1
EXHIBIT 10.37
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of October 4, 1999, by and between The Chronicle Publishing Company, a
Nevada corporation (the "Seller"), and Pulitzer Inc., a Delaware corporation
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Seller owns certain assets which it uses to conduct the
operations of The Pantagraph, a daily newspaper serving Central Illinois, and
Illinois Valley Press, a collection of seven weekly newspapers, one monthly
business magazine and one shopper produced for local communities in Central
Illinois (collectively, the "Business").
WHEREAS, the Purchaser desires to purchase from the Seller, and the
Seller desires to sell to the Purchaser, substantially all of the assets of the
Seller owned, used or held for use by the Seller primarily to conduct the
operations of the Business, and in connection therewith, the Purchaser has
agreed to assume certain liabilities of the Seller relating to the Business, all
upon the terms and subject to the conditions set forth herein (such transaction
sometimes being referred to herein as the "Asset Purchase").
WHEREAS, the Seller and the Purchaser desire to make certain
representations, warranties, covenants and agreements in connection with the
Asset Purchase, all as more fully 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 I.
DEFINITIONS
1.1 Certain Definitions. For all purposes of and under this Agreement,
the following terms shall have the respective meanings set forth below:
(a) "Action" means any claim, action, suit or proceeding, arbitral
action, governmental inquiry, criminal prosecution or other investigation.
(b) "Affiliate" means any "affiliate" as defined in Rule 144(a)(1)
promulgated under the Securities Act of 1933, as amended, any successor statute
thereto, and the rules and regulations promulgated thereunder.
(c) "Business" shall have the meaning ascribed to such term in the
recitals and shall be deemed to include the Purchased Assets.
2
(d) "Business Day" means any weekday (Monday through Friday) on
which commercial banks in San Francisco, California are open for business.
(e) "Confidentiality Agreement" means the letter agreement between
the Seller and the Purchaser, dated as of July 13, 1999.
(f) "Contract" means any currently enforceable contract, agreement,
indenture, note, bond, instrument, lease, conditional sales contract, mortgage,
license, franchise agreement, concession agreement, security interest, guaranty,
binding commitment or other agreement or arrangement, whether written or oral.
(g) "Encumbrance" means any security interest, pledge, mortgage,
lien, charge, easement, encroachment, lease, license, option, purchase right,
any right of a third party, adverse claim of ownership or use, restriction on
transfer (such as a right of first refusal or other similar right) or use or any
other contractual limitation of any nature, defect of title, or other
encumbrance of any kind or character.
(h) "Environmental Law" means any Law or Governmental Order
pertaining to land use, air, soil, surface water, groundwater (including the
protection, cleanup, removal, remediation or damage thereof), public or employee
health or safety or any other environmental matter, including, without
limitation, the following laws as in effect on the Closing Date: (i) Clean Air
Act (42 U.S.C. ss.7401, et seq.); (ii) Clean Water Act (33 U.S.C. ss.1251, et
seq.); (iii) Resource Conservation and Recovery Act (42 U.S.C. ss.6901, et
seq.); (iv) Comprehensive Environmental Resource Compensation and Liability Act
(42 U.S.C. ss.9601, et seq.); (v) Safe Drinking Water Act (42 U.S.C. ss.300f, et
seq.); (vi) Toxic Substances Control Act (15 U.S.C. ss.2601, et seq.); (vii)
Rivers and Harbors Act (33 U.S.C. ss.401, et seq.); (viii) Endangered Species
Act (16 U.S.C. ss.1531, et seq.); (ix) Occupational Safety and Health Act (29
U.S.C. ss.651, et seq.); and (x) any other Laws relating to Hazardous Materials
or Hazardous Materials Activities.
(i) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, any successor statute thereto, and the rules and regulations
promulgated thereunder.
(j) "GAAP" means generally accepted accounting principles in the
United States.
(k) "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.
(l) "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.
(m) "Hazardous Material" means any material or substance that is
prohibited or regulated by any Environmental Law or that has been designated by
any Governmental
2
3
Authority to be radioactive, toxic, hazardous or otherwise a danger to health,
reproduction or the environment, including asbestos, petroleum, radon gas and
radioactive matter.
(n) "Hazardous Materials Activity" means the handling,
transportation, transfer, recycling, storage, use, treatment, manufacture,
investigation, removal, remediation, release, exposure of others to, sale or
other distribution of any Hazardous Material or any product containing a
Hazardous Material.
(o) "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.
(p) "Income Tax" means any federal, state, county, provincial,
local or foreign income, franchise, business profits or other similar Tax, any
estimated Tax related thereto, any interest and penalties (civil or criminal)
thereon or additions thereto, and any expenses incurred in connection with the
determination, settlement or litigation of any Liabilities related to any such
Tax.
(q) "Intellectual Property" means any (i) United States and foreign
patents, patent applications, patent disclosures and improvements thereto, (ii)
United States and foreign trademarks, service marks, trade dress, logos, trade
names and corporate names, the goodwill associated therewith, and the
registrations and applications for registration thereof, and (iii) United States
and foreign copyrights, and the registrations and applications for registration
thereof.
(r) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, any successor statute thereto, and the rules and regulations
promulgated thereunder.
(s) "IRS" means the United States Internal Revenue Service, and any
successor agency thereto.
(t) "Knowledge of the Seller," "known to the Seller" and phrases of
similar import mean, with respect to any matter in question relating to the
Business or the Seller, if (i) any executive officer of the Seller, (ii) Xxxxxx
Xxxxxx, the Publisher of The Pantagraph, (iii) Xxxxx Xxxxxxxxxx, the Chief
Financial Officer of The Pantagraph and the General Manager of the Illinois
Valley Press, (iv) Xxx X'Xxxxx, operations manager, (v) Xxxx Xxxxx, human
resources manager, (vi) Xxxx Xxxxxxx, circulation director, (vii) Xxxx Xxxxxx,
advertising director, or (viii) Xxx Xxxxxx, director of newsroom operations, has
actual knowledge of such matter without obligation of inquiry.
(u) "Law" means any federal, state, county, provincial, local or
foreign statute, law, ordinance, regulation, rule, code or rule of common law.
(v) "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,
3
4
matured or unmatured, and whether due or to become due, asserted or unasserted,
or known or unknown.
(w) "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.
(x) "Material Adverse Effect" means any change or effect that is
materially adverse to the assets, liabilities, properties, operations, business,
condition (financial or otherwise) or results of operations of the Business,
except for any such changes or effects resulting from (i) the pendency of the
transactions contemplated by this Agreement, (ii) the announcement or other
disclosure of the transactions contemplated by this Agreement, (iii) regulatory
changes, or (iv) changes in conditions generally applicable to the newspaper
publishing industry, or in general economic conditions in the geographic regions
in which the Business is conducted.
(y) "NGCL" means the General Corporation Law of the State of
Nevada, and any successor statute thereto.
(z) "Permitted Encumbrances" means (i) Encumbrances for inchoate
mechanics' and materialmen's liens for construction in progress and workmen's,
repairmen's, warehousemen's and carriers' liens arising in the ordinary course
of the business, (ii) Encumbrances for Taxes not yet due and payable, and for
Taxes being contested in good faith, (iii) except as set forth in subsections
(i) and (ii) of Schedule 4.3, Encumbrances arising out of, under or in
connection with this Agreement, (iv) Encumbrances reflected on the Latest
Balance Sheet, (v) Encumbrances and imperfections of title the existence of
which would not reasonably be expected, to materially detract from the value of,
materially interfere with, or otherwise materially affect the use and enjoyment
of the property subject thereto or affected thereby, and (vi) solely with
respect to Owned Real Property, provided that the following are not violated by
existing improvements in any material respect and do not prohibit or materially
detract from the value of the Owned Real Property, interfere with or otherwise
affect the continued use and operation of such Owned Real Property for the same
uses and operations as currently conducted, or grant any third party any option
or right to acquire or lease a material portion thereof, (A) easements, rights
of way and other similar restrictions which would be shown by a current title
report, (B) conditions that may be shown by a current survey, title report or
physical inspection, and (C) zoning, building and other similar restrictions
imposed by applicable Law.
(aa) "Person" means any individual, general or limited partnership,
firm, corporation, limited liability company, association, trust, unincorporated
organization or other entity.
(bb) "Proprietary Rights" means (i) Intellectual Property, (ii)
trade secrets and confidential business information (including, without
limitation, 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, copyrightable works, financial, marketing and
business data, pricing
4
5
and cost information, business and marketing plans and customer and
supplier lists and information), (iii) other proprietary rights, (iv) copies
and tangible embodiments thereof (in whatever form or medium), and (v) licenses
granting any rights with respect to any of the foregoing.
(cc) "Seller Documents" means, collectively, the (i) the Grant
Deeds, (ii) the Xxxx of Sale, (iii) the Assignment and Assumption, and (iv) the
Assignment of Proprietary Rights.
(dd) "Subsidiary" means (unless otherwise indicated), with respect
to a Person, any other Person in which such Person has a direct or indirect
equity or other ownership interest greater than or equal to fifty percent (50%).
(ee) "Tax" means any federal, state, county, provincial, local or
foreign income, franchise, business profits, gross receipts, sales, use, ad
valorem, employment, payroll, excise, social security (FICA, OASDI or similar),
unemployment, disability, severance, transfer, gains, profits, excise,
franchise, property, capital stock, premium, minimum and alternative minimum or
other tax, fee, levy, duty, assessment or charge 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.
(ff) "Tax Return" means a report, return, refund claim, statement
or other information required to be supplied to, or otherwise filed with, a
Governmental Authority with respect to any Tax, including any schedule or
attachment thereto or any amendment thereof.
1.2 Certain Additional Definitions. For all purposes of and under this
Agreement, the following terms shall have the respective meanings ascribed
thereto in the respective sections of this Agreement set forth opposite each
such term below:
Term Section
---- -------
Agreement Preamble
Asset Purchase Recitals
Asset Transfer Amount 6.9(g)
Asset Transfer Date 6.9(g)
Assignment and Assumption 3.2(a)
Assignment of Proprietary Rights 3.2(a)
Assumed Liabilities 2.2(b)
Assumed Plans 6.9(c)
Benefit Plan(s) 4.11(a)
Xxxx of Sale 3.2(a)
Business Contract(s) 2.1(b)
Business Employee(s) 4.9
Business Insurance Policies 4.19(a)
Business License(s) 2.1(b)
5
6
Term Section
---- -------
Cash Payment 2.3(a)
Closing 3.1
Closing Date 3.1
Closing Working Capital 2.3(b)
Excluded Assets 2.1(c)
Excluded Liabilities 2.2(c)
Financial Statements 4.13(a)
GCIU Fund 6.9(j)
Grant Deeds 3.2(a)
Indemnified Party 9.4
Indemnifying Party 9.4
Independent Accountant 2.3(b)
Latest Balance Sheet 4.13(a)
Latest Balance Sheet Date 4.13(a)
Leased Assets 4.5(a)
Leased Real Property 4.5(a)
Losses 9.2
Material Business Contract(s) 4.7(a)
Material Business License(s) 4.8
Notice of Disagreement 2.3(b)
Owned Real Property 4.5(a)
Purchase Price 2.3(a)
Purchased Assets 2.1(b)
Purchaser Preamble
Purchaser DB Plan 6.9(f)
Purchaser 401(k) Plan 6.9(d)
Purchaser Trust 6.9(f)
Seller Preamble
Seller Articles of Incorporation 4.1
Seller Bylaws 4.1
Seller DB Plan 6.9(f)
Seller 401(k) Plan 6.9(d)
Seller Trust 6.9(f)
Short Term Agreement 4.7(a)
Statement of Working Capital 2.3(b)
Tax Audit 6.12
Termination Date 8.1(b)
Third Party Agreement 6.1(b)
Transferred Employees 6.9(a)
Transferred Non-Union Employees 6.9(a)
Working Capital 2.3(b)
6
7
ARTICLE II.
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Purchased Assets.
(a) Purchase and Sale. Upon the terms and subject to the conditions
set forth herein, at the Closing, the Purchaser shall purchase from the Seller,
and the Seller shall irrevocably sell, convey, transfer, assign and deliver to
the Purchaser, free and clear of all Encumbrances other than Permitted
Encumbrances and those Encumbrances set forth in Schedule 4.5(b) hereto, all
right, title and interest in and to the Purchased Assets (as defined below).
(b) Definition of Purchased Assets. For all purposes of and under
this Agreement, the term "Purchased Assets" shall mean, refer to and include all
of the Seller's right, title and interest in and to all tangible and intangible
assets, properties and rights which are owned, used or held for use by the
Seller primarily to conduct the operations of the Business, on the Closing Date,
including, without limitation, all right, title and interest of the Seller in
and to all real property (including, without limitation, the Owned Real Property
set forth in Schedule 4.5(a) hereto), and any leaseholds and sub-leaseholds
therein, buildings, structures, improvements, fixtures, furnishings and other
fittings thereon, and easements, rights-of-way, and other appurtenances thereto,
all tangible personal property (whether or not located on the Seller's premises)
including all machinery, equipment and tools, furniture and furnishings,
computers and computer supplies, office materials and supplies, automobiles,
trucks and other vehicles, inventories of any kind or nature, raw materials and
supplies, manufactured and purchased goods, goods in process and finished goods,
all accounts, notes and other receivables, all prepaid assets and expenses, and
all books, records (other than copies of the Seller's Income Tax Returns),
ledgers, files, documents, correspondence, customer, supplier, advertiser,
circulation and other lists, invoices and sales data, creative, advertising and
other promotional materials, studies, reports, and other printed or written
materials or data, and specifically including, without limitation, the
following:
(i) Proprietary Rights (including, without limitation, the
Intellectual Property set forth in Schedule 4.6(a) hereto), goodwill associated
therewith, licenses and sublicenses granted and obtained with respect thereto,
rights thereunder, remedies against infringements thereof, and rights to
protection of interests therein under the applicable Laws of all jurisdictions
and relating primarily to the Business;
(ii) Contracts relating primarily to the Business to which the
Seller is a party or by which its assets or properties are bound (each, a
"Business Contract" and, collectively, "Business Contracts") (including, without
limitation, the Material Business Contracts set forth in Schedule 4.7(a)
hereto), to the extent transferable by the Seller to the Purchaser, and all
rights thereunder;
(iii) Licenses owned or possessed by the Seller and relating
primarily to the Business (each, a "Business License" and, collectively,
"Business Licenses") (including,
7
8
without limitation, the Material Business Licenses set forth in Schedule 4.8
hereto), to the extent transferable by the Seller to the Purchaser, and all
rights thereunder;
(iv) rights in or to all Assumed Plans, and any and all assets
associated with or allocated to Business Employees and former employees of the
Business thereunder;
(v) any and all refunds of Taxes relating primarily to the
Business other than refunds of Income Taxes;
(vi) Actions, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment of any kind or nature (including, without limitation, any such item
relating to Taxes other than Income Taxes) relating to the Purchased Assets or
the Assumed Liabilities; and
(vii) the workers' compensation insurance policy with Third
Coast Insurance Company set forth on Schedule 4.19 hereto.
(c) Definition of Excluded Assets. Notwithstanding anything to the
contrary set forth in this Section 2.1 or elsewhere in this Agreement, the term
"Purchased Assets" shall not mean, refer to or include the following
(collectively, the "Excluded Assets"):
(i) the corporate charter and bylaws, qualifications to
transact business as a foreign corporation, arrangements with registered agents
relating to foreign qualifications, taxpayer and other identification numbers,
seals, minute books, stock transfer books, blank stock certificates, and other
similar documents relating to the organization, maintenance, and existence of
the Seller as a corporation;
(ii) all assets, whether real or personal, tangible or
intangible, which are owned, used or held for use by the Seller primarily to
conduct any business operation or activity other than the Business;
(iii) all real and personal property (including, without
limitation, all equipment, furniture, fixtures, files, computers, computer
software and computer software licenses, supplies and other personal property)
used by the corporate and accounting departments of the Seller at its principal
executive offices in California;
(iv) nontransferable Business Contracts;
(v) nontransferable Business Licenses;
(vi) rights in or to all Benefit Plans other than Assumed
Plans, and all assets associated with such Benefit Plans;
(vii) cash and cash equivalents;
(viii) any and all refunds of Income Taxes;
8
9
(ix) Actions, deposits, prepayments, refunds, causes of action,
choses in action, rights of recovery, rights of set off, and rights of
recoupment of any kind or nature (including any such item relating to Income
Taxes) relating to the Excluded Assets or the Excluded Liabilities;
(x) insurance policies applicable to the Business, other than
the workers' compensation insurance policy with Third Coast Insurance Company
set forth on Schedule 4.19 hereto, and all refunds paid or payable in connection
with the cancellation or discontinuance of any insurance policies applicable to
the Business (including, without limitation, the Business Insurance Policies set
forth in Schedule 4.19 hereto) following the Closing; and
(xi) all rights of the Seller under this Agreement, any
agreement, certificate, instrument or other document executed and delivered by
the Seller or the Purchaser in connection with the transactions contemplated
hereby, or any side agreement between the Seller and the Purchaser entered into
on or after the date of this Agreement.
2.2 Assumption of Liabilities.
(a) Assumption. Upon the terms and subject to the conditions set
forth herein, at the Closing the Purchaser shall assume from the Seller (and
therefore pay, perform and discharge), and the Seller shall irrevocably convey,
transfer and assign to the Purchaser, all of the Assumed Liabilities (as defined
below).
(b) Definition of Assumed Liabilities. For all purposes of and
under this Agreement, the term "Assumed Liabilities" shall mean, refer to and
include all Liabilities of the Seller primarily arising out of or relating to
the operation of the Business, including, without limitation, the Liabilities
set forth below to the extent that such Liabilities arose out of or relate
primarily to the operation of the Business or the Purchased Assets, but
specifically excluding the Excluded Liabilities (as defined below):
(i) Liabilities of the Seller under all Business Contracts
(including, without limitation, the Material Business Contracts set forth in
Schedule 4.7(a) hereto);
(ii) Liabilities of the Seller under all Business Licenses
(including, without limitation, the Material Business Licenses), to the extent
such Business Licenses are transferable by the Seller to the Purchaser;
(iii) Liabilities of the Seller under all Assumed Plans;
(iv) Liabilities reflected in the Latest Balance Sheet;
(v) Liabilities for Taxes other than Income Taxes of the Seller
or of any other Person required to be paid by the Seller pursuant to Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by contract or otherwise;
9
10
(vi) Liabilities of the Seller arising out, of or in connection
with, any Action (including, without limitation, any Action set forth in
Schedule 4.16 hereto), other than Actions brought by or on behalf of any
shareholder, officer or director of Seller;
(vii) Liabilities of the Seller for any obligation to make
severance payments to any Business Employee pursuant to any collective
bargaining agreement covering such Business Employee;
(viii) Liabilities of the Seller for all accrued vacation and
sick time of all Business Employees;
(ix) Liabilities of the Seller arising from discharges or
releases of Hazardous Materials and other Hazardous Material Activities,
violations of Environmental Laws or similar matters to the extent such
Liabilities are related to the operations of the Business; and
(x) Liabilities under any collective bargaining agreements
relating to the Business, including, without limitation, all employee benefit
plans or other arrangements required under any collective bargaining agreement
or otherwise negotiated with the union that is a party thereto.
(c) Definition of Excluded Liabilities. Except for the Assumed
Liabilities, the Purchaser shall not assume any Liabilities of the Seller
(collectively, the "Excluded Liabilities"). Notwithstanding anything to the
contrary set forth in this Section 2.2 or elsewhere in this Agreement, the term
"Assumed Liabilities" shall not mean, refer to or include (and, therefore, the
"Excluded Liabilities" shall include) the following:
(i) Liabilities of the Seller under any Benefit Plan which is
not an Assumed Plan;
(ii) Liabilities for Income Taxes of the Seller or of any other
Person required to be paid by the Seller pursuant to Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract or otherwise;
(iii) Liabilities of the Seller in respect of transaction costs
payable by the Seller pursuant to Section 6.8 hereof or any other provision of
this Agreement;
(iv) Liabilities not primarily arising out of or relating to
the operation of the Business;
(v) Liabilities of the Seller under any Material Business
Contract or Material Business License that is not set forth in Schedule 4.7(a)
or Schedule 4.8 hereto, respectively, other than those permitted to be incurred
pursuant to Section 6.1 hereof and those under which the Purchaser accepts any
benefits pursuant to this Agreement and doesn't notify the Seller in writing
within thirty (30) calendar days following the Closing that it has rejected such
Material Business Contract or Material Business License;
10
11
(vi) Actions brought by or on behalf of any shareholder,
officer or director of the Seller;
(vii) Actions against the Seller based upon any claims reported
as of the Closing Date under Seller's general liability, excess liability or
automobile insurance policies to the extent (but only to the extent) that (x)
Seller is insured for such claims and actually receives insurance proceeds in
respect of such liability, and (y) the Purchaser is unable to enforce such
insurance policies with respect to such Actions; and
(viii) Liabilities not directly relating to the Business and
arising under (A) that certain Agreement and Plan of Merger and Reorganization,
dated as of June 28, 1995, by and between The Chronicle Publishing Company, a
Nevada corporation incorporated on January 23, 1906, and Tele-Communications,
Inc., a Delaware corporation, or (B) that certain Contribution and Assumption
Agreement, dated as of March 29, 1996, by and between The Chronicle Publishing
Company, a Nevada corporation incorporated on January 23, 1906, and the Seller.
2.3 Consideration for Purchased Assets.
(a) Consideration. Subject to Section 2.3(b) hereof, the purchase
price (the "Purchase Price") for the Purchased Assets shall be (i) $180 million
in cash (the "Cash Payment"), and (ii) the assumption by the Purchaser of the
Assumed Liabilities pursuant to Section 2.2 hereof.
(b) Working Capital Adjustment.
(i) For all purposes of and under this Agreement, the term
"Working Capital" shall mean (i) the value of the Seller's current assets
included within the Purchased Assets, minus (ii) the value of the Seller's
current liabilities included within the Assumed Liabilities, each calculated as
of the Closing to the extent practicable in accordance with GAAP applied in a
manner consistent with the preparation of the Financial Statements.
(ii) As promptly as practicable, but in any event within ninety
(90) calendar days following the Closing, the Seller shall cause to be prepared
and delivered to the Purchaser a statement (the "Statement of Working Capital")
setting forth the Working Capital as of the Closing (the "Closing Working
Capital").
(iii) Subject to Section 2.3(b)(iv) hereof, within forty-five
(45) calendar days following delivery of the Statement of Working Capital
pursuant to Section 2.3(b)(ii) hereof, (A) the Seller shall pay to the Purchaser
the amount of any negative Closing Working Capital reflected in the Statement of
Working Capital, or (B) the Purchaser shall pay to the Seller the amount of any
positive Closing Working Capital reflected in the Statement of Working Capital.
Any and all payments made pursuant to this Section 2.3(b)(iii) 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 made pursuant to this Section
2.3(b)(iii) shall be deemed to be an adjustment to the Purchase Price.
11
12
(iv) If the Purchaser disagrees in good faith with the
Statement of Working Capital, then the Purchaser shall notify the Seller in
writing (the "Notice of Disagreement") of such disagreement within forty-five
(45) calendar days following delivery of the Statement of Working Capital. The
Notice of Disagreement shall set forth in reasonable detail the basis for the
disagreement described therein. Thereafter, the Seller and the Purchaser shall
attempt in good faith to resolve and finally determine the amount of the Closing
Working Capital. If the Seller and the Purchaser are unable to resolve the
disagreement within thirty (30) calendar days following delivery of the Notice
of Disagreement, then the Seller and the Purchaser shall select a mutually
acceptable, nationally recognized independent accounting firm that does not then
have a relationship with the Seller or the Purchaser, or either of their
respective Affiliates (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 Seller 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 Seller
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 Notice of Disagreement, and the recalculation, if any, of the
Statement of Working Capital in light of such resolution. If an Independent
Accountant is engaged pursuant to this Section 2.3(b)(iv), the fees and expenses
of the Independent Accountant shall be borne equally by the Seller and the
Purchaser. Within ten (10) calendar days after delivery of a notice of
determination by the Independent Accountant as described above, any payment
required by Section 2.3(b)(iii) hereof shall be made, based on such
determination.
(c) Allocation of Purchase Price. For all purposes (including Tax
and financial accounting purposes), (i) the portion of the Purchase Price
attributable to those Purchased Assets which are current assets (as
characterized in accordance with GAAP applied in a manner consistent with the
preparation of the Financial Statements) shall be allocated in a manner
consistent with the determination of the Closing Working Capital, and (ii) the
portion of the Purchase Price attributable to those Purchased Assets which are
fixed assets (as characterized in accordance with GAAP applied in a manner
consistent with the preparation of the Financial Statements) shall be allocated
$500,000 to land, $2,000,000 to buildings and $5,000,000 to machinery and
equipment (including, without limitation, computer and other office equipment,
furniture and vehicles). With respect to the portion of the Purchase Price
attributable to those Purchased Assets which are other assets (as characterized
in accordance with GAAP applied in a manner consistent with the preparation of
the Financial Statements), the parties shall, as promptly as practicable
following the execution hereof, enter into good-faith negotiations regarding a
mutually agreeable allocation of such portion of the Purchase Price. In the
event that the parties are unable to agree by November 15, 1999 on an allocation
of the portion of the Purchase Price attributable to the other assets which are
Purchased Assets, then the parties agree to rely on an appraisal of the other
assets which are Purchased Assets by a mutually acceptable independent
nationally recognized firm of newspaper valuation experts. The cost of such
appraisal shall be borne equally by the parties, shall be obtained no later than
December 15, 1999, and shall be conclusive and binding on the parties for
purposes of this Section 2.3(c). Notwithstanding any other provision hereof, the
allocation of the Purchase Price pursuant to this Section 2.3(c) shall be
consistent with Section 1060 of the Internal Revenue Code. The
12
13
Purchaser and the Seller (i) shall execute and file all Tax Returns and prepare
all financial statements, returns and other instruments in a manner consistent
with the allocation determined pursuant to this Section 2.3(c), (ii) shall not
take any position before any Governmental Authority or in any judicial
proceeding that is inconsistent with such allocation, and (iii) shall cooperate
with each other in a timely filing, consistent with such allocation, of Form
8594 with the IRS. In the event that any Governmental Authority makes or
proposes to either party hereto an allocation of the Purchase Price which
differs from that agreed upon by the parties pursuant to this Section 2.3(c),
the other party hereto shall reasonably cooperate with the contesting party in
contesting the Governmental Authority's determination.
2.4 Further Assurances. At and after the Closing, and without further
consideration therefor, (i) the Seller shall execute and deliver to the
Purchaser such further instruments and certificates of conveyance and transfer
as the Purchaser may reasonably request in order to more effectively convey and
transfer the Purchased Assets to the Purchaser and to put the Purchaser in
operational control of the Business, or for aiding, assisting, collecting and
reducing to possession any of the Purchased Assets and exercising rights with
respect thereto, and (ii) the Purchaser shall execute and deliver to the Seller
such further instruments and certificates of assumption, novation and release as
the Seller may reasonably request in order to effectively make the Purchaser
responsible for all Assumed Liabilities and, to the extent not inconsistent with
this Agreement, release the Seller therefrom to the fullest extent permitted
under applicable Law.
2.5 Nontransferable Business Contracts and Business Licenses. To the
extent that transfer or assignment hereunder by the Seller to the Purchaser of
any Business Contract or Business License is not permitted or is not permitted
without the consent of another Person (each such Business Contract and Business
License that is a Material Business Contract and Material Business License being
set forth in Schedule 2.5 hereto), this Agreement shall not be deemed to
constitute an undertaking to assign the same if such consent is not given or if
such an undertaking otherwise would constitute a breach thereof or cause a loss
of benefits thereunder. The Seller shall use all commercially reasonable efforts
to obtain any and all such third party consents under all Material Business
Contracts and Material Business Licenses; provided, however, that the Seller
shall not be required to pay or incur any cost or expense to obtain any third
party consent that the Seller is not otherwise required to pay or incur in
accordance with the terms of the applicable Material Business Contract or
Material Business License. If any such third party consent is not obtained
before the Closing, the Seller shall cooperate with the Purchaser in any
reasonable arrangement designed to provide to the Purchaser after the Closing
the benefits under the applicable Business Contract or Business License.
ARTICLE III.
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.,
California time, on the later of (i) January 5, 2000, or (ii) a date to be
designated by the Seller and the Purchaser, which date shall be no later than
the second (2nd) Business Day after satisfaction and fulfillment or, if
permissible
13
14
pursuant to the terms hereof, waiver of the conditions set forth in
Article VII hereof (the "Closing Date"), at the offices of Xxxxxx & Xxxxxxx, 000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, unless another
time, date or place is mutually agreed upon in writing by the Seller and the
Purchaser.
3.2 Closing Deliveries of the Seller. At the Closing, the Seller shall
deliver, or cause to be delivered, to the Purchaser the following instruments,
certificates and other documents, dated as of the Closing Date and executed on
behalf of the Seller by a duly authorized officer thereof, in order to effect
the transfer of the Purchased Assets to the Purchaser pursuant to Section 2.1
hereof:
(a) Instruments of Transfer and Assignment.
(i) A grant deed or deeds, as the case may be, in substantially
the form attached hereto as Exhibit A (the "Grant Deeds"), conveying good and
marketable fee simple title to all of the Owned Real Property, free and clear of
all Encumbrances other than Permitted Encumbrances, together with appropriate
certificates of occupancy, to the extent applicable, with respect to the Owned
Real Property (it being expressly acknowledged and agreed that the Seller and
the Purchaser shall share equally in the cost of obtaining policies insuring
title to the Owned Real Property for the benefit of the Purchaser);
(ii) a Xxxx of Sale substantially in the form attached hereto
as Exhibit B (the "Xxxx of Sale") conveying good title, free and clear of all
Encumbrances other than Permitted Encumbrances, to the tangible personal
property set forth on Schedule A to the Xxxx of Sale;
(iii) an Instrument of Assignment and Assumption substantially
in the form attached hereto as Exhibit C (the "Assignment and Assumption");
(iv) an Assignment of Proprietary Rights substantially in the
form attached hereto as Exhibit D (the "Assignment of Proprietary Rights");
(v) copies of all instruments, certificates, documents and
other filings (if applicable) necessary to release the Purchased Assets from all
Encumbrances other than Permitted Encumbrances and those Encumbrances set forth
in Schedule 4.5(b) hereto, all in a form reasonably satisfactory to counsel for
the Purchaser;
(vi) copies of all requisite Licenses, waivers, consents,
approvals, authorizations, qualifications and other orders of any Governmental
Authorities with competent jurisdiction over the transactions contemplated
hereby to be obtained by the Seller which are necessary to effect the valid
transfer and assignment of the Purchased Assets to the Purchaser pursuant to
this Agreement and to otherwise consummate the transactions contemplated hereby,
and those consents, approvals or waivers from third parties (i) under Business
Contracts and Business Licenses that are obtained prior to Closing, (ii) as set
forth under subsections (i) and (ii) of Schedule 4.3 hereto, and (iii) which are
necessary to effect the valid transfer and assignment of the Purchased Assets
(but other than consents, approvals or waivers under Business Contracts
14
15
and Business Licenses) to the Purchaser pursuant to this Agreement and to
otherwise consummate the transactions contemplated hereby; and
(vii) all other instruments and certificates of conveyance and
transfer as the Purchaser may reasonably request in order to more effectively
convey and transfer the Purchased Assets to the Purchaser and to put the
Purchaser in operational control of the Business, or for aiding, assisting,
collecting and reducing to possession any of the Purchased Assets and exercising
rights with respect thereto.
(b) Closing Certificates and Other Documents.
(i) An officer's certificate substantially in the form attached
hereto as Exhibit E;
(ii) a secretary's certificate substantially in the form
attached hereto as Exhibit F;
(iii) a certificate of the Seller certifying as to its
non-foreign status which complies with the requirements of Section 1445 of the
Internal Revenue Code;
(iv) waivers, in form and substance reasonably satisfactory to
the Purchaser, duly executed by each of the lenders described in Schedule 4.3
hereto pursuant to which each such lender (x) consents to the performance of the
Seller's obligations hereunder and the consummation of the transactions
contemplated hereby, and (y) waives any conflict with, breach or other violation
of, either of the agreements set forth in Schedule 4.3 hereto which may result
from the performance of the Seller's obligations hereunder or the consummation
of the transactions contemplated hereby; and
(v) any other documents and instruments relating to the
existence of the Seller, and the authority of the Seller to enter into and
perform its obligations under this Agreement and consummate the transactions
contemplated hereby reasonably requested by the Purchaser, all in form and
substance reasonably satisfactory to the Purchaser.
(c) Legal Opinions.
(i) A legal opinion of Xxxxxx & Xxxxxxx, outside counsel for
the Seller, substantially in the form attached hereto as Exhibit G; and
(ii) a legal opinion of W. Xxxxxx Xxxxxx, general counsel of
the Seller, substantially in the form attached hereto as Exhibit H.
3.3 Closing Deliveries of the Purchaser. At the Closing, the Purchaser
shall deliver, or cause to be delivered, to the Seller the following
instruments, certificates and other documents, dated as of the Closing Date and
executed or acknowledged (as applicable) on behalf of the Purchaser by a duly
authorized officer thereof, in order to pay for the Purchased Assets
15
16
and effect the assumption of all Assumed Liabilities from the Seller pursuant
to Section 2.2 hereof:
(a) Cash Payment. An amount in cash equal to the Cash Payment,
which shall be made by wire transfer of immediately available funds to an
account designated in writing by the Seller at least two (2) Business Days prior
to the Closing Date.
(b) Instruments of Assumption.
(i) The Xxxx of Sale;
(ii) the Assignment and Assumption;
(iii) the Assignment of Proprietary Rights; and
(iv) all other instruments and certificates of assumption,
novation and release as the Seller may reasonably request in order to
effectively make the Purchaser responsible for all Assumed Liabilities and, to
the extent not inconsistent with this Agreement, release the Seller therefrom to
the fullest extent permitted under applicable Law.
(c) Closing Certificates and Other Documents.
(i) An officer's certificate substantially in the form attached
hereto as Exhibit I;
(ii) a secretary's certificate substantially in the form
attached hereto as Exhibit J; and
(iii) any other documents and instruments relating to the
existence of Purchaser, and the authority of the Purchaser to enter into and
perform its obligations under this Agreement and consummate the transactions
contemplated hereby reasonably requested by the Seller, all in form and
substance reasonably satisfactory to the Seller.
(d) Legal Opinion. A legal opinion of Fulbright & Xxxxxxxx, LLP
outside counsel for the Purchaser, substantially in the form attached hereto as
Exhibit K.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
4.1 Organization. The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, 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 the Business as
presently conducted by the Seller. The Seller is duly authorized, qualified or
licensed to do business as a foreign corporation, and is in good standing, under
the
16
17
Laws of each state or other jurisdiction in which the character of its
properties owned, operated or leased, or the nature of its activities, makes
such qualification or licensing necessary, except in those states and
jurisdictions where the failure to be so qualified or in good standing would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. True and complete copies of the Articles of Incorporation (the
"Seller Articles of Incorporation") and Bylaws (the "Seller Bylaws") of the
Seller, each as amended and in effect as of the date of this Agreement, have
been made available to the Purchaser and its agents and representatives.
4.2 Authority. The Seller has all requisite corporate power and
authority to enter into and deliver this Agreement and the Seller Documents, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by the
Seller of this Agreement and the Seller Documents, the performance by the Seller
of its obligations hereunder and thereunder, and the consummation by the Seller
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary corporate action on the part of the Seller. This Agreement has
been duly executed and delivered by the Seller and, assuming the due
authorization, execution and delivery of this Agreement by the Purchaser, this
Agreement constitutes a legally valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
enforceability may be limited by principles of public policy, 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, without limitation, 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). Upon the execution and delivery
of the Seller Documents by the Seller at the Closing and, assuming the due
authorization, execution and delivery of the Assignment and Assumption by the
Purchaser, each of the Seller Documents will constitute a legally valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its respective terms, except as such enforceability may be limited by
principles of public policy, 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, without limitation, 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).
4.3 No Violation; Third Party Consents. 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 4.3 hereto, the
execution and delivery by the Seller of this Agreement and the Seller Documents,
the performance by the Seller of its obligations hereunder and thereunder, and
the consummation by the Seller 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
17
18
termination, amendment, modification, acceleration or cancellation of any
material obligation or loss of any material benefit under, result in the
creation of any Encumbrance other than a Permitted Encumbrance on any of the
Purchased Assets pursuant to, or require the Seller to obtain any consent,
waiver, approval or action of, make any filing with, or give any notice to any
Person as a result or under, the terms and provisions of (i) the Seller Articles
of Incorporation or the Seller Bylaws, (ii) any material Contract to which the
Seller is a party or by which any of the Purchased Assets is bound, or (iii) any
Law applicable to the Seller or any of the Purchased Assets, or any Governmental
Order issued by a Governmental Authority by which the Seller or any of the
Purchased Assets is in any way bound or obligated, except, in the case of
clauses (ii) and (iii) of this Section 4.3, as would not, individually or in the
aggregate, have a Material Adverse Effect.
4.4 Government Consents. No 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 Seller in
connection with the execution and delivery by the Seller of this Agreement and
the Seller Documents, the performance by the Seller of its obligations hereunder
and thereunder, and the consummation by the Seller of the transactions
contemplated hereby and thereby, including, without limitation, the sale and
transfer of the Purchased Assets and transferable Business Licenses to the
Purchaser, except (i) as set forth in Schedule 4.4 hereto, and (ii) where the
failure to obtain such consent, waiver, approval, order or authorization, or to
make such registration, qualification, designation, declaration or filing, would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
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 the Seller
primarily to conduct the operations of the Business: (i) each parcel of real
property owned, as of the date hereof, by the Seller ("Owned Real Property"),
(ii) each parcel of real property leased from or to a third party, as of the
date hereof, by the Seller ("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) all fixed assets
owned or leased by the Seller, as reflected in the Seller's schedule of fixed
assets prepared in the ordinary course of business as of the date set forth
therein. Except as set forth in Schedule 4.5(a) hereto, the Seller 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 Business. All of the tangible assets and
properties used by the Seller pursuant to a lease or license included among the
Purchased Assets shall be referred to herein, collectively, as "Leased Assets."
(b) The Seller has good and marketable fee simple title to all of
the Owned Real Property, free and clear of all Encumbrances other than Permitted
Encumbrances and those Encumbrances set forth on Schedule 4.5(b) hereto. The
Seller has good title to all of the tangible personal Purchased Assets purported
to be owned by the Seller, free and clear of all Encumbrances other than
Permitted Encumbrances and those Encumbrances set forth on Schedule 4.5(b)
hereto.
18
19
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 the Seller as of the date
hereof, to the extent such Intellectual Property is related primarily to the
operations of the Business. 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) Except as set forth on Schedule 4.6(b) hereto, the Seller owns
or has a valid right to use all Proprietary Rights used by the Seller to conduct
the operations of the Business as currently conducted by the Seller (including,
without limitation, the Intellectual Property set forth in Schedule 4.6(a)
hereto) without infringing upon the rights of any other Person, except as would
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect. To the knowledge of the Seller, no other Person is infringing
upon the rights of the Seller in or to any of the Intellectual Property set
forth in Schedule 4.6(a) hereto, except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
4.7 Business Contracts.
(a) Schedule 4.7(a) hereto contains a list of each Business
Contract (whether written or oral and including all amendments thereto) to which
the Seller is a party or by which the Seller or any of the Purchased Assets is
bound as of the date hereof, which is material to the Business, the Purchased
Assets or the Assumed Liabilities (each, a "Material Business Contract" and,
collectively, the "Material Business Contracts"), including, without limitation,
the following: (i) leases relating to all Leased Real Property; (ii) capital or
operating leases or conditional sales agreements relating to any Purchased
Assets (other than Short Term Agreements), in each case involving monthly
payments in excess of $5,000; (iii) noncompetition or other agreements
restricting the ability of the Seller to engage in the Business in any location;
(iv) employment, consulting, separation, collective bargaining or other labor
agreements; and (v) agreements under which the Seller is obligated to indemnify,
or entitled to indemnification from, any other Person, other than any agreement
that requires indemnification solely in connection with or as a result of a
breach of such agreement. For purposes of this Agreement, any Short Term
Agreement or any Business Contract to which the Seller is a party and which
obligates the Seller to pay less than $100,000 in annual payments shall be
deemed not to be a Material Business Contract, and any Business Contract (other
than Short Term Agreements) to which the Seller is a party and which obligates
the Seller to pay more than $100,000 in annual payments shall be deemed to be a
Material Business Contract. 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 the Seller upon ninety (90) days or
less notice without penalty.
(b) The Seller has made available to the Purchaser and its agents
and representatives a copy of each written Material Business Contract and a
written summary of each
19
20
oral Material Business Contract. Except as set forth in Schedule 4.7(b) hereto,
(i) each Material Business Contract is in full force and effect and represents a
valid, binding and enforceable obligation of the Seller in accordance with the
respective terms thereof and, to the knowledge of the Seller, 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 the Seller or, to the knowledge of the Seller,
on the part of any other party under any Material Business Contract, in any case
which has had or could reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
4.8 Business Licenses. The Seller owns or possesses all right, title
and interest in and to all Licenses which are necessary to conduct the Business
as conducted by the Seller as of the date hereof, except for such Licenses which
the failure to obtain or possess would not, individually or in the aggregate,
have a Material Adverse Effect (each, a "Material Business License" and,
collectively, the "Material Business Licenses"). Schedule 4.8 hereto contains a
list of all Material Business Licenses in effect as of the date hereof. No loss
or expiration of any Material Business License is pending or, to the knowledge
of the Seller, threatened, other than the expiration of any Material Business
Licenses in accordance with the terms thereof which may be renewed in the
ordinary course of business.
4.9 Business Employees. Schedule 4.9 hereto contains a true, correct
and complete list of all employees of the Seller who, as of the date of this
Agreement, have employment duties principally related to the Business, including
(and designating as such) any such employee who is an inactive employee on paid
or unpaid leave of absence, and indicating date of employment, current title and
compensation. Each employee set forth in Schedule 4.9 hereto who remains
employed by the Seller immediately prior to the Closing (whether actively or
inactively), and each additional employee who is hired to work primarily in the
Business following the date hereof and prior to the Closing who remains employed
by the Seller immediately prior to the Closing (whether actively or inactively),
shall be referred to herein individually as a "Business Employee" and,
collectively, as "Business Employees."
4.10 Tax Matters.
(a) With respect to Taxes, other than Income Taxes, relating to the
Business, (i) the Seller has filed all material Tax Returns which it has been
required to file (taking into account all extensions) through and including the
date hereof, and all such Tax Returns were properly and accurately compiled and
completed, fairly presented the information purported to be shown therein and
correctly reflected all of the Seller's Liabilities for Taxes for the periods
covered by such Tax Returns in all material respects, (ii) all material Taxes
owed by the Seller (whether or not shown on any Tax Return) have been fully and
timely paid and (iii) except as set forth in Schedule 4.10 hereto, there is not
currently pending any dispute or claim concerning any Tax Liability of the
Seller either claimed or raised by any Governmental Authority in writing or of
which the Seller has knowledge. There are no liens on any of the Purchased
Assets which arose in connection with any failure (or alleged failure) by the
Seller to pay any Taxes, other than Taxes which are not yet due and payable or
which are being contested in good faith through
20
21
appropriate proceedings and for which adequate reserves are reflected on the
Latest Balance Sheet.
(b) The Seller has made available to the Purchaser correct and
complete copies of all Tax Returns (other than Income Tax Returns) related to
the Business filed by, and all examination reports and statements of
deficiencies in Taxes (other than Income Taxes) related to the Business assessed
against or agreed to by, the Seller since January 1, 1994. Except as otherwise
set forth in Schedule 4.10 hereto, the Seller has not waived any statute of
limitations in respect of the assessment and collection of Taxes (other than
Income Taxes) or agreed to any extension of time with respect to a Tax (other
than Income Tax) assessment or deficiency. The Seller is not currently the
beneficiary of any extension of time within which to file any Tax (other than an
Income Tax) Return.
4.11 Employee Benefit Plans.
(a) Schedule 4.11(a) hereto contains a true, correct and complete
list of each employment, bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, equity (or equity-based),
leave of absence, layoff, vacation, day or dependent care, legal services,
cafeteria, life, health, medical, accident, disability, workmen's compensation
or other insurance, severance, separation, termination, change of control or
other benefit plan, agreement (including any collective bargaining agreement),
practice, policy or arrangement, whether written or oral, and whether or not
subject to ERISA (including, without limitation, any "employee benefit plan"
within the meaning of Section 3(3) of ERISA), which the Seller sponsors,
maintains, has any obligation to contribute to, has Liability under or is
otherwise a party to as of the date hereof, and which covers or otherwise
provides benefits to any Business Employees or former Business Employees (or
their dependents and beneficiaries) (with respect to their relationship with the
Business) (each, a "Benefit Plan" and, collectively, the "Benefit Plans").
(b) Except as set forth in Schedule 4.11(b) hereto:
(i) each of the Assumed Plans, the Seller 401(k) Plan and the
Seller DB Plan presently complies and has been operated in compliance in all
material respects with its terms and all applicable Laws, including, without
limitation, all tax rules for which favorable tax treatment is intended;
(ii) each of the Assumed Plans, the Seller 401(k) Plan and the
Seller DB Plan which is intended to be tax-qualified under Section 401(a) of the
Internal Revenue Code has been determined by the IRS to be so qualified and, to
the knowledge of the Seller, no circumstances have occurred that would adversely
affect the tax-qualified status of any such Assumed Plan;
(iii) with respect to each of the Assumed Plans, the Seller
401(k) Plan and the Seller DB Plan, true, correct, and complete copies of the
applicable following documents have been made available to the Purchaser and its
agents and representatives: (A) all current plan documents and related trust
documents, and any amendments thereto; (B) Forms 5500, financial
21
22
statements, and actuarial reports for the most recent plan year; (D) the most
recently issued IRS determination letter; and (d) summary plan descriptions; and
(iv) neither the Seller, nor any entity required to be
aggregated with the Seller or any Subsidiary thereof (as defined under Sections
414(b), 414(c), 414(m) or 414(o) of the Internal Revenue Code or Section 4001 of
ERISA) has incurred any withdrawal liability that has not been satisfied with
respect to any "multiemployer plan" (as defined in Section 3(37) of ERISA).
(c) Except as set forth in Schedule 4.11(c) hereto, the execution
and delivery by the Seller of this Agreement and the Seller Documents, the
performance by the Seller of its obligations hereunder and thereunder, and the
consummation by the Seller of the transactions contemplated hereby and thereby,
does not and will not result in the acceleration or creation of any rights or
benefits of any current or former Business Employee (or other current or former
service provider to the Business) that would not have been required but for the
transactions contemplated by this Agreement.
4.12 Sufficiency of Purchased Assets.
(a) The Purchased Assets (including the licenses or leasehold
interests in or relating to the Leased Assets) constitute all of the assets,
properties and rights necessary for the conduct of the Business by the Seller in
a manner consistent with past practice.
(b) The Owned Real Property and tangible personal property
included in the Purchased Assets or the Leased Assets are in good condition and
repair (ordinary wear and tear excepted) for property of comparable type, age
and usage, except for tangible personal property that is obsolete and no longer
used in the Business.
4.13 Financial Statements.
(a) Attached to Schedule 4.13(a) hereto is a true, correct and
complete copy of the following financial statements (collectively, the
"Financial Statements"): (i) the unaudited statement of assets and liabilities
of the Business (the "Latest Balance Sheet") as of July 31, 1999 (the "Latest
Balance Sheet Date"), and the related unaudited statements of revenues and
expenses for the seven (7) month period then ended, and (ii) the unaudited
statement of assets and liabilities of the Business as of December 31, 1998, and
the related unaudited statements of revenues and expenses for the year then
ended. Each of the Financial Statements is derived from the books and records of
the Seller (which are accurate and complete in all material respects) and the
audited consolidated financial statements of the Seller (which were prepared in
accordance with GAAP), and fairly present, in all material respects, the assets
and the Liabilities of the Seller that primarily relate to, or primarily arise
out of, the Business as of the respective dates thereof, and the results of
operations of the Business for the respective periods then ended.
(b) Except as set forth in Schedule 4.13(b) hereto, no reserves
or other Liabilities attributable to the Business were recorded in the
consolidated financial statements of
22
23
the Seller as of July 31, 1999 and December 31, 1998, respectively, that are
not reflected in the Financial Statements.
4.14 No Undisclosed Liabilities. The Seller has no Liabilities that are
attributable to the Business other than (i) the Liabilities reflected on the
Latest Balance Sheet, (ii) Liabilities incurred in the ordinary course of
business and consistent with past practices after the Latest Balance Sheet Date,
none of which is material to the assets, properties, business, results of
operations or condition (financial or otherwise) of the Business, (iii)
Liabilities set forth in Schedule 4.14 hereto, and (iv) Liabilities that have
not had and would not reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect.
4.15 Subsidiaries and Investments. The Seller does not have any
Subsidiaries, and does not own any direct or indirect equity or debt interest in
any other Person, including, without limitation, any interest in a corporation,
partnership or joint venture, and is not obligated or committed to acquire any
such interest, in any case which Subsidiary, interest or other Person relates
primarily to the Business.
4.16 Litigation; Governmental Orders.
(a) Except as set forth in Schedule 4.16 hereto, as of the date
hereof, there are no pending or, to the knowledge of the Seller, threatened
Actions by any Person or Governmental Authority against or relating to the
Seller with respect to the Business or any Assumed Plan or, to the knowledge of
the Seller, any current or former employees (in their capacity as such) of the
Seller, or to which any of the Purchased Assets are subject, other than those
which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect.
(b) The Seller is not subject to or bound by any Governmental Order
other than those which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
4.17 Compliance with Laws. Except as set forth in Schedule 4.17 hereto,
to the knowledge of the Seller, the Seller is in compliance with, and the Seller
has never received any claim or notice that it is not in compliance with, each
Law or Governmental Order applicable to the Business, except as would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
4.18 Environmental Matters. Except as would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect, (i) no
Hazardous Material is present at any of the Owned Real Property or Leased Real
Property in violation of any applicable Environmental Law, (ii) during the
course of its operation of the Business, the Seller has not engaged in any
Hazardous Materials Activity in violation of any applicable Environmental Law,
(iii) as of the date hereof, no Action is pending or, to the knowledge of the
Seller, has been threatened in writing against the Seller concerning any of the
Owned Real Property or Leased Real Property, or any of the Hazardous Materials
Activities of the Seller taken during the course of its operation of the
Business, (iv) the Seller has operated the Business
23
24
in compliance with all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations of Environmental Laws and
related Governmental Orders, and (v) all Licenses, permits, consents, or other
approvals required under Environmental Laws that are necessary to the operation
of the Business have been obtained and are in full force and effect.
4.19 Insurance.
(a) Schedule 4.19 hereto contains a true, correct and complete list
(specifying the insurer, the policy number or covering note number with respect
to binders and the limits, and the aggregate limit, if any, of the insurer's
liability thereunder) of all policies or binders of fire, liability, errors and
omissions, workers' compensation, vehicular, and other insurance held by or on
behalf of the Seller with respect to the Business as of the date hereof
("Business Insurance Policies").
(b) All of the Business Insurance Policies are in full force and
effect. The Seller is not in default with respect to any material provision
contained in any such Business Insurance Policy, nor has the Seller failed to
give any notice or present any claim under any such Business Insurance Policy in
due and timely fashion. The Seller has not received any notice of cancellation
or non-renewal of any such Business Insurance Policy. The Seller has not
received any notice from any of its insurance carriers that any premiums will be
materially increased in the future or that any insurance coverage under the
Business Insurance Policies will not be available in the future on substantially
the same terms as now in effect.
(c) All of the Business Insurance Policies in the name of the
Seller with respect to libel (all of which are identified on Schedule 4.19) will
be in full force and effect, and enforceable by the Purchaser, following the
consummation of the transactions contemplated by this Agreement in respect of
all reported or unreported libel claims arising out of occurrences prior to the
Closing.
(d) Seller will maintain all of the Business Insurance Policies set
forth on Schedule 4.19 hereto, and the workers' compensation insurance policy
referenced in Section 2.2(b)(vii) hereof, in full force and effect through and
including the Closing Date in respect of all matters occurring prior to the
Closing.
4.20 Transactions with Affiliates. Except as set forth in Schedule 4.20
hereto, since January 1, 1999, no shareholder, officer, director or employee of
the Seller or any of its Affiliates, or any immediate family member of any of
the foregoing, has (a) borrowed money from, or loaned money to, the Business
which remains outstanding, (b) except as set forth in Schedule 4.11(a) hereto,
any contractual or other claim, express or implied, of any kind whatsoever
against the Business, (c) any interest in any of the Purchased Assets, or (d)
engaged in any other transaction with the Business other than in such person's
capacity as an employee, officer or director of the Seller.
4.21 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Seller directly
with the Purchaser without the intervention of any Person on behalf of the
Seller in such manner as to give rise to any valid
24
25
claim by any Person against the Purchaser for a finder's fee, brokerage
commission or similar payment, other than Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, whose fees and expenses shall be borne by the Seller.
4.22 Absence of Certain Changes. Except as contemplated by, or
disclosed in, this Agreement, since July 31, 1999, there has been no change or
effect in the assets, properties, operations, liabilities, business, condition
(financial or otherwise) or results of operations of the Business, that has had
or would reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
4.23 Year 2000. The Seller has made available to the Purchaser and its
agents and representatives disclosure regarding the Business's state of
readiness, remediation plans and related expenditures relating to what is
commonly referred to as the "Year 2000 problem," and such disclosure is true,
correct and complete in all material respects.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
5.1 Organization. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation.
5.2 Authority. The Purchaser has all requisite corporate power and
authority to enter into and deliver this Agreement and the Assignment and
Assumption, 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 Assignment and Assumption,
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 duly executed and delivered by
the Purchaser and, assuming the due authorization, execution and delivery of
this Agreement by the Seller, this Agreement constitutes a legally valid and
binding obligation of the Purchaser, enforceable against the Purchaser in
accordance with its terms, except as such enforceability may be limited by
principles of public policy, 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, without limitation, 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). Upon the execution and delivery of the Assignment and
Assumption by the Purchaser at the Closing and, assuming the due authorization,
execution and delivery thereof by the Seller, the Assignment and Assumption will
constitute a legally valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such
enforceability may be limited by principles of public policy, and subject to (i)
the effect of any applicable Laws of general
25
26
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,
without limitation, 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 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 5.3 hereto, the execution and delivery
by the Purchaser of this Agreement and the Assignment and Assumption, 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 Encumbrance other than a Permitted Encumbrance on any of assets
or properties of the Purchaser pursuant to, or require the Purchaser to obtain
any consent, waiver, approval or action 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 Assignment and Assumption or to
consummate the transactions contemplated hereby or thereby.
5.4 Governmental Consents. No 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 Assignment and Assumption, the performance by the Purchaser of its
obligations hereunder and thereunder, and the consummation by the Purchaser of
the transactions contemplated hereby and thereby, including, without limitation,
the assumption of the Assumed Liabilities from the Seller, except (i) as set
forth in Schedule 4.4 hereto, and (ii) where the failure to obtain such consent,
waiver, approval, order or authorization, or to make such registration,
qualification, designation, declaration or filing, would not have a material
adverse effect on the ability of the Purchaser to perform its obligations under
this Agreement and the Assignment and Assumption or to consummate the
transactions contemplated hereby or thereby.
5.5 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by the Purchaser directly
with the Seller without the intervention of any Person on behalf of the
Purchaser in such manner as to give rise to any valid
26
27
claim by any Person against the Seller for a finder's fee, brokerage commission
or similar payment.
ARTICLE VI.
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 8.1 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,
the Seller shall (i) conduct the operations of the Business in the ordinary
course of business and consistent with past practices, (ii) use commercially
reasonable efforts to preserve intact the goodwill of the Business and the
current relationships of the Seller with its officers, employees, customers,
advertisers, suppliers and others with significant and recurring business
dealings with the Business, (iii) use commercially reasonable efforts to
maintain all Business Insurance Policies and all Business Licenses that are
necessary for the Seller to carry on the Business in the manner conducted by the
Seller as of the date hereof, (iv) maintain the books of account and records of
the Business 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 or
inaccuracy in (in each case as of the Closing) any of the representations and
warranties of the Seller contained in Article IV 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 8.1 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,
the Seller shall not agree to, take, or cause to be taken, any of the following
actions to the extent such actions relate primarily to the Business:
(i) merge with or into, or consolidate with, any other Person;
provided, however, that nothing in this Section 6.1(b)(i) shall prohibit or
otherwise restrain the Seller from entering into an agreement with another
Person to merge with or into, or consolidate with, such Person (hereinafter, a
"Third Party Agreement") as long as (A) neither the Business nor the Purchased
Assets, in whole or in part, are transferred pursuant to such Third Party
Agreement, and (B) such Third Party Agreement does not prevent or interfere with
the consummation of the transactions contemplated hereby.
(ii) change or agree to rearrange in any material respect the
character of the Business;
(iii) (A) except as set forth on Schedule 6.9(b) hereto, adopt,
enter into or amend any arrangement which is, or would be, an Assumed Plan
unless otherwise required by
27
28
applicable Law or this Agreement, or (B) make any change in any actuarial
methods or assumptions used in funding any Assumed Plan or in the assumptions or
factors used in determining benefit equivalences thereunder;
(iv) knowingly waive any right of material value;
(v) make any change in the accounting methods or practices of
the Seller, or make any changes in depreciation or amortization policies or
rates adopted by the Seller;
(vi) make any material write down of inventory or material
write off as uncollectible of accounts receivable;
(vii) increase any wage, salary, bonus or other direct or
indirect compensation payable or to become payable to any of the Business
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 made in the ordinary course of business consistent with past
practice, and those required by any existing Contract or Law;
(viii) enter into any transactions with any of its
shareholders, officers, directors or employees or their immediate family
members, or any Affiliate of any of the foregoing, other than employment
arrangements made in the ordinary course of business consistent with past
practice;
(ix) except as set forth on Schedule 6.9(b) hereto, make any
payment or commitment to pay any severance or termination pay to any Business
Employee or any independent contractor, consultant, agent or other
representative of the Business, other than payments or commitments to pay such
Business Employees in the ordinary course of business consistent with past
practice;
(x) (A) other than office leases entered into in the ordinary
course of business, enter into any real property lease (as lessor or lessee);
(B) sell, abandon or make any other disposition of any of the assets or
properties of the Seller other than in the ordinary course of business
consistent with past practice; or (C) grant or incur any Encumbrance on any of
the assets or properties of the Seller other than Permitted Encumbrances;
(xi) except in the ordinary course of business and consistent
with past practices and except for Excluded Liabilities, incur or assume any
debt, obligation or Liability;
(xii) 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;
(xiii) pay, directly or indirectly, any of its Liabilities
before the same become due in accordance with its terms or otherwise than in the
ordinary course of business and consistent with past practices; or
28
29
(xiv) enter into any commitments to make capital expenditures
payable after the Closing in an aggregate amount exceeding $100,000; or
(xv) fail to pay and perform any of its debts, obligations and
Liabilities as and when due and any leases, agreements, Contracts and other
commitments to which it is a party in accordance with the terms and provisions
thereof.
(c) Notwithstanding anything to the contrary set forth in this
Section 6.1 or elsewhere in this Agreement, the Seller shall be permitted,
without obtaining the consent or other approval of the Purchaser, to enter into,
perform its obligations under, and consummate the transactions contemplated by,
any existing or new agreements or other arrangements pursuant to which the
Seller shall sell, transfer or otherwise dispose of any of its assets other than
the Purchased Assets, it being expressly acknowledged and agreed by each of the
parties hereto that the foregoing shall include the right to distribute the
proceeds from any such sale, transfer or other disposition to the shareholders
of the Seller without obtaining the consent or other approval of the Purchaser;
provided, however, that the performance by the Seller of its rights under this
Section 6.1(c) shall not prevent or interfere with the performance of the
Seller's obligations under this Agreement or the consummation of the
transactions contemplated hereby.
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 8.1 hereof, the Seller shall permit the
Purchaser and its authorized agents and representatives to have reasonable
access, upon reasonable notice and during normal business hours, to all Business
Employees, assets and properties and all relevant books, records and documents
of or relating to the Business and the Purchased Assets, and shall furnish to
the Purchaser such information and data, financial records and other documents
relating to the Business and the Purchased Assets as the Purchaser may
reasonably request. The Seller shall permit the Purchaser and its agents and
representatives reasonable access to the Seller'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 all commercially reasonable efforts
to cause such Persons to cooperate with the Purchaser and its agents and
representatives in such consultations and in verifying such information. Without
limiting the generality of the foregoing, the Seller (i) shall cooperate with
and permit the Purchaser or its agents or representatives, at the Purchaser's
expense, to conduct or cause to be conducted (A) a review and audit of the
financial statements of the Business for the year ended December 31, 1998 and
for the nine month period ended September 30, 1999, and (B) all real property
investigations, assessments and environmental due diligence (including, without
limitation, Phase I and Phase II environmental studies (provided, however, that
Purchaser shall not commence any Phase II study without reasonable prior
notification and good faith consultation with Seller on matters including the
timing, scope and duration of any such Phase II study) and review of appropriate
environmental records), and (ii) discuss the preparation of the year 2000 budget
for the Business with the Purchaser.
29
30
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, the consummation of the transactions contemplated
hereby, or otherwise, shall be governed by the terms set forth in the
Confidentiality Agreement; provided, however, that on and after the Closing
Date, the Purchaser and its officers, employees, agents or representatives shall
be entitled to disclose information relating to the Business.
6.4 Further Actions.
(a) Upon the terms and subject to the conditions set forth in this
Agreement (including, without limitation, the terms of Section 6.4(b) hereof),
the Seller and the Purchaser shall each use their respective commercially
reasonable best 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 party
hereto in doing, all things necessary, proper or advisable under applicable Laws
to consummate the transactions contemplated hereby, including, without
limitation: (i) obtaining all necessary 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 legal proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, 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 Seller
and the Purchaser hereby agree 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 to file any Notification and Report Form and related
material required under the HSR Act as soon as practicable after the date
hereof. The Seller and the Purchaser shall each thereafter use its respective
commercially reasonable best efforts to complete as soon as practicable its
substantial compliance with any requests for additional information or
documentary material that may be made under the HSR Act. The Purchaser and the
Seller hereby further agree to use their respective commercially reasonable best
efforts to (i) obtain any governmental clearances required for consummation of
the transactions contemplated hereby, (ii) respond to any government request for
information, (iii) 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
30
31
transactions contemplated hereby, including, without limitation, by using all
reasonable legal efforts to vigorously pursue all available avenues of
administrative and judicial appeal and all available legislative action, and
(iv) in the event that any permanent or preliminary injunction or other 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 Seller. The Seller 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 Seller or the
Purchaser to consummate the transactions contemplated hereby to fail to be
satisfied or fulfilled at or prior to the Closing, including, without
limitation, 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 Seller in Article IV hereof to fail to be true and correct as of the Closing
in all material respects. The Seller shall take, or cause to be taken, all
commercially reasonable actions within 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 Seller or the
Purchaser to consummate the transactions contemplated hereby to fail to be
satisfied or fulfilled, including, without limitation, 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 V 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 commercially reasonable actions
within its power to cause to be satisfied or fulfilled, at or prior to the
Closing, the conditions precedent to the obligations of the Seller to consummate
the transactions contemplated hereby as set forth in Section 7.2 hereof.
6.7 Publicity. The Seller 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
the Seller 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, 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 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 Seller
31
32
shall pay all transaction costs and expenses (including legal, accounting and
other professional fees and expenses and other fees described in Section 4.20
hereof) that it incurs in connection with the negotiation, execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby. Notwithstanding the foregoing and anything to the contrary
contained in this Agreement, the Seller and the Purchaser shall share equally
any transfer Taxes (including stock transfer, sales, use and deed Taxes, but
excluding Income Taxes) or refunds thereof and the fees and costs of recording
or filing all applicable conveyancing instruments associated with the transfer
of the Purchased Assets from the Seller to the Purchaser pursuant to this
Agreement. The Seller and the Purchaser shall cooperate in the preparation,
execution and filing of all Tax Returns regarding any transfer Taxes which
become payable as a result of the transfer of the Purchased Assets from the
Seller to the Purchaser pursuant to this Agreement.
6.9 Employees and Employee Benefit Matters.
(a) The Purchaser shall offer employment as of the Closing Date to
all Business Employees. As of the Closing Date, the Purchaser shall employ each
Business Employee whose employment is not covered by a collective bargaining
agreement and who accepts the Purchaser's offer of employment ("Transferred
Non-Union Employees") at a salary, on terms and conditions (and with employee
benefits (including without limitation, benefits of the type described in
Section 3(1) of ERISA)) that are substantially as favorable in the aggregate, as
those provided by the Seller (or its Affiliates) immediately before the
execution hereof. The Purchaser shall provide each Transferred Non-Union
Employee credit for years of service with the Seller or any Affiliate of the
Seller prior to the Closing for (A) the purpose of eligibility and vesting under
the Purchaser's health, vacation and other employee benefit plans (including,
without limitation, the Purchaser 401(k) Plan and the Purchaser DB Plan), and
(B) any and all pre-existing condition limitations and eligibility waiting
periods under group health plans of the Purchaser, and shall cause to be
credited to any deductible out-of-pocket expenses under any health plans of the
Purchaser any deductibles or out-of-pocket expenses incurred by Transferred
Non-Union Employees and their beneficiaries and dependents during the portion of
the calendar year prior to their participation in the health plans of the
Purchaser. Notwithstanding any other provision of this Agreement, Business
Employees that become employed by the Purchaser as of the Closing who are
covered by a collective bargaining agreement on and after the Closing
(collectively with the Transferred Non-Union Employees, the "Transferred
Employees") shall receive benefits in accordance with the terms of such
collective bargaining agreement.
(b) Effective at the Closing Date, the Purchaser shall assume the
severance arrangements set forth in Schedule 6.9(b) hereto; provided, however,
that the Purchaser shall have no liability under such severance arrangements
with respect to terminations of employment occurring before the Closing.
(c) Effective on the Closing Date, the Purchaser shall assume the
Seller's obligations, duties and Liabilities to provide benefits under, and the
Seller shall assign, all Benefit Plans (including all related assets and funding
vehicles) sponsored, established and maintained by the Seller solely for the
benefit of Business Employees as are set forth in Schedule 6.9(c) hereto (the
"Assumed Plans") and any other arrangement described in Section 6.1(b)(iii)
32
33
hereof that is adopted by the Seller before the Closing with the prior written
consent of the Purchaser. The Seller shall have no Liability with respect to the
Assumed Plans following the Closing Date.
(d) Effective as of the Closing Date, the Seller shall cause each
Business Employee to have a fully nonforfeitable right to such employee's
account balances, if any, under The Tax Deferred Investment Plan of The
Chronicle Publishing Company (the "Seller 401(k) Plan"). Effective as of the
Closing Date, the Purchaser shall establish or shall extend coverage to each
Transferred Employee under a defined contribution individual account plan (the
"Purchaser 401(k) Plan") qualified pursuant to Sections 401(a) and 401(k) of the
Internal Revenue Code to the extent the Transferred Employee has satisfied the
requirements for participation therein.
(e) As soon as practicable after the Closing Date, the Seller shall
cause the trustee of the Seller 401(k) Plan to transfer in the form of cash (or
such other form as may be agreed upon by the Seller and the Purchaser) the full
account balances of the Transferred Employees in such plan, reduced by any
necessary benefit, distribution or withdrawal payments to or in respect of
Transferred Employees occurring during the period from the Closing Date to the
date of transfer described herein, to the appropriate trustee as designated by
the Purchaser under the trust agreement forming a part of the Purchaser 401(k)
Plan. The aggregate account balances of Transferred Employees under the Seller
401(k) Plan transferred by the trustee of the Seller 401(k) Plan to the trustee
of the Purchaser 401(k) Plan shall be increased (or decreased) by the Seller by
the amount of any actual earnings (or losses) on each account included therein
from the Closing Date to the date of transfer to the Purchaser 401(k) Plan and
such earnings (or losses) shall be credited (or debited) to the appropriate
accounts. Following the transfer of account balances to the Purchaser 401(k)
Plan as described herein, neither the Seller nor the Seller 401(k) Plan and the
related trust shall have any obligation or Liability with respect to the
benefits and entitlements accrued under the Seller 401(k) Plan in respect of
Transferred Employees whose account balances are transferred to the Purchaser
401(k) Plan pursuant hereto. The Purchaser shall reasonably cooperate to
effectuate the foregoing.
(f) Not later than ninety (90) days following the date hereof (but
in no event less than thirty (30) days before the Closing Date), the Seller may
elect to transfer assets and Liabilities of The Pension Plan of The Chronicle
Publishing Company (the "Seller DB Plan") attributable to the Business Employees
and the former employees of the Business as of the Closing Date. The Seller
shall promptly notify the Purchaser of its election under this Section 6.9(f).
To the extent the Seller elects such a transfer of assets and Liabilities,
effective as of the Closing Date, the Seller shall cause the Seller DB Plan and
the trust established pursuant to the Seller DB Plan (the "Seller Trust") to
transfer to a defined benefit pension plan qualified pursuant to Section 401(a)
of the Internal Revenue Code (the "Purchaser DB Plan") and the trust established
pursuant to the Seller DB Plan (the "Purchaser Trust") maintained or sponsored
by the Purchaser, the Liabilities of the Seller DB Plan attributable to the
accrued benefits of the Business Employees and former Employees of the Business
under the Seller DB Plan as of the Closing Date, subject to the transfer of
assets from the Seller Trust to the Purchaser Trust in accordance with Section
6.9(g) hereof. The Purchaser DB Plan shall provide to each Business Employee all
of his or her benefits accrued under the Seller DB Plan as of the Closing Date.
The
33
34
accrued benefits required to be provided to Business Employees and former
employees of the Business under the Purchaser DB Plan shall be determined under
the terms of the Seller DB Plan as in effect immediately prior to the Closing
Date (provided that no improvements thereto shall be made after the date
hereof), including the terms of the early retirement benefits, retirement type
subsidies, optional forms of benefit and all other protected benefits described
in Section 204(g) of ERISA, Section 411(d)(6) of the Internal Revenue Code and
Treasury Regulation Section 1.411(d)-4. The Purchaser shall reasonably cooperate
to effectuate the foregoing.
(g) Prior to the Closing Date, the Seller shall designate the date
(the "Asset Transfer Date") on which assets of the Seller Trust shall be
transferred to the Purchaser Trust in connection with the transfer of
Liabilities pursuant to Section 6.9(f) hereof, and shall notify the Purchaser
thereof. The Asset Transfer Date shall be as soon as practicable but no later
than one (1) year following the Closing Date. Not less than one hundred and
twenty (120) days before the Asset Transfer Date, the enrolled actuary for the
Seller DB Plan, subject to review by the enrolled actuary for the Purchaser DB
Plan, shall calculate the amount of assets to be transferred from the Seller
Trust to the Purchaser Trust (the "Asset Transfer Amount") that would have been
sufficient to satisfy the requirements of Sections 401(a)(12) and 414(l) of the
Internal Revenue Code, Treasury Regulation Section 1.414(l)-1 and Section 208 of
ERISA as of the Closing Date with respect to the transfer of the Liabilities of
the Seller DB Plan attributable to the accrued benefits of the Business
Employees and former employees of the Business as of the Closing Date in
accordance with Section 6.9(f) hereof.
(h) On the Asset Transfer Date, the Seller shall cause the Seller
Trust to transfer to the Purchaser Trust, and the Purchaser shall cause the
Purchaser Trust to accept from the Seller Trust, assets in the form of cash (or
such other form as may be agreed by the Seller and the Purchaser) in an amount
equal to the Asset Transfer Amount, plus interest from the Closing Date to the
Asset Transfer Date, less benefits paid to the Business Employees by the Seller
DB Plan on or after the Closing Date with interest (such interest to be
determined using an interest rate of seven percent (7%)). In no event shall any
transfers take place which are not in accordance with all applicable laws,
including without limitation, Sections 401(a)(12) and 414(l) of the Internal
Revenue Code.
(i) The Seller shall cause the administrator of the Seller 401(k)
Plan and the administrator of the Seller DB Plan, and the Purchaser shall cause
the administrator of the Purchaser 401(k) Plan and the administrator of the
Purchaser DB Plan, to timely make such filings as are required under ERISA, the
Internal Revenue Code or any applicable Laws with respect to the transfer of
account balances, assets or Liabilities described in this Section 6.9, including
any required filings on Form 5310-A.
(j) Prior to the Closing, the Purchaser and the Seller will take
such actions as are necessary so that Section 4204 of ERISA will apply with
respect to the GCIU - Employer Retirement Fund (the "GCIU Fund") as it relates
to Business Employees or former employees of the Business and shall enter into
such further agreements, including an agreement substantially in the form set
forth on Exhibit L hereto, it being understood that any potential economic
exposure to the Purchaser is not material. Notwithstanding the foregoing, the
Purchaser and the Seller
34
35
agree to give good-faith consideration to any reasonable request made by the
other to address matters relating to the GCIU Fund by proceeding other than as
set forth in the foregoing sentence.
6.10 Interdivisional Agreements. Except as set forth in Schedule 6.10
hereto, prior to Closing, the Seller shall terminate, without any continuing
Liability to the Business resulting therefrom, all agreements between any
division of the Seller not related to the Business, on the one hand, and the
division of the Seller responsible for operating the Business, on the other
hand.
6.11 Retention of and Access to Records. From and after the Closing,
the Purchaser shall preserve, in accordance with the normal document retention
policy of the Business, all books and records transferred by the Seller to the
Purchaser pursuant to this Agreement. As soon as practicable following the
Closing, the Purchaser shall deliver to Seller or, if so requested, to the
shareholders of the Seller (through the representative designated pursuant to
Section 10.7 hereof) such financial information relating to the Business as has
been customarily provided to Seller by The Pantagraph in sufficient detail to
enable the Seller or such shareholders to prepare the Seller's financial
statements, the Statement of Working Capital and all Tax Returns of the Seller
and such shareholders 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 Seller, and its counsel, accountants and other authorized
agents and representatives, and to any shareholders of the Seller and their
respective counsel, accountants and other authorized agents and representatives,
during normal business hours and upon the execution and delivery of a
confidentiality and non-disclosure agreement in customary form and substance
(which shall include appropriate exceptions for disclosure relating to Tax
Returns and other Tax matters), reasonable access to the employees, books,
records and other data relating to the Purchased Assets, the Excluded Assets,
the Assumed Liabilities and the Excluded Liabilities in its possession 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.
6.12 Tax Matters.
(a) The Purchaser shall have the right, at its expense, to control
any audit or examination by any Governmental Authority ("Tax Audit"), initiate
any claim for refund, and contest, resolve and defend against any other
assessment, notice of deficiency or other adjustment or proposed adjustment
relating to any Liability for Taxes that is an Assumed Liability; provided,
however, that the Purchaser shall not (i) consent, without the prior written
approval of the Seller, which approval shall not be unreasonably withheld or
delayed, to any change in the treatment of an item, or (ii) initiate any claim
for a refund, in either case which could in any respect adversely affect the
Seller's Liability for Taxes which are not an Assumed Liability.
35
36
(b) The Seller and the Purchaser shall each provide the other with
such assistance as may reasonably be requested by the other in connection with
the preparation of any Tax Return, any Tax Audit or other examination by any
Governmental Authority, or any judicial or administrative proceedings relating
to Taxes, and each shall provide the other with any records or information that
may be relevant to such Tax Return, Tax Audit or examination, proceedings or
determination. Such assistance shall include making employees available on a
mutually convenient basis to provide additional information and explanation of
material provided hereunder and shall include providing copies of any relevant
Tax Returns and supporting work schedules. The party requesting assistance
hereunder shall reimburse the other for reasonable expenses incurred in
providing such assistance.
6.13 Insurance Matters.
(a) The Purchaser anticipates obtaining prior to Closing (i) a
"tail" policy to the EPLI portion of the Seller's directors' and officers'
liability insurance policy (as referenced on Schedule 4.19 hereto) if necessary
to continue in effect for the benefit of the Purchaser the coverage under such
EPLI portion of such insurance, and (ii) modifications or "nose" policies to the
Purchaser's existing liability insurance policies (other than libel (if
necessary) and workers' compensation insurance policies), each with respect to
claims relating to matters occurring prior to the Closing that have not been
reported as of the Closing Date. The Seller shall use its reasonable efforts to
assist the Purchaser in obtaining such modifications or policies, and the
Purchaser agrees to reimburse the Seller for any premiums required to be paid by
the Seller in connection therewith.
(b) The Seller and the Purchaser shall execute and deliver to each
other such further instruments and certificates and other documents as each
other may reasonably request in order to more effectively obtain the insurance
modifications or policies referenced in Section 6.13(a) hereof (including libel
and workers' compensation insurance modifications or policies).
ARTICLE VII.
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 Seller contained in
this Agreement that are not qualified as to materiality shall be true and
correct in all material respects at and as of the Closing, and all
representations and warranties of the Seller that are so qualified as to
materiality shall be true and correct in all respects at and as of the Closing,
in each case with the same effect as though such representations and warranties
were made at and as of the Closing (other than 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, provided that any
representation or warranty that is expressly made as of a specified date that is
qualified as to materiality shall be true and correct in all respects as of such
specified date only).
36
37
(b) The Seller 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) The Seller shall have delivered to the Purchaser all of the
certificates, instruments and other documents required to be delivered by the
Seller at or prior to the Closing pursuant to Section 3.2 hereof.
7.2 Conditions to Obligations of the Seller. The obligations of the
Seller 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 Seller in
writing:
(a) All representations and warranties of the Purchaser contained
in this Agreement that are not qualified as to materiality shall be true and
correct in all material respects at and as of the Closing, and all
representations and warranties of the Purchaser that are so qualified as to
materiality shall be true and correct in all respects at and as of the Closing,
in each case with the same effect as though such representations and warranties
were made at and as of the Closing (other than 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, provided that any
representation or warranty that is expressly made as of a specified date that is
qualified as to materiality shall be true and correct in all 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 Seller 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.
37
38
ARTICLE VIII.
TERMINATION
8.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated and abandoned:
(a) by either the Seller 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 breach of
this Agreement by the party seeking such termination, by either the Seller or
the Purchaser if the Closing has not occurred on or prior to 5:00 p.m.
(California time) on the date which is 120 calendar days following the date of
this Agreement (the "Termination Date"); provided, however, that the Seller in
its sole discretion may elect to extend the Termination Date until 5:00 p.m.
(California time) on a date which is not later than 180 calendar days following
the date of this Agreement by written notice to the Purchaser at least ten (10)
calendar days prior to the initial Termination Date; or
(c) by either the Seller 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 Seller nor the Purchaser may terminate this
Agreement pursuant to this Section 8.1(c) unless the party seeking to so
terminate this Agreement has used 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.
8.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 8.1 hereof, this Agreement shall become null and void and neither party
hereto shall have any further liability hereunder except that (i) the provisions
of Section 6.7 and Section 6.8 and Article VIII generally shall remain in full
force and effect, and (ii) each party hereto shall remain liable to each other
party hereto for any willful breach of its obligations under this Agreement
prior to such termination.
ARTICLE IX.
SURVIVAL AND INDEMNIFICATION
9.1 Survival. None of the representations and warranties of the Seller
and the Purchaser contained in this Agreement, or in any certificate, instrument
or other document delivered by the Seller or the Purchaser pursuant to this
Agreement or in connection with the transactions contemplated hereby, shall
survive the Closing. None of the covenants and agreements of the Seller and the
Purchaser contained in this Agreement, or in any certificate, instrument or
other document delivered by the Seller or the Purchaser pursuant to this
Agreement or in connection with the transactions contemplated hereby, shall
survive the Closing, except to the extent such covenants and agreements by their
terms contemplate performance after the Closing. No claim shall be made or
action brought by any party hereto after the Closing (i) for
38
39
the breach of, or inaccuracy in, any representation or warranties contained in
this Agreement, or in any certificate, instrument or other document delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby, or (ii) for the breach of any covenant or agreement contained in this
Agreement, or in any certificate, instrument or other document delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby, except with respect to those covenants and agreements that by their
terms contemplate performance after the Closing, including, but not limited to,
the covenants and agreements set forth in Sections 2.3(b), 2.3(c), 2.4, 2.5,
4.19(c), 6.3, 6.4(a), 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, and 6.13 hereof, Article
VIII and Article X hereof, and in this Article IX.
9.2 Indemnification By Purchaser. From and after the date hereof, the
Purchaser shall indemnify, defend and hold harmless the Seller, and its
respective shareholders, officers, directors, employees, affiliates, agents and
representatives, from and against all judgments, settlements, demands, claims,
actions or causes of action, deficiencies, assessments, Liabilities, losses,
damages (whether direct or indirect, incidental or consequential), interest,
fines, penalties, costs and expenses (including, without limitation, reasonable
legal, accounting and other costs and expenses incurred in connection with
investigating, defending, settling or satisfying any and all demands, claims,
actions or causes of action, suits, proceedings, deficiencies, assessments,
judgments or appeals, and in seeking indemnification therefor pursuant to this
Section 9.2) (collectively, "Losses") arising out of, resulting from, related to
or associated with any and all of the Assumed Liabilities. The Purchaser agrees,
with respect to claims referenced in Section 2.2(c)(vii) hereof, (x) to pursue
the defense and administration of such claims on behalf of the Seller against
the insurer, and (y) to defend the Seller with respect to any Action arising
from such claims. The Purchaser further agrees to indemnify, defend and hold
harmless the Seller, and its respective shareholders, officers, directors,
employees, affiliates, agents and representatives from all Losses arising from
such claims to the extent the Seller does not receive insurance proceeds in
respect of any such Losses.
9.3 Indemnification By Seller. From and after the date hereof, the
Seller shall indemnify, defend and hold harmless the Purchaser, and its
respective shareholders, officers, directors, employees, affiliates, agents and
representatives, from and against all judgments, settlements, demands, claims,
actions or causes of action, deficiencies, assessments, Liabilities, losses,
damages (whether direct or indirect, incidental or consequential), interest,
fines, penalties, costs and expenses (including, without limitation, reasonable
legal, accounting and other costs and expenses incurred in connection with
investigating, defending, settling or satisfying any and all demands, claims,
actions or causes of action, suits, proceedings, deficiencies, assessments,
judgments or appeals, and in seeking indemnification therefor pursuant to this
Section 9.3) arising out of, resulting from, related to or associated with any
and all of the Excluded Liabilities.
9.4 Notice and Defense of Claims. Each party entitled to
indemnification under this Article IX (the "Indemnified Party") shall give
notice to the party required to provide such indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claims
as to which indemnity is sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or litigation resulting therefrom and to
consent to the entry of any judgment or the entry into of any settlement with
respect thereto, provided that
39
40
the Indemnified Party may participate in such defense at such party's expense,
and provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Article IX except to the extent that the Indemnifying Party has been
adversely affected by such failure. The Indemnified Party shall furnish such
information regarding itself or the claim in question as the Indemnifying Party
may reasonably request in writing and shall otherwise cooperate with the
Indemnifying Party to such extent as shall be reasonably required in connection
with the defense of such claim and litigation resulting therefrom.
ARTICLE X.
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 a copy to:
------------------------ ---------------
Xx. Xxxxxx X. Xxxxxxx
Senior Vice President-Finance Xxxxxxx X. Xxxxxx, Esq.
Pulitzer Inc. Fulbright & Xxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx Xxxxxxxxx 000 Xxxxx Xxxxxx
Xx. Xxxxx, XX 00000 Xxx Xxxx, XX 00000
if to the Seller, to: with copies to:
--------------------- ---------------
The Chronicle Publishing Company
000 Xxxxxxx Xxxxxx Xxxxxx & Xxxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 000 Xxxxxxxxxxxx Xxxxx
Attention: W. Xxxxxx Xxxxxx Xxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxxxxxx Xxxxxxxxx
and, with regard to matters
---------------------------
relating to Taxes, to:
----------------------
Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx
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
40
41
overnight delivery service or sent by telecopy (receipt confirmed) or, if
mailed, when actually received.
10.2 Attorneys' Fees and Costs. If attorneys' fees or other costs are
incurred to secure performance of any obligations hereunder, or to establish
damages for the breach thereof or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party will be entitled
to recover reasonable attorneys' fees and costs incurred in connection
therewith.
10.3 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned or delegated by the Seller 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 its rights and obligations
under this Agreement to a direct or indirect wholly-owned subsidiary of the
Purchaser, as long as the Purchaser continues to remain fully liable for all of
its obligations hereunder. Notwithstanding the foregoing, the Seller shall be
entitled after the Closing Date to assign its obligations under this Agreement
to another entity which succeeds to all or substantially all of the Seller's
assets and properties for the purpose of handling any dissolution or liquidation
of the Seller.
10.4 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, 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 10.4.
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 Seller Documents) 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 and the
Confidentiality Agreement constitute all the representations, warranties,
covenants and agreements of the parties hereto and
41
42
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. Except as set forth below in this
Section 10.7, this Agreement is made for sole for the benefit of the parties
hereto and nothing contained herein, express or implied, is intended to or shall
confer upon any other Person (including any Business Employee) 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. Notwithstanding
the foregoing or anything to the contrary contained in this Agreement, the
parties hereto acknowledge and agree that the shareholders of the Seller are the
only third party beneficiaries of the benefits under this Agreement that inure
to the Seller following the Closing, and, as a result, a representative of the
shareholders to be designated from time to time by the Seller or the previously
designated shareholder representative in writing shall be entitled to enforce
any of the shareholders' third party beneficiary rights following the Closing
for so long as any such rights remain in effect pursuant to the terms 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
California, without giving effect to any conflicts of law rule or principle that
might require the application of the laws of another jurisdiction.
10.9 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).
10.10 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.
10.11 Bulk Sales Laws. The parties hereby waive compliance with the
Bulk Sales Laws of any State in which the Purchased Assets are located or in
which operations relating to the Business are conducted.
10.12 Headings; Interpretation; Schedules and Exhibits. The descriptive
headings of the several Articles and Sections of this Agreement are inserted for
convenience only and do not
42
43
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 neither 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.
10.13 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE SUCH WAIVER, (II) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER
VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.13.
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.
[Remainder of Page Intentionally Left Blank]
43
44
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.
THE CHRONICLE PUBLISHING COMPANY
By: /s/ W. Xxxxxx Xxxxxx
-------------------------------
Name: W. Xxxxxx Xxxxxx
Title: Secretary
PULITZER INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President - Finance
44
