Exhibit 10.3
CONTRIBUTION
AGREEMENT
By and Between
PRIMEDIA, INC.,
INTELLICHOICE,
INC.,
PRIMEDIA SPECIALTY GROUP
INC.,
MCMULLEN ARGUS PUBLISHING
INC.
and
AUTOMOTIVE.COM,
INC.
Dated as of November 15,
2005
TABLE OF
CONTENTS
i
ii
CONTRIBUTION
AGREEMENT
This CONTRIBUTION AGREEMENT
(this “ Agreement ”) is dated as of
November 15, 2005, by and between PRIMEDIA, INC., a Delaware
corporation (“ Primedia ”), INTELLICHOICE, INC.,
a California corporation (“ IntelliChoice ”),
PRIMEDIA SPECIALTY GROUP INC., a Delaware corporation (“
Primedia Specialty ”), MCMULLEN ARGUS PUBLISHING INC.,
a Delaware corporation (“ McMullen ,” and
together with Primedia, IntelliChoice and Primedia Specialty,
“ Transferor ”), and AUTOMOTIVE.COM, INC., a
Delaware corporation (the “ Company
”).
R E C I T A L S
WHEREAS , Transferor, the Company and the Stockholders
(as defined therein) have entered into that certain Stock Purchase
Agreement, dated of even date herewith (the “ Stock
Purchase Agreement ”), pursuant to which the Stockholders
of the Company are selling to Transferor for cash 10,493,930 shares
of common stock, par value $0.01 per share, of the Company (the
“ Common Stock ”);
WHEREAS , immediately after the closing of the
transactions contemplated in the Stock Purchase Agreement,
Transferor desires to contribute to the Company, and the Company
desires to receive from the Transferor, the Contributed Assets
(defined below) in exchange for the Company’s issuance to
Transferor of 4,761,311 shares of newly issued Common
Stock;
WHEREAS , immediately after the closing of the
transactions contemplated in the Stock Purchase Agreement and this
Agreement, Transferor shall own 80.1% of the outstanding capital
stock of the Company;
WHEREAS , in connection with the transactions
contemplated by the Stock Purchase Agreement, Transferor and the
Company also are entering into that certain License Agreement (as
defined herein) pursuant to which Transferor has agreed to license
to the Company certain rights to use trademarks and editorial
content of Transferor; and
WHEREAS , the parties desire to effect such contribution
and share issuance and other related transactions pursuant to the
terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE
, in consideration of the premises,
and the mutual representations, warranties, covenants and
agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto intending to be legally bound by
the terms hereof applicable to each of them, hereby agree as
follows:
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ARTICLE I.
DEFINITIONS
1.1
Definitions
. In addition to the terms
defined elsewhere in this Agreement, the following capitalized
terms shall have the following meanings when used
herein:
“Affiliate” with respect to any Person, shall mean any other
Person directly or indirectly controlling, controlled by or under
common control with, such Person. For purposes of this
Agreement, “control” (including with correlative
meanings, the terms “controlling,”
“controlled by” or “under common
control with” ) as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by
contract or otherwise. Notwithstanding the foregoing, neither the
Company nor Kohlberg Kravis Roberts & Co. shall be deemed
to be an Affiliate of Transferor for purposes of this
Agreement.
“Contract”
means any agreement, contract, note,
loan, evidence of indebtedness, purchase order, letter of credit,
indenture, security or pledge agreement, undertaking, covenant not
to compete, employment agreement, severance agreement, license,
lease, instrument, obligation or commitment, whether oral or
written.
“Contributed
Assets”
shall mean all of the right, title and interest in and to all of
the business, properties, assets, goodwill and rights of Transferor
or any Affiliate of Transferor, whatever kind and nature, real,
personal or mixed, tangible or intangible, wherever located,
constituting the Contributed Business, other than the Excluded
Assets, including without limitation each of the
following:
(a)
all items
identified on Schedule A attached hereto;
(b)
all rights and
obligations under the Contributed Contracts;
(c)
all Contributed
Intellectual Property;
(d)
all the business,
properties, assets, goodwill and rights of
IntelliChoice;
(e)
all insurance
benefits, including all rights, claims and proceeds, actions and
causes of action under any insurance policy or settlement with
insurers, that provide coverage with the respect to the Contributed
Assets;
(f)
all rights to
causes of action, lawsuits, judgments, claims and demands of any
nature, known or unknown, contingent or non-contingent, with
respect to the ownership, use or function of any of the Contributed
Assets, whether arising by way of counterclaim or
otherwise;
(g)
all available
supplies, art work, display units, telephone and fax numbers and
purchasing records solely related to the Contributed Assets, other
than the Licensed
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Properties and
all sales literature, promotional literature, customer, supplier
and distribution lists primarily related to the Contributed Assets,
other than the Licensed Properties; and
(h)
all rights under
or pursuant to all warranties, representations and guarantees made
by third parties primarily in connection with the Contributed
Assets or services furnished to Transferor primarily affecting the
Contributed Assets, to the extent such warranties, representations
and guarantees are assignable.
“Contributed
Business” means the
automotive on-line operations of Transferor, which includes all
operations of IntelliChoice and each of the operations of the
Transferor-owned websites identified on
Schedule 4.9(a) attached hereto.
“ Contributed Contracts
” means any Contract solely related to the ownership and
operation of the Contributed Business in substantially the same
manner as currently owned and operated.
“Excluded
Assets” shall mean
all of the right, title and interest in and to all of the assets of
Transferor set forth on Schedule B attached hereto, all
of which shall not be deemed at any time to be Contributed
Assets.
“ IntelliChoice ”
refers to IntelliChoice, Inc., a California corporation and
wholly-owned subsidiary of Transferor.
“Liability” means, with respect to any Person, any
liability, indebtedness, expense, guaranty, endorsement or
obligation of or by such Person of any kind, character or
description, whether known or unknown, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, due or to become due, vested or
unvested, executory, determined, determinable or otherwise and
whether or not the same is required to be accrued on the financial
statements of such Person.
“License
Agreement” means
that certain License Agreement, dated of even date herewith, by and
among the Company, Transferor and certain Affiliates of Transferor,
as the same may be modified and amended from time to
time.
“Lien”
includes any lien, claim, charge,
encumbrance, mortgage, pledge or security interest of any
kind.
“Permits”
means all approvals, authorizations,
certificates, consents, licenses, orders, franchises,
qualifications, registrations and permits or other similar
authorizations of a Governmental Authority (and any other Person)
required under Applicable Law necessary for the operation of the
Contributed Assets.
“Person”
means any individual, corporation,
limited or general partnership, limited liability company, limited
liability partnership, trust, association, joint venture,
Governmental Authority and other entity and group (which term shall
include a “group” as such term is defined in
Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended).
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“PP&E”
shall mean property, plant,
equipment and other tangible personal property, including all
machinery, furniture, furnishings, vehicles, equipment, tools,
office equipment, computer hardware, supplies, materials, parts and
other items of tangible personal property, other than any of the
foregoing that are included in the Excluded Assets.
“Shared Services
Agreement” means
that certain Shared Services Agreement, dated of even date
herewith, by and among the Company and Primedia, as the same may be
modified and amended from time to time.
“Stockholders
Agreement”
means that certain Stockholders Agreement of Automotive.com, dated
of even date herewith, by and among the Company, Transferor and the
stockholders and optionholders of the Company identified therein,
as the same may be modified and amended from time to
time.
“Transferred
Employees” shall
mean those employees listed on Schedule C attached
hereto, all of whom shall be treated in accordance with
Section 6.6.
“Transfer
Taxes” means all
federal, state, local or foreign sales, use, transfer, real
property transfer, mortgage recording, stamp duty, capital,
value-added or similar taxes that may be imposed in connection with
the direct or indirect transfer to the Company of the Contributed
Assets or assumption of the Assumed Liabilities by the Company,
together with any interest, additions to tax or penalties with
respect thereto and any interest in respect of such additions to
tax and penalties.
1.2
Index of Other Defined
Terms . In addition
to those terms defined above, the following terms shall have the
respective meanings given thereto in the sections indicated
below:
|
Defined Term
|
|
Section
|
|
|
|
|
|
|
|
“Additional
Agreements”
|
|
5.1
|
|
|
|
|
|
|
|
“Agreement”
|
|
Preamble
|
|
|
|
|
|
|
|
“Assumed
Liabilities”
|
|
2.2
|
|
|
|
|
|
|
|
“Cap”
|
|
7.2(c)
|
|
|
|
|
|
|
|
“Claims”
|
|
7.2(a)
|
|
|
|
|
|
|
|
“Closing”
|
|
3.1
|
|
|
|
|
|
|
|
“Closing
Date”
|
|
3.1
|
|
|
|
|
|
|
|
“Common
Stock”
|
|
Recitals
|
|
|
|
|
|
|
|
“Company”
|
|
Preamble
|
|
4
|
Defined Term
|
|
Section
|
|
|
|
|
|
|
|
“Company Additional
Agreements”
|
|
5.1
|
|
|
|
|
|
|
|
“Company Indemnified
Party”
|
|
7.2(a)
|
|
|
|
|
|
|
|
“Contributed
Contracts”
|
|
4.10(a)
|
|
|
|
|
|
|
|
“Contributed Intellectual
Property”
|
|
4.9(a)
|
|
|
|
|
|
|
|
“Governmental
Authority”
|
|
4.3
|
|
|
|
|
|
|
|
“Indemnitee”
|
|
7.4
|
|
|
|
|
|
|
|
“Indemnitor”
|
|
7.4
|
|
|
|
|
|
|
|
“Laws”
|
|
4.3
|
|
|
|
|
|
|
|
“Material Adverse
Effect”
|
|
4.3
|
|
|
|
|
|
|
|
“Proposed
Settlement”
|
|
7.6
|
|
|
|
|
|
|
|
“Shares”
|
|
2.1
|
|
|
|
|
|
|
|
“Stock Purchase
Agreement”
|
|
Recitals
|
|
|
|
|
|
|
|
“Transaction
Expenses”
|
|
6.1
|
|
|
|
|
|
|
|
“Transferor”
|
|
Preamble
|
|
|
|
|
|
|
|
“Transferor Additional
Agreements”
|
|
4.1
|
|
|
|
|
|
|
|
“Transferor Disclosure
Schedule”
|
|
Article IV
|
|
|
|
|
|
|
|
“Transferor Indemnified
Party”
|
|
7.3(a)
|
|
ARTICLE II.
CONTRIBUTION OF ASSETS
2.1
Agreement to Contribute and
Accept . Upon the
terms and subject to the conditions of this Agreement and in
reliance upon the representations, warranties and agreements herein
set forth, Transferor hereby conveys, transfers, assigns and
delivers to the Company, and the Company hereby accepts from
Transferor, all of Transferor’s right, title and interest in
and to the Contributed Assets, free and clear of all Liens, in
exchange for (i) the Company’s issuance to Transferor of
4,761,311 newly issued shares of Common Stock (such shares the
“ Shares ”) and (ii) the assumption by the
Company of the Assumed Liabilities as set forth in
Section 2.2.
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2.2
Assumption of
Liabilities .
Subject to the terms and conditions of this Agreement and in
reliance upon the representations, warranties and agreements herein
set forth, the Company, effective as of the Closing, will assume
any and all Liabilities (executory or otherwise) of Transferor that
accrue or relate to the period after the Closing under any
Contributed Contract (the “ Assumed Liabilities
”). In the event that payment is received by Transferor
as payment for the performance of services, which performance of
services is an Assumed Liability hereunder, Transferor shall, or
shall cause its respective Affiliates to, pay over to the Company
the amounts so received in respect of such Assumed
Liability.
EXCEPT FOR THE ASSUMED LIABILITIES
WHICH ARE HEREBY EXPRESSLY ASSUMED, THE COMPANY DOES NOT ASSUME ANY
LIABILITIES, DEBTS, OBLIGATIONS OR DUTIES OF TRANSFEROR OR ANY
AFFILIATE OF TRANSFEROR (OTHER THAN THE COMPANY) OF ANY KIND OR
NATURE WHATSOEVER.
ARTICLE III.
THE CLOSING
3.1
Closing and the Closing
Date . The closing
(the “ Closing ”) of the transactions
contemplated hereby shall occur on the date hereof (the “
Closing Date ”) at the offices of Latham &
Watkins LLP located at 650 Town Center Drive, 20 th
Floor, Costa Mesa, California 92626, and shall be effective
immediately after the effective time of the transactions
contemplated in the Stock Purchase Agreement, unless another date,
time or place is agreed to in writing by the parties
hereto.
3.2
Transferor
Deliverables .
Concurrent with the execution hereof, Transferor shall deliver to
the Company the following:
(a)
duly executed
assignment documents (including transfer documents for the
Contributed Intellectual Property) necessary to transfer and convey
ownership of the Contributed Assets to the Company;
(b)
such other
instruments of sale, transfer, conveyance and assignment as the
Company and its counsel may request; and
(c)
(i) a copy
of resolutions adopted by the Board of Directors of Transferor
authorizing the execution, delivery and performance of this
Agreement and the Transferor’s Additional Agreements as
applicable, and (ii) a certificate of a duly authorized
officer of Transferor, dated the Closing Date, stating that such
resolutions were duly adopted and are in full force and effect at
such date, and setting forth the incumbency of each person
executing this Agreement, or any document required by this
Section 3.2 on behalf of Transferor.
3.3
Company Deliverables
. Concurrent with the
execution hereof, the Company shall deliver to
Transferor:
(a)
a certificate
representing the Shares; and
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(b)
(i) a copy
of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this
Agreement and the Company’s Additional Agreements as
applicable, and (ii) a certificate of a duly authorized
officer of the Company, dated the Closing Date, stating that such
resolutions were duly adopted and are in full force and effect at
such date, and setting forth the incumbency of each person
executing this Agreement, or any document required by this
Section 3.3 on behalf of the Company.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF
TRANSFEROR
Transferor has delivered to the
Company a disclosure schedule with numbered sections
corresponding to the relevant sections in this Agreement (the
“ Transferor Disclosure Schedule ”), a copy of
which is attached hereto. Transferor represents and warrants
to the Company as follows:
4.1
Organization and Authority of
Transferor .
Transferor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has the
full corporate power and authority to enter into this Agreement and
the other agreements and instruments referred to in this Agreement
that Transferor is executing and delivering (the “
Transferor’s Additional Agreements ”) and to
carry out the transactions contemplated hereby and
thereby.
4.2
Authorization of
Agreement . The
execution, delivery and performance by Transferor of this Agreement
and Transferor’s Additional Agreements and the consummation
by Transferor of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary corporate action of
Transferor. This Agreement and Transferor’s Additional
Agreements have been duly executed and delivered by Transferor and
constitute legal, valid and binding obligations of Transferor,
enforceable in accordance with their respective terms, except as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to
or affecting the rights of creditors generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and by an implied
covenant of good faith and fair dealing.
4.3
No Conflicts
. Neither the execution,
delivery or performance of this Agreement or any of
Transferor’s Additional Agreements, nor the consummation by
Transferor of the transactions contemplated hereby or thereby, nor
compliance by Transferor with the terms and provisions hereof or
thereof, will, directly or indirectly (with or without notice or
lapse of time or both), (i) conflict with the Certificate of
Incorporation or By-Laws of Transferor, as amended to date,
(ii) conflict with, or result in the breach or termination of,
or constitute a default under (or with notice or lapse of time or
both, result in the breach or termination of or constitute a
default under) or result in the termination or suspension of, or
accelerate the performance required by the terms, conditions or
provisions of, any note, bond, mortgage, indenture, license, lease,
agreement, commitment or other instrument to which Transferor is a
party or by which Transferor is bound, (iii) constitute a
violation by any Transferor of any law, statute, rule, regulation,
ordinance, order, ruling, writ, judgment, injunction or decree
(collectively, “ Laws ”)
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of any foreign or domestic federal, state or
local legislative, judicial, executive or other governmental
authority (“ Governmental Authority ”)
applicable to Transferor or the Contributed Assets or
(iv) result in the creation of any Lien upon any of the
Contributed Assets; except, in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, breaches,
terminations, suspensions, acceleration of performance or
violations which, taken as a whole, would not have a Material
Adverse Effect or a material adverse effect on Transferor’s
ability to consummate the transactions contemplated by this
Agreement and Transferor’s Additional Agreements. A
“ Material Adverse Effect ” shall mean a
material adverse effect on the business, assets or condition
(financial or otherwise) of Transferor, excluding any such effects
arising out of or resulting from changes in the general economy
(including those arising from acts of war or terrorism) or the
reaction of employees, suppliers or customers to
(i) Transferor’s entering into this Agreement,
(ii) the announcement thereof or (iii) the consummation
of the transactions contemplated hereby.
4.4
No Consents
. No order, permission,
consent, approval, license, authorization, registration, or
validation of, or filing with, or notice to, or exemption by, any
Governmental Authority is required to authorize, or is required in
connection with, the execution, delivery or performance by
Transferor of this Agreement or any of Transferor’s
Additional Agreements.
4.5
Compliance with Laws
. The Contributed Business is
in material compliance with all applicable Laws.
4.6
Litigation
. Except as set forth on
Schedule 4.6 of the Transferor Disclosure Schedule,
there are no material actions, suits, inquiries, proceedings or
investigations pending or, to the Transferor’s knowledge,
expressly threatened to be instituted by any third party before any
court or other Governmental Authority against Transferor that
relates to or involves any Contributed Assets or the Contributed
Business.
4.7
No Brokers
. There is no obligation or
liability, contingent or otherwise, for brokers’ or
finders’ fees or commissions in connection with the
transactions contemplated by this Agreement for which the
Contributed Business is liable.
4.8
Title to Assets
. Transferor has, and at the
Effective Time the Company shall acquire, good, valid and
transferable title to all of the Contributed Assets, in each case,
free and clear of all Liens.
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4.9
Intellectual
Property .
(a)
Schedul
