ASSET PURCHASE AGREEMENT
EXHIBIT
2.1
EXECUTION COPY
by
and among
GATEHOUSE
MEDIA, INC.,
GATEHOUSE
MEDIA WEST VIRGINIA HOLDINGS, INC.,
GATEHOUSE
MEDIA ILLINOIS HOLDINGS, INC.,
CHAMPION
PUBLISHING, INC.
AND
CHAMPION
INDUSTRIES, INC.
Effective
as of June 28, 2007
TABLE
OF CONTENTS
i
| 5.2 | Organization; Goodwill | 27 |
|
5.3
|
Access to Facilities, Files and Records | 27 |
| 5.4 | Representations and Warranties | 27 |
| 5.5 | Corporate Action | 27 |
| 5.6 | Consents | 27 |
| 5.7 | Confidential Information | 28 |
| 5.8 | Consummation of Agreement | 28 |
| 5.9 | Notice of Proceedings | 28 |
| 5.10 | Interim Financial Statements | 28 |
| 5.11 | Taxes | 28 |
| 5.12 | Audited Financial Statements; Interim Financial Statements | 29 |
| ARTICLE VI.COVENANTS OF BUYER PENDING THE CLOSING DATE | 30 | |
| 6.1
Representations and Warranties
6.2 Corporate
Action
6.3 Confidential
Information
6.4 Consummation
of Agreement
6.5 Notice
of Proceedings
6.6 Maintenance
of Financial Position
|
30
30
30
30
31
31
|
|
| ARTICLE VII. CONDITIONS TO THE OBLIGATIONS OF SELLERS | 31 | |
|
7.1 Representations,
Warranties and Covenants
7.2 Proceedings.
7.3 Xxxx-Xxxxx-Xxxxxx
|
31
32
32
|
|
| ARTICLE VIII. CONDITIONS TO THE OBLIGATIONS OF BUYER | 33 | |
|
8.1 Representations,
Warranties and Covenants
8.2 Proceedings
8.3 Xxxx-Xxxxx-Xxxxxx.
8.4 Consents.
8.5 Financing
8.6 Title
Insurance
|
33
33
34
34
34
34
|
|
| ARTICLE IX. INDEMNIFICATION | 35 | |
|
9.1 Survival;
Limitations
9.2 Indemnification
of Buyer
9.3 Indemnification
of Sellers
9.4 Notice
of Claims
9.5 Defense
of Third Party Claims
|
35
37
38
38
38
|
|
| ARTICLE X. MISCELLANEOUS PROVISIONS | 39 | |
|
10.1 Risk
of Loss
10.2 Abandonment
of Agreement
10.3 Liabilities
Upon Abandonment
10.4 Expenses
10.5 Employees
and Employee Benefits
10.6 Further
Assurances and Consents
|
39
40
40
41
41
42
|
|
ii
|
10.7 Waiver
of Compliance
10.8 Notices
10.9 Assignment
10.10 Governing
Law
10.11 Public
Announcements
10.12 No
Third Party Rights
10.13 Waiver
of Jury Trial
10.14 Counterparts
10.15 Headings
10.16 Specific
Performance
10.17 Severability
10.18 Confidentiality
10.19 Entire
Agreement; Amendments
10.20 Champion
Industries, Inc.
|
44
44
45
45
45
46
46
46
46
46
46
46
46
47
|
|
|
Schedules
Schedule
1.2(j) Excluded
Assets
Schedule
1.6(c) Exceptions
to GAAP
Schedule
2.2(e) Transition
Services Table
Schedule
2.2(f) Non-Competition
Agreement
Schedule
3.3 Financial
Statements
Schedule
3.7 Licenses
and Permits
Schedule
3.9 Contracts
Schedule
3.10(a) Owned
Real Property
Schedule
3.10(b) Leased
Real Property
Schedule
3.11
Intellectual Property
Schedule
3.12 Litigation
and Compliance with Laws
Schedule
3.13(a) Employees;
Salaries
Schedule
3.13(b) Labor
Agreements
Schedule
3.14 Tangible
Personal Property
Schedule
3.15 Changes
Since Balance Sheet Date
Schedule
3.17 Environmental
Matters
Schedule
3.18 Circulation
Reports
Schedule
5.1 Maintenance
of Business
Schedule
8.4 Material
Consents
|
||
iii
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”), effective as of June 28, 2007, is
by and among Champion Publishing, Inc., a West Virginia corporation (“Buyer”),
Champion Industries, Inc., a West Virginia corporation (“Champion”), GateHouse
Media, Inc., a Delaware corporation (“GHS”), GateHouse Media Illinois Holdings,
Inc., a Delaware corporation (“GHSI”), and GateHouse Media West Virginia
Holdings, Inc., a Delaware corporation (“GHSWV”). GHS, GHSI and GHSWV
are each individually referred to herein as a “Seller” and together referred to
as “Sellers”.
WHEREAS,
Sellers own and publish the The Herald Dispatch, a daily newspaper
distributed in and around Huntington, West Virginia, together with all related
publications and services and assets and facilities, all related web sites
and
all of Sellers’ rights to prepare, publish, sell and distribute any of the
foregoing in all languages (collectively the “Newspaper”) and the
mastheads and certain other intellectual property associated with the Newspaper
(the “Mastheads”); and
WHEREAS,
Sellers desire to sell and Buyer desires to purchase substantially all of the
assets related to the operation, publication and distribution of the Newspaper
as a going concern, together with the Mastheads.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth and based upon the representations and warranties made by each party
to the other in this Agreement, the parties have agreed to consummate the sale
of the Newspaper on the terms contained herein.
ARTICLE
I
SALE
OF ASSETS AND TERMS OF PAYMENT
1.1 Transfer
of Assets. Upon the terms and subject to the conditions of this
Agreement, on the Closing Date (as defined in Section 2.1 hereof) Sellers
will sell, assign, convey or cause to be conveyed, transfer and deliver to
Buyer, and Buyer will purchase and accept from Sellers, all of the assets and
properties of Sellers, tangible or intangible, of every kind and description,
used by Sellers that relate primarily to the business and operation of the
Newspaper as a going concern (all such assets being referred to herein as the
“Sellers’ Assets”), but excluding the Excluded Assets described in
Section 1.2 below.
1
In
addition, upon the terms and subject to the conditions of this Agreement, on
the
Closing Date, Sellers will sell, assign, convey or cause to be conveyed,
transfer and deliver to Buyer, and Buyer will purchase and accept from Sellers,
the Newspaper’s “Mastheads” which consist of the mastheads, trademarks, trade
dress, trade names, service marks, registrations, domain names, and other
property rights relating thereto and all goodwill associated
therewith. The Sellers’ Assets along with the Mastheads are
hereinafter collectively referred to as the “Assets”. The Assets
include, without limitation, the following:
(a) The
Real Property (as defined in Section 3.10(b));
(b) All
Leases (as defined in Section 3.9(e));
(c) Sellers
tangible personal property, editorial material, work in process, finished goods,
manuscripts, notes and drafts, graphic artwork, cuts, photographs and negatives
owned by Sellers to the extent they relate primarily to the Newspaper;
promotional materials, inserts, and direct mail materials owned by Sellers
to
the extent they relate primarily to the Newspaper; stationery, supplies,
purchase orders, forms, labels, shipping materials and catalogs owned by Sellers
to the extent they relate primarily to the Newspaper; and all lists owned by
Sellers of contributors, authors, correspondents, reviewers, photographers,
illustrators and editors who contribute or have contributed to the Newspaper;
other inventory and supplies, and other assets and equipment relating primarily
to the Newspaper, including without limitation those listed in
Schedule 3.14 hereto;
(d) All
contracts, agreements and similar documents that relate to the operation of
the
Newspaper or are otherwise specifically assumed pursuant hereto, together with
all subscriptions and all orders and agreements for the sale of advertising,
space reservations and insertion orders relating to the Newspaper, including
without limitation those described in Schedule 3.9
hereto;
(e) All
of Sellers right, title and interest in and to all licenses, Permits (as defined
in Section 3.17), variances, franchises, certifications, approvals and other
governmental authorizations relating primarily to the Newspaper, together with
any renewals, extensions or modifications thereof and additions
thereto;
(f) All
publishable materials of any nature, as used in the business of the Newspaper,
the names “The Herald Dispatch”, “The Xxxxxxxx Herald” and
“Xxxxxx Herald”, copyrights, patents, trademarks, service marks, logotypes
and trade names (including registrations and applications for registration
of
any of the foregoing), web sites, domain names, processes, inventions, computer
software, computer programs and software and program rights, trade secrets,
goodwill and other intangible rights and interests issued to or owned by Sellers
and used in connection with the operation, publication and distribution of
the
Newspaper;
2
(g) All
of Sellers accounts or other receivables, claims, evidences of debt owed to
Sellers, utility deposits and other deposits and prepaid expenses arising out
of
Sellers’ operation of the Newspaper together with all records relating
thereto;
(h) All
of the Newspaper’s files and other records in whatever form relating to the
operation of the Newspaper, including without limitation all of its historical
materials relating to the Newspaper’s advertising, circulation and distribution,
all circulation, subscriber, delivery and mailing lists and carrier routes
maintained by Sellers to the extent they relate to the Newspaper, all data
related to such lists, all circulation readership studies, audience surveys
and
research owned by Sellers, and all other mailing lists, together with all
records, reports and tapes of computer data owned by Sellers, in each case
to
the extent they relate primarily to the Newspaper, rate cards, verification
cards, advertising insertion orders, specimen copies of all advertisements
carried in the Newspaper, and copies of current price lists, discount lists,
catalogs, public relations materials, sales correspondence, call reports, call
books, advertiser lists and sales promotion lists;
(i) All
claims, causes of action, rights of recovery and rights of set-off of any kind
(including, without limitation, rights under and pursuant to all warranties,
representations and guarantees made by suppliers of products, materials or
equipments, or components thereof) to the extent they relate to the Newspaper,
are owned by Sellers and relate to the period of time following the Closing
Date;
(j) All
of Sellers libraries of back and current issues of the Newspaper;
(k) All
of Sellers goodwill in and going concern value of the Newspaper;
(l) Any
prepaid taxes of Sellers which are included as Assets on the Closing Date
Balance Sheet (as defined in Section 2.6(d));
3
(m) All
of Sellers right, title and interest in and to any non-solicitation agreements
benefiting the Newspaper;
(n) Without
duplication, all assets relating primarily to the operations of the Newspaper
reflected in the Newspaper’s balance sheet included in the Financial Statements
dated as of the Balance Sheet Date (each as defined in Section 3.3), together
with changes in the ordinary course of business or as otherwise allowed under
this Agreement up to and including the Closing Date; and
(o) Partial
assignment of Sellers’ rights to indemnification under the Amended and Restated
Asset Purchase Agreement effective as of April 12, 2007 by and among Gannett
Satellite Information Network, Inc., Gannett River States Publishing
Corporation, Pacific and Southern Company, Inc., Federated Publications, Inc.,
Media West – GSI, Inc., Media West – GRS, Inc., GateHouse Media Illinois
Holdings, Inc. and GateHouse Media, Inc., pursuant to which the indemnity
obligations of the Gannett Parties with respect to the Newspaper are partially
assigned to Buyer and Champion Industries, Inc. Notwithstanding
anything to the contrary contained herein, it is understood that Sellers are
not
making any representation, warranty or guarantee as to the enforceability or
collectibility of such assignment against the Gannett Parties.
1.2 Excluded
Assets. The following assets relating to the business of
operating, publishing and distributing the Newspaper shall be retained by
Sellers and shall not be sold, assigned, conveyed, transferred or delivered
to
Buyer (the “Excluded Assets”):
(a) Claims
by Sellers with respect to the Excluded Assets and liabilities not assumed
by
Buyer, including without limitation all refunds and claims for tax refunds
(except for prepaid taxes acquired by Buyer pursuant to Section 1.1(l) above)
and counterclaims with respect to obligations and liabilities not being assumed
by Buyer hereunder;
(b) All
contracts of insurance, tax records and tax returns;
(c) All
Employee Benefits Plans (as defined in Section 3.13(b));
(d) The
right to use the “GateHouse” and “GateHouse Media” names and, except for the
agreements described in Schedule 3.9, the right to participate in any plan,
procedure or right that was made available to the Newspaper by or through GHS,
or any of its affiliates;
4
(e) All
claims, refunds, causes of action, choses in action, rights of recovery, rights
of set off and rights of recoupment of Sellers related to the businesses of
the
Newspaper on or prior to the Closing Date, exclusive of the rights granted
in
Sections 1.1(g) and 1.1(o);
(f) (i)
the franchise to be a corporation ; (ii) the organizational documents (including
articles or certificate of incorporation or bylaws (as applicable)); (iii)
in
respect of Sellers which are corporations: (A) the corporate seal, (B) the
minute books, (C) the stock books, and (D) the stock certificates;
(iv) the qualifications to transact business as a foreign corporation; (v)
the
arrangements with registered agents relating to foreign qualifications, taxpayer
and other identification numbers; (vi) other records or similar documents
relating to the organization, maintenance and existence of Sellers as a
corporation; and (vii) any other corporate records relating to the corporate
organization or capitalization (as applicable) of Sellers;
(g) All
items of a corporate overhead nature that are controlled by or located at the
corporate offices of Sellers;
(h) Any
right, property or asset described in Schedule 1.2(j) hereto, including
the property and rights which are shared with affiliates of Sellers and not
used
primarily in the businesses of the Newspaper;
(i) Any
assets or properties of Seller, tangible or intangible, of every kind and
description which are not used primarily in connection with the businesses
of
the Newspaper and are not included in the Financial Statements; and
(j) Sellers’
rights under this Agreement.
5
1.3 Liabilities.
(a) The
Assets shall be sold and conveyed to Buyer free and clear of all Liens (as
defined in Section 3.8), except for Permitted Encumbrances (as defined in
Section 3.10), except that Buyer shall assume, discharge and perform the
following liabilities (the “Assumed Liabilities”):
(i) those
liabilities and obligations of Sellers under the contracts assigned to Buyer
which are described in Subsection 1.1(d) (other than any obligation under any
such contract related or arising prior to the Closing Date, including, without
limitation, any liability for breach or nonperformance); provided, however,
that
if any such contract requires a consent to the assignment thereof to Buyer
and
such consent has not been obtained, then this Agreement, to the extent permitted
by law, shall constitute an equitable assignment by Sellers to Buyer of all
rights, benefits, title and interest, liabilities and obligations under such
contract;
(ii) those
liabilities and obligations of Sellers as of the Closing Date under agreements
for advertising to the extent to be run in issues of the Newspaper published
after the Closing Date (subject to the adjustment provisions of Section 1.6
below);
(iii) those
liabilities and obligations of Sellers for trade accounts payable, advertising
rebates payable and taxes which are included on the Closing Date Balance Sheet
(to the extent of the amount reflected on such balance sheet as a liability)
and
any expenses for which Buyer is responsible under Section 1.6(a);
and
(iv) those
liabilities and obligations of Sellers and the Newspaper included on the Closing
Date Balance Sheet, which shall include paid in advance subscriptions and
accrued liabilities of Sellers to employees of the Newspaper for unused
vacation, sick leave, holiday and personal days (to the extent of the amounts
reflected on such balance sheet and only to the extent Sellers do not have
a
legal obligation to pay such amounts upon termination of employment on or before
the Closing Date).
6
(b) Except
as set forth in Section 1.3(a) above or as otherwise expressly set forth herein,
Buyer does not assume and will not be liable for, and Sellers shall remain
unconditionally liable for, all other liabilities or obligations of Sellers
(or
any other person, in the case of liabilities or obligations for taxes) (the
“Excluded Liabilities”), including, but not limited to:
(i) any
liability or obligation arising prior to Closing under any contract not
described in Subsection 1.1(d) above;
(ii) any
liability under any contract of insurance or relating to any other Excluded
Assets;
(iii) any
liability to any of the Newspaper’s employees of any nature whatsoever related
to the period on or prior to the Closing Date, including under any employee
benefit plan of any nature and including any unemployment or workers
compensation claims;
(iv) any
liability arising out of any termination by any Seller of the employment of
any
employee, consultant or independent contractor of the Newspaper on or prior
to
the Closing Date, or who retired on or prior to the Closing Date;
(v) any
liability under any litigation, proceeding or claim of any nature related to
the
Newspaper arising during, or brought by any person or entity with respect to,
the period of time on or prior to the Closing Date, whether or not such
litigation, proceeding or claim is pending, threatened or asserted before,
on or
after the Closing Date;
(vi) any
liability for (I) any taxes (other than taxes of Sellers assumed by Buyer
pursuant to Section 1.3(a)(iii) above) with respect to the Newspaper or the
Assets for periods ending on or prior to the Closing Date and taxes deemed,
pursuant to Section 1.6(b), payable for the portion ending on the Closing Date
of a Straddle Period (as defined in Section 1.6(b)), (II) except as allocated
in
Section 10.4, any taxes imposed on the transfer of the Assets or the Newspaper
on or prior to the Closing Date and, (III) any estate or gift taxes imposed
with
respect to Sellers, the Assets or the Newspaper on or prior to the Closing
Date;
provided, however, that Transfer Taxes (as defined in Section 10.4) on the
transfer of the Assets pursuant to this Agreement shall be paid by Buyer as
provided in Section 10.4;
7
(vii) except
as otherwise set forth in this Agreement, any and all liabilities incurred
by
Sellers in connection with the negotiation, execution or performance of this
Agreement (including, without limitation, all legal, accounting, brokers,
finders and other professional fees and expenses); or
(viii) any
and all obligations, liabilities and/or commitments, including but not limited
to obligations, liabilities and/or commitments pursuant to Environmental Laws,
arising out of or related to conditions or events arising from or related to
the
Real Property and/or the operation of the Newspaper thereon that occurred on
or
prior to the Closing Date. The obligations, liabilities and/or
commitments contemplated by this Section 1.3(b)(viii) include, but are not
limited to, all matters arising from or relating to Item 2 of Schedule
3.17 and all facts and circumstances underlying or leading to such
implementation or that made such implementation necessary.
1.4 Consideration. Subject
to the conditions contained in this Agreement, and in consideration of the
sale
of the Assets, Buyer will pay on the Closing Date the sum of Seventy-Seven
Million dollars ($77,000,000) (the “Base Purchase Price”), as adjusted pursuant
to Section 1.6 below (the “Purchase Price”).
1.5 Manner
of Payment. The Purchase Price shall be paid to Sellers on the
Closing Date in immediately available funds by wire transfer to bank accounts
designated by Sellers in writing at least two (2) business days prior to the
Closing Date. Notwithstanding the foregoing, each of Sellers may,
without the consent of Buyer or GateHouse, assign to one or more of its
affiliates (the “Sellers Designee(s)”) all or a portion of its rights to receive
payment of the Purchase Price in accordance with the terms and conditions of
this Agreement. Either of Sellers shall notify Buyer at least two (2)
business days prior to the Closing Date as to the identity of the Sellers
Designee(s), if any.
8
1.6 Adjustments.
(a) Issues
Prior to the Closing Date/Working Capital Adjustment. Sellers
shall be entitled to all income earned and collected and be responsible for
all
expenses incurred in connection with the business and operation of the Newspaper
on or prior to the Closing Date. Buyer shall be entitled to all
income earned and be responsible for all expenses incurred in connection with
the business and operation of the Newspaper after the Closing
Date. In addition to the Purchase Price Buyer shall pay to Sellers
the additional sum of Eight Hundred Thirty Seven Thousand Five Hundred
Fifty-Four Dollars ($837,554) (the “Additional Sum”) subject to a further
adjustment for any change in working capital (the “Adjustment”). The
Adjustment is premised upon the “Working Capital” of the Newspaper from
Newspaper’s Closing Date Balance Sheet being One Million Six Hundred
Seventy-Five Thousand One Hundred Seven Dollars ($1,675,107). To the
extent that the Working Capital on the Closing Date Balance Sheet varies from
One Million Six Hundred Seventy-Five Thousand One Hundred Seven Dollars
($1,675,107), the Additional Sum and, if necessary, the Purchase Price shall
be
increased or decreased, as the case may be, One Dollar ($1.00) for each One
Dollar ($1.00) of variance. For example, if Working Capital on the
Closing Date is One Million Eight Hundred Thirty-Seven Thousand Five Hundred
Fifty-Four Dollars ($1,837,554) Buyer would pay the Seventy Seven Million
Dollars ($77,000,000) Base Purchase Price plus the Additional Sum (Eight Hundred
Thirty Seven Thousand Five Hundred Fifty-Four Dollars ($837,554)) plus the
Adjustment of One Hundred Sixty-Two Thousand Four Hundred Forty-Seven Dollars
($162,447) [$1,837,554 – $1,675,107]. If Working Capital on the
Closing Date is Three Hundred Thirty-Seven Thousand Five Hundred Fifty-Three
Dollars ($337,553) Buyer would pay as Purchase Price Seventy Six Million Five
Hundred Thousand Dollars ($76,500,000) to reflect the One Million Three Hundred
Thirty-Seven Thousand Five Hundred Fifty-Four Dollar ($1,337,554) [$1,675,107
-
$337,553] decrease in Working Capital [$77,000,000 + $837,554 –
$1,337,554].
9
In
computing the adjustment described above, the Closing Date Balance Sheet (as
defined in subsection (c)) shall be prepared in accordance with Sellers
historical accounting practices which reflect accrual basis accounting and
are
in accordance with generally accepted accounting principles other than as set
forth on Schedule 1.6(c). All intercompany and affiliate
receivables or liabilities will be treated as shareholders’ equity and will be
excluded from the balance sheet adjustment and will not be assumed by
Buyer. All prepaid advertising and subscriptions shall be accrued as
liabilities in the amount of such prepayments.
(b) Other
Adjustments. All items of income and expense directly relating to
the business of operating the Newspaper, other than the income and expenses
referred to above, shall be prorated between Sellers and Buyer as of the close
of business on the Closing Date. Such items to be prorated shall
include, without limitation, power and utility charges, personal property taxes
and real property taxes. The portion of any personal property taxes
and real property taxes for a taxable period that includes the Closing Date
(a
“Straddle Period”) that shall be deemed to be payable for the portion of the
period ending on the Closing Date shall be the amount of such taxes for the
entire period (or, in the case of such taxes determined on an arrears basis,
the
amount of such taxes for the immediately preceding period) multiplied by a
fraction the numerator of which is the number of calendar days in the period
ending on the Closing Date and the denominator of which is the number of
calendar days in the entire period. The portion of any other taxes
for a Straddle Period that shall be deemed to be payable for the portion of
the
period ending on the Closing Date shall be determined based on an interim
closing of the books to the extent practicable and otherwise based on the
formula described in the immediately preceding sentence.
(c) Adjustment
Calculations. Three (3) business days prior to the Closing Date,
to the extent practicable, the adjustments provided in this Section 1.6 shall
be
made to the Base Purchase Price on the basis of the then most recently available
financial statements of the Newspaper, which shall be reflected on a preliminary
balance sheet for the Newspaper (the “Preliminary Balance Sheet”) prepared by
Sellers. Within 90 days after the Closing Date, Sellers will
prepare an adjusted balance sheet for the Newspaper (the “Closing Date Balance
Sheet”) as of the close of business on the Closing Date, reflecting the
adjustments provided in this Section 1.6 and showing the recalculation of
adjustments reflected on the Preliminary Balance Sheet, along with back-up
materials necessary for Buyer’s understanding of the Closing Date Balance Sheet
and the calculation thereof.
10
Sellers
and their accountants will provide Buyer’s accountants with reasonable access to
the books, records and working papers of Sellers necessary to review such
calculations. Within 120 days after the Closing Date, final
adjustments pursuant to this Section 1.6 and any required refund or payment
shall be made on the basis of the Closing Date Balance Sheet (the “Adjustment
Payment Date,” provided that if any amounts are in dispute, the Adjustment
Payment Date for the disputed amounts shall be the date payment is required
to
be made as required below). If any dispute arises over the amount to
be refunded or paid, such refund or payment shall nonetheless be promptly made
to the extent such amount is not in dispute. If Buyer does not notify
Sellers within 75 days of receiving the Closing Date Balance Sheet that Buyer
disputes the information contained therein, then Buyer shall be deemed to agree
to the Closing Date Balance Sheet and to have waived all further right to
dispute the information contained therein and its use in applying the provisions
of this Agreement. If Buyer does notify Sellers of a dispute
regarding the Closing Date Balance Sheet within 75 days of receiving it, and
if
such dispute cannot be resolved by the parties within 30 days thereafter, it
shall be referred to a mutually satisfactory independent public accounting
firm
of national stature which has not been employed by either party for the two
years preceding the Closing Date. The determination of such firm
shall be conclusive and binding on each party and any required payment or refund
in accordance therewith shall be made in immediately available funds within
10
days of such determination. The fees of such firm shall be shared
equally by each party.
1.7 Allocation
of Purchase Price. As soon as practicable after the date hereof,
but in no event later than ninety (90) days after the Closing Date, Buyer and
Sellers will negotiate, in good faith, with a view towards allocating, as of
the
Closing Date, the Purchase Price (as adjusted in accordance with this Article
I) among the Assets.
11
If
Buyer
and Sellers agree upon an allocation, then both parties agree to file Federal
Form 8594 consistent with such an agreement. If an agreement cannot
be reached prior to the Closing, the parties shall engage an independent and
mutually acceptable appraiser to perform a valuation of the
Assets. This valuation shall be used in allocating the Purchase
Price. Buyer and Sellers shall use such allocation for all purposes,
including tax and financial reporting. If, contrary to the intent of
the parties hereto as expressed in this Section 1.7, any taxing authority makes
or proposes an allocation different from that contemplated in this Section
1.7,
Sellers and Buyer shall cooperate with each other in good faith to contest
such
taxing authority’s allocation (or proposed allocation); provided,
however, that, after consultation with the party adversely affected
by
such allocation (or proposed allocation), the other party hereto may file such
protective claims or returns as may reasonably be required to protect its
interest.
ARTICLE
II.
THE
CLOSING
2.1 Time
and Place of Closing. The closing (the “Closing”) of the sale and
purchase of the Assets shall be held in the offices of Sellers, 000 XxxxxxXxxxx
Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 on the third business day following the
satisfaction or waiver of all of the conditions to closing set forth in Articles
VII and VIII, or at such other time and place as shall be mutually agreed upon
by the parties (the “Closing Date”). Closing shall be deemed
effective at 11:59 p.m. local time on the Closing Date.
2.2 Deliveries
by Sellers. At the Closing, Sellers, as appropriate, will deliver
to Buyer the following, each of which shall be in form and substance
satisfactory to the parties hereto:
(a) Bills
of sale, general warranty deeds, assignments and other instruments of transfer
and documents as shall be appropriate to carry out the intent of this Agreement
and sufficient to sell, assign, convey and transfer good and valid (or in the
case of real property, good and marketable) title to the Assets to Buyer,
subject to Permitted Encumbrances;
(b) Assignments
of Sellers domain names relating to the Newspaper;
12
(c) Any
consents to assignments from third parties obtained by Sellers relating to
the
Material Contracts that require such consent as shown on Schedule 3.9
hereto, as well as any other consents obtained by Sellers;
(d) Receipt
for the Purchase Price;
(e) Transition
services agreements among Sellers and Buyer executed by Sellers, which, among
other things, provide for Sellers to continue to provide certain services with
respect to the Newspaper for various periods of time after the Closing Date,
substantially in accordance with Schedule 2.2(e), as set forth in such
agreements (the “Transition Services Agreements”);
(f) A
non-competition and non-solicitation agreement between Sellers and Buyer
executed by Sellers substantially in the form set forth in Schedule
2.2(f) (the “Non-Competition Agreement”);
(g) Certificates,
dated the Closing Date, of an appropriate officer of each Seller as to approval
of such Seller relating to this Agreement and the transactions contemplated
hereby;
(h) Certificates
of an appropriate officer of each Seller certifying the fulfillment of the
conditions set forth in Sections 8.1(a) and 8.1(b) below;
(i) A
certificate of an appropriate officer of each Seller as to that Seller’s status
as a non-foreign entity; and
(j) Such
other certificates, instruments and documents as are required to be delivered
by
Sellers pursuant to the terms of this Agreement.
2.3 Deliveries
by Buyer. At the Closing, Buyer will deliver to Sellers the
following, each of which shall be in form and substance satisfactory to the
parties hereto:
(a) Funds
equal to the Purchase Price in such manner as described in Section 1.5
above;
(b) An
instrument of assumption pursuant to which Buyer shall assume the Assumed
Liabilities as provided in Section 1.3 hereof;
(c) The
Transition Services Agreements, executed by Buyer;
(d) The
Non-Competition Agreement, executed by Buyer;
(e) A
Publisher’s Agreement, effective on the Closing Date with a termination date of
December 31, 2012, between the Newspaper and USA WEEKEND and on the same
economic terms in effect between the Newspaper and USA WEEKEND immediately
prior
to Closing, in substantially the form attached hereto as Exhibit
2.3(f);
13
(f) Certificate
dated the Closing Date, of the Secretary of Buyer as to approval of Buyer
relating to this Agreement and the transactions contemplated
hereby;
(g) Certificate
of an officer of Buyer certifying the fulfillment of the conditions set forth
in
Sections 7.1(a) and 7.1(b) below; and
(h) Such
other certificates, instruments and documents as are required to be delivered
by
Buyer pursuant to the terms of this Agreement.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Sellers,
as appropriate, represent and warrant to Buyer as follows:
3.1 Organization;
Qualification. Each Seller is a corporation validly existing and
in good standing under the laws of its state of incorporation. The
applicable Seller has the full power and authority to own and operate the Assets
(excluding the Mastheads) and carry on the business operations of the Newspaper
as such operations are now being conducted. The applicable Seller has
the full power and authority to own the Mastheads. Each Seller
(a) is duly qualified to do business and in good standing, and is duly
licensed, authorized or qualified to transact business in each jurisdiction
in
which the ownership or lease of real property or the conduct of its business
requires it to be so qualified, and (b) has all government licenses,
Permits, approvals and other authorizations necessary to own its properties
and
assets and carry on its business as it is now being conducted, except such
licenses, Permits, approvals and other authorizations described in clauses
(a)
and (b) the lack of which would not have a Material Adverse Effect (as defined
in Section 3.4).
3.2 Authority
Relative to this Agreement. Each Seller has the full power,
authority and legal right to execute and deliver this Agreement and to
consummate the transactions and perform its obligations as contemplated
hereby.
14
3.3 Financial
Statements. Schedule 3.3 sets forth (a) the unaudited
financial statements of the Newspaper for the fiscal year ended December 31,
2006 and (b) unaudited financial statements for the period through March 4,
2007
(the “Balance Sheet Date”) (the financial statements referred to in clauses (a)
and (b) being “Financial Statements”). The representations and
warranties in this Section 3.3 are qualified by the pro forma adjustments which
were made in the Financial Statements pursuant to adjustments shown on
Schedule 3.3 furnished to Buyer, including: (x) pension plan expense was
eliminated, (y) newsprint expense was adjusted to approximate market price,
and
(z) intercompany allocations for the Sellers News Service have been
eliminated. The Financial Statements fairly present in all material
respects the financial position of the Newspaper and the results of operations
of the Newspaper as at and for the periods covered thereby and have been
prepared in conformity with Sellers historical accounting practices which
reflect accrual basis accounting and are in accordance with generally accepted
accounting principles, except as otherwise noted therein or as set forth on
Schedule 1.6(c). No material adjustments of the Financial
Statements are required for a fair presentation of the results of operations
and
financial position of the Newspaper on an accrual basis. Except as
set forth on Schedule 3.3, the Financial Statements are correct and
complete in accordance with the books and records regularly maintained by the
Newspaper which reflect accrual basis accounting. The Financial
Statements fairly present the results of operations and financial position
of
the Newspaper as of the dates and for the periods set forth
therein. Sellers shall deliver on the Closing Date to Buyer a
schedule of the Newspaper’s outstanding accounts receivable as of the Closing
Date. All such accounts receivable have arisen in the ordinary course
of business and represent bona fide indebtedness incurred by the applicable
account debtor and have been properly adjusted for bankrupt and other
uncollectible accounts. Assuming reasonable collection efforts by
Buyer, Sellers have no reason to believe that such accounts receivable would
not
be collectible (net of Sellers reserves for uncollectible receivables
established by Sellers in the ordinary course of its business consistent with
past practice). Sellers make no representations, however, about the
future business or financial prospects of the Newspaper for Buyer’s intended
purposes.
15
3.4 Business
Since the Balance Sheet Date. Except as set forth on Schedule
3.15, since the Balance Sheet Date, the business of the Newspaper has been
conducted in the ordinary course of business and in substantially the same
manner as it was before the Balance Sheet Date. Since the Balance
Sheet Date, there has been no change in the business, condition (financial
or
otherwise), properties or operations of the Newspaper or other event or
occurrence which has had or would reasonably be expected to have a material
adverse effect on the business, operations, properties or condition (financial
or otherwise) of the Newspaper taken as a whole (“Material Adverse Effect”) as
of the Closing Date.
3.5 No
Defaults.
(a) The
execution, delivery and performance of this Agreement by Sellers
will
not
(i) conflict with any provision of the Certificates of Incorporation or
Bylaws of any Seller, (ii) result in a default (or give rise to any right
of termination, cancellation or acceleration), with notice or passage of time
or
both, under or conflict with any of the terms, conditions or provisions of
any
Material Contract (as defined in Section 3.9), note, bond, mortgage or other
instrument, obligation or agreement relating to the business of the Newspaper
or
to which any of the Assets may be subject, and which default or conflict, singly
or in the aggregate, would or would reasonably be expected to have a Material
Adverse Effect, (iii) violate any law, statute, rule, regulation, order,
injunction or decree of any federal, state or local governmental authority
or
agency applicable to Seller or any of the Assets, or (iv) result in the
creation or imposition of any Lien of any nature whatsoever on any of the
Assets.
(b) Except
for the required consents with respect to the contracts referred to in
Section 3.9 and the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “Xxxx-Xxxxx-Xxxxxx Act”), Sellers are
not required to submit any notice, report or other filing with, or obtain any
consent, approval or waiver from, any governmental or regulatory authority
or
instrumentality or any other third party in connection with the execution,
delivery or performance of this Agreement by Sellers or the consummation of
the
transactions contemplated hereby, except where failure to give such notice,
report or other filing, or to obtain such consent, approval or waiver would
have
no, and would not be reasonably expected to have a, Material Adverse
Effect.
16
3.6 Undisclosed
Liabilities. No Seller has any obligation or liability to be
reflected or reserved against in any of the Financial Statements which is not
fully reflected or reserved against in such Financial Statements except for
liabilities which have arisen after the Balance Sheet Date in the ordinary
course of business.
3.7 Licenses
and Authorizations. All licenses, Permits and authorizations
required to own the Assets and to conduct the business of the Newspaper are
held
by Sellers are in full force and effect with no violations of any of them having
occurred, other than violations that would not have, and would be reasonably
expected to have, a Material Adverse Effect. All such material
licenses, Permits and Authorizations are listed in Schedule
3.7. Except as disclosed in Schedule 3.12, no
proceeding is pending or, to the knowledge of Sellers, threatened in writing,
seeking the revocation or limitation of any such license, Permit or other
authorization.
3.8 Condition
and Adequacy of the Assets; Title. The tangible assets included
in the Assets are in adequate operating condition and repair, ordinary wear
and
tear excepted, and are adequate and suitable in accordance with general industry
practices and applicable law for the purposes for which they are currently
used. Each Seller has good and marketable title to all of the Assets
which it purports to own free and clear of all security interests, mortgages,
conditional sales agreements, charges, liens and other encumbrances (“Liens”),
except for Permitted Encumbrances . All inventory of each Seller
included in the Assets is useful in the ordinary course of such Seller’s
business. Without limiting the generality of any of the foregoing,
except as indicated on Schedule 3.8, no Seller uses furniture, fixtures,
equipment, inventory or supplies in connection with the operation of the
Newspaper which it does not own. Except for the Excluded Assets, the
Assets are, in the aggregate, all of the assets which are necessary to operate
the Newspaper in the manner in which the Newspaper was operated during the
12-month period ending on the Balance Sheet Date and since such time, except
for
additions thereto and deletions therefrom in the ordinary course of business
and
consistent with past practice.
3.9 Contracts
and Arrangements. As used herein, “Material Contracts” means all
of the following contracts, agreements and arrangements (written or oral)
included in the Assets involving annual consideration of more than
$25,000:
17
(a) Sales
agency or advertising representation contracts;
(b) Contracts
for the future construction or purchase of capital improvements, purchase of
materials, supplies or equipment, or for the sale of assets;
(c) Consulting
contracts, employment agreements or freelance agreements;
(d) Licenses
or agreements under which Seller is authorized to publish materials supplied
by
others in future issues of the Newspaper;
(e) Leases
of real and personal property (collectively, the “Leases”); and
(f) Any
other contract or lease not made in the usual and ordinary course of business,
or not terminable by Sellers without liability upon not more than 90 days’
written notice.
All
of
the Material Contracts are listed on Schedule 3.9. Schedule
3.9 specifies those Material Contracts, the assignment of which requires the
consent of a third party. Provided that any requisite consent to the
assignment of Material Contracts to Buyer is obtained, to the knowledge of
Sellers, each of the contracts and leases which is assigned to and assumed
by
Buyer on the Closing Date is valid and in full force and
effect. There is no existing default, event of default or other event
under such Material Contracts which, with or without notice or lapse of time
or
both, would constitute a default or an event of default by a Seller under any
such contract. To the knowledge of Sellers, there is not, under any
of the Material Contracts, any existing default or event of default which,
with
or without notice or lapse of time or both would constitute a default or event
of default on the part of any other party thereto, except such defaults, events
of default and other events which would not have, and would not reasonably
be
expected to have, a Material Adverse Effect. Prior to the Closing
Date, Sellers will make available to Buyer complete copies (or written summaries
of oral contracts) of all of the Material Contracts.
3.10 Real
Property.
(a) Schedule
3.10(a) sets forth a complete and accurate list of all real property owned
in fee by Sellers or their respective affiliates and used primarily in the
business of the Newspaper (the “Owned Real Property”);
(b) Schedule
3.10(b) sets forth a complete and accurate list of all leasehold interests
used primarily in the business of the Newspaper (the “Leased Real
Property”). The Leased Real Property and the Owned Real Property are
collectively referred to as the “Real Property”;
18
(c) Sellers
hold good and marketable fee title to each parcel of Owned Real Property
disclosed on Schedule 3.10(a), free and clear of any Liens, easements,
rights-of-way, licenses, use restrictions, claims, charges, options, rights
of
first offer, rights of first refusal or title defects, except for Permitted
Encumbrances of any nature whatsoever (as defined below). As used
herein, the term “Permitted Encumbrances” means (i) liens for taxes not yet due
and payable; (ii) liens for taxes which are being contested in good faith and
by
appropriate proceedings in the amount of which a reserve has been created on
the
Closing Date Balance Sheet; (iii) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like liens arising in the ordinary course of
business or which are being contested in good faith and by appropriate
proceedings in the amount of which a reserve has been created on the Closing
Date Balance Sheet; or (iv) easements, rights-of-way, encroachments,
licenses, restrictions, conditions and other similar encumbrances incurred
or
suffered in the ordinary course of business and which do not materially
interfere with the current use of the Owned Real Property or result in, or
would
not reasonably be expected to result in, a Material Adverse Effect;
(d) Sellers
have a valid and enforceable interest in each parcel of Leased Real Property
disclosed in Schedule 3.10(b) as being leased by Sellers;
and
(e) There
is no action or proceeding pending or, to the knowledge of Sellers, threatened
in writing, by any governmental agency or authority for assessment or collection
of past-due taxes, impact fees or special assessments affecting any part of
any
Owned Real Property, and no condemnation or eminent domain proceeding is pending
or, to the knowledge of Sellers, threatened in writing, against any part of
any
Owned Real Property.
3.11 Intellectual
Property. Except for the Excluded Assets (as defined in Section
1.2) and any matter relating thereto, all copyrights, trademarks, trade names,
service marks, logotypes and patents and all other material intellectual
property rights which are owned or held for use or used by Sellers in connection
with the business and operation of the Newspaper and which are material to
the
operation of the Newspaper or ownership of any of the Assets (the “Rights”) are
valid, in good standing and uncontested.
19
3.12 Litigation
and Compliance with Laws. Except as set forth on
Schedule 3.12: (a) the Newspaper has not been operating
under or subject to, or in default with respect to, any order, writ, injunction,
judgment or decree of any court or federal, state, or local governmental
authority or agency; (b) neither Sellers nor any of their officers, agents
or affiliates has received any inquiry, written or oral, from any such authority
concerning any of the operations or business of the Newspaper during the
two-year period prior to the date of this Agreement which has had or is
reasonably expected by Sellers to have a Material Adverse Effect; (c) there
is
no litigation, claim or arbitration pending by or against, or to the knowledge
of Sellers or their affiliates, threatened against, any Seller or the Newspaper
related to or affecting any of the Assets or the operation of the Newspaper,
including without limitation, any litigation, arbitration or claim relating
to
any union or union activities; and (d) Sellers and their affiliates have
complied with all laws, regulations, orders or decrees applicable to Sellers,
the Assets and the Newspaper and the present uses by Sellers of the Assets
and
operation of the Newspaper do not violate any such laws, regulations, orders
or
decrees, except for any non-compliance with or violation of any of the foregoing
that, singly or in the aggregate, has not had and is reasonably expected by
Sellers not to have a Material Adverse Effect.
3.13 Employees.
(a) Schedule 3.13(a)
lists the names and salaries or rates of commission, date of employment (with
Sellers or the prior owner of the Newspaper) and job title of all the full
and
part-time employees of the Newspaper.
(b) Except
as set forth on Schedule 3.13(b), (i) Sellers are not a party to any
collective bargaining agreement or any other labor agreement covering or
relating to any employees of the Newspaper, and have not recognized and have
not
received a demand for recognition of any collective bargaining representative
relating to any employees of the Newspaper; and (ii) no strike is pending or
to
the knowledge of Sellers threatened against the Newspaper by its employees
or
any collective bargaining representative claiming to represent such
employees.
20
(c) Employee
Benefit Programs; ERISA.
(i) Sellers
have delivered to Buyer correct and complete copies of each material employment,
bonus, deferred compensation, pension, stock option, stock appreciation right,
profit-sharing or retirement plan, arrangement or practice, each material
medical, vacation, retiree medical, severance pay plan, and each other material
agreement or fringe benefit plan, arrangement or practice, of GHS, whether
legally binding or not, including all “employee benefit plans,” as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), which covered one or more employees of the Newspaper at any
time since Sellers acquisition of the Newspaper (“Employee Benefit
Programs”). GHS and its ERISA Affiliates (as defined below) have
complied, in all material respects, with the terms of all Employee Benefit
Programs and all laws with respect to such programs, including the Code and
ERISA, and no default exists with respect to the obligations of GHS or any
of
its ERISA Affiliates under any such Employee Benefit Programs, which default
would have a Material Adverse Effect.
(ii) Neither
GHS nor any of its ERISA Affiliates has made a complete or partial withdrawal,
within the meaning of Section 4201 of ERISA, from any multiemployer plan which
covered one or more employees of the Newspaper at any time since Sellers
acquisition of the Newspaper which has resulted in, or could result in, any
withdrawal liability, except for any such liability which would not have a
Material Adverse Effect. Neither Seller nor its predecessor owner of
the Newspaper have ever maintained or contributed to a plan which has been
a
multiemployer plan with respect to Newspaper employees.
21
(iii) Neither
GHS nor any of its ERISA Affiliates has provided or is required to provide,
security to any pension plan or to any single-employer plan which covered one
or
more employees of the Newspaper at any time during 2006-2007 pursuant to Section
401(a)(29) of the Code except as would not have a Material Adverse
Effect. “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, and the regulations thereunder. “ERISA Affiliate”
means, with respect to any entity, trade or business, any other entity, trade
or
business that is a member of a group described in Section 414(b), (c), (m)
or
(o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity,
trade or business, or that is a member of the same “controlled group” as the
first entity, trade or business pursuant to Section 4001(a)(14) of
ERISA.
3.14 Personal
Property. Schedule 3.14 lists all tangible personal
property included in the Assets having an original cost of $5,000 or
more. Except as set forth on Schedule 3.14, Sellers own
and have good and valid title to such properties, free and clear of all Liens,
except for Permitted Encumbrances.
3.15 Changes. Except
as shown on Schedule 3.15 to this Agreement, since the Balance Sheet
Date, no Seller has, with respect to the business of the Newspaper: (a)
mortgaged, pledged or subjected to a Lien, any of the Assets; (b) sold, leased,
removed or transferred any material asset used or useful in the business of
the
Newspaper; or (c) increased the compensation payable or to become payable
to any employee or agent, except increases in accordance with historical
practices.
3.16 Brokers. Except
for Xxxxx Van Essen & Xxxxxx, the fees of which shall be paid by Sellers,
there is no broker or finder or other person who would have any valid claim
against Buyer for a commission or brokerage in connection with this Agreement
or
the transactions contemplated hereby as a result of any agreement, understanding
or action by Sellers.
3.17 Environmental
Matters. Except as set forth on Schedule 3.17, the
Newspaper has obtained all Permits (as defined below) required under all
Environmental Laws and is in compliance with all Environmental Laws and with
all
such Permits and has not violated any of the foregoing, except where such
failure to comply or violation would not have a Material Adverse
Effect.
22
For
purposes of this Agreement, “Environmental Law” means all Legal Requirements and
Permits concerning land use, public health, safety, welfare, or the environment,
including without limitation the Resource Conservation and Recovery Act,
(42
U.S.C. §§ 6901 et seq.), as amended, and the Comprehensive Environmental
Response, Compensation, and Response Act (42 U.S.C. §§ 9601 et seq.), as amended
(“CERCLA”). For purposes of this Agreement, “Legal Requirements”
means any statute, ordinance, code or other law (including the common law),
rule, regulation, order, notice standard, procedure or requirement enacted,
adopted, applied or issued by any governmental or regulatory authority (domestic
or foreign), including, without limitation judicial decisions applying or
interpreting any such Legal Requirement. For purposes of
this Agreement, “Permit” shall mean any permit, license, consent, authorization,
approval, privilege, waiver, exception, variance, exclusionary or inclusionary
orders and other concessions. All such Permits are current and in
full force and effect. Except as set forth on Schedule 3.17,
with respect to the business, ownership and/or operation of the Newspaper,
Sellers have not received and, to the knowledge of Sellers, no other person
has
received, any notice from any governmental or regulatory agency to the effect
that Sellers have performed, failed to perform, or suffered any act, or that
a
condition exists, which might reasonably give rise to liability to Sellers
under
CERCLA, nor has Sellers, or, to the knowledge of Sellers, any other person,
submitted any notice pursuant to section 103 of CERCLA to, or responded to
any request for information pursuant to section 104 of CERCLA from, any
governmental or regulatory agency with respect to the Assets. Except
as set forth on Schedule 3.17, Sellers has not caused or contributed to
the release or threat of release of any Hazardous Substance, and to the
knowledge of Sellers there exists no Hazardous Substance released, threatened
to
be released, disposed, discharged, dumped or spilled on, at, beneath, from
or to
the Real Property (including without limitation any surface waters or
groundwaters thereon), except as would not have a Material Adverse
Effect. For purposes of this Agreement, “Hazardous Substance” means
any element, material, chemical, compound, mixture or solution defined,
designated, listed, classified or regulated under any Environmental
Law. Except as set forth on Schedule 3.17, to the knowledge of
Sellers, no Hazardous Substance used, generated or handled by the Newspaper
on
the Real Property or elsewhere has been released, disposed, discharged, dumped
or spilled on, or migrated to or from, any other real property, except as
would
not have a Material Adverse Effect. Sellers has produced true and
complete copies of all non-proprietary audits, data, reports, investigations
or
other materials conducted in respect of or concerning the environmental
condition of the Real Property or the Newspaper that are in Sellers possession,
custody or control. Except as set forth on Schedule 3.17, to
the knowledge of Sellers, no underground storage tanks or asbestos containing
materials are or have been located in, on or under any portion of the Real
Property or structures thereon.
23
3.18 Circulation. The
paid circulation of the Newspaper reported in the Audit Bureau of Circulations
Reports for the 26 weeks ended September 24, 2006 and for the 27 weeks ended
April 1, 2007 and the Newspaper’s publisher’s statements (as set forth on
Schedule 3.18 hereto) are true and correct.
3.19 Insurance. Schedule 3.19 sets forth a true, correct and complete list of all claims made by Sellers under insurance policies of any kind or nature maintained as of the date of this Agreement by or on behalf of Sellers and relating to the Newspaper and/or the Assets which are still outstanding, setting forth as to each claim the date, nature and amount thereof and its current status.
3.20 Taxes. (a)
Except as set forth in Schedule 3.20, GHSWV has timely filed, after
giving effect to any applicable extensions, all tax returns required to be
filed
by it, and all such tax returns were complete and correct at the time of filing
and continue to be complete and correct. GHSWV has timely paid, after
giving effect to any applicable extensions, all taxes required to be paid by
it.
(b) No
representative of any taxing authority is asserting in writing or orally any
material tax deficiency that has not been adequately reserved for, and no liens
for taxes exist (other than liens for taxes not yet due or for taxes being
contested in good faith), with respect to the Assets or the
Newspaper. All required tax estimates, deposits, prepayments and
similar reports or payments for current periods have been properly
made. There are no actions, suits, proceedings, investigations or
claims pending or, to the knowledge of Sellers, threatened against GHSWV in
respect of taxes, nor are any material matters under discussion with any
governmental authority relating to taxes.
(c) All
material amounts that are required to be collected or withheld by GHSWV have
been duly collected and withheld, and any such amounts that are required to
have
been remitted to any taxing authority have been duly remitted.
(d) GHSWV
has not waived any statute of limitations in respect of taxes or agreed to
an
extension of time with respect to a tax assessment or deficiency.
24
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
represents and warrants to Sellers as follows:
4.1 Organization. Buyer
is a corporation validly existing and in good standing under the laws of the
State of West Virginia.
4.2 Authority
Relative to this Agreement. Buyer has the full power, authority
and legal right to execute and deliver this Agreement and to consummate the
transactions and perform its obligations as contemplated hereby. The
execution and delivery of this Agreement by Buyer and the consummation of the
transactions contemplated hereby by Buyer have been duly and validly authorized
by all necessary action, and this Agreement has been duly and validly executed
and delivered by Buyer and assuming due authorization, execution and delivery
by
Seller, constitutes a legal, valid and binding obligation of Buyer enforceable
against Buyer in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency or similar law affecting the rights of
creditors generally.
4.3 No
Defaults. The execution, delivery and performance of this
Agreement by Buyer will not (a) conflict with or result in any breach of
any provision of the certificate of incorporation, by-laws or other
organizational documents of Buyer, or (b) violate any law, statute, rule,
regulation, order, injunction or decree of any federal, state or local
governmental authority or agency applicable to Buyer.
4.4 Brokers. There
is no broker or finder or other person who would have any valid claim against
any Seller for a commission or brokerage in connection with this Agreement
or
the transactions contemplated hereby as a result of any agreement, understanding
or action by Buyer.
ARTICLE
V.
COVENANTS
OF SELLER PENDING THE CLOSING DATE
Sellers,
as applicable, covenant and agree that from the date hereof to and including
the
Closing Date:
5.1 Maintenance
of Business. Sellers shall continue to carry on the business and
operation of, and maintain the books, accounts and records of, the Newspaper
in
substantially the same manner as heretofore in the ordinary course of business
and shall maintain the properties, machinery, equipment and other Assets used
in
the business of the Newspaper in substantially the same manner as heretofore
in
the ordinary course of business.
25
Except
as
set forth on Schedule 5.1, prior to the Closing Date, no Seller will,
with respect to the Newspaper, without the prior written consent of Buyer,
which
will not be unreasonably withheld, conditioned or delayed:
(a) (i)
Make any change in circulation practices, or promotional, marketing or premium
practices of the Newspaper, other than changes in the ordinary course of
business which changes are not material, or (ii) make any change in policies
for
the pricing of circulation or advertising of the Newspaper except for changes
in
the ordinary course of business which changes are not material;
(b) Sell,
lease, remove, transfer or agree to sell, lease, remove or transfer any of
the
Assets without replacement thereof with an asset of substantially equivalent
kind, condition and value;
(c) Enter
into or amend any contract of employment or collective bargaining agreement,
or
permit or commit to any increases or changes in the compensation (including,
but
not limited to, bonus, pension, profit-sharing, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement) of any employees of the Newspaper, except for increases in
accordance with historical practices;
(d) Enter
into or amend any contract or commitment with respect to any of the Newspaper
involving annual consideration of more than $25,000, waive any right or enter
into any other transaction, other than as permitted by other provisions of
this
Agreement;
(e) Sell,
assign, transfer, license or permit to lapse any material Right;
(f) Make
any material change in any of the Real Property or fail to maintain the Real
Property or other Assets in adequate repair and condition, ordinary wear and
tear excepted; or cancel or fail to renew any of the current insurance policies
or any of the coverage thereunder maintained for the protection of any of the
Real Property or the other Assets;
26
(g) Except
for Permitted Encumbrances, encumber any of the Assets or permit any of the
Assets to become subject to any Lien; or
(h) Enter
into any contracts, agreements or arrangements (written or oral) with any of
its
affiliates.
5.2 Organization;
Goodwill. Sellers shall use their reasonable efforts to preserve
the business organization of the Newspaper intact and preserve the goodwill
of
the Newspaper’s suppliers, customers and others having business relations with
the them.
5.3 Access
to Facilities, Files and Records. At the reasonable request of
Buyer and subject to the need to preserve the confidentiality of this
transaction prior to Closing in order to preserve relationships with employees
and customers, Sellers shall give or cause to be given to the officers,
employees, accountants, counsel and authorized representatives of Buyer (a)
full
access during normal business hours to all facilities, property, accounts,
books, minute books, deeds, title papers, licenses, agreements, contracts,
tax
returns, records and files of every character, equipment, machinery, fixtures,
furniture, vehicles, notes and accounts payable and receivable and inventories
related to the Newspaper, and (b) all such other information concerning the
Assets and affairs of the Newspaper as Buyer may reasonably
request. With the consent and supervision of Sellers, Sellers shall
permit representatives of Buyer to perform inspections of the Real Property
and
the structures located thereon and to perform surveys, environmental
assessments, sampling and audits as Buyer may reasonably request with respect
to
the Assets.
5.4 Representations
and Warranties. Sellers shall give detailed written notice to
Buyer promptly upon the occurrence of or becoming aware of the impending or
threatened occurrence of any event which would cause or constitute a breach,
or
would have caused a breach had such event occurred or been known to Sellers
prior to the date hereof, of any of Sellers representations or warranties
contained in this Agreement or in any Schedule hereto.
5.5 Corporate
Action. Subject to the provisions of this Agreement, Sellers will
take all necessary action required of them to carry out the transactions
contemplated by this Agreement.
5.6 Consents. Sellers
will use commercially reasonable efforts to obtain or cause to be obtained
prior
to the Closing Date consents to the assignment to or assumption by Buyer of
all
of the Material Contracts which require the consent of any third party by reason
of the transactions provided for in this Agreement as shown on Schedule
3.9; provided, however, that no Seller shall be required to make any
payments or to incur any obligations to third parties in connection with the
obtaining of any such consent.
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5.7 Confidential
Information. If for any reason the transactions contemplated in
this Agreement are not consummated, Sellers shall not disclose to third parties
any information designated as confidential and received from Buyer or its agents
in the course of investigating, negotiating and completing the transactions
contemplated by this Agreement. Nothing shall be deemed to be
confidential information with respect to the preceding sentence
which: (a) is known to Sellers at the time of its disclosure to it;
(b) becomes publicly known or available other than through disclosure by
Sellers; (c) is rightfully received by Sellers from a third party not known
by
Sellers to be subject to an obligation of confidentiality; or (d) is
independently developed by Sellers.
5.8 Consummation
of Agreement. Subject to the provisions of Section 10.2 of this
Agreement, Sellers shall use reasonable efforts to fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under
this
Agreement and to cause the transactions contemplated by this Agreement to be
fully carried out.
5.9 Notice
of Proceedings. Sellers will promptly notify Buyer in writing
upon becoming aware of any order or decree or any complaint praying for an
order
or decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereunder, or upon receiving any notice from any
governmental department, court, agency or commission of its intention to
institute an investigation into, or institute any action or proceeding to
restrain or enjoin consummation of this Agreement or such transactions, or
to
nullify or render ineffective this Agreement or such transactions if
consummated.
5.10 Interim
Financial Statements. Sellers shall deliver to Buyer unaudited
interim financial statements for the Newspaper promptly but not later than
20
days after the close of each of the Newspaper’s periodic accounting periods, if
any, that occurs between the Balance Sheet Date and the Closing
Date. Such interim periodic financial statements shall include
financial information both for the current accounting period and for the fiscal
year to date, as well as comparisons with the respective corresponding periods
in the prior fiscal year.
5.11 Taxes. Sellers
shall pay all taxes relating to the Newspaper or the Assets as they become
due.
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5.12 Audited
Financial Statements; Interim Financial Statements. Sellers shall
cause to be delivered to Buyer within thirty (30) days following the Closing
Date Ernst & Young LLP’s audit of the Newspaper’s financial statements for
the three years ending December 31, 2006 and interim financial statements of
Newspaper as required by financial reporting standards affecting Buyer or
Champion.
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ARTICLE
VI.
COVENANTS
OF BUYER PENDING THE CLOSING DATE
Buyer
covenants and agrees that from the date hereof to and including the Closing
Date:
6.1 Representations
and Warranties. Buyer shall give detailed written notice to
Sellers promptly upon the occurrence of or becoming aware of the impending
or
threatened occurrence of any event which would cause or constitute a breach,
or
would have caused a breach had such event occurred or been known to Buyer prior
to the date hereof, of any of the representations and warranties of Buyer
contained in this Agreement.
6.2 Corporate
Action. Subject to the provisions of this Agreement, Buyer will
take all necessary corporate and other action required of it to carry out the
transactions contemplated by this Agreement.
6.3 Confidential
Information. If for any reason the transactions contemplated in
this Agreement are not consummated, Buyer shall not disclose to third parties
any information designated as confidential and received from Sellers or their
agents in the course of investigating, negotiating and completing the
transactions contemplated by this Agreement. Nothing shall be deemed
to be confidential information which: (a) is known to Buyer at the
time of its disclosure to it; (b) becomes publicly known or available other
than
through disclosure by Buyer; (c) is rightfully received by Buyer from a third
party; or (d) is independently developed by Buyer.
Except
to
the extent required by law, Buyer also shall not disclose to third parties
the
terms of this Agreement; provided, however, that Buyer may disclose such terms
to any current or prospective lender or investor who has demonstrated to the
reasonable satisfaction of Buyer (x) the financial capability to be a lender
or
investor of Buyer and (y) a good faith interest in becoming a lender or investor
of Buyer. Buyer shall cause any person or entity to whom the terms of
this Agreement are disclosed to agree to abide by the provisions of this Section
6.3. Buyer shall be responsible for compliance with the provisions of
this Section 6.3 by any person or entity to whom the terms of this Agreement
are
disclosed by Buyer.
6.4 Consummation
of Agreement. Subject to the provisions of Section 10.2 of this
Agreement, Buyer shall use its reasonable efforts to fulfill and perform all
conditions and obligations on its part to be fulfilled and performed under
this
Agreement and to cause the transactions contemplated by this Agreement to be
fully carried out.
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6.5 Notice
of Proceedings. Buyer will promptly notify Sellers in writing
upon becoming aware of any order or decree or any complaint praying for an
order
or decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereunder, or upon receiving any notice from any
governmental department, court, agency or commission of its intention to
institute an investigation into, or institute any action or proceeding to
restrain or enjoin the consummation of this Agreement or such transactions,
or
to nullify or render ineffective this Agreement or such transactions if
consummated.
6.6 Maintenance
of Financial Position. Between the date of this Agreement and the
Closing Date, Buyer shall not take any action, or fail to take any action,
that
would impair Buyer’s ability to fulfill its obligations under this
Agreement.
ARTICLE
VII.
CONDITIONS
TO THE OBLIGATIONS OF SELLERS
The
obligations of Sellers under this Agreement are, at their option, subject to
the
fulfillment of the following conditions prior to or at the Closing
Date:
7.1 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Buyer contained in this Agreement and in
any
statement, certificate, schedule or other document delivered by Buyer pursuant
hereto or in connection with the transactions contemplated hereby, shall have
been true and accurate as of the date when made and shall be deemed to be made
again on and as of the Closing Date and shall then be true and accurate, except
for untrue or inaccurate representation or warranties which would not, in the
aggregate, impair Buyer’s ability to fulfill its obligations under this
Agreement;
(b) Buyer
shall have performed and complied in all material respects with each and every
covenant and agreement required by this Agreement to be performed or complied
with by it prior to or at the Closing Date, and shall have delivered all
agreements and documents contemplated by Section 2.3, other than the delivery
by
Buyer of the Purchase Price and the instrument of assumption, each of which
shall be delivered as of the Closing; and
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(c) Buyer
shall have delivered to Sellers a certificate of an appropriate officer of
Buyer, dated the Closing Date, certifying to the fulfillment of the conditions
set forth in Sections 7.1(a) and 7.1(b) above.
7.2 Proceedings.
(a) No
action or proceeding shall have been instituted before any court or governmental
body to restrain or prohibit, or to obtain substantial damages in respect of,
the consummation of the transactions contemplated by this Agreement which,
in
the reasonable opinion of Sellers, may reasonably be expected to result in
an
award of substantial damages;
(b) None
of the parties to this Agreement shall have received written notice from any
governmental body of (i) its intent to institute any action or proceeding to
restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry, including a routine Civil Investigative Demand) into the consummation
of this Agreement, or (ii) the actual commencement of such an
investigation. In the event such a notice of intent is received or
such an investigation is commenced, this Agreement may not be abandoned by
Sellers for a period of ninety (90) days from the date of such notice of intent
or notice of commencement, but Closing shall be delayed during such
period. This Agreement may be abandoned after this ninety (90)-day
period if, in the reasonable opinion of Sellers, there is a likely probability
that an investigation will result in an action or proceeding of the type
described in clause (a) of this Section 7.2; and
(c) At
the Closing Date, there shall be no injunction, restraining order or decree
of
any nature of any court or governmental authority or body in effect which
restrains or prohibits the consummation of the sale and purchase of the
Assets.
7.3 Xxxx-Xxxxx-Xxxxxx. The
waiting period (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated, and all other authorizations,
consents and approvals of governments and governmental agencies required for
consummation of the transactions contemplated hereby shall have been
obtained.
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ARTICLE
VIII.
CONDITIONS
TO THE OBLIGATIONS OF BUYER
The
obligations of Buyer under this Agreement are, at its option, subject to the
fulfillment of the following conditions prior to or at the Closing
Date.
8.1 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Sellers contained in this Agreement and in
any
statement, deed, certificate, schedule or other document delivered pursuant
to
this Agreement or in connection with the transactions contemplated hereby,
shall
have been true and accurate (without regard to any materiality qualifiers
contained therein) as of the date when made and shall be deemed to be made
again
on and as of the Closing Date and shall then be true and accurate (without
regard to any materiality qualifiers contained therein), except for untrue
or
inaccurate representations or warranties which would not, singly or in the
aggregate, have or reasonably be expected to have a Material Adverse
Effect;
(b) Sellers
shall have performed and complied in all material respects with each and every
covenant and agreement required by this Agreement to be performed or complied
with by it prior to or at the Closing Date, and shall have delivered all
agreements and documents contemplated by Section 2.2, other than delivery to
Buyer of the instruments conveying the Assets to Buyer which shall be delivered
as of the Closing; and
(c) Sellers
shall have delivered to Buyer certificates of appropriate officers of Sellers,
dated the Closing Date, certifying to the fulfillment of the conditions set
forth in Sections 8.1(a) and 8.1(b) above.
|
|
8.2
|
Proceedings.
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(a) No
action or proceeding shall have been instituted before any court or governmental
body to restrain or prohibit, or to obtain substantial damages in respect of,
the consummation of this Agreement which, in the reasonable opinion of Buyer,
may reasonably be expected to result in an award of such substantial
damages;
(b) None
of the parties to this Agreement shall have received written notice from any
governmental body of (i) its intent to institute any action or proceeding to
restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry, including a routine Civil Investigative Demand) into the consummation
of this Agreement, or (ii) the actual commencement of such an
investigation. In the event such a notice of intent is received or
such an investigation is commenced, this Agreement may not be abandoned by
Buyer
for a period of ninety (90) days from the date of such notice of intent or
notice of commencement, but Closing shall be delayed during such
period. This Agreement may be abandoned after this ninety (90)-day
period if, in the reasonable opinion of Buyer, there is a likely probability
that an investigation will result in an action or proceeding of the type
described in clause (a) of this Section 8.2; and
(c) At
the Closing Date, there shall be no injunction, restraining order or decree
of
any nature of any court or governmental authority or body in effect which
restrains or prohibits the consummation of the sale and purchase of the
Assets.
8.3 Xxxx-Xxxxx-Xxxxxx. The
waiting period (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated, and all other authorizations,
consents and approvals of governments and governmental agencies required for
consummation of the transactions contemplated hereby shall have been
obtained.
8.4 Consents. Sellers
shall have obtained the material consents set forth on Schedule 8.4 in
form and substance reasonably satisfactory to Buyer.
8.5 Financing. Buyer
shall have obtained, and on the Closing Date will have commitments for loans
on
terms and conditions reasonably acceptable to Buyer to provide sufficient funds
to pay to Sellers the Purchase Price and otherwise to satisfy all of its
obligations under this Agreement.
8.6 Title
Insurance. Buyer shall have obtained a commitment for a 2006 ALTA
Owner’s Title Insurance Policy with respect to the Real Property (the “Title
Commitment”) issued by a title company reasonably acceptable to Buyer and its
lenders (the “Title Company”) in form and substance reasonably satisfactory to
Buyer and its lenders. The Title Commitment will be accompanied by
readable copies of all documents cited as exceptions to title therein (the
“Underlying Documents”), which will be certified by the Title Company as true,
correct and complete copies of the Underlying Documents. Buyer shall
have the right, in its reasonable discretion, to object to any such exceptions,
and to terminate this Agreement if Sellers do not cause such exceptions to
be
removed, such that the Title Commitment is deemed reasonably satisfactory to
Buyer and its lenders.
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ARTICLE
IX.
INDEMNIFICATION
9.1 Survival;
Limitations.
(a) The
representations and warranties of the parties contained in or made pursuant
to
this Agreement shall be deemed to have been made on the date hereof and on
the
Closing Date, shall survive the Closing Date and shall remain operative and
in
full force and effect for the period ending May 7, 2008 (the “Survival Period”);
provided that if on or prior to the expiration of the Survival Period, a notice
of claim for indemnification shall have been given in accordance with
Section 9.4 hereof, the indemnified party shall continue to have the right
to be indemnified with respect to such indemnification claim until such claim
for indemnification has been satisfied or otherwise resolved as provided in
this
Article IX; and provided further that the representations and warranties
contained in Section 3.17 (‘Environmental Matters’), 3.18 (‘Circulation’) and
Section 3.20 (‘Taxes’) shall survive until the expiration of the applicable
statute of limitations period plus 90 days and the representations and
warranties contained in Sections 3.2 (‘Sellers’ Authority’), 3.16 (‘Brokers’)
and 4.2 (‘Buyer’s Authority’) and all covenants and agreements made by any party
hereunder which are to be performed after the Closing Date shall survive without
time limit, with the exception of Sections 9.2(a) and 9.3(a), which shall
only remain operative and in full force and effect as long as indemnification
with respect to the underlying representation and warranty remains available
in
accordance with the foregoing provisions of this Section 9.1(a) (including
as extended pursuant to the first proviso hereof).
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(b) Except
for any Loss and Expense suffered by Buyer based on the breach of any
representation or warranty contained in Section 3.17 (‘Environmental Matters’),
Section 3.18 (‘Circulation’) and Section 3.20 (‘Taxes’) or resulting from fraud
or willful misconduct by Sellers, Buyer shall not be entitled to indemnification
under this Agreement for any indemnification claim under Section 9.2(a) until
the aggregate Loss and Expense (as defined herein) suffered by Buyer subject
to
indemnification under Section 9.2(a) of this Agreement exceeds $100,000
(the “Threshold”). Once the Threshold has been reached, Buyer shall
be entitled to full indemnification from Sellers pursuant to Section 9.2(a)
below for the aggregate amount of Loss and Expense suffered by Buyer, including
any and all claims which individually or in the aggregate did not reach the
Threshold. Notwithstanding the foregoing, the Threshold shall not
apply to any adjustments under Section 1.6, any Loss and Expense suffered by
Buyer based on any breach of any representation or warranty contained in Section
3.17 (‘Environmental Matters’) or Section 3.20 (‘Taxes’) or resulting from fraud
or willful misconduct by Sellers or to any indemnification claim related to
covenants and agreements made by any party hereto which are to be performed
after the Closing Date.
(c) Sellers’
maximum aggregate liability to Buyer for indemnification claims under Section
9.2(a) of this Agreement with respect to any Loss and Expense shall be $7.7
million (the “Cap”); provided that the Cap shall not apply to any Loss and
Expense suffered by Buyer based on any breach of any representation or warranty
contained in Section 3.17 (‘Environmental Matters’), Section 3.18
(‘Circulation’) or resulting from fraud or willful misconduct by Sellers or any
covenants and agreements made by any party hereto which are to be performed
after the Closing Date. Except with regard to compensation for claims
paid to third parties, no indemnifying party shall have any liability to an
indemnified party for any punitive, indirect, incidental or consequential
damages or loss including, without limitation, loss of revenue or loss of
profits.
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(d) Except
for equitable remedies (including, without limitation, injunctive relief) and
in
the absence of fraud, the parties hereto acknowledge and agree that the sole
and
exclusive remedy of Buyer and Seller, as the case may be, from and after the
Closing Date with respect to any Loss and Expense whatsoever and any and all
claims for breach or liability under this Agreement or any of the transactions
contemplated hereby shall be solely in accordance with, and limited by, the
indemnification provisions set forth in this Article IX.
9.2 Indemnification
of Buyer. Sellers agree that they shall jointly and
severally indemnify, defend and hold Buyer harmless from and against
any and all damages, claims, losses, expenses, costs, obligations and
liabilities, including without limitation, liabilities for reasonable attorneys’
fees and disbursements (“Loss and Expense”), suffered directly or indirectly by
Buyer by reason of, or arising out of:
(a) any
breach of any representation or warranty made by Sellers pursuant to this
Agreement, provided that, solely for purposes of this Article IX, any
representation or warranty of Sellers contained herein that is subject to a
materiality or Material Adverse Effect qualification shall not be so qualified
for purposes of determining whether a breach has occurred;
(b) any
failure by any Seller to perform or fulfill any of its covenants or agreements
set forth in this Agreement;
(c) any
failure by any Seller to pay or perform when due any of its liabilities or
obligations arising out of or related to the business of the Newspaper on or
prior to the Closing Date which have not been assumed by Buyer hereunder,
including, but not limited to, the Excluded Liabilities;
(d) any
litigation, proceeding or claim by any third party relating to the business
or
operations of the Newspaper on or prior to the Closing Date;
(e) the
Excluded Assets; or
(f) any
liability, including but not limited to any liability pursuant to any
Environmental Law, arising from or related to conditions or events that occurred
prior to the Closing arising from or related to the ownership of the Real
Property and/or the operations of the Newspaper on the Real Property on or
prior
to the Closing Date.
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9.3 Indemnification
of Sellers. Buyer agrees that it shall indemnify, defend and hold
each Seller harmless from and against any and all Loss and Expense suffered
directly or indirectly by such Seller by reason of, or arising out
of:
(a) any
breach of any representation or warranty made by Buyer pursuant to this
Agreement;
(b) any
failure by Buyer to perform or fulfill any of its covenants or agreements set
forth in this Agreement;
(c) any
failure by Buyer to pay or discharge on or subsequent to the Closing Date any
Assumed Liabilities hereunder or any liabilities or obligations arising out
of
or related to the business of the Newspaper incurred or first required to be
performed by Buyer after the Closing Date; or
(d) any
litigation, proceeding or claim by any third party relating to the business
or
operation of the Newspaper after the Closing Date.
(e) claims
made by New Employees with respect to termination of employment by Buyer after
the Closing Date, including, but not limited to, any claims for improper
termination or severance payments.
9.4 Notice
of Claims. If any Sellers or Buyer believes that it has suffered
or incurred any Loss and Expense, it shall notify the other party promptly
in
writing and within the applicable time period specified in Section 9.1,
describing such Loss and Expense, the amount thereof, if known, and the method
of computation of such Loss and Expense, all with reasonable particularity
and
containing a reference to the provisions of this Agreement in respect of which
such Loss and Expense shall have occurred; provided, however, that the amount
of
the Loss and Expense set forth in the notice shall not be a limitation on any
claim for the actual amount of such Loss and Expense.
9.5 Defense
of Third Party Claims. If any action at law or suit in equity is
instituted by a third party (a “Claim”) with respect to which any of the parties
intends to claim a Loss and Expense under this Article IX, such party shall
promptly notify the indemnifying party of such action or suit. The
indemnifying party shall have the right to conduct and control any Claim through
counsel of its own choosing, but the indemnified party may, at its election,
participate in the defense of any such Claim at its sole cost and
expense.
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Notwithstanding
the foregoing, the failure by a party to abide by these terms and conditions
shall not affect the other party’s obligations to indemnify such party against
Loss and Expense under this Article IX, except to the extent the indemnifying
party is actually prejudiced thereby.
ARTICLE
X.
MISCELLANEOUS
PROVISIONS
10.1 Risk
of Loss. The risk of any loss, damage or destruction to any of
the Assets to be transferred to Buyer hereunder from any cause shall be borne
by
Sellers at all times prior to the Closing hereunder. Upon the
occurrence of any loss or damage in excess of $100,000 to any of the Assets
to
be transferred hereunder prior to the Closing, Sellers shall notify Buyer of
same in writing immediately stating with particularity the extent of the loss
or
damage incurred, the cause thereof if known and the extent to which restoration,
replacement and repair of the Assets lost or destroyed will be reimbursed under
any insurance policy with respect thereto. In the event the loss
exceeds $1,000,000 and the Assets cannot be substantially repaired or restored
within 90 days after such loss, or, without regard to the amount or duration
of
such loss, if production of The Herald Dispatch is interrupted for three (3)
consecutive days, Buyer shall have the option, exercisable by giving written
notice to Sellers within 30 days after such loss, to:
(a) Terminate
this Agreement;
(b) Postpone
the Closing until such time as the Assets have been substantially repaired,
replaced or restored; or
(c) Elect
to consummate the Closing and accept the Assets in their “then” condition, in
which event Sellers shall assign to Buyer all rights under any insurance claim
covering the loss and pay over to Buyer any proceeds under any such insurance
policy thereto received by Sellers with respect thereto.
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10.2 Abandonment
of Agreement. This Agreement may be terminated by Sellers or
Buyer at any time prior to the Closing Date:
(a) by
the mutual consent of both parties hereto; or
(b) subject
to extension under Section 7.2(b), by Sellers if any of the conditions provided
in Article VII hereof has not been timely met and cannot be met on or before
September 15, 2007 (other than as a result of a breach of this Agreement by
Sellers) and has not been waived, provided Sellers are not then in material
breach of this Agreement; or
(c) subject
to extension under Section 8.2(b), by Buyer if any of the conditions provided
in
Article VIII hereof has not been timely met by and cannot be met on or before
September 15, 2007 (other than as a result of a breach of this Agreement by
Buyer) and has not been waived, provided Buyer is not then in material breach
of
this Agreement.
10.3 Liabilities
Upon Abandonment. In the event this Agreement is terminated
pursuant to Section 10.2 above, no party hereto shall have any liability to
any
other party for costs, expenses, damages, loss of anticipated profits or
otherwise, unless the termination occurs because of any misrepresentation or
breach of warranty by such party or the failure of performance of, or compliance
with, any covenant or agreement contained in this Agreement by such party;
provided, that if Sellers terminate this Agreement pursuant to Section 10.2(b)
because Buyer has not delivered the Purchase Price at Closing or has otherwise
breached any of its material obligations under this Agreement or if Buyer
terminates this Agreement pursuant to Section 10.2(c) because Sellers have
not
delivered the Assets at Closing or have otherwise breached their material
obligations under this Agreement, then Buyer or Sellers, as the case may be,
shall pay the other party on demand an amount equal to ten percent (10%) of
the
Base Purchase Price by wire transfer of immediately available funds, and such
payment shall constitute liquidated damages and the sole remedy of Sellers
or
Buyer, as the case may be, under this Agreement. The party that has
failed to perform acknowledges and agrees that the other party’s recovery of
such amount shall constitute payment of liquidated damages and not a penalty
and
that such liquidated damages amount is reasonable in light of the substantial
but indeterminate harm anticipated to be caused by the party that has failed
to
perform its obligations under this Agreement, the difficulty of proof of loss
and damages, the inconvenience and non-feasibility of otherwise obtaining an
adequate remedy, and the value of the transactions to be consummated
hereunder.
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10.4 Expenses. Except
as otherwise provided herein, all costs and expenses incurred in connection
with
this Agreement and the transactions contemplated hereby will be paid by the
party incurring such costs and expenses. Any sales or use taxes or
recording or transfer taxes or fees directly related to transferring the Assets
to Buyer (“Transfer Taxes”) shall be paid by Buyer. The cost of title
insurance for the real property purchased by Buyer hereunder shall be paid
by
Buyer. Buyer shall also reimburse Sellers for all costs and expenses,
not to exceed One Hundred Seventy Five Thousand Dollars ($175,000) incurred
by
Sellers and their affiliates in connection with (a) Ernst & Young LLP’s
audit of the Newspaper’s financial statements for the three years ending
December 31, 2006 if and to the extent such audit is required by Buyer; and
(b)
any related interim financial statements required by financial reporting
standards affecting Buyer.
10.5 Employees
and Employee Benefits.
(a) Buyer
hereby agrees to offer employment, effective the day after the Closing Date,
to
all individuals who are, on the Closing Date, active, full or part-time
employees (including employees on short-term leave) of the
Newspaper. With respect to each such employee to whom Buyer offers
employment, Buyer shall offer to employ such person at a base compensation
that
is no less than the base compensation that was paid to such employee immediately
prior to Closing. Each employee of the Newspaper who accepts
employment with Buyer on the Closing Date is hereinafter referred to as a “New
Employee”.
(b) Except
as set forth in subsection (a) above, Buyer, in its sole discretion, shall
determine what employee benefits will be made available to New Employees;
provided, however, that Buyer will offer medical coverage to New Employees
on
and after the Closing Date, to the extent permitted by Buyer’s health plans,
shall waive for New Employees any pre-existing condition limitations and waiting
periods that may apply under its health plans, and shall recognize New
Employees’ service with Sellers or any of their respective affiliates as if it
were service with Buyer for purposes of satisfying any vesting requirements
under any benefit plans offered by Buyer (but not for purposes of benefit
accrual or for determining the amount of benefits payable under any benefit
plan
other than a vacation plan).
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(c) Buyer
shall be responsible for any obligations under federal, state or local plant
closing statutes, including the WARN Act, with respect to events occurring
after
the Closing Date other than any such obligations arising from the consummation
of the transactions contemplated by this Agreement.
(d) Sellers
shall be responsible for and timely pay all compensation owed to the New
Employees and shall be responsible for and timely provide New Employees with
all
benefits owed under the Employee Benefit Programs through the Closing
Date. Sellers will retain all of the Employee Benefit Programs,
including all employee benefit plans and pension plans, and Buyer will not
assume obligations under any such programs. Sellers shall be fully
and solely responsible for any costs, expenses, obligations and liabilities
arising out of the pension or retirement obligations attributable to the
Newspaper’s current or former employees related to the period on or prior to the
Closing Date.
10.6 Further
Assurances and Consents.
(a) To
the extent Buyer has proceeded with Closing notwithstanding the failure of
Sellers to effect the deliveries contemplated by Sections 8.1(b) or 8.4, from
time to time after the Closing Date, without further consideration, each Seller
will, at its expense, (i) execute and deliver, or cause to be executed and
delivered, such documents to Buyer as Buyer may reasonably request in order
to
effectively vest in Buyer good and valid (and, in the case of Real Property,
good and marketable) title to the Assets, and (ii) use reasonable efforts to
obtain any third-party consents to the assignment to Buyer of the Material
Contracts which require the consent of any third party by reason of the
transactions provided for in this Agreement and which were not obtained by
Seller on or before the Closing Date.
(b) From
time to time after the Closing Date, Buyer will provide Sellers with access,
with reasonable prior notice and during normal business hours, to the financial
records of the Newspaper related to the period on or prior to the Closing Date
for use by Sellers in connection with tax and/or legal proceedings related
to
the operation of the Newspaper on or prior to the Closing Date. Buyer
agrees to maintain all tax records related to the Newspaper for all tax years
that remain open as of the Closing Date unless and until (i) Sellers notify
Buyer in writing that any such tax year(s) has (have) been closed or (ii) Buyer
has given Sellers prior written notice of its intent to destroy such records
and
Sellers have not reasonably and promptly requested that such records not be
destroyed.
42
(c) If,
in order to properly prepare its financial statements or documents to be filed
with any governmental authority or agency, it is necessary that any party hereto
be furnished with additional information relating to the Assets or the Newspaper
and such information is in the possession of any of the other parties hereto,
such party or parties agree to use its/their best efforts to furnish such
information to the requesting party without cost or expense to the requesting
party, unless it necessary for such party or parties to incur third party
expenses (e.g. legal or accounting fees) in connection with such request in
which case the requesting party shall reimburse the furnishing party for such
third party expenses. After the Closing Date, except to the extent
otherwise noted, Sellers, on the one hand, and Buyer, on the other hand, shall,
to the extent reasonably requested by the other: (i) assist in the preparation
of tax returns relating to the Assets and/or the Newspaper, (ii) cooperate
in
preparing any audits by or disputes with any governmental authority, including
but not limited to, regarding any tax returns, (iii) at any time after the
execution of this Agreement, assist in the preparation of audited financial
statements to the extent they relate to, incorporate or rely upon any
information regarding the Assets and/or the Newspaper, including but not limited
to providing relevant work papers and any certification or representation
reasonably requested, (iv) make available information, records and documents
relating to taxes relating to the Assets and/or the Newspaper, and
(v) furnish copies of correspondence received from any governmental
authority in connection with any tax audit or information request relating
to
the Assets and/or the Newspaper.
43
10.7 Waiver
of Compliance. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, representation,
warranty, covenant, agreement or condition herein may be waived by the other
party only by a written instrument signed by the party granting the
waiver. Any such waiver or failure to insist upon strict compliance
with a term of this Agreement shall not operate as a waiver of, or estoppel
with
respect to, any subsequent or other failure to comply.
10.8 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given when delivered by hand or by facsimile transmission or mailed
by
registered or certified mail (return receipt requested), postage prepaid, to
the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If
to Sellers, to:
GateHouse
Media, Inc.
000
XxxxxxXxxxx Xxxxxx
Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxxxx
X.
Xxxx
Chief
Executive Officer
Fax
No. (000) 000-0000
with
a copy to:
GateHouse
Media, Inc.
000
XxxxxxXxxxx Xxxxxx Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxx
Xxxxxxxx Sack
General
Counsel
Fax
No.
(000) 000-0000
(b) If
to Buyer:
Champion
Publishing, Inc.
0000-00
Xxxxx Xxxxxx
Xxxxxxxxxx,
Xxxx Xxxxxxxx 00000
Attn: Xxxx
X. Xxx
Fax
No.
(000) 000-0000
with
a
copy to:
Xxxxxxxxxx
Xxxxx LLP
000
Xxxxx Xxxxxx
Xxxxxxxxxx,
Xxxx Xxxxxxxx
00000
Attn: Xxxxxx
X. Xxxxxx
Fax
No. (000) 000-0000
44
(c) If
to Champion Industries, Inc., to:
0000-00
Xxxxx Xxxxxx
Xxxxxxxxxx,
Xxxx Xxxxxxxx 00000
Attn: Xxxx
X. Xxx
Senior
Vice President and Chief Financial Officer
Fax
No. (000) 000-0000
with
a
copy to:
Xxxxxxxxxx
Xxxxx LLP
000
Xxxxx Xxxxxx
Xxxxxxxxxx,
Xxxx Xxxxxxxx
00000
Attn: Xxxxxx
X. Xxxxxx
Fax
No. (000) 000-0000
10.9 Assignment. This
Agreement and all of its terms shall be binding upon and inure to the benefit
of
the parties and their respective successors and permitted
assigns. Prior to the Closing, this Agreement shall not be assigned
by any party hereto without the prior written consent of the other
parties.
10.10 Governing
Law. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the State of West Virginia without reference
to
the choice of law principles thereof.
10.11 Public
Announcements. Prior to the Closing, except as required by
applicable law, rule or regulation, no public announcement (including an
announcement to employees) or press release concerning the transactions provided
for herein shall be made by any party without the prior written approval of
the
other parties, which shall not be unreasonably withheld, conditioned or
delayed. With respect to any disclosures required by applicable law,
rule or regulation, including disclosure requirements under applicable
securities laws and Current Reports on Form 8-K, each party will consult with
the other party and allow the other party to review the proposed disclosure
prior to making any such disclosures. In addition, in the event
Buyer, GateHouse or any of their respective affiliates sells the Newspaper
during the twelve (12) month period commencing on the Closing Date, Buyer and
GateHouse shall not, and shall cause their respective affiliates not to,
publicly disclose any information relating to the multiple of the Newspaper’s
EBITDA, cash flow, revenue or any other financial metric of the Newspaper that
the purchase price represents, other than disclosures required by
law.
45
10.12 No
Third Party Rights. Nothing in this Agreement shall be deemed to
create any right on the part of any person or entity not a party to this
Agreement.
10.13 Waiver
of Jury Trial. Sellers and Buyer specifically waive any right to
trial by jury in any court with respect to any contractual, tortious or
statutory claim, counterclaim or crossclaim against the other arising out of
or
connected in any way to this Agreement because the parties hereto, each of
whom
are represented by counsel, believe that the complex commercial aspects of
their
dealing with one another make a jury determination neither desirable nor
appropriate.
10.14 Counterparts. This
Agreement may be executed in identical counterparts and each counterpart hereof
shall be deemed to be an original instrument, but all counterparts hereof taken
together shall constitute a single document.
10.15 Headings. The
article and section headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
of
this Agreement.
10.16 Specific
Performance. Except as provided in Section 10.3, without limiting
or waiving in any respect any rights or remedies of Buyer or any of Sellers
given under this Agreement, or now or hereafter existing at law or in equity
or
by statute, Buyer and each Seller shall be entitled to seek specific performance
of the obligations to be performed by Buyer or a Seller, as the case may be,
in
accordance with the provisions of this Agreement.
10.17 Severability. If
any provision of this Agreement or the application of any such provision to
any
person or circumstance shall be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
10.18 Confidentiality. Except
as contemplated in Section 6.3, Sellers and Buyer shall not disclose to third
parties the terms of this Agreement except as required by applicable
law.
10.19 Entire
Agreement; Amendments. This Agreement, including the Exhibits and
Schedules hereto and the documents delivered hereunder, embodies the entire
agreement and understanding of the parties in respect of the subject matter
hereof, and supersedes all prior agreements and understandings between the
parties. This Agreement may not be amended except in a writing signed
by both parties. The parties have caused this Agreement to be signed
by their respective duly authorized officers as of the date first above
written.
46
10.20 Champion
Industries, Inc. Champion Industries, Inc. hereby guarantees to
Sellers, as a primary obligor, payment and performance by Buyer of its
obligations under this Agreement and under each of the other agreements
contemplated hereunder to which Buyer is a party (including without limitation,
all amendments hereof and thereof), in each case, subject to the terms,
conditions and limitations hereof and thereof. Champion Industries,
Inc. hereby waives suretyship defenses, demand, payment, protest and notice
of
dishonor or nonperformance of any such obligations (other than any copies of
notices required to be delivered under this Agreement to Champion Industries,
Inc.), and no consent of Champion Industries, Inc. shall be required with
respect to any amendment or waiver of this Agreement (other than this Section
10.22) that is effected in accordance with this Agreement. The
liability of Champion Industries, Inc. under this Agreement by reason of this
Section 10.22 is primary, and Sellers shall not be required to make any demand
on Buyer for performance of any of its obligations under this Agreement, nor
to
exhaust any legal, contractual or equitable remedies against Buyer, prior to
proceeding against Champion Industries, Inc.
{Signature
page follows}
47
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, which is
effective as of the date first written above.
SELLERS:
GATEHOUSE
MEDIA, INC.
By:
Name:
Title:
Date:
GATEHOUSE
MEDIA WEST VIRGINIA HOLDINGS, INC.
By:
Name:
Title:
Date:
GATEHOUSE
MEDIA ILLINOIS HOLDINGS, INC.
By:
Name:
Title:
Date:
BUYER:
CHAMPION
PUBLISHING, INC.
By:
Name: Xxxxx
X.
Xxxxxx
Title: President
and Chief
Operating Officer
Date: June
28,
2007
48
CHAMPION
INDUSTRIES, INC.
By:
Name: Xxxxx
X.
Xxxxxx
Title: President
and Chief
Operating Officer
Date: June
28,
2007
