required
to post any bond. In the event that the entire merger
consideration referred to in Item 2 is tendered by the Acquiror
within 49 days from the date of this agreement and the Company and
/ or CDP fail to close this transaction, the Acquiror shall be
entitled to institute an action or arbitration proceeding as
provided by this agreement and shall be entitled to obtain a
judgement of
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specific performance without having to plead or prove irreparable
harm or lack of an adequate remedy at law. Nor shall the Acquiror
be required to post any bond.
14. GOVERNING LAW. This agreement and any dispute, disagreement, or
issue of construction or interpretation arising hereunder whether
relating to its execution, its validity, the obligations provided
herein or performance shall be governed or interpreted according to
the internal laws of the State of Florida including its laws
relating to statutes of limitations without regard to choice of law
considerations.
15. ARBITRATION. Any controversy, dispute or claim arising out of or
relating to this agreement, or its interpretation, application,
implementation, breach or enforcement which the parties are unable
to resolve by mutual agreement, shall be settled by submission by
either party of the controversy, claim or dispute to binding
arbitration before three arbitrators in accordance with the rules
of the American Arbitration Association then in effect. In any
such arbitration proceeding the parties agree to provide all
discovery deemed necessary by the arbitrators. The decision and
award made by the arbitrators shall be final, binding and
conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
16. DISPUTE RESOLUTION. If the Company initiates an action or
arbitration proceeding against CDP and / or the Acquiror, the
jurisdiction of such action or arbitration proceeding shall be in
Orange County, Florida. On the other hand, if prior to the
initiation of an action or arbitration proceeding, CDP or the
Acquiror initiates an action or arbitration proceeding against the
Company, the jurisdiction shall be Montgomery County, Pennsylvania.
Each of the parties waives any objection it may have to personal
jurisdiction of the foregoing courts.
17. ATTORNEYS' FEES. In the event that there is any controversy or
claim arising out of or relating to this agreement, or to the
interpretation, breach or enforcement thereof, and any action or
proceeding including an arbitration proceeding is commenced to
enforce the provisions of this agreement, the prevailing party(ies)
shall be entitled to an award by the court or arbitrator, as
appropriate, of reasonable attorneys' fees, costs and expenses
('Awards'). In addition to the foregoing, the parties agree that
i.) if the Company fails to close the transaction contemplated
hereby, notwithstanding the tender of the entire merger
consideration referred to in Item 2, CDP and the Acquiror shall be
entitled to Awards, and ii.) if CDP fails to close the transaction
contemplated hereby for any reason other than its failure to obtain
a $900,000 line of credit under circumstances where it has used its
best efforts to obtain such line of credit (which best efforts
includes providing any personal guarantees of Messrs. Michael Paul
and John Rafanello and their spouses, if any) or the failure of the
Acquiror to raise $500,000 in financing, the Company and the
Acquiror shall be entitled to Awards.
Please execute a copy of this agreement evidencing your consent to be
bound.
Sincerely,
/s/ Peter S. Balise
Peter S. Balise, President
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We hereby agree to the contents of the foregoing letter agreement.
COLLEGE DIRECTORY PUBLISHING, INC.
By: /s/ Michael S. Paul
--------------------------------
Michael S. Paul
Chief Executive Officer
M G MANAGEMENT, INC.
By: /s/ Mark I. Golden
--------------------------------
Mark I. Golden, President
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Merger Agreement - The Publishing Co. of North America Inc. and College Directory Publishing Inc.
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