EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
by and among
21st CENTURY NEWSPAPERS, INC.,
JOURNAL REGISTER COMPANY
and
WOLVERINE ACQUISITION CORP.
Dated as of July 2, 2004
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..............................................1
Section 1.1 Defined Terms..........................................1
Section 1.2 Interpretation.........................................9
ARTICLE II THE MERGER...............................................9
Section 2.1 The Merger.............................................9
Section 2.2 Closing................................................9
Section 2.3 Effective Time.........................................9
Section 2.4 Articles of Incorporation.............................10
Section 2.5 Bylaws................................................10
Section 2.6 Directors of the Surviving Corporation................10
Section 2.7 Officers of the Surviving Corporation.................10
Section 2.8 Effect of Merger on Capital Stock.....................10
Section 2.9 Exchange of Certificates..............................11
Section 2.10 Payment at Closing for Certain Indebtedness...........12
Section 2.11 Payments at Closing for Expenses......................13
Section 2.12 Transfer Taxes........................................13
Section 2.13 FIRPTA Certificate....................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........13
Section 3.1 Organization and Qualification........................13
Section 3.2 Capitalization........................................14
Section 3.3 Authorization and Validity of Agreement...............15
Section 3.4 Consents and Approvals................................15
Section 3.5 No Violations.........................................15
Section 3.6 Financial Statements; Undisclosed Liabilities.........16
Section 3.7 Compliance with Law...................................17
Section 3.8 Litigation............................................17
Section 3.9 Employee Benefit Matters..............................17
Section 3.10 Taxes.................................................19
Section 3.11 Intellectual Property.................................20
Section 3.12 Material Contracts....................................20
Section 3.13 Brokers and Finders...................................22
Section 3.14 Absence of Certain Changes............................22
Section 3.15 Circulation Matters...................................22
Section 3.16 Environmental Matters.................................23
Section 3.17 Related Transactions..................................24
Section 3.18 Real Property.........................................24
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Section 3.19 Advertising...........................................25
Section 3.20 Sufficiency of Assets.................................25
Section 3.21 Insurance.............................................25
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.............26
Section 4.1 Organization and Qualification........................26
Section 4.2 Authorization and Validity of Agreement...............26
Section 4.3 Consents and Approvals................................26
Section 4.4 No Violation..........................................27
Section 4.5 Funding...............................................27
Section 4.6 Brokers and Finders...................................27
ARTICLE V COVENANTS OF THE COMPANY................................27
Section 5.1 Conduct of the Company................................27
Section 5.2 Termination of Discussions; No Solicitations..........30
Section 5.3 Repurchase of Notes...................................30
Section 5.4 Termination of Affiliate Agreements...................30
ARTICLE VI COVENANTS OF PURCHASER..................................31
Section 6.1 Compensation and Benefits.............................31
Section 6.2 Insurance; Indemnity..................................32
ARTICLE VII COVENANTS OF PURCHASER AND THE COMPANY..................33
Section 7.1 Access to Information.................................33
Section 7.2 Reasonable Efforts....................................33
Section 7.3 Certain Filings.......................................34
Section 7.4 Public Announcements..................................34
Section 7.5 Survival of Representations and Warranties............34
Section 7.6 Notices of Certain Events.............................35
Section 7.7 Implied Warranties....................................35
ARTICLE VIII CONDITIONS TO THE MERGER................................35
Section 8.1 Conditions to Obligations of Each Party...............35
Section 8.2 Conditions Precedent to the Obligations
of the Company...................................36
Section 8.3 Conditions Precedent to the Obligations
of Purchaser and Merger Sub......................36
ARTICLE IX TERMINATION.............................................38
Section 9.1 Termination...........................................38
Section 9.2 Effect of Termination.................................39
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ARTICLE X MISCELLANEOUS...........................................39
Section 10.1 Notices...............................................39
Section 10.2 Entire Agreement......................................40
Section 10.3 Assignment; Binding Effect............................40
Section 10.4 Fees and Expenses.....................................41
Section 10.5 Amendments............................................41
Section 10.6 Waivers...............................................41
Section 10.7 Severability..........................................41
Section 10.8 Captions..............................................41
Section 10.9 Counterparts..........................................41
Section 10.10 Governing Law.........................................41
Section 10.11 Jurisdiction; Venue; Services of Process..............42
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Agreement") is made and entered
into this 2nd day of July, 2004, by and among 21ST CENTURY NEWSPAPERS, INC., a
Delaware corporation (the "Company"), JOURNAL REGISTER COMPANY, a Delaware
corporation ("Purchaser"), and WOLVERINE ACQUISITION CORP., a Delaware
corporation wholly owned by Purchaser ("Merger Sub").
RECITALS
WHEREAS, the respective Boards of Directors of the Company and Merger
Sub have determined that the merger of Merger Sub with and into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, would be fair and in the best interests of the current Stockholders
and the stockholders of Merger Sub, respectively;
WHEREAS, concurrently with the execution of this Agreement,
Stockholders holding in excess of 80% of the Company Stock have executed, and
delivered to Purchaser, written consents irrevocably approving the Merger and
the transactions contemplated hereby;
WHEREAS, Purchaser and the Company desire to make, and have relied
upon, certain representations, warranties, covenants and agreements in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINED TERMS. When used in this Agreement, the following
terms shall have the meanings set forth below:
"Affiliate" means, with respect to any specified Person, a Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, including,
without limitation, each Subsidiary of such specified Person. For the purposes
of this definition, "control", when used with respect to any specified Person,
means the power to direct or cause the direction of the management and policies
of such Person, directly or indirectly, whether through ownership of voting
securities or by contract, credit arrangement or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" has the meaning set forth in the Preamble.
"Alternative Transaction" means, with respect to the Company and its
Subsidiaries, any transaction or series of related transactions involving (a)
other than as permitted pursuant to Section 5.1, the sale, disposition or other
transfer of a material amount of the assets of the Company or its Subsidiaries,
(b) other than in accordance with the Trust Agreement of Xxxxx Media Company,
LLC, et al., Liquidation Trust dated as of December 31, 2003, the sale,
disposition or other transfer of shares of any series of capital stock of the
Company or its Subsidiaries (other than pursuant to the exercise of Options
outstanding as of the date hereof) or (c) a merger, consolidation,
recapitalization or similar transaction involving the Company and/or its
Subsidiaries.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Code" means the United States Internal Revenue Code of 1986, as
amended.
"Commitment Letters" has the meaning set forth in Section 4.5.
"Company" has the meaning set forth in the Preamble.
"Company Benefit Plans" means all Employee Benefit Plans sponsored,
contributed to or maintained by the Company or any of its Subsidiaries, or to
which the Company or any of its Subsidiaries is a party, for the benefit of, or
with, current or former employees of the Company or any of its Subsidiaries, but
excluding any Multiemployer Plan.
"Company Business" has the meaning set forth in Section 3.20.
"Company Disclosure Schedule" means the Disclosure Schedule delivered
by the Company to Purchaser simultaneously with the execution and delivery of
this Agreement.
"Company Expenses" has the meaning set forth in Section 2.11.
"Company Intellectual Property" has the meaning set forth in Section
3.11.
"Company Material Adverse Effect" means any change, development, event
or circumstance which would, individually or in the aggregate, reasonably be
expected to (i) have a material adverse effect on the business, cash flows,
results of operations, assets, liabilities or financial condition of the Company
and its Subsidiaries taken as a whole, other than effects caused by events,
changes or developments relating to the economy in general or resulting from
industry-wide developments generally affecting newspaper publishing companies
except to the extent and only to the extent the Company is affected in a
disproportionate manner as compared to other similar companies in the newspaper
publishing industry or the failure of the Company and its Subsidiaries to retain
employees as a result of the announcement of the transactions contemplated
hereby or (ii) prevent, impede or delay the consummation of the transactions
contemplated hereby.
"Company Publications" has the meaning set forth in Section 3.20.
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"Company Stock" has the meaning set forth in Section 2.8(b).
"Company's Organizational Documents" has the meaning set forth in
Section 3.1.
"Contract" means any written note, bond, mortgage, indenture, letter
of credit, lease or sublease, contract, agreement, obligation, arrangement,
understanding or commitment.
"DGCL" has the meaning set forth in Section 2.1.
"Dissenting Stockholders" has the meaning set forth in Section 2.10.
"Effective Time" has the meaning set forth in Section 2.3.
"Employee Benefit Plan" means each plan, program, policy, payroll
practice, contract, agreement or other arrangement providing for compensation,
severance, termination pay, performance awards, stock or stock-related awards,
fringe benefits or other employee benefits of any kind, including, without
limitation, each "employee benefit plan", within the meaning of Section 3(3) of
ERISA (whether or not such plan is actually subject to ERISA).
"Environment" means the environment as defined by Section 101(8) of
the federal Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. ss. 9601(8), and also includes any ambient air inside a
structure or building.
"Environmental Laws" means, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C.
xx.xx. 9601 et seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. xx.xx. 11001 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. xx.xx. 6901 et seq., the Toxic Substances Control Act, 15 U.S.C.
xx.xx. 2601 et seq., the Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq., and the
Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. xx.xx. 1251 et
seq., all rules and regulations promulgated pursuant to any of the above
statutes, and any other applicable federal, state or local law, statute,
ordinance, rule or regulation governing, or common law cause of action with
respect to, Environmental Matters.
"Environmental Matters" means any matters arising out of or relating
to health and safety, or toxic or hazardous waste, materials or substances, or
pollution or protection of the Environment or workplace (or the effect of the
environment on human health and safety), or restoration of natural resources,
including, without limitation, any of the foregoing relating to the use,
generation, transport, treatment, Release, threatened Release, storage, or
disposal of any Hazardous Substances.
"Environmental Permits" has the meaning set forth in Section 3.16(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
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"Financial Statements" means the audited consolidated balance sheet,
consolidated statements of income and consolidated statements of cash flows and
consolidated statements of shareholders' equity for the Company and its
Subsidiaries for the years ended December 30, 2001, December 29, 2002 and
December 28, 2003 and the unaudited consolidated balance sheet, consolidated
statements of income and consolidated statements of cash flows and consolidated
statements of shareholders' equity for the three months ended March 28, 2004 for
the Company and its Subsidiaries.
"FIRPTA Certificate" has the meaning set forth in Section 2.13.
"GAAP" means United States generally accepted accounting principles
and practices as in effect from time to time and applied consistently throughout
the periods involved.
"Governmental Entity" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory or self regulatory authority or agency, federal, state, local or
foreign.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Entity.
"Hazardous Substance" means any chemicals, materials, wastes, or
substances defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "hazardous constituents", "restricted
hazardous materials", "extremely hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", "residual waste", or words of
similar meaning and regulatory effect under any applicable Environmental Laws
and shall include, without limitation, petroleum, asbestos, polychlorinated
biphenyls, untreated sewage, industrial sludge, radioactive materials, and crude
oil.
"HSR Act" has the meaning set forth in Section 3.4.
"Indebtedness" means (a) the Senior Indebtedness, (b) the Notes, and
in the case of each of (a) and (b) any cost or expense (including, for the sake
of clarity, accrued interest) incurred in the repayment, repurchase, redemption,
retirement or other cancellation thereof and any other amounts required to
fulfill the Company's obligations pursuant to Section 2.11 and Section 5.3, and
(c) any capital lease obligations, including, for the sake of clarity, in each
of cases (a), (b) and (c) the current portion thereof.
"Indemnified Persons" has the meaning set forth in Section 6.2.
"Insurance Policies" has the meaning set forth in Section 3.21.
"Intellectual Property" means domestic and foreign patents, patent
applications, inventions, invention disclosures, trademark and service xxxx
applications, registered trademarks, registered service marks, copyrights,
copyright registrations, trademarks, service marks, trade names, material trade
secrets, know-how, formulae, processes, material licenses in respect of computer
software and other intellectual property, material websites, material domain
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names and other intellectual property and all applications for registration of
any of the foregoing, all goodwill associated therewith and all other
intellectual property rights.
"Investor Stockholders Agreement" means that certain Investor
Stockholders Agreement dated as of August 21, 1997 by and among the Company and
certain of the Stockholders.
"IRS" means the Internal Revenue Service.
"knowledge of the Company" means the actual knowledge, after due
inquiry, of Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxxx, Xxxx Xxxxx,
Xxx Xxxxx, Xxxxx Xxxxx, Xxxx XxXxxx, Xxx Xxxxx, Xx Xxxx, Xxxxxx Xxxxxxxx, Xxx
Xxxx, Xxxxx Xxxx and Xxx Xxxxx.
"Leased Real Property" means the real property leased, subleased or
otherwise occupied by the Company or any of its Subsidiaries, as tenant,
subtenant or otherwise, together with, to the extent leased, subleased or
otherwise occupied by the Company or any of its Subsidiaries, all buildings and
other structures, facilities or improvements currently located thereon, and all
fixtures, systems and equipment attached or appurtenant thereto.
"Liabilities" means any and all debts, liabilities, damages, or other
obligations (whether accrued, absolute, contingent, matured, unmatured,
liquidated, unliquidated, known or unknown) including those arising under any
law, Proceeding or Governmental Order and those arising under any Contract.
"Lien" means any claim, pledge, restriction on voting or transfer or
pledge, option, right of first refusal or first offer or other third party
right, mortgage, deed of trust, lien (including, without limitation,
environmental and tax liens, or otherwise), condition, covenant, restriction,
charge, easement, encumbrance, restriction or security interest or other title
defect or similar right of any kind.
"Loss" means all losses, dues, royalties, costs, charges, expenses,
Liabilities, awards, Liens, judgments, fines, penalties, demands, claims,
actions, causes of action, Taxes, assessments, amounts paid in settlement, or
deficiencies (including the expenses of investigation and attorneys' fees and
expenses).
"Material Contracts" has the meaning set forth in Section 3.12.
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" means an amount equal to Four Hundred Fifteen
Million Dollars ($415 million), plus (1) the aggregate of (a) the aggregate
amount of the Company's and each of its Subsidiaries' cash and cash equivalents
on hand or in bank accounts as of the Closing (net of amounts of outstanding
checks or transfers) (but not including cash or cash equivalents to the extent
applied to satisfy the minimum amount set forth in Section 8.3(g)) and (b) an
amount equal to 27% of the Option Payments, less (2) the aggregate of (x) the
aggregate amount of all Indebtedness of the Company and its Subsidiaries as of
the Closing, (y) all Company Expenses and (z) 73% of the amount payable to
employees of the Company as transaction bonuses in the
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amounts and to the individuals set forth on Exhibit A (which amounts shall
include the portion thereof which the Company is required to withhold under
applicable Tax laws) (the "Transaction Bonuses"). An illustrative computation of
the Merger Consideration is set forth on Section 1.1 of the Company Disclosure
Schedule.
"Merger Sub" has the meaning set forth in the Preamble.
"Multiemployer Plan" means any "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA.
"Multiple Employer Plan" means any plan that has two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA.
"Notes" has the meaning set forth in Section 2.10.
"Option" has the meaning set forth in Section 2.8(d).
"Option Holder" means any holder of Options.
"Option Payments" means the aggregate amount payable pursuant to
Section 2.8(d) as a result of the cancellation or termination of outstanding
Options in connection with the transactions contemplated hereby (which amount
shall include the portion thereof which the Company is required to withhold
under applicable Tax laws).
"Other Filings" means any filings required to be filed by the Company
or Purchaser with any Governmental Entity under the Securities Act, the Exchange
Act, any stock exchange rule or any other federal, state, local or foreign laws
in connection with the transactions contemplated hereby.
"Owned Real Property" means the real property owned by the Company or
any of its Subsidiaries, together with all buildings and other structures,
facilities or improvements currently located thereon, all fixtures, systems and
equipment of the Company or any of its Subsidiaries attached or appurtenant
thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.
"PBGC" means the Pension Benefit Guaranty Corporation
"Permit" means any license, franchise, permit, consent, concession,
order, approval, variance, certificates, exemptions, authorization or
registration from, of or with a Governmental Entity.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for Taxes, assessments and governmental charges or
levies not due and payable and for which adequate reserves are maintained on the
financial statements of the Company and its Subsidiaries as of the Closing Date
in conformity with GAAP; (b) Liens imposed by law, such as
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materialmen's, mechanics', carriers', workmen's and repairmen's liens and other
similar liens arising in the ordinary course of business securing obligations
that are not overdue for a period of more than 30 days or which are being
contested in good faith by appropriate proceedings (and for which adequate
reserves are maintained on the financial statements of the Company and its
Subsidiaries as of the Closing Date in conformity with GAAP), but which in each
case do not exceed $25,000 individually or $100,000 in the aggregate; (c)
immaterial pledges or deposits to secure obligations under workers' compensation
laws or similar legislation or to secure public or statutory obligations; (d)
immaterial deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in the
ordinary course of business consistent with past practice, (e) all matters of
record, including, without limitation, survey exceptions, reciprocal easement
agreements and other encumbrances on title to real property, (f) all applicable
zoning, entitlement, conservation restrictions and other land use and
environmental regulations, (g) all exceptions, restrictions, easements, charges,
rights-of-way and other Liens set forth in any Permits or other state, local or
municipal franchise applicable to the Company or any of its Subsidiaries or any
of their respective properties, (h) Liens securing the obligations of the
Company and its Subsidiaries under the Senior Indebtedness, and (i) Liens
referred to in Section 1.2 of the Company Disclosure Schedule.
"Per Share Stock Consideration" means that amount which when
multiplied by the sum of:
(a) the number of outstanding shares of common stock outstanding
immediately prior to the Effective Time, and
(b) the number of shares of Common Stock issuable upon the exercise of
Options outstanding as of the Effective Time (whether or not such
Options are vested and whether or not such Options are exercisable
prior to the Effective Time) which have an exercise price that is less
than the amount referred to in the first line of this definition (the
"In The Money Options"),
will be equal to the Merger Consideration plus the aggregate exercise
price of the In the Money Options.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Entity.
"Proceedings" has the meaning set forth in Section 3.16(d).
"Purchaser" has the meaning set forth in the Preamble.
"Purchaser Disclosure Schedule" means the Disclosure Schedule
delivered by Purchaser to the Company simultaneously with the execution and
delivery of this Agreement.
"Real Property" means, collectively, the Leased Real Property and the
Owned Real Property.
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"Registration Rights Agreement" means that certain Amended and
Restated Registration Rights Agreement by and among the Company, the
Stockholders and the other parties thereto dated March 22, 2002, as amended
through the date hereof.
"Release" means any spill, leaking, pumping, pouring, emitting,
emptying, dumping, injection, deposit, disposal, discharge, dispersal, leaching,
or allowing the escape, of any Hazardous Substance into the Environment.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Indebtedness" has the meaning set forth in Section 2.10.
"Stock Consideration" has the meaning set forth in Section 2.8(b).
"Stockholders" means the holders of Company Stock.
"Stockholders Agreement" means that certain Amended and Restated
Stockholders Agreement by and among the Company and the Stockholders dated March
22, 2002.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Subsidiary" means, with respect to any Person, any Person of which
such first Person (either above or through or together with any other
Subsidiary) (i) is a general partner; (ii) holds or controls, directly or
indirectly, voting power to elect a majority of the Board of Directors or others
performing similar functions or (iii) owns, directly or indirectly, more than
20% of the stock, equity interests or other securities.
"Tax" means any net income, alternative or add-on minimum tax, gross
income, gross receipts, sales, use, ad valorem, value added, transfer,
franchise, profits, withholding, payroll, employment, excise, severance, stamp,
capital stock, occupation, property, environmental or windfall profits tax, or
other like assessment or charge of any kind whatsoever, together with any
interest, penalty, addition to tax or additional amount imposed by any tax
authority (domestic or foreign) responsible for the imposition of any such tax.
"Tax Return" means any return, declaration or information return
relating to Tax, including any schedule or attachment thereto, and including any
amendment thereto, filed or required to be filed with any tax authority.
"Termination Date" means December 2, 2004.
"Transfer Taxes" has the meaning set forth in Section 2.12.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
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"Working Capital" means and includes: (i) the current assets of the
Company, including accounts receivable net of reserves; inventories, and prepaid
expenses; but excluding cash and cash equivalents, less (ii) the current
Liabilities of the Company, including accounts payable, accrued expenses and
unearned subscriptions liability (excluding debit balances, if any, in unearned
subscription accounts); but excluding the current portion of Indebtedness, the
Option Payments and the Company Expenses, in the case of each of the foregoing
as determined in accordance with GAAP applied on a basis consistent with the
basis on which GAAP was applied in connection with the Financial Statements.
Section 1.2 INTERPRETATION. Meanings specified in this Agreement shall
be applicable to both the singular and plural forms of such terms and to the
masculine, feminine and neuter genders, as the context requires and the words
"include", "includes" or "including" shall be deemed to be followed by the words
"without limitation".
ARTICLE II
THE MERGER
Section 2.1 THE MERGER. Upon the terms and subject to the conditions
of this Agreement and in accordance with the Delaware General Corporation Law
(the "DGCL"), at the Effective Time, Merger Sub shall be merged with and into
the Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the surviving corporation in the Merger (the Company
in its capacity as the surviving corporation is sometimes hereinafter referred
to as the "Surviving Corporation"). The Merger shall have the effects specified
in the DGCL.
Section 2.2 CLOSING. Unless this Agreement is sooner terminated as
provided in Article IX, upon the terms and subject to the conditions set forth
in this Agreement, the closing of the Merger (the "Closing") shall take place at
the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, Xxx Xxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 9:00 a.m. local time, on the third business day
following the last to be fulfilled or waived of the conditions set forth in
Article VIII (other than those conditions that by their nature are to be
fulfilled at the Closing, but subject to the fulfillment of such conditions) to
be fulfilled or waived in accordance herewith, or at such other time or date as
the parties hereto may agree. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date".
Section 2.3 EFFECTIVE TIME. If all the conditions to the Merger set
forth in Article VIII shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated as provided in Article IX, the
parties hereto shall cause a Certificate of Merger meeting the requirements of
Section 251 of the DGCL to be properly executed and filed in accordance with
such Section on the Closing Date. The Merger shall become effective at the time
of filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with the DGCL or at such later time which the parties
shall have agreed upon and designated in such filing as the effective time of
the Merger (the "Effective Time").
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Section 2.4 ARTICLES OF INCORPORATION. The articles of incorporation
of the Surviving Corporation in effect at the Effective Time shall, at the
Effective Time, be amended to conform to the certificate of incorporation of
Merger Sub (except that the name of the Surviving Corporation shall be "21st
Century Newspapers, Inc.") until duly amended in accordance with the terms
thereof and the DGCL.
Section 2.5 BYLAWS. The bylaws of the Surviving Corporation in effect
at the Effective Time shall, at the Effective Time, be amended to conform to the
bylaws of Merger Sub until duly amended in accordance with the terms thereof and
the DGCL.
Section 2.6 DIRECTORS OF THE SURVIVING CORPORATION. As of the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
Section 2.7 OFFICERS OF THE SURVIVING CORPORATION. As of the Effective
Time, the officers of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation until the earlier of their
resignation or removal or until their respective successors are duly elected and
qualified, as the case may be.
Section 2.8 EFFECT OF MERGER ON CAPITAL STOCK. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of the capital stock of the Company or any shares of the capital
stock of Merger Sub:
(a) Each share of common stock, $0.01 par value, of Merger Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of voting common stock, $0.01 par value,
of the Surviving Corporation.
(b) The Merger Consideration shall be allocated among the Stockholders
and the Option Holders in the manner provided in this Section 2.8(b) and in
Section 2.8(d). Except as otherwise provided herein, each share of common stock
of the Company ("Company Stock") issued and outstanding immediately prior to the
Effective Time (other than any shares of Company Stock that are owned or held in
treasury by the Company) shall be converted into the right to receive from the
Surviving Corporation upon the consummation of the Merger an amount equal to the
Per Share Stock Consideration. The Per Share Stock Consideration payable to any
Stockholder shall be paid solely in cash. As of the Effective Time, all shares
of Company Stock issued and outstanding immediately prior to the Effective Time
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate representing any such
shares of Company Stock shall cease to have any rights with respect thereto,
except the right to receive the Per Share Stock Consideration upon surrender of
such certificate in accordance with this Section 2.8(b) and Section 2.9.
(c) Notwithstanding anything in this Agreement to the contrary, shares
of Company Stock issued and outstanding immediately prior to the Effective Time
held by a holder (if any) who has the right , if applicable, to demand payment
for and an appraisal of such shares in accordance with the DGCL shall not be
converted into a right to receive the Per Share Stock
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Consideration unless such holder fails to perfect or otherwise loses such
holder's right to such payment or appraisal, if any.
(d) All options to purchase shares of capital stock of the Company
(individually, an "Option" and collectively, the "Options") outstanding
immediately prior to the Effective Time whether under any Company stock option
plan or otherwise, and whether or not then exercisable, shall be cancelled and
each Option Holder will be entitled to receive, for each share of Company Stock
subject to an Option, an amount in cash equal to the excess, if any, of the Per
Share Stock Consideration over the per share exercise price of such Option. The
amounts payable pursuant to this Section 2.8(d) shall be paid as soon as
practicable after the Effective Time in accordance with this Section 2.8(d). All
amounts payable pursuant to this Section 2.8(d) shall be subject to any required
withholding of Taxes. The Company shall request each Option Holder to submit to
the Company, not later than five business days prior to the Effective Time,
instructions for delivery of the applicable Per Share Stock Consideration, which
instructions shall include customary representations and warranties by the
Option Holder as to the ownership of Options. No later than three business days
prior to the Effective Time the Company shall deliver to Purchaser a schedule
setting forth how the payments to be made pursuant to this Section 2.8(d) will
be distributed, including wire instructions in the case of payments to be made
at the Effective Time by wire transfer.
Section 2.9 EXCHANGE OF CERTIFICATES. (a) On or after the Effective
Time, each holder of an outstanding certificate or certificates which prior
thereto represented shares of Company Stock shall surrender to the Surviving
Corporation the certificate or certificates representing such shares of Company
Stock and, upon acceptance thereof and of the instruction letter described below
by the Surviving Corporation, be entitled to the amount of cash (after giving
effect to any required Tax withholdings) into which such holder's shares of
Company Stock have been converted pursuant to this Agreement. The Company shall
request each Stockholder to submit to the Company, not later than five business
days prior to the Effective Time, instructions for delivery of the applicable
Per Share Stock Consideration, which instructions shall include customary
representations and warranties by the Stockholder as to ownership and absence of
Liens of the Stockholder's shares of Company Stock. No later than three business
days prior to the Effective Time, the Company shall deliver to Purchaser a
schedule setting forth how the Stock Consideration will be distributed,
including wire instructions in the case of payments to be made at the Effective
Time by wire transfer. After the Effective Time, there shall be no further
transfer on the records of the Company or its transfer agent of certificates
representing shares of Company Stock which have been converted, in whole or in
part, pursuant to this Agreement into the right to receive cash and if such
certificates are presented to the Surviving Corporation for transfer, they shall
be canceled against delivery of cash. Until surrendered as contemplated by this
Section 2.9(a), each certificate for shares of Company Stock shall be deemed at
any time after the Effective Time to represent only the right to receive upon
such surrender the Per Share Stock Consideration payable as contemplated by
Section 2.8(b). No interest will be paid or will accrue on any amounts payable
as Per Share Stock Consideration or as Option Payments.
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(b) No dividends or other distributions with respect to Company Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered certificate for shares of Company Stock with respect to the shares
of Company Stock represented thereby.
(c) Neither Purchaser nor the Company shall be liable to any Person in
respect of any shares of retained Company Stock (or dividends or distributions
with respect thereto) or the Per Share Stock Consideration required to be
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(d) If any consideration is to be paid to a Person other than the
Person in whose name the certificate or Option surrendered in exchange therefor
is registered, it shall be a condition to such exchange that the Person
requesting such exchange shall pay to the Surviving Corporation any Transfer
Taxes or other Taxes required by reason of the payment of such consideration to
a Person other than that of the registered holder of the certificate or Option
so surrendered, or such person shall establish to the reasonable satisfaction of
the Surviving Corporation that such Tax has been paid or is not applicable.
(e) If any certificate for shares of Company Stock shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such certificate to be lost, stolen or destroyed and, if
required by Purchaser or the Surviving Corporation, the posting by such Person
of a bond, in such reasonable amount as Purchaser or the Surviving Corporation
may direct, as indemnity against any claim that may be made against it with
respect to the alleged loss, theft or destruction of such certificate, the
Surviving Corporation will pay, in exchange for such lost, stolen or destroyed
certificate, the Per Share Stock Consideration to be paid in respect of the
shares of Company Stock represented by such certificate.
Section 2.10 PAYMENT AT CLOSING FOR CERTAIN INDEBTEDNESS. At or
immediately prior to the Closing, (a) Purchaser and Merger Sub shall provide
sufficient funds to the Company to enable the Company to (i) repay in full the
obligations of the Company under that certain Credit Agreement, dated as of
August 27, 2002, among the Company, the credit parties signatory thereto, the
lenders signatory thereto, Comerica Bank as Syndication Agent, Suntrust Bank as
Documentation Agent, General Electric Capital Corporation as Administrative
Agent, Agent and Lender and GECC Capital Markets Group, Inc. as Lead Arranger,
as amended (the "Senior Indebtedness") and (ii) redeem the Notes in accordance
with the provisions of Section 9.1 of the Purchase Agreement, dated March 22,
2002, as amended, relating to the Company's 14% Subordinated Notes due Xxxxx 00,
0000 (xxx "Xxxxx"), (x) the Company will settle the Senior Indebtedness, (c) the
Company will redeem the Notes in full and (d) the Company will repurchase, at a
purchase price of $0.01 per share, all shares issued in connection with the
Notes which remain in escrow as of the date hereof (it being agreed and
understood that the actions referred to in clauses (a) through (d) above may
occur substantially simultaneously). At least five business days prior to the
Closing Date, the Company shall have delivered to Purchaser a copy of a
customary pay-off letter with respect to the Senior Indebtedness and shall have
made arrangements reasonably satisfactory to Purchaser for the release of all
Liens securing such Senior Indebtedness.
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Section 2.11 PAYMENTS AT CLOSING FOR EXPENSES. No later than three
business days prior to the Closing Date, the Company shall provide Purchaser
with a statement of all outstanding fees and expenses of the Company and each of
its Subsidiaries in connection with the negotiation and the consummation of the
transactions contemplated hereby that have not been paid (such fees and
expenses, other than the Transaction Bonuses and Option Payments, the "Company
Expenses"). At the Closing, Purchaser and Merger Sub shall provide sufficient
funds to the Surviving Corporation to enable the Surviving Corporation to, and
shall cause the Surviving Corporation to, pay the Company Expenses and the
Transaction Bonuses.
Section 2.12 TRANSFER TAXES. Except as otherwise provided in Section
2.9(d), Purchaser shall be responsible for and shall pay all sales, use,
transfer, real property transfer, documentary, recording, stock transfer and
similar Taxes and fees, and any deficiency, interest or penalty asserted with
respect thereto (collectively, "Transfer Taxes") arising out of the transactions
effected pursuant to this Agreement. The Company shall timely file all necessary
documentation and Tax Returns with respect to such Transfer Taxes. For the
avoidance of doubt, Transfer Taxes shall not include any Taxes that are based
on, or calculated by reference to, income, profits or gains.
Section 2.13 FIRPTA CERTIFICATE. At or prior to the Closing Date, the
Company shall deliver to Purchaser (a) a certification from the Company which
complies with Treasury Regulation Section 1.1445-2(c)(3), dated no more than 30
days prior to the Closing Date and signed by a responsible corporate officer of
the Company, that no interest in the Company is a "United States real property
interest" (as defined in Section 897(c)(1) of the Code) (a "FIRPTA
Certificate"), and (b) proof reasonably satisfactory to Purchaser that the
Company has provided notice of such certification to the Internal Revenue
Service in accordance with the provisions of Treasury Regulation Section
1.897-2(h)(2). If the Company fails to deliver the documentation described in
the preceding sentence, notwithstanding anything contained herein to the
contrary, Purchaser shall be entitled to withhold from the portion of the Merger
Consideration payable to a holder of Company Stock or from the portion of the
Option Payments payable to a holder of an Option any amounts required to be
withheld pursuant to Section 1445 of the Code, unless such holder provides
Purchaser with a validly executed IRS Form W-9.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser as follows:
Section 3.1 ORGANIZATION AND QUALIFICATION. The Company and each of
its Subsidiaries is duly formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization, has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted and is in good standing and duly qualified
to do business in each jurisdiction in which the transaction of its business
makes such qualification necessary, except where the failure to be so qualified
and in good standing would not, individually or in the aggregate, reasonably be
expected to have a
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Company Material Adverse Effect. True and complete copies of the Company's and
each of its Subsidiaries' certificate of incorporation and by-laws (or if such
Subsidiary is not a corporation, its organizational documents) (collectively,
the "Company's Organizational Documents"), each as amended to date and currently
in full force and effect, have been delivered to Purchaser (it being agreed that
anything provided to Purchaser in the data room prepared by the Company in
connection with the transactions shall be deemed to be delivered to Purchaser
for the purposes of this Agreement).
Section 3.2 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 2,000,000 shares of Company Stock. As of the date of this
Agreement, (i) 961,887 shares of Company Stock are issued and outstanding and
10,000 shares of Company Stock are held in treasury, (ii) 175,306 shares of
Company Stock are reserved or required to be reserved for issuance pursuant to
outstanding Options and 119,099 shares of Company Stock are reserved or required
to be reserved for issuance in respect of future grants of Options and (iii)
5,351 shares of Company Stock (which are included in such 961,887 shares of
Company stock issued and outstanding) are being held in escrow for the benefit
of the holders of Notes. Except as set forth on Section 3.2(a) of the Company
Disclosure Schedule, all outstanding shares of Company Stock are validly issued,
fully paid and nonassessable and are not subject to preemptive rights or, to the
knowledge of the Company, Liens. Section 3.2(a) of the Company Disclosure
Schedule sets forth a list, as of the date hereof, of the Stockholders and each
holder of Options and the number of shares of Company Stock held by each such
Stockholder and the number of shares of Company Stock subject to each of such
Options and the exercise prices thereof. Except as set forth in Section 3.2(a)
of the Company Disclosure Schedule, there are no outstanding subscriptions,
options, warrants, calls, rights, commitments or any other agreements to which
the Company is a party or by which the Company is bound which obligate the
Company to (i) issue, deliver or sell or cause to be issued, delivered or sold
any additional shares of Company Stock or any other capital stock of the Company
or any other securities convertible into, or exercisable or exchangeable for, or
evidencing the right to subscribe for, any such shares of Company Stock or any
other capital stock of the Company or (ii) purchase, redeem or otherwise
acquire, register, transfer, sell or make payments in respect of any shares of
Company Stock or any other capital stock of the Company. In accordance with
Article II hereof, upon the Effective Time, all of the outstanding Options will
be terminated and upon payment of the Option Payments in accordance with Article
II hereof, the Company will have no further obligations to the holders thereof
with respect thereto except to remit the applicable withholding Taxes when due.
Except as set forth in Section 3.2(a) of the Company Disclosure Schedule to the
knowledge of the Company, there are no voting trusts, stockholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any of the Company Stock. All Stockholders are party to
either the Stockholders Agreement or the Investor Stockholders Agreement, the
Stockholders Agreement and the Investor Stockholders Agreement are each
enforceable in accordance with their terms and Section 7 of the Stockholders
Agreement and Section 1(b) of the Investor Stockholders Agreement are each
applicable to the transactions contemplated hereby. No shares of Company Stock
are held by any Subsidiary of the Company.
(b) Except as set forth in Section 3.2(b) of the Company Disclosure
Schedule, the Company does not have any Subsidiaries nor does it own, directly
or indirectly, any capital stock or other proprietary interest in any Person.
Except as set forth in Section 3.2(b) of the Company
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Disclosure Schedule, all such interests are owned by the Company and are held
free and clear of all Liens, other than Permitted Liens. Except as set forth in
Section 3.2(a) of the Company Disclosure Schedule, there are no outstanding
subscriptions, options, warrants, calls, rights, commitments or any other
agreements to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound which obligate the Company or any Subsidiary
to (i) issue, deliver or sell or cause to be issued, delivered or sold any
additional shares of capital stock or other proprietary interest of any
Subsidiary or any other securities convertible into, or exercisable or
exchangeable for, or evidencing the right to subscribe for, any such shares of
capital stock or other security or proprietary interest of any Subsidiary or
(ii) purchase, redeem or otherwise acquire, register, transfer, sell or make
payments in respect of any shares of capital stock or other proprietary interest
of any Subsidiary.
Section 3.3 AUTHORIZATION AND VALIDITY OF AGREEMENT. The Company has
the requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The Company has duly authorized the execution, delivery and performance
of this Agreement and no other proceedings on the part of the Company are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
Section 3.4 CONSENTS AND APPROVALS. Neither the execution and delivery
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will require on the part of the Company any
consent, approval, authorization or permit of, or filing with, or notification
to, any Governmental Entity, except (a) for any applicable filings required
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (b) as set forth in Section 3.4 of the Company Disclosure Schedule,
(c) as provided for in Section 2.3 or (d) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
Section 3.5 NO VIOLATIONS. Except as set forth in Section 3.5 of the
Company Disclosure Schedule, neither the execution and delivery of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (a) conflict with or violate the Company's
Organizational Documents, (b) result in a violation or breach of, constitute a
default (with or without notice or lapse of time, or both) under, give rise to
any right of termination, cancellation or acceleration of, or result in the
imposition of any Lien on any assets or property of the Company or its
Subsidiaries or result in any increase in the Company's or any of its
Subsidiaries' payment or performance obligations pursuant to any Contract or
other obligation to which the Company or its Subsidiaries is a party or by which
the Company or its Subsidiaries or any of their respective assets or properties
are bound, except for such violations, breaches and defaults (or rights of
termination, cancellation or acceleration or Lien) as to which requisite waivers
or consents have been obtained or which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect or
(c) assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in Section 3.4 and this Section 3.5 are duly and
timely obtained or made, violate any order, writ,
-15-
injunction, decree, statute, rule or regulation applicable to the Company, or
any of its Subsidiaries or any of their respective assets and properties, except
for such conflicts, violations, breaches or defaults which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.6 FINANCIAL STATEMENTS; UNDISCLOSED LIABILITIES. (a) The
Financial Statements are set forth in Section 3.6(a) of the Company Disclosure
Schedule. Each of the balance sheets included in the Financial Statements
(including any related notes and schedules thereto) fairly presents, in all
material respects, the consolidated financial position of the Company and its
Subsidiaries as of its date, and each of the statements of income and cash flows
included in the Financial Statements (including any related notes and schedules
thereto) fairly presents, in all material respects, the consolidated results of
operations and cash flows of the Company and its Subsidiaries for the periods
set forth therein, in each case in accordance with the books and records of the
Company and GAAP (except that such Financial Statements which are unaudited do
not contain all of the footnotes required under GAAP and are subject to normal
year-end adjustments).
(b) The balance sheet dated as of May 31, 2004 and the statement of
income and statement of cash flows for the Company and its Subsidiaries for the
five months ended May 31, 2004 (the "Recent Financial Statements") are set forth
in Section 3.6(b) of the Company Disclosure Schedule and were each prepared in
accordance with the normal practices of the Company, under GAAP (except that the
Recent Financial Statements do not contain all of the footnotes required under
GAAP), and reasonably reflect in all material respects the combined results of
operations of the Company and its Subsidiaries for the periods set forth
therein, subject to normal recurring year-end adjustments.
(c) Neither the Company nor any of its Subsidiaries has any material
Liability, which is required to be disclosed on a balance sheet prepared in
accordance with GAAP, other than (i) Liabilities shown on the unaudited balance
sheet for the Company for the three months ended March 28, 2004 and (ii)
Liabilities incurred in the ordinary course of business since March 28, 2004,
none of which would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
(d) The books of account, minute books and other records of the
Company and each of its Subsidiaries, all of which have been made available to
Purchaser, are complete and correct in all material respects and have been
maintained in all material respects in accordance with sound business practices.
The accounts, books and records of the Company and each of its Subsidiaries, are
maintained in a manner consistent with past practice and have recorded therein
in all material respects the results of operations and the assets and
liabilities of the Company and each of its Subsidiaries, required to be
reflected under GAAP. The Company and its Subsidiaries maintain a system of
accounting and internal controls sufficient in all material respects to provide
reasonable assurances that financial transactions are executed in accordance
with the general and specific authorization of the management of the Company and
Subsidiaries. There are no significant deficiencies or material weaknesses in
the design or operation of internal controls over financial reporting that would
reasonably be expected to adversely affect the Company's ability to record,
process, summarize and report financial information, and there is no fraud,
-16-
whether or not material, that involves management or, to the knowledge of the
Company, other employees who have a significant role in the Company's internal
controls and the Company has provided to Purchaser copies of any written
materials relating to the foregoing.
Section 3.7 COMPLIANCE WITH LAW. Except as set forth in Section 3.7 of
the Company Disclosure Schedule, the Company and each of its Subsidiaries is
conducting its business in compliance in all material respects with all material
laws, statutes, rules, regulations, decrees or orders of any Governmental Entity
applicable to it and its properties. Except as set forth in Section 3.7 of the
Company Disclosure Schedule or as contemplated or permitted by this Agreement,
the Company and each of its Subsidiaries holds all Permits necessary for the
conduct of its business as now being conducted, except where the failure to hold
such Permits would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
Section 3.8 LITIGATION. Except as disclosed in Section 3.8 of the
Company Disclosure Schedule, there are no claims, requests for indemnification,
actions, proceedings or governmental investigations pending or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries which,
if adversely determined, would, individually or in the aggregate reasonably be
expected to result in (i) monetary damages in excess of $50,000 individually or
$250,000 in the aggregate or (ii) the granting of other relief which would
reasonably be expected be material to the Company or any of its Subsidiaries.
The Company and its Subsidiaries are not subject to any outstanding and
unsatisfied order, writ, judgment, injunction or decree or settlement or consent
agreement by or with a Governmental Entity the satisfaction of which would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Except as disclosed in Section 3.8 of the Company
Disclosure Schedule, the Company has not asserted any claim or request for
indemnification or commenced or threatened any action, proceeding or
investigation in respect of any claim or request for indemnification involving
amounts in excess of $100,000.
Section 3.9 EMPLOYEE BENEFIT MATTERS. (a) All Company Benefit Plans
that are material are listed in Section 3.9(a)(1) of the Company Disclosure
Schedule. True and complete copies of the Company Benefit Plans so listed have
been made available to Purchaser, as have, with respect to each Company Benefit
Plan so listed, (i) the most recent Annual Report (Form 5500 Series) and
accompanying schedule, if any; (ii) the current summary plan description if any
(whether or not required to be furnished under ERISA); (iii) the most recent
annual financial and/or actuarial report, if any; and (iv) the most recent
determination letter from the IRS, if any. Except as disclosed in Section
3.9(a)(2) of the Company Disclosure Schedule, the Company Benefit Plans have
been administered in material compliance with their terms and with the
requirements of ERISA and the Code. Any Company Benefit Plan intended to be
qualified under Section 401(a) of the Code is so qualified and has either been
determined by the IRS to be so qualified or has been submitted to the IRS to
obtain such a determination within the applicable remedial amendment period, as
defined in Treas. Reg. ss. 1.401 (b)-(c), and, to the knowledge of the Company,
no circumstances exist that could adversely affect the qualified status of any
such plan or its related trust. To the knowledge of the Company, there are no
pending, nor has the Company received notice of any threatened, material claims
against or involving any of the Company Benefit Plans. Neither the Company nor
any of its Subsidiaries has incurred, or is
-17-
reasonably likely to incur, any Liability under Title IV of ERISA (other than
for PBGC premiums, which will be paid when due). Except as set forth in Section
3.9(b) of the Company Disclosure Schedule, the Company has provided Purchaser
with an estimate of the Withdrawal Liability under each of the Multiemployer
Plans set forth therein. There have been no amendments to the Company Benefit
Plans as reflected in the copies made available to Purchaser that, individually
or in the aggregate, materially increase the benefits provided to participants
thereunder.
(b) With respect to each Company Benefit Plan that is subject to Title
IV or Section 302 of ERISA or Sections 412 or 4971 of the Code (other than a
Multiemployer Plan), there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived. Each Company Benefit Plan that is a Multiemployer Plan or a
Multiple Employer Plan is listed on Section 3.9(b) of the Company Disclosure
Schedule.
(c) Except as disclosed in Section 3.9(c)(1) of the Company Disclosure
Schedule, there are no unfair labor practice or labor arbitration proceedings
pending or, to the knowledge of the Company, threatened against the Company or
its Subsidiaries. Except as set forth in Section 3.9(c)(2) of the Company
Disclosure Schedule, (i) the Company and each of its Subsidiaries is not
delinquent in any material respect in payments to any of its employees, for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed or amounts required to be reimbursed by them, (ii) the
Company and each of its Subsidiaries is in material compliance with all
applicable federal, state and local laws, rules and regulations respecting
employment, employment practices, labor, terms and conditions of employment and
wages and hours, occupational safety and health and workers' compensation, (iii)
to the knowledge of the Company, no labor union or labor union organization has
sought within the past three years to represent any of the Company's or its
Subsidiaries' employees, representatives or agents or (iv) there is not, nor has
there been at any time during the past three years, any labor strike, dispute,
slowdown, organizing activity, or stoppage actually pending, or, to the
knowledge of the Company, threatened against or involving the Company or its
Subsidiaries. Each individual who renders services to the Company or any of its
Subsidiaries who is classified as having the status of an independent contractor
or other non-employee status for any purpose (including for purposes of taxation
and tax reporting and under Company Benefit Plans) is properly so characterized.
Section 3.9(a)(1) of the Company Disclosure Schedule lists each Company Benefit
Plan that provides life, health, medical or other welfare benefits (other than
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA) to former employees or beneficiaries or dependents thereof,
and, except as provided in one or more collective bargaining agreements or as
set forth in Section 3.9(c)(3) of the Company Disclosure Schedule, the Company
and each of its Subsidiaries has reserved the right to amend, terminate or
modify at any time all such plans.
(d) Section 3.5 of the Company Disclosure Schedule sets forth a list
of all Company Benefit Plans under which the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby could
(either alone or in conjunction with any other event) result in, cause the
accelerated vesting, funding or delivery of, or increase the amount or value of,
any payment or benefit to any employee, officer or director of the Company
-18-
or any of its Subsidiaries, or could limit the right of the Company or any of
its Subsidiaries to amend, merge, terminate or receive a reversion of assets
from any Company Benefit Plan or related trust. Except as set forth in Section
3.9(d)(1) of the Company Disclosure Schedule, no amounts payable in connection
with the consummation of the transactions contemplated hereby will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code. The maximum amount payable to all Persons pursuant to the Transaction
Bonuses is $3,900,000, and the maximum amount of cash payments payable pursuant
to those arrangements set forth in Section 3.9(d)(2) is as set forth therein as
of the date hereof.
Section 3.10 TAXES. (a) Except as set forth in Section 3.10 of the
Company Disclosure Schedule, (i) all material Tax Returns required to be filed
by or on behalf of the Company and its Subsidiaries have been timely filed
(taking into account any extension of time to file) and all such Tax Returns
were true, complete and correct in all material respects, (ii) all Taxes
required to be paid by or with respect to the Company and its Subsidiaries have
been timely paid and neither the Company nor any of its Subsidiaries has any
material liability for Taxes in excess of the amounts paid (or reserved, in
accordance with GAAP, on the Financial Statements), (iii) as of the date hereof,
no deficiencies or other claims for unpaid Taxes have been proposed, asserted,
assessed, or threatened in each case in writing against or with respect to the
Company or any of its Subsidiaries, (iv) neither the Company nor any of its
Subsidiaries is a party to any agreement or arrangement providing for the
allocation, sharing or indemnification of Taxes, or has any liability for Taxes
of another Person (other than the Company and its Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as transferee or successor, by contract or otherwise, and (v) there are no
Tax Liens against any property or assets of the Company or any of its
Subsidiaries, except for Permitted Liens.
(b) Except as set forth in Section 3.10 of the Company Disclosure
Schedule, all Taxes that the Company and its Subsidiaries are required to
withhold or collect have been duly withheld or collected and have been timely
paid over, as required, to the appropriate taxing authority.
(c) Except as set forth in Section 3.10 of the Company Disclosure
Schedule, there are no audits, inspections, inquiries, or proceedings pending or
in progress with respect to Taxes of the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries have received written notice of
any potential audit, inspection, inquiry or proceeding with respect to Taxes.
Except as set forth in Section 3.10 of the Company Disclosure Schedule, no
waivers of statutes of limitations and no extensions of time with respect to any
assessment or deficiency of Tax have been given with respect to any material
Taxes with respect to the Company and its Subsidiaries, which waivers or
extensions are in effect as of the date hereof.
(d) (i) Within the past five (5) years, neither the Company nor any of
its Subsidiaries has been a "distributing corporation" or a "controlled
corporation" in a distribution intended to qualify under Section 355(a) of the
Code and (ii) neither the Company nor any of its Subsidiaries has participated
in any "reportable transaction" or "listed transaction" that is required to be
reported pursuant to Treasury Regulation Section 1.6011-4.
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(e) The net operating loss carryforwards ("NOLs") of the Company as of
December 31, 2003 were, and as of the date hereof are, not less than (i) $27
million for federal income tax purposes and (ii) $20 million for federal
alternative minimum tax purposes. Except for limitations that may apply by
reason of the Merger, such NOLs are not subject to limitation under Section 382
of the Code, Treasury Regulation Sections 1.1502-15, -21, or otherwise.
(f) Neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from, taxable
income for any taxable period (or portion thereof) that begins after the Closing
Date as a result of any (i) change in method of accounting for a taxable period
(or portion thereof) ending on or prior to the Closing Date under Section 481(c)
of the Code (or any similar provision of state, local or foreign law), (ii)
"closing agreement" as described in Section 7121 of the Code (or any similar
provision of state, local or foreign law) or (iii) installment sale or open
transaction disposition made on or prior to the Closing Date.
Section 3.11 INTELLECTUAL PROPERTY. The Company and each of its
Subsidiaries owns or has the valid right to use all material Intellectual
Property used in or necessary for the conduct of its business as now operated
(the "Company Intellectual Property"). Section 3.11 of the Company Disclosure
Schedule lists all Company Intellectual Property that are United States patents,
and applications therefor, United States federal and state registered trademarks
and service marks, and applications therefor, and copyright registrations. The
operation of the business of the Company and its Subsidiaries does not in any
material respect violate, infringe or otherwise conflict with the Intellectual
Property of third parties, except as disclosed in Section 3.11 of the Company
Disclosure Schedule. Except as set forth in Section 3.11 of the Company
Disclosure Schedule, no claims, actions or proceedings are pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries based upon or challenging or seeking to deny or restrict the
ownership, license or use of any material Company Intellectual Property. The
Company has no knowledge of any infringement or improper use by any third party
of any material Company Intellectual Property. The software which constitutes
the Company Intellectual Property is in compliance in all material respects with
the Business Software Alliance guidelines.
Section 3.12 MATERIAL CONTRACTS. (a) Section 3.12(a) of the Company
Disclosure Schedule sets forth a true and complete list of all the Material
Contracts to which the Company or any of its Subsidiaries is a party or by which
any of their respective properties or assets are bound. As used herein,
"Material Contracts" means all of the following:
(i) all Contracts that require the payment or incurrence of
Liabilities, or the rendering of services, by the Company or any of its
Subsidiaries, of more than $100,000 per annum (other than purchase orders with
customers and vendors entered into in the ordinary course of business);
(ii) all Contracts relating to, or evidences of, or guarantees
of, or providing security for, indebtedness or the deferred purchase price of
property (whether incurred, assumed, guaranteed or secured by any asset);
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(iii) all acquisition, partnership, joint venture, teaming
arrangements or other similar Contracts, arrangements or agreements currently in
effect or entered into by the Company or any of its Subsidiaries (after the date
of acquisition by the Company of any such Subsidiary);
(iv) all Contracts entered into by the Company or any of its
Subsidiaries since January 1, 2003 relating to the sale of any interest in Real
Property or the sale, lease, license, mortgage, encumbrance or other disposition
by the Company or its Subsidiaries of any assets with a book value or purchase
price in excess of $50,000.
(v) each Contract of the Company or any of its Subsidiaries
restricting or otherwise affecting the ability of the Company or any of its
Subsidiaries to compete in its business or otherwise in any jurisdiction;
(vi) all leases or agreements under which the Company or any of
its Subsidiaries is lessor of or permits any third party to hold or operate any
personal property owned or controlled by the Company or any of its Subsidiaries,
that cannot be terminated on 60 days' notice or less without payment of any
material (in the context of such agreement) penalty or material (in the context
of such agreement) premium by the Company or any of its Subsidiaries;
(vii) all Contracts to which the Company or any of its
Subsidiaries is a party for the employment or retention of any officer,
individual employee or other Person on a full-time, part-time, consulting or
other basis if $50,000 or more could reasonably be expected to be paid under
such Contract in any fiscal year of the Company, other than offer letters with
respect to employment at will which do not provide for any cost or penalty in
connection with the termination of any such Person;
(viii) all Contracts relating to loans to officers, directors or
Affiliates;
(ix) all material licenses included in the Company Intellectual
Property to which the Company or any of its Subsidiaries is a party, except for
any of the foregoing related to the use of generally available computer
software;
(x) all Contracts that relate to the purchase of newsprint, other
than spot purchase orders with vendors entered into in the ordinary course of
business;
(xi) all other existing agreements to which the Company or any of
its Subsidiaries is a party, not otherwise covered by clauses (i) through (x),
the loss of which would reasonably be expected to result in a Company Material
Adverse Effect.
(b) Except as disclosed in Section 3.12(b) of the Company Disclosure
Schedule:
(i) neither the Company nor any of its Subsidiaries party to any
Material Contract, nor, to the knowledge of the Company, any other party
thereto, is in material breach thereof or material default thereunder, or has
given written notice of material breach or material default to any other party
thereunder;
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(ii) each Material Contract is valid and binding on the Company
and its relevant Subsidiaries party thereto, as the case may be, and, to the
knowledge of the Company, each respective counterparty thereto, and each
Material Contract is in full force and effect; except as may be limited by any
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity; and
(iii) except to the extent that any consents set forth in
Sections 3.4 and 3.5 of the Company Disclosure Schedule are not obtained, the
consummation of the transactions contemplated by this Agreement will not result
in any Material Contract failing to continue in full force and effect after the
consummation of the transactions contemplated by this Agreement without material
(in the context of such Material Contract) penalty or other material (in the
context of such Material Contract) adverse consequence.
Section 3.13 BROKERS AND FINDERS. Except as disclosed in Section 3.13
of the Company Disclosure Schedule, in connection with the transactions
contemplated hereby, no broker, finder or investment bank has acted directly or
indirectly for the Company, and the Company has not incurred any obligation to
pay any brokerage, finder's or other fee or commission to any Person, other than
Xxxxxxx, Xxxxx & Co., X.X. Xxxxxx Securities Inc. and Xxxxx, Van Essen & Xxxxxx
LLP.
Section 3.14 ABSENCE OF CERTAIN CHANGES. Except as disclosed in
Section 3.14 of the Company Disclosure Schedule or as otherwise specifically
contemplated by this Agreement, since January 1, 2004 the business of the
Company and each of its Subsidiaries has been conducted only in the ordinary
course consistent with past practice, and there have not been any events,
changes or developments which, individually or in the aggregate, would
reasonably be expected to have a Company Material Adverse Effect or would
constitute a violation of Sections 5.1(e), (j)(i) and (j)(iv) if such Sections
had then been in effect.
Section 3.15 CIRCULATION MATTERS. (a) Section 3.15 of the Company
Disclosure Schedule sets forth a list of the net paid circulation of each of the
paid Company Publications and the distribution for each of the non-paid Company
Publications for each month during the period from January 2003 through May
2004, each of which such lists is complete and accurate in all material
respects.
(b) For each of the Company Publications subject to the Audit Bureau
of Circulations ("ABC") and/or United States Postal Service ("USPS")
regulations, the Company has delivered to Purchaser complete and accurate copies
of (i) the ABC Annual Statements for the most recent available twelve month
period and (ii) the Statements of Ownership, Management and Circulation required
to be filed with the USPS for the most recent calendar year, and the information
provided to the ABC and the USPS, respectively, is true and correct in all
material respects.
(c) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, since December 31, 2003, neither the Company nor any of its
Subsidiaries has made any material
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change in its policies for the pricing, discounting, distribution or
solicitation of circulation or advertising of any Company Publication.
(d) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, the Company and its Subsidiaries own or have the valid right to use
the Customer Data other than immaterial potions thereof, free and clear of any
Liens other than Permitted Liens which do not materially adversely effect the
value or use of such data, and have the right to transfer such ownership and/or
right to Purchaser, and no third party has the right to use any of the
information in such Customer Data. No carrier, distributor or similarly situated
independent contractor providing services to the Company has, to the Company's
knowledge, claimed any ownership or equity interest in any distribution list or
the distribution route for any Company Publication. "Customer Data" means all
subscriber and non-subscriber lists, customer files and information, including
summary or compilation data, and lists of single copy dealers and racks.
Section 3.16 ENVIRONMENTAL MATTERS. (a) Notwithstanding any other
provision in this Agreement, this Section 3.16 contains the exclusive
representations of the Company concerning Environmental Matters.
(b) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, the Company and each of its Subsidiaries are in compliance, in all
material respects, with all applicable Environmental Laws.
(c) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, the Company and each of its Subsidiaries have, in all material
respects, obtained and timely applied to renew all material permits (including,
without limitation, any permit to install with respect to air emissions from
printing presses), licenses, authorizations, registrations and other
governmental consents required by applicable Environmental Laws (collectively
referred to as "Environmental Permits") and are in substantial compliance with
the terms and conditions of such Environmental Permits.
(d) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, no writ, injunction, decree, order, judgment, lawsuit, claim, action,
proceeding, or summons (collectively referred to as "Proceedings") is pending
or, to the Company's knowledge, threatened alleging material Liability or
potential for material Liability of the Company or any Subsidiary under any
Environmental Law.
(e) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, to the knowledge of the Company, there have been no Releases or
threatened Releases of Hazardous Substances at, on or under any property owned
or leased by the Company or any of its Subsidiaries for which any criminal or
material monetary or other Liability under applicable Environmental Laws has
been or would reasonably be expected to be asserted against the Company or any
of its Subsidiaries.
(f) Except as set forth in Section 3.16 of the Company Disclosure
Letter, none of the Owned Real Property or the Leased Real Property, and, to the
knowledge of the Company, no real property formerly leased, owned or operated by
the Company or any of its Subsidiaries, is
-23-
listed or proposed for listing on the National Priorities List established by
the United States Environmental Protection Agency pursuant to the federal
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ss. 9601 et seq. ("NPL"), or any state analog to the NPL
maintained or created under the Environmental Laws of any state.
Section 3.17 RELATED TRANSACTIONS. Section 3.17(a) of the Company
Disclosure Schedule sets forth a correct and complete list of all transactions,
Contracts and relationships between any of the Company's directors, officers,
employees, Affiliates (other than Subsidiaries) or Stockholders or any of their
respective Affiliates, on the one hand, and the Company or any of its
Subsidiaries, on the other hand, other than employment and other contracts
listed in Section 3.9(a) of the Company Disclosure Schedule.
Section 3.18 REAL PROPERTY. (a) Section 3.18(a) of the Company
Disclosure Schedule sets forth a list of all of the Real Property owned or
leased by the Company or any of its Subsidiaries, including: (i) with respect to
each parcel of Owned Real Property, (a) the street address of such parcel of
Owned Real Property, (b) the current owner of such parcel of Owned Real Property
and (c) a brief and general statement on the current use of such parcel of Owned
Real Property; and (ii) with respect to each parcel of the Leased Real Property,
(a) the street address of such parcel of Leased Real Property, (b) the identity
of the lessor and lessee of such parcel of Leased Real Property, (c) the term
(referencing applicable renewal periods) of the leases pertaining to such parcel
of Leased Real Property and (d) a brief and general statement on the current use
of such parcel of Leased Real Property.
(b) Except as otherwise set forth in Section 3.18(b) of the Company
Disclosure Schedule, (i) the Company and each of its Subsidiaries has good and
marketable fee simple or leasehold title (as the case may be) to all of the Real
Property owned by it, free and clear of all Liens, except Permitted Liens, (ii)
there are no leases, subleases, licenses, concessions or other agreements
(written or oral) granting to any Person (other than the Company and any of its
Subsidiaries) the right to use or occupy the Real Property, and (iii) there are
no outstanding options, rights of first offer or rights of first refusal to
purchase the Owned Real Property or any portion thereof or interest therein. The
Permitted Liens do not materially impair or materially adversely affect (A) the
value of the applicable material Real Property or (B) other Real Property in a
manner which would be material to the Company and its Subsidiaries taken as a
whole or materially impair or materially adversely affect the current use,
occupancy or operation thereof.
(c) Except as otherwise set forth in Section 3.18(c) of the Company
Disclosure Schedule: (i) all material Leased Real Property is leased by the
Company and its Subsidiaries (as the case may be) under valid and subsisting
leases or subleases (as the same may have been amended or modified) that are in
full force and effect; (ii) neither the Company nor any of its Subsidiaries has
received written notice of any material breach or default, or cancellation or
termination thereunder; and (iii) to the knowledge of the Company there are no
conditions, events or circumstances which with notice or lapse of time, or both,
would constitute a material breach or default under such lease or sublease. True
and complete copies of all material leases and/or all material subleases have
previously been delivered to Purchaser, including all material amendments,
modifications, side letters and other agreements relating thereto. Except as set
-24-
forth in Section 3.18(c) of the Company Disclosure Schedule, the Company and its
Subsidiaries (as the case may be) is in possession of each parcel of the Leased
Real Property.
Section 3.19 ADVERTISING. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, none of the Company Publications' 10 largest (by
dollar amount) retail advertisers, 10 largest (by dollar amount) preprint
advertisers, 10 largest (by dollar amount) classified advertisers, or 10 largest
(by dollar amount) commercial printing accounts (in each case as of both the
twelve month period ended December 31, 2003 and the five month period ending May
31, 2004) (collectively, the "Large Advertisers") has terminated or, to the
knowledge of the Company, intends to terminate or materially reduce its
relationship with the Company and/or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries has changed its discounting or distribution
policies with respect to any of the Large Advertisers or categories of
advertising since December 31, 2003 in any material respect or to advertisers
generally in any material respect. No party to the Advertising Representation
and Circulation Services Agreement dated May 22, 2002 between Greater Detroit
Newspaper Network, Inc. and Hometown Communications Network, Inc. (the "Hometown
Contract") has terminated, given notice of termination or threatened to
terminate the Hometown Contract, and the Company is not and, to the knowledge of
the Company, no other party is planning to terminate the Hometown Contract.
Section 3.20 SUFFICIENCY OF ASSETS. Section 3.20(a) of the Company
Disclosure Schedule sets forth a complete and accurate list of (i) all of the
newspaper and other publications owned and operated by the Company and its
Subsidiaries as of the date hereof (collectively, the "Company Publications"),
(ii) all of the Internet websites owned and operated by the Company and its
Subsidiaries as of the date hereof and (iii) all of the other material services,
businesses or operations conducted by the Company and its Subsidiaries as of the
date hereof (collectively, the "Company Business"). The consummation of the
transactions contemplated by this Agreement will convey to Purchaser the entire
Company Business as heretofore conducted and all of the assets and properties
used or held for use (whether real or personal, tangible or intangible, owned,
leased or held under license) in connection with the operation of the Company
Business as heretofore conducted in all material respects. Such assets and
properties are all of the assets and properties necessary and sufficient (and
the right, title and interest of Purchaser and immediately after Closing the
Company will be sufficient) to conduct the Company Business in all material
respects as heretofore conducted by the Company and its Subsidiaries.
Section 3.21 INSURANCE. Complete and accurate copies of all material
insurance policies and bonds of the Company and its Subsidiaries (the "Insurance
Policies") have been provided to Purchaser, and all such policies and bonds are
in full force and effect. All premiums due thereon have been timely paid, the
Company and its Subsidiaries have otherwise complied in all material respects
with the terms and conditions of all such policies and bonds, no insurer has
threatened in writing a termination or material alteration of coverage under any
such policies or bonds, and neither the Company nor any of its Subsidiaries has
received any notice of cancellation or non-renewal of any such policy. Except as
would not reasonably be expected to have a Company Material Adverse Effect,
since January 1, 2003, there has been no material claim by the Company or any of
its Subsidiaries pending under any such policies or bonds as to
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which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds, or in respect of which such underwriters have reserved
their rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 4.1 ORGANIZATION AND QUALIFICATION. (a) Purchaser is duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted.
(b) Merger Sub is duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted.
Section 4.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. (a) Purchaser has
the requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. Purchaser has duly authorized the execution, delivery and performance of
this Agreement by Purchaser and no other proceedings on the part of Purchaser
are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Purchaser and
constitutes the legal, valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms.
(b) Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. Merger Sub has duly
authorized the execution, delivery and performance of this Agreement by Merger
Sub and no other corporate proceedings on the part of Merger Sub are necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Merger Sub and constitutes the
legal, valid and binding obligation of Merger Sub, enforceable against Merger
Sub in accordance with its terms.
Section 4.3 CONSENTS AND APPROVALS. Neither the execution and delivery
of this Agreement by Purchaser and Merger Sub nor the consummation by Purchaser
and Merger Sub of the transactions contemplated hereby will require on the part
of Purchaser or Merger Sub or any of their respective Subsidiaries any consent,
approval, authorization or Permit of, or filing with or notification to, any
Governmental Entity, except (a) for any applicable filings required under the
HSR Act, (b) as set forth in Section 4.3 of the Purchaser Disclosure Schedule,
(c) as provided for in Section 2.3 or (d) where the failure to obtain such
consent, approval,
-26-
authorization or Permit, or to make such filing or notification, would not
prevent the consummation of the transactions contemplated hereby.
Section 4.4 NO VIOLATION. Except as set forth in Section 4.4 of the
Purchaser Disclosure Schedule, neither the execution and delivery of this
Agreement by Purchaser or Merger Sub nor the consummation by Purchaser or Merger
Sub of the transactions contemplated hereby will (a) conflict with or violate
its organizational documents or (b) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in Section
4.3 and this Section 4.4 are duly and timely obtained or made, violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Purchaser or Merger Sub or any of their respective Subsidiaries or their
respective assets or properties, except for such conflicts or violations which
would not in the aggregate prevent the consummation of the transactions
contemplated hereby.
Section 4.5 FUNDING. Purchaser has received and furnished to the
Company a copy of the commitment letters set forth in Section 4.5 of the
Purchaser Disclosure Schedule (the "Commitment Letters"). The aggregate proceeds
of the financing to be provided pursuant to the Commitment Letters together with
cash available or existing borrowing facilities is sufficient to enable
Purchaser to consummate the transactions contemplated by this Agreement and pay
all related fees and expenses for which Purchaser will be responsible.
Section 4.6 BROKERS AND FINDERS. In connection with the transactions
contemplated hereby, no broker, finder or investment bank has acted directly or
indirectly for Purchaser or Merger Sub, and neither Purchaser nor Merger Sub has
incurred any obligation to pay any brokerage or finder's fee or commission to
any Person other than Bear, Xxxxxxx & Co. Inc.
ARTICLE V
COVENANTS OF THE COMPANY
Section 5.1 CONDUCT OF THE COMPANY. Except as disclosed in Section 5.1
of the Company Disclosure Schedule, from the date of this Agreement until the
Closing Date, the Company agrees that, except as otherwise specifically
contemplated by this Agreement or the Company Disclosure Schedule, or as
Purchaser shall otherwise give its prior consent in writing (such consent not to
be unreasonably withheld, delayed or conditioned), it being agreed and
understood that nothing in this Section 5.1 shall prevent the Company from
declaring, setting aside or paying any dividend or making any distribution in
cash (but not with respect to any cash held in escrow or otherwise similarly set
aside for payment of any Liability) with respect to its capital stock on or
prior to the Closing Date or from making any cash payments to reduce
Indebtedness:
(a) ORDINARY COURSE. The Company shall and shall cause each of its
Subsidiaries to conduct their respective businesses in the ordinary course
consistent with past practice and the Company will and will cause each of its
Subsidiaries to use their respective reasonable efforts (i) to keep available
the services of its current officers and employees, (ii) preserve its
relationships
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with customers, advertisers, suppliers and others having business dealings with
the Company or its Subsidiaries and (iii) to preserve intact its current
business organizations.
(b) GOVERNING DOCUMENTS. The Company will not and will cause each of
its Subsidiaries not to amend any of their respective organizational documents.
(c) ISSUANCE OF SECURITIES. The Company will not and will cause each
of its Subsidiaries not to issue, encumber, transfer, sell or dispose of, or
authorize or agree to the issuance, transfer, sale or disposition of (whether
through the issuance or granting of options, rights, warrants, or otherwise),
any shares of its capital stock or any voting securities or any options, rights,
warrants or other securities convertible into or exchangeable or exercisable for
any such shares of capital stock or voting securities or amend any of the terms
of any securities or agreements relating to such capital stock or voting
securities outstanding on the date hereof, other than through exercise of
Options outstanding as of the date hereof.
(d) NO ACQUISITIONS. Except as permitted under Section 5.1(h), the
Company will not and will cause each of its Subsidiaries not to acquire or agree
to acquire, by merging or consolidating with, or by purchasing (i) an equity
interest in or material portion of the assets of, any business or any
corporation, partnership, association or other business organization or division
thereof, (ii) any real property or (iii) any other assets having a purchase
price in an amount exceeding $50,000, in any case, or $150,000, in the
aggregate, other than acquisitions of inventory in the ordinary course of
business consistent with past practice.
(e) NO DISPOSITIONS. The Company will not and will cause each of its
Subsidiaries not to sell, lease, license, mortgage, encumber or otherwise
dispose of or agree to sell, lease, license, mortgage, encumber or otherwise
dispose of, any right, title, or interest in any of its Real Property or of any
of its other assets other than, in the case of any assets other than Real
Property, the fair market value of which or the consideration for which does not
exceed $25,000, individually, or $75,000, in the aggregate, and other than
dispositions of inventory in the ordinary course of business consistent with
past practice.
(f) MAINTENANCE OF PROPERTIES. The Company and its Subsidiaries will
use their respective reasonable efforts to maintain and repair all property
material to the operation of its business in a manner consistent in all material
respects with past practice.
(g) MATERIAL CONTRACTS. The Company will not and will cause each of
its Subsidiaries not to enter into any Contract which would constitute a
Material Contract (other than a Material Contract relating to the rendering of
services by the Company as set forth in Section 3.12(a)(i) unless such Contract
may not be terminated without payment of penalty or premium on 60 days notice or
less) or modify in any material respect or breach any Material Contract or
waive, release or assign any material rights or claims thereunder; provided,
however, that nothing in this Section 5.1(g) shall prohibit the Company or any
of its Subsidiaries from taking any action that is the subject of but not
otherwise prohibited by any other subsection of this Section 5.1.
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(h) CAPITAL EXPENDITURES. The Company will not and will cause each of
its Subsidiaries not to authorize or make commitments for capital expenditures
in an amount exceeding $50,000, individually, or $250,000, in the aggregate, in
each case in the ordinary course of business consistent with past practice and
other than capital expenditures in accordance with the 2004 capital budget
previously provided to Purchaser (in accordance with which the Company and its
Subsidiaries shall act).
(i) INDEBTEDNESS. The Company will not and will cause each of its
Subsidiaries not to incur, assume, guaranty or otherwise become liable in
respect of any indebtedness for money borrowed or subject any of its assets,
tangible or intangible, to any Liens (other than Permitted Liens), except for
payment when due of accounts payable incurred in the ordinary course of
business, consistent with past practice.
(j) COMPENSATION AND BENEFITS. The Company will not and will cause
each of its Subsidiaries not to (i) except in the ordinary course consistent
with past practice, increase the compensation or employee benefits of any
employee whose annual compensation exceeds $75,000 or any officer, consultant,
or director, (ii) adopt, amend, modify or terminate any Company Benefit Plan or
any other bonus, profit-sharing, compensation, severance, termination, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
individual (iii) enter into any collective bargaining agreement or cause or
suffer any termination, amendment or modification to any existing collective
bargaining agreement, or (iv) except in the ordinary course consistent with past
practice, pay or provide any benefit or grant any award to any employee whose
annual compensation exceeds $75,000 or any director, consultant or officer,
other than as required by an existing Company Benefit Plan.
(k) ACCOUNTING. The Company will not and will cause each of its
Subsidiaries not to make any changes in its accounting methods or practices
other than as required by law.
(l) TAX. Neither the Company nor any of its Subsidiaries will make,
change or revoke any material Tax election, change any annual Tax accounting
period, adopt or change any material method of Tax accounting, file any material
amended Tax Return or material claim for Tax refund, enter into any closing
agreement, settle or compromise any material Tax claim, audit or assessment,
surrender any material right to claim a Tax refund, offset or other reduction in
Tax, or consent to any extension or waiver of the limitations period applicable
to any material Tax claim or assessment.
(m) RECEIVABLES AND PAYABLES. The Company will not and will cause each
of its Subsidiaries not to accelerate the receipt of amounts due with respect to
trade accounts receivable or any other accounts receivable, or lengthen the
period for payment of accounts payable, other than in the ordinary course to
maintain customary levels of working capital for the operation of the business
of the Company and its Subsidiaries.
(n) AFFILIATE TRANSACTIONS. The Company will not and will cause each
of its Subsidiaries not to enter into any (or modify any existing) transaction,
Contract, understanding or
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relationship with any of its officers, directors, employees, Affiliates (other
than Subsidiaries) or any Stockholder, in each case including any of their
respective Affiliates.
(o) MERGER, LIQUIDATION, ETC. The Company will not and will cause each
of its Subsidiaries not to adopt a plan of liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or reorganization.
(p) INTELLECTUAL PROPERTY. The Company will not and will cause each of
its Subsidiaries not to sell, assign, transfer, license or permit to lapse any
material rights with respect to any material Company Intellectual Property.
(q) CIRCULATION. The Company will not and will cause each of its
Subsidiaries not to (i) make any material change in circulation practices, or
promotional, marketing or premium practices of any of the Company Publications,
in each case other than in the ordinary course of business consistent with past
practice, or (ii) make any change in policies for the pricing of circulation or
advertising of any of the Company Publications except for changes in the
ordinary course of business which changes are not material.
(r) COMMITMENTS. The Company will not and will cause each of its
Subsidiaries not to take or commit to take any of the actions described in
clauses (b) through (q) of this Section 5.1.
Section 5.2 TERMINATION OF DISCUSSIONS; NO SOLICITATIONS. Immediately
after the execution of this Agreement, the Company shall terminate and cease,
and shall cause its Affiliates, and their respective employees, officers,
directors, representatives, agents, accountants and advisors (collectively,
"Representatives") to terminate and cease, all discussions and negotiations that
may then be ongoing by any of them with respect to an Alternative Transaction.
From the date hereof through the earlier of (a) the Closing or (b) the
termination of this Agreement in accordance with its terms, the Company shall
not and shall cause its Affiliates, and their respective Representatives not to,
directly or indirectly, solicit, participate in, encourage or initiate
discussions or negotiations with, or provide or cause to be provided any
information to, any Person or group of Persons (other than Purchaser, Merger Sub
or any of their respective Affiliates) concerning any Alternative Transaction.
If at any time prior to the Closing, the Company, its Subsidiaries or any of
their respective Affiliates or Representatives is approached by any third party
which expresses an interest in entering into an Alternative Transaction, the
Company will promptly disclose to Purchaser the nature of such contact and the
identity of the parties involved.
Section 5.3 REPURCHASE OF NOTES. The Company will comply with the
provisions of Article IX, including the notice provisions thereof, of the
Purchase Agreement relating to the Notes such that the Notes may be redeemed by
the Company at the Closing.
Section 5.4 TERMINATION OF AFFILIATE AGREEMENTS. Except as set forth
in Section 5.4 of the Company Disclosure Letter, on or prior to the Closing, the
Company will terminate all Contracts between any of the Company's directors,
employees, officers, Affiliates (other than Subsidiaries) or Stockholders or any
of their respective Affiliates, on the one hand,
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and the Company or any of its Subsidiaries, on the other hand, other than the
employment and other contracts listed in Section 3.9(a) of the Company
Disclosure Schedule.
ARTICLE VI
COVENANTS OF PURCHASER
Section 6.1 COMPENSATION AND BENEFITS. (a) For not less than 12 months
following the Closing Date, Purchaser shall provide, or shall cause the Company
or any Affiliate of Purchaser to provide, compensation and employee benefits to
current and former employees of the Company and its Subsidiaries that are no
less favorable in the aggregate than those provided to such employees by the
Company Benefit Plans set forth in Section 3.9(a)(1) of the Company Disclosure
Schedule as such plans are in effect immediately prior to the date hereof (other
than with respect to stock or other equity plans or Transaction Bonuses). In the
event that any employee of the Company or any of its Subsidiaries is at any time
after the Closing Date transferred to Purchaser or any Affiliate of Purchaser or
becomes a participant in an employee benefit plan, program or arrangement
maintained by or contributed by Purchaser or its Affiliates, Purchaser shall
cause such plan, program or arrangement to treat the prior service of such
employee with the Company or any of its Subsidiaries, to the extent such prior
service is recognized under the comparable plan, program or arrangement of the
Company or any of its Subsidiaries, as service rendered to Purchaser or its
Affiliates, as the case may be; provided, however, that in administering such
plans, programs or arrangements of Purchaser or its Affiliates, Purchaser shall
not be required to provide such service credit for purposes of benefit accrual
under any defined benefit pension plans or retiree medical plans and may cause a
reduction of benefits under any other plans, programs or arrangements to the
extent necessary to avoid duplication of benefits with respect to the same
covered matter or years of service. This paragraph shall not apply to any
collective bargaining agreements or wages, hours or other terms and conditions
of employment, including employee benefit plans, programs and arrangements,
which are mandatory subjects of collective bargaining. Wages, hours, and other
terms and conditions of employment for members of any collective bargaining unit
shall be provided after the Closing in accordance with the applicable collective
bargaining agreements for the term of such agreements.
(b) Purchaser will cause its medical, dental and other welfare plans
in which current or former employees or their dependants of the Company or any
of its Subsidiaries commence to participate after the Effective Time to (i)
waive any preexisting condition limitations to the extent waived under the
corresponding Company Benefit Plan and (ii) honor any deductible and
out-of-pocket expenses incurred by such employees and dependants under similar
plans of the Company for the plan year in which such participation begins. To
the extent that any such employee participates in a life insurance program of
Purchaser and its Affiliates, Purchaser will cause to be waived any medical
certification for such employees up to the amount of life insurance coverage
such employees had under any Company Benefit Plan.
(c) Nothing in this Agreement shall be interpreted or construed to
confer upon employees of the Company and its Subsidiaries any right with respect
to continuance of
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employment by the Company and its Subsidiaries or with Purchaser, nor shall this
Agreement interfere in any way with the right of Purchaser or its Affiliates or
the Company and its Subsidiaries to terminate any employee's employment at any
time. Nothing in this Agreement shall interfere in any way with the right of
Purchaser or any Affiliate to amend, terminate or otherwise discontinue any
Company Benefit Plan.
Section 6.2 INSURANCE; INDEMNITY. (a) For a period of six years
following the Effective Time, Purchaser shall indemnify, defend and hold
harmless to the fullest extent permitted under applicable law each Person who is
now or has been an officer or director of the Company (individually, an
"Indemnified Person" and collectively, the "Indemnified Persons"), against all
Losses, actually incurred by the Indemnified Person in connection with any
Proceeding arising out of or pertaining to acts or omissions (other than
intentional misconduct, illegal acts or acts of fraud), or alleged acts or
omissions (other than intentional misconduct, illegal acts or acts of fraud), by
them in their capacities as such, whether commenced, asserted or claimed before
or after the Effective Time; provided, however, that no indemnification shall be
made to any Indemnified Person to the extent it is finally determined by a court
of competent jurisdiction (after all rights to appeal shall have expired) that
such Indemnified Person did not, with the respect to the matter subject to
indemnification hereunder, act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company (or any
Subsidiary thereof). In the event of any such Proceeding, (i) Purchaser shall
pay the reasonable fees and expenses of counsel selected by the Indemnified
Person, which counsel shall be reasonably acceptable to Purchaser, in advance of
the final disposition of any such Proceeding to the full extent and under all
circumstances permitted by the DGCL as in effect on the date hereof, upon
receipt of any undertaking required by applicable law, and (ii) Purchaser will
direct the defense of any such matter; provided further, however, that Purchaser
shall not be obligated pursuant to this Section 6.2 to pay the fees and
disbursements of more than one counsel for all Indemnified Persons in any single
Proceeding, except to the extent that, in the opinion of counsel for the
Indemnified Persons, two or more of such Indemnified Persons have conflicting
interests in the outcome of such action.
(b) From and after the Effective Time, Purchaser shall purchase and
maintain or cause the Surviving Corporation to purchase and maintain, for a
period of six years following the Effective Time, policies of directors' and
officers' liability insurance covering each Person who was a director or officer
of the Company at any time prior to the Effective Time with respect to claims
arising from facts or events that occurred on or prior to the Effective Time and
providing at least the same coverage and amounts and containing terms that are
no less advantageous to the insured parties as those in effect immediately prior
to the Effective Time; provided, however, if the aggregate annual premiums for
such insurance exceed 300% of the per annum rate of premiums currently paid by
the Company for such insurance, then the Surviving Corporation shall provide the
maximum coverage that shall then be available at an annual premium equal to 300%
of such rate.
(c) Each of Purchaser and Merger Sub covenants for itself and its
successors and assigns, that it and they shall not (other than in the case of
intentional misconduct, illegal acts or acts of fraud) institute any action or
proceeding in any court or before any administrative agency or before any other
tribunal against any of the current directors or officers of the Company, in
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their capacity as such, with respect to any liabilities, actions or causes of
action, judgments, claims or demands of any nature or description
(consequential, compensatory, punitive or otherwise), including in each such
case any of the foregoing relating to, arising out of or resulting from this
Agreement or the transactions contemplated by this Agreement. Neither Purchaser
nor the Surviving Corporation shall, nor shall either permit any of the
Subsidiaries of the Surviving Corporation to, take any action directly or
indirectly to disaffirm or adversely affect the provisions of the articles of
organization and bylaws and any other written agreements of the Company or any
of its Subsidiaries that provide indemnification of and expense reimbursement to
any Indemnified Person.
(d) The provisions of this Section 6.2 shall not be terminated or
modified in such a manner as to adversely affect any Indemnified Person to whom
this Section 6.2 applies without the consent of such Indemnified Person (it
being expressly agreed that the Indemnified Persons to whom this Section 6.2
applies shall be third party beneficiaries of this Section 6.2 and shall be
entitled to enforce the covenants contained herein) and each party entitled to
insurance coverage under this Section 6.2, respectively, and his or her heirs
and legal representatives, and shall be in addition to any other rights an
Indemnified Person may have under the certificate or articles of incorporation
or bylaws of the Surviving Company or any of its Subsidiaries, under the DGCL or
otherwise.
ARTICLE VII
COVENANTS OF PURCHASER AND THE COMPANY
The parties hereto agree that:
Section 7.1 ACCESS TO INFORMATION. From the date hereof until the
Closing Date, the Company (a) will give Purchaser, its counsel, financial
advisors, auditors and other authorized Representatives reasonable access during
normal business hours and on reasonable notice to the officers,
managers/department heads, properties, books and records of and relating to the
Company, (b) will furnish to Purchaser, and its authorized Representatives such
financial and operating data and other information with respect to the Company
and its Subsidiaries, as such Persons may reasonably request, including fiscal
monthly financial statements and related analysis of the Company and its
Subsidiaries by no later than the 15th day after the end of each calendar month,
and (c) will instruct its Representatives to cooperate with Purchaser in its
investigation of the Company. Up to the Closing, any information provided, or
caused to be provided, by the Company pursuant to this Section 7.1 shall be
subject to the terms of the Confidentiality Agreement dated as of April 13, 2004
between the Company and Purchaser.
Section 7.2 REASONABLE EFFORTS. (a) Subject to the terms and
conditions of this Agreement and applicable law, each of the parties hereto
shall act in good faith and use reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary, proper
or advisable to consummate and make effective the transactions
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contemplated hereby as soon as practicable, including such actions or things as
the other party may reasonably request in order to cause any of the conditions
(including, without limitation, the condition set forth in Section 8.3(i)) to
such other party's obligation to consummate the transactions contemplated by
this Agreement to be fully satisfied as soon as practicable. Without limiting
the foregoing, the parties shall consult and fully cooperate with and provide
assistance to each other in obtaining all consents, approvals, waivers,
licenses, permits, authorizations, registrations, qualifications or other
permission or action by, and giving all necessary notices to and making all
necessary filings with and applications and submissions to, any Governmental
Entity or other Person as soon as reasonably practicable after filing. Prior to
making any application to or filing with any Governmental Entity or other Person
in connection with this Agreement, each party shall provide the other party with
drafts thereof and afford the other party a reasonable opportunity to comment on
such drafts in advance of such application or filing.
Section 7.3 CERTAIN FILINGS. (a) As soon as practicable, and in any
event no later than ten business days after the date hereof, each of the parties
hereto shall file any Notification and Report Forms and related material
required to be filed by it with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act with
respect to transactions contemplated hereby and shall promptly make any further
filings pursuant thereto that may be necessary, proper or advisable. Each of
Purchaser and the Company shall furnish to the other such information and
assistance as the other shall reasonably request in connection with the
preparation of any submissions to, or agency proceedings by, any Governmental
Entity under the HSR Act or any comparable laws of foreign jurisdictions, and
each of Purchaser and the Company shall keep the other promptly apprised of any
communications with, and inquiries or requests for information from, such
Governmental Entities.
(b) Each of the Company and Purchaser shall prepare and file any Other
Filings required to be filed by them. The Company and Purchaser shall cooperate
with each other and provide to each other all information necessary in order to
prepare the Other Filings. The information provided by the Company and Purchaser
for use in the Other Filings shall at all times prior to the Closing Date be
true and correct in all material respects and shall not omit to state any
material fact required to be stated therein or necessary in order to make such
information not false or misleading. Each such filing shall, when filed, comply
in all material respects with applicable law.
Section 7.4 PUBLIC ANNOUNCEMENTS. Purchaser and the Company will
consult with each other before issuing any press release or making any public
statement with respect to the transactions contemplated hereby and, except as
may be required by applicable law or any listing agreement with any securities
exchange, will not issue any such press release or make any such public
statement unless the text of such statement shall first have been agreed to by
the parties.
Section 7.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties and any covenant which by its terms is
contemplated to be performed prior to the Closing in this Agreement shall not
survive the Closing.
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Section 7.6 NOTICES OF CERTAIN EVENTS. (a) Each of Purchaser and the
Company shall promptly notify the other following the receipt of any notice or
other communication from any Governmental Entity in connection with the
transactions contemplated hereby or of any action, suit, claim or proceeding
commenced or, to its knowledge, threatened against it which relates to or seeks
to delay or prohibit the consummation of the transactions contemplated hereby.
(b) Each party shall promptly notify the other party of the occurrence
or non-occurrence of any fact, development or event which would be reasonably
likely to cause any condition set forth in Article VIII not to be satisfied;
provided, however, that no such notification, nor the obligation to make such
notification, shall affect the representations, warranties, covenants or
agreements of such notifying party hereunder or the conditions to the
obligations of any party to consummate the transactions contemplated by this
Agreement.
Section 7.7 IMPLIED WARRANTIES. Except as expressly provided in this
Agreement, the Company has not made and is not making any representation or
warranty whatsoever to Purchaser as to the Company, any of its Subsidiaries or
their respective businesses and shall not be liable in respect of the accuracy
or completeness of any information provided to Purchaser in connection with this
Agreement. Without limiting the foregoing, Purchaser acknowledges that
Purchaser, together with its advisors, has made its own investigation of the
Company and its businesses and is not relying on any implied warranties (whether
of merchantability or fitness for a particular purpose or otherwise), or upon
any representation or warranty whatsoever as to the prospects (financial or
otherwise), or the viability or likelihood of success, of the businesses of the
Company as conducted after the Closing Date, or upon the information contained
in the Confidential Memorandum furnished by Xxxxxxx, Xxxxx & Co., X.X. Xxxxxx
Securities Inc. or Xxxxx Van Essen & Xxxxxx LLP on behalf of the Company, or in
any subsequent or supplemental materials provided by the Company, except as
expressly provided in this Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
Section 8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each party hereto to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing Date of
the following conditions, any or all of which may be waived in writing by the
Company and Purchaser in whole or in part, to the extent permitted by applicable
law:
(a) NO INJUNCTION. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated or enforced any statute, rule,
regulation, executive order, decree, judgment, preliminary or permanent
injunction or other order which is in effect and which prohibits, enjoins or
otherwise restrains the consummation of the transactions contemplated hereby;
provided, that the parties shall use commercially reasonable efforts to cause
any such decree, judgment, injunction or order to be vacated or lifted; and
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(b) HSR ACT WAITING PERIOD. Any applicable waiting period under the
HSR Act relating to the transaction contemplated hereby shall have expired or
terminated and no action shall have been instituted by the Department of Justice
or the Federal Trade Commission challenging or seeking to enjoin the
consummation of the transactions contemplated hereby, other than any such action
that shall have been withdrawn or terminated.
Section 8.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to effect the transactions contemplated hereby is
also subject to the satisfaction at or prior to the Closing Date of each of the
following additional conditions, unless waived in writing by the Company:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by Purchaser herein shall be true and correct in all
respects with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except for changes
permitted or contemplated by this Agreement and except for representations and
warranties that are made as of a specific date or time, which shall be true and
correct in all respects only as of such specific date or time; except for such
failures of such representations and warranties to be true and correct as would
not, individually or in the aggregate, have a material adverse effect on the
ability of Purchaser to perform its obligations hereunder and consummate the
Merger on the Closing Date;
(b) COMPLIANCE WITH COVENANTS. Purchaser shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement to be performed or
complied with by it prior to or at the Closing Date;
(c) CERTIFIED RESOLUTIONS. The Company shall have received a true and
complete copy, certified by the Secretary or an Assistant Secretary of Merger
Sub, of the resolutions duly and validly adopted by the board of directors of
Merger Sub and by Purchaser as the sole stockholder of Merger Sub, evidencing
their authorization of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(d) OFFICER'S CERTIFICATES. The Company shall have received such
certificates of Purchaser, dated the Closing Date and signed by an executive
officer of Purchaser, to evidence satisfaction of the conditions set forth in
Sections 8.2(a) and (b) (insofar as each relates to Purchaser) as may be
reasonably requested by the Company; and
(e) CONSENTS. The Company shall have received evidence that Purchaser
has obtained or made all consents, approvals, orders, authorizations,
registrations, declarations, and filings referred to in Section 4.3 required to
be obtained or made prior to the Closing Date.
Section 8.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PURCHASER AND
MERGER SUB. The obligation of Purchaser and Merger Sub to effect the
transactions contemplated hereby is also subject to the satisfaction at or prior
to the Closing Date of each of the following additional conditions, unless
waived in writing by Purchaser:
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(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made by the Company herein (other than the representations and
warranties of the Company set forth in Section 3.2(a)) shall be true and correct
in all respects on and as of the date of this Agreement and on and as of the
Closing Date, with the same force and effect as though such representations and
warranties had been made on and as of the Closing Date, except for changes
permitted or contemplated by this Agreement and except for representations and
warranties that are made as of a specific date or time, which shall be true and
correct in all respects only as of such specific date or time; except for such
failures of such representations and warranties to be true and correct in all
respects (without giving effect to any limitation or qualification as to
"materiality" (including the word "material") or "Company Material Adverse
Effect" set forth herein) as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The
representations and warranties of the Company set forth in Section 3.2(a) shall
be true and correct in all respects on the date of this Agreement and on and as
of the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
(b) COMPLIANCE WITH COVENANTS. The Company shall have performed in all
material respects all obligations and agreements, and complied in all material
respects with all covenants, contained in this Agreement to be performed or
complied with by it prior to or on the Closing Date;
(c) CERTIFIED RESOLUTIONS. Purchaser and Merger Sub shall have
received a true and complete copy, certified by the Secretary or an Assistant
Secretary of the Company, of the resolutions duly and validly adopted by the
board of directors and the Stockholders, evidencing its authorization of the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and evidencing the matters to be submitted to
vote of stockholders under Section 8.3(j);
(d) OFFICER'S CERTIFICATES. Purchaser shall have received such
certificate of the Company, dated the Closing Date, signed by an executive
officer of the Company to evidence satisfaction of the conditions set forth in
Sections 8.3(a), (b), (g) and (h) as may be reasonably requested by Purchaser,
together, in the case of (g), with reasonable supporting detail;
(e) CONSENTS. Purchaser shall have received evidence that the Company
has obtained all consents, approvals, orders, authorizations, registrations,
declarations and filings referred to in Sections 3.4 and 3.5 required to be made
or obtained prior to the Closing Date shall have been made or obtained;
(f) TERMINATION OF CERTAIN AGREEMENTS. The Advisory Services Letter
Agreement, dated as of August 21, 1997 by and between the Company and Xxxxx &
Company LLC shall have been terminated;
(g) MINIMUM WORKING CAPITAL. The Company shall have Working Capital
and cash and cash equivalents as of the close of business on the day immediately
prior to the Closing Date of at least $9,000,000;
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(h) MATERIAL ADVERSE EFFECT. There shall not have occurred any event,
circumstance, development or condition which has had or would reasonably be
expected to have a Company Material Adverse Effect;
(i) FINANCING. Purchaser shall have obtained the financing necessary
to consummate the transactions contemplated by this Agreement and otherwise
satisfy its obligations hereunder consistent with the terms of the Commitment
Letters;
(j) SECTION 280G. The Company shall have, between the date hereof and
the Closing Date, submitted to stockholders of the Company for a vote those
arrangements set forth in Section 8.3(j) of the Company Disclosure Schedule, the
terms of which vote shall have met the requirements of Section 280G(b)(5)(B) of
the Code and the regulations thereunder; and
(k) REPAYMENT OF INDEBTEDNESS. Purchaser shall have received customary
pay-off letters with respect to the Senior Indebtedness and the Notes and
evidence of the repurchase of all shares issued in connection with the Notes
which shares remain held in escrow as of the date hereof.
ARTICLE IX
TERMINATION
Section 9.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual written consent of the Company and Purchaser;
(b) by either the Company or Purchaser, if (i) any federal or state
court of competent jurisdiction or other federal or state governmental or
regulatory body shall have issued any judgment, injunction, order or decree
prohibiting, enjoining or otherwise restraining the transactions contemplated by
this Agreement and such judgment, injunction, order or decree shall have become
final and nonappealable or (ii) any statute, rule, regulation or executive order
promulgated or enacted by any federal or state governmental authority which
prohibits the consummation of the transactions contemplated hereby shall be in
effect;
(c) by Purchaser or the Company if the Closing Date shall not have
occurred on or before the Termination Date; provided, however, that the right to
terminate this Agreement under this Section 9.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing Date to occur on or before
the Termination Date;
(d) by the Company, if Purchaser breaches any of Purchaser's
representations and warranties or fails to comply with any of the Purchaser's
covenants or agreements contained in this Agreement which breach or failure to
comply would be reasonably likely to result in the failure of a condition set
forth in Section 8.2(a) or, as the case may be, 8.2(b), and which breach or
failure to comply is not curable or, if curable, is not cured within 30 days of
notice thereof; or
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(e) by Purchaser, if the Company breaches any of its representations
and warranties or fails to comply with any of its covenants or agreements
contained in this Agreement which breach or failure to comply would be
reasonably likely to result in the failure of a condition set forth in Section
8.3(a) or, as the case may be, 8.3(b), and which breach or failure to comply is
not curable or, if curable, is not cured within 30 days of notice thereof.
Section 9.2 EFFECT OF TERMINATION. In the event of any termination of
this Agreement pursuant to Section 9.1 hereof, this Agreement forthwith shall
become void and of no further force or effect, and no party hereto (or any of
its Affiliates or Representatives) shall have any liability or obligation
hereunder, except in accordance with the expense provisions of Section 10.4 and
the confidentiality provisions of Section 7.1 and Article X shall survive any
such termination and except that nothing in this Agreement will relieve any
party from liability for any breach of this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) or sent by fax (with
immediate confirmation) or nationally recognized overnight courier service, as
follows:
(a) if to Purchaser, to:
Journal Register Company
State Street Square
00 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx
Vice President and General Counsel
Fax: (000) 000-0000
with a copy, which shall not constitute notice, to:
Journal Register Company
State Street Square
00 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxx Xxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Chairman of the Board and Chief Executive Officer
Xxxx X. Xxxxxxx
Executive Vice President and Chief Financial Officer
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Fax: (000) 000-0000
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
(b) if to the Company, to:
21st Century Newspapers, Inc.
00 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx
Fax: (000) 000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
Fax: (000) 000-0000
or to such other Person or address or facsimile number as any party shall
specify by like written notice to the other parties hereto (any such notice of a
change of address to be effective only upon actual receipt thereof).
Section 10.2 ENTIRE AGREEMENT. This Agreement (including the
schedules, exhibits and other documents referred to herein), together with the
Confidentiality Agreement referred to in Section 7.1, constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior written or oral and all contemporaneous oral agreements
and understandings between any of the parties hereto with respect to the subject
matter hereof.
Section 10.3 ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any of the rights, benefits or obligations hereunder may be assigned, in whole
or in part, by either party (whether by operation of law or otherwise) without
the prior written consent of the other party hereto; PROVIDED, HOWEVER, that
each of Purchaser and Merger Sub may assign its respective right, interest
and/or obligations hereunder to a subsidiary of Purchaser, so long as no such
assignment shall release Purchaser of its obligations hereunder. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any Person, other than the parties hereto or their respective
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successors and assigns and, with respect to Section 6.2 only, the Indemnified
Persons, any rights or remedies.
Section 10.4 FEES AND EXPENSES. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, fees and disbursements of counsel, financial
advisors and accountants) shall be borne by the party which incurs such cost or
expense.
Section 10.5 AMENDMENTS. This Agreement may be amended by the parties
at any time prior to the Closing Date; provided, that this Agreement may not be
amended or modified except by an instrument in writing signed on behalf of each
of the parties hereto.
Section 10.6 WAIVERS. At any time prior to the Closing Date, the
Company, on the one hand, or Purchaser, on the other hand, may, to the extent
legally allowed, (a) extend the time specified herein for the performance of any
of the obligations or other acts of the other, (b) waive any inaccuracies in the
representations and warranties of the other contained herein or in any document
delivered pursuant hereto or (c) waive compliance by the other with any of the
agreements or covenants of such other party or parties (as the case may be)
contained herein. Any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of the party or parties to be bound
thereby. No such extension or waiver shall constitute a waiver of, or estoppel
with respect to, any subsequent or other breach or failure to strictly comply
with the provisions of this Agreement. The failure of any party to insist on
strict compliance with this Agreement or to assert any of its rights or remedies
hereunder or with respect hereto shall not constitute a waiver of such rights or
remedies.
Section 10.7 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated thereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
Section 10.8 CAPTIONS. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 10.9 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
Section 10.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to the
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principles of conflicts of laws which could result in the application of the
laws of another jurisdiction.
Section 10.11 JURISDICTION; VENUE; SERVICES OF PROCESS. Each of the
parties hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
Proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any Proceeding relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Agreement shall be effective service of process for any Proceeding
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any Proceeding arising out of this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America,
in each case located in the County of New York, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such Proceeding brought in any such court has been brought in an
inconvenient forum. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
21ST CENTURY NEWSPAPERS, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman & CEO
JOURNAL REGISTER COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President & CEO
WOLVERINE ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chairman, President & CEO
