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EXECUTION COPY
EXHIBIT 10.4
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TRANSITIONAL SERVICES AGREEMENT
by and between
AMERICAN PUBLISHING MANAGEMENT SERVICES INC.
and
LIBERTY GROUP OPERATING, INC.
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This TRANSITIONAL SERVICES AGREEMENT (the
"Transitional Services Agreement") is entered into as of
this 27th day of January, 1998 by and between AMERICAN
PUBLISHING MANAGEMENT SERVICES INC. a corporation organized
and existing under the laws of the state of Delaware
("APMS"), and LIBERTY GROUP OPERATING, INC., a Delaware
corporation ("CNCO"; the term CNCO shall include all
subsidiaries of CNCO unless the context provides
otherwise). CNCO and APMS are sometimes hereinafter
collectively referred to as the "Parties".
W I T N E S S E T H:
WHEREAS, XXXXXXXXX INTERNATIONAL INC., a Delaware corporation (the
"Company"), APAC-90 INC., a Delaware corporation and an indirect wholly owned
subsidiary of the Company ("APAC-90"), AMERICAN PUBLISHING (1991) INC., a
Delaware corporation and an indirect wholly owned subsidiary of the Company
("AP-91"), APAC-95 INC., a Delaware corporation and an indirect wholly owned
subsidiary of the Company ("APAC-95"), LIBERTY GROUP PUBLISHING, INC., a
Delaware Corporation (the "Investor"), GREEN EQUITY INVESTORS II, L.P., a
Delaware limited partnership (the "Guarantor") and CNCO have entered into an
Asset Purchase Agreement dated as of November 21, 1997 (the "Asset Purchase
Agreement") relating to the sale to CNCO of substantially all of the assets and
the assumption of certain liabilities of certain community newspapers and other
publications (the "Business") as further identified in Exhibit A to such Asset
Purchase Agreement.
WHEREAS, AMERICAN PUBLISHING COMPANY OF ILLINOIS, a Delaware corporation
and an indirect wholly owned subsidiary of the Company ("APC Illinois") (APC
Illinois, APAC-90, AP-91 and APAC-95 collectively, the "Subsidiaries"), CNCO,
the Company, APAC-90, AP-91 and APAC-95 have entered into an Asset Purchase
Agreement dated as of November 21, 1997 (the "Illinois Asset Purchase
Agreement") relating to the sale to CNCO of substantially all of the assets and
the assumption of certain liabilities of certain community newspapers and other
publications (the "Illinois Business") (the Business and the Illinois Business
together,
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the "Transferred Business") as further identified in Schedule 1 to such
Illinois Asset Purchase Agreement.
WHEREAS, CNCO is interested in purchasing certain Services (as defined in
Section 1.04) from APMS, a subsidiary of the Company which was responsible for
providing such Services to the Subsidiaries prior to the date hereof, during a
transition period from the date hereof.
NOW, THEREFORE, the Parties, intending to become legally bound, hereby
agree as follows:
ARTICLE I
Definitions
For the purposes of this Transitional Services Agreement, the following
terms shall have the definitions hereinafter specified:
SECTION 1.01. "APMS" shall mean American Publishing Management Services
Inc. and any of its subsidiaries that perform the Services.
SECTION 1.02. "CNCO" shall mean Liberty Group Operating, Inc. and its
subsidiaries unless the context requires otherwise.
SECTION 1.03. "Parties" shall mean APMS and CNCO, collectively (and each
individually, a "Party").
SECTION 1.04. "Service" or "Services" shall mean those services described
on Schedule A hereto or otherwise provided by APMS pursuant to Section 2.01.
SECTION 1.05. "Subsidiaries" shall mean APC Illinois, APAC-90, AP-91 and
APAC-95, collectively, as well as all subsidiaries of such entities.
SECTION 1.06. "Transitional Services Agreement" shall mean this contract
between the Parties and all schedules hereto.
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Except as otherwise defined in this Transitional Services Agreement, all
terms, the first letters of which are capitalized, shall have the meanings
assigned to them in the Asset Purchase Agreement or the Illinois Asset Purchase
Agreement, as the case may be.
ARTICLE II
Agreement to Sell and Buy
SECTION 2.01. (a) Provision of Services. APMS shall provide to CNCO,
the Services listed and described on Schedule A hereto. In addition, APMS
shall furnish to CNCO such other services ("Other Services") as CNCO may
reasonably request and to which APMS shall reasonably agree. In every case,
all of the Services shall be provided in accordance with the terms, limitations
and conditions set forth herein and on Schedule A. Other Services shall be
provided on such terms as the Parties may mutually agree, subject to the terms
and conditions of this Transitional Services Agreement. Unless otherwise
agreed by the Parties, the Services shall be performed by APMS for CNCO in a
manner that is substantially the same as the manner in which such Services were
generally performed by APMS for the Subsidiaries prior to the date of this
Transitional Services Agreement and CNCO shall use such Services for
substantially the same purposes and in substantially the same manner as the
Subsidiaries had used such Services prior to the date hereof.
(b) Use of Services. APMS shall be required to provide Services only to
CNCO in connection with its conduct of the Transferred Business and such other
newspapers and similar publications as CNCO may acquire. Notwithstanding the
foregoing, CNCO shall not be required to provide any Services or Other Services
with respect to any business conducted by CNCO other than its newspaper
publishing business, which includes shoppers and total market coverage
publications. CNCO shall not resell any Services or Other Services to any
person whatsoever or permit the use of the Services or Other Services by any
person other than in connection with the conduct of business in the ordinary
course of CNCO and its subsidiaries.
(c) Relationship of Parties. APMS shall act under this Transitional
Services Agreement solely as an
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independent contractor and not as an agent of CNCO. Employees or agents of
APMS rendering services to CNCO pursuant to this Transitional Services
Agreement shall not be deemed employees or agents of CNCO. APMS shall
retain the exclusive right of control with respect to such persons.
(d) Right to Shut Down. APMS shall have the right to shut down
temporarily for maintenance purposes the operation of the facilities providing
any Service or Other Service whenever in its judgment, reasonably exercised,
such action is necessary. If the maintenance is non-scheduled, CNCO shall be
notified that maintenance is required. APMS shall give CNCO as much advance
notice of any such shutdown as is practicable. Where feasible, this notice
shall be given in writing. Where written notice is not feasible, oral notice
shall be given and promptly confirmed in writing. APMS shall be relieved of
its obligations to provide Services or Other Services during the period that
its facilities are so shut down but shall use reasonable efforts to minimize
each period of shutdown for such purpose and to schedule such shutdown so as
not to inconvenience or disrupt the conduct of the Transferred Business by the
CNCO.
SECTION 2.02. (a) National Classified Advertising Program. CNCO shall
participate in the program pursuant to which individual publications owned by
the Company's subsidiaries sell national classified advertising (the "National
Classified Advertising Program") on the same basis as the publications which
comprise the Transferred Business participated in such National Classified
Advertising Program prior to the Closing Date. CNCO's participation in the
National Classified Advertising Program and the Services provided by APMS
described in item D.3. of Schedule A with respect thereto shall constitute
Services for purposes of this Transitional Services Agreement.
(b) AdQuest Advertising. APMS and CNCO shall jointly negotiate an
extension of the term of APMS's agreement with AdQuest relating to the
placement of classified advertising on the Internet if APMS and CNCO mutually
agree that such joint negotiation would be in the Parties respective best
interests.
SECTION 2.03. Mutual Cooperation. The Parties shall cooperate with each
other in connection with the performance of any Services or Other Services
hereunder and the transition at the end of the term of this Transitional
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Services Agreement, including, without limitation, by making available on a
timely basis all information which is reasonably requested with respect to the
performance of Services and Other Services hereunder. CNCO shall make
available on a timely basis to APMS all information and materials reasonably
requested by APMS to enable it to provide the Services and Other Services.
CNCO shall give APMS reasonable access, during regular business hours and at
such other times as are reasonably required, to the premises on which CNCO
conduct business for the purposes of providing Services and Other Services.
During the term of this Agreement, for six months following the expiration of
this Transitional Services Agreement and in connection with the year end audit
for the year that this Transitional Services Agreement expires, the Parties
shall make available to each other on a timely basis all information with
respect to the performance of Services and Other Services hereunder which is
reasonably requested.
SECTION 2.04. Books and Records. APMS shall keep books and records of
the Services and Other Services provided and reasonable supporting
documentation of all out-of-pocket costs incurred in connection with providing
such Services and Other Services, and shall make such books and records
available to CNCO, upon reasonable notice, during normal business hours.
ARTICLE III
Fees; Payment; Independent Contractor
SECTION 3.01. Fees. APMS will provide the Services to CNCO at Cost.
"Cost" means a dollar amount equal to (x) APMS's annual cost to operate its
Marion, Illinois administrative office, exclusive of costs (including employee
costs) related to services which are not of the types not provided hereunder,
multiplied by (y) a ratio (the "Ratio") equal to (i) the number of newspapers
and other publications having daily circulation owned by CNCO on the Closing
Date, after giving effect to the transactions contemplated by the Equity
Purchase Agreement, divided by (ii) the number of newspapers and other
publications having daily circulation owned by American Publishing Company
(directly or indirectly) immediately prior to the Closing; provided that Cost
shall be adjusted for (i) changes in the number of newspapers and other
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publications owned by CNCO, as the parties shall mutually agree and (ii)
changes (not in excess of 10% per year) in the employee and other costs to APMS
of providing the Services and the Other Services. In addition, to the extent
that APMS agrees to provide any Other Services, the fee, for such Other
Services shall be as mutually agreed to by APMS and CNCO. Notwithstanding the
foregoing, APMS shall retain the right to charge payroll fees ("Payroll Fees")
on behalf of CNCO to each location based upon the number of employees at such
location who are paid via direct deposit in accordance with the schedule of
fees then in effect with respect to the Subsidiaries. Such Payroll Fees shall
be paid directly to CNCO or a subsidiary thereof. In addition, CNCO shall
reimburse APMS, within 30 days after the receipt of any invoice therefor and
presentation of any such supporting documentation that CNCO may reasonably
request, for (i) any and all non-salary expenses related to training newspaper
staff in sourcing co-op advertising as described in item D.1. of Schedule A if
such training is requested by CNCO and (ii) any reasonable out-of-pocket
traveling expenses (including reimbursement for economy class travel and
accommodations) incurred at CNCO's request by employees of APMS in the course
of performing Services or Other Services hereunder during or any time after the
first calendar month which commences more than 90 days after the date hereof.
Notwithstanding anything to the contrary herein, the fee for the classified
advertising consulting Services provided by Xxxxxx Xxxx described in item D.2.
of Schedule A shall be $300 per day plus reasonable expenses.
SECTION 3.02. Payment. Itemized statements will be rendered each month
by APMS to CNCO for Services and Other Services delivered during the preceding
month, and each such statement shall set forth in reasonable detail a
description of such Services and Other Services and the amounts charged
therefor. The amounts due under each invoice shall be paid in full within 30
days after the date thereof and such payment shall be accompanied by a copy of
the applicable invoice. Statements not paid within such 30-
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day period shall be subject to late charges for each month or portion
thereof the statement is overdue, calculated as the lesser of the following:
(i) the then current prime rate offered by The First National Bank
of Chicago, plus one percentage point, or
(ii) the maximum rate allowed by applicable law.
Notwithstanding the foregoing, if an invoice is disputed in good faith and APMS
receives prompt written notice of such dispute, late charges pursuant to
clauses (i) and (ii) above shall not begin to accrue until such dispute is
resolved.
SECTION 3.03. Disclaimer of Warranty. EXCEPT AS EXPRESSLY SET FORTH IN
THIS TRANSITIONAL SERVICES AGREEMENT, THE SERVICES AND OTHER SERVICES AND GOODS
TO BE PURCHASED UNDER THIS TRANSITIONAL SERVICES AGREEMENT ARE FURNISHED AS IS,
WHERE IS, WITH ALL FAULTS AND WITHOUT WARRANTY OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE. APMS DOES NOT MAKE ANY WARRANTY THAT ANY SERVICE OR OTHER SERVICE
COMPLIES WITH ANY LAW, DOMESTIC OR FOREIGN.
SECTION 3.04. Taxes. All payments by CNCO to APMS under this
Transitional Services Agreement shall be grossed-up by CNCO to cover any sales
tax or similar tax ("Taxes") (but excluding any tax based upon the net income
of APMS) payable with respect to the provision by APMS of Services, and APMS
shall be solely responsible for paying any such Taxes to the appropriate
Governmental Authority.
ARTICLE IV
Term of Particular Services
SECTION 4.01. (a) Term of Services. The provision of Services shall
commence on the date hereof and, with respect to each Service and Other
Service, shall terminate on the third anniversary of the date hereof; provided,
however, that: (i) CNCO may cancel any Service or Other Service upon 90 days'
written notice and (ii) APMS may cease to provide any Service or Other Service
upon 60 days' written notice to CNCO if APMS ceases to provide such
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Service or Other Service to the Company's subsidiaries, divisions and business
units; provided that APMS may not provide such notice of its intent to cease
providing any Service or Other Service hereunder until one year from the date
hereof. Notwithstanding the foregoing, APMS may cease to provide the classified
advertising consulting Services of Xxxxxx Xxxx to CNCO at any time if Xx. Xxxx
ceases to be employed by APMS.
(b) Return of Books and Records. Upon the termination of a Service or
Other Service with respect to which CNCO holds books, records or files,
including, but not limited to, current and archived copies of computer files,
owned by CNCO and used by APMS in connection with the provision of a Service to
CNCO, APMS shall return all of such books, records or files as soon as
reasonably practicable. APMS shall bear all costs and expenses associated with
the return of such documents. At its own expense, APMS may make a copy of such
books, records or files for its legal files.
ARTICLE V
Benefits
SECTION 5.01. Savings Plan. Prior to the Transfer Date, CNCO shall have
established a defined contribution plan within the meaning of Section 3(34) of
the Employment Retirement Income Security Act of 1974, as amended (the "CNCO
401k Plan"), which is substantially similar in all material respects to the
American Publishing Retirement Savings Plan (the "AP 401k Plan"), for the
benefit of employees of CNCO, including the Employees, after the Transfer Date.
Effective as of the Transfer Date (i) APMS shall cause the Employees to cease
participation in the AP 401k Plan and (ii) the Employees who were eligible to
participate in the AP 401K Plan immediately prior to the Transfer Date shall
become participants in the CNCO 401k Plan. Employees participating in the CNCO
401k Plan shall be vested in such CNCO 401k Plan to the same extent that they
were vested under the AP 401k Plan immediately prior to the Transfer Date.
Employees who receive an eligible rollover distribution within the meaning of
Section 402(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
including a direct rollover distribution (within the meaning of Section
401(a)(31) of the Code, and regulations thereunder) from the AP 401k Plan shall
be permitted to make a rollover contribution to the CNCO 401k Plan. To the
extent that an Employee is eligible to make a rollover contribution of a direct
rollover distribution (within
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the meaning of Section 401(a)(31) of the Code and the regulations thereunder)
from the AP 401k Plan to the CNCO 401k Plan, such rollover contribution may
include promissory notes for loans made to such Employee under the terms of the
AP 401k Plan. Effective as of the date immediately following the Transfer
Date, APMS shall provide CNCO with certain Services described in Schedule A
hereto in connection with the management and administration of the CNCO 401K
Plan and such Other Services with respect to the CNCO 401K Plan as APMS and
CNCO may agree upon, subject to the provisions of this Transitional Service
Agreement. APMS and CNCO shall cooperate in good faith to expedite the
creation of the CNCO 401k Plan.
SECTION 5.02. Medical and Dental Benefits. Effective as of the date
immediately following the Transfer Date, (i) APMS shall cause the Employees to
cease coverage under and participation in the American Publishing Group Health
Plan and the underlying insurance policy or policies (the "AP Health Plan") and
the other health plans and the underlying insurance policies held in the names
of the community newspapers and other publications which comprise the
Transferred Business which apply to Employees not covered by the AP Health Plan
(the "Other Health Plans") and (ii) CNCO shall establish (a) health care plans
(the "CNCO Health Plans") substantially similar in all material respects to the
AP Health Plan and the Other Health Plans to cover Employees (and their
eligible dependents) who were covered by the AP Health Plan and the Other
Health Plans, as applicable, prior to the Transfer Date on the substantially
same basis and subject to substantially the same conditions that would have
applied to such Employees (and their dependents) absent the transactions
contemplated by the Equity Purchase Agreement, the Transfer Service Agreement
and the related documents and (b) a corresponding Code Section 125 plan or
plans. The CNCO Health Plans shall waive any waiting period requirement and
any pre-existing condition and actively-at-work exclusions (but only to the
extent that Employees were not subject to such requirements and exclusions
prior to the Transfer Date) and shall provide that any expenses incurred on or
before the Transfer Date under the AP Health Plan or the Other Health Plans, as
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applicable, shall be taken into account for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions under the
corresponding CNCO Health Plans. Effective as of the date immediately
following the Transfer Date, APMS shall provide CNCO with certain Services
described in Schedule A hereto in connection with the management and
administration of the CNCO Health Plans and such Other Services with respect to
the CNCO Health Plans as APMS and CNCO may agree upon, subject to the
provisions of this Transitional Services Agreement. Notwithstanding the
foregoing, APMS shall not be required to provide any Services with respect to
the CNCO Health Plans if such CNCO Health Plans are not with the same health
care provider or providers and insurance carrier or carriers which covered the
Employees participating in the AP Health Plan prior to the Transfer Date unless
and until the Parties mutually agree on services to be provided, in which case
such services shall be treated as Other Services for purposes of this
Transitional Services Agreement.
SECTION 5.03. Disability Coverage. Effective as of the date immediately
following the Transfer Date (i) APMS shall cause the Employees to cease
coverage under and participation in (x) the Fortis Long-Term Disability Plan
and the underlying insurance policy or policies and (y) the American Publishing
Short Term Disability Plan and the underlying insurance policy or policies and
(ii) CNCO shall establish (x) a long-term disability plan (the "CNCO Long-Term
Disability Plan") which provides coverage to Employees which is substantially
similar in all material respects to the coverage they received under the Fortis
Long-Term Disability Plan and (y) such other short-term disability plan or
plans as it deems appropriate, if any, (the "CNCO Short-Term Disability Plan").
CNCO shall use its commercially reasonable efforts to ensure that no Employee
shall be subject to any waiting period or pre-existing condition exclusion with
respect to coverage under the CNCO Long-Term Disability Plan which would not
have applied absent his or her transfer of employment to CNCO. Effective as of
the date immediately following the Transfer Date, APMS shall provide CNCO with
certain Services described in Schedule A hereto in connection with the
management and the administration of the CNCO Long-Term Disability Plan and
such Other Services with respect to the CNCO Long-Term Disability Plan as APMS
and CNCO may agree upon, subject to the provisions of this Transitional
Services Agreement. APMS will not be required to provide any services in
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connection with (i) the CNCO Long-Term Disability plan if Fortis is not the
insurance provider under such plan and (ii) the CNCO Short-Term Disability
Plan, if any, unless and until the Parties mutually agree on services to be
provided, in which case such services shall be treated as Other Services for
purposes of this Transitional Services Agreement.
SECTION 5.04. Life Insurance. Effective as of the date immediately
following the Transfer Date (i) APMS shall cause the Employees to cease
coverage under and participation in the American Publishing Life Insurance Plan
and the underlying insurance policy or policies and (ii) CNCO shall establish a
life insurance plan (the "CNCO Life Insurance Plan") which provides coverage to
Employees (and their eligible dependents) which is substantially similar in all
material respects to the coverage they received under the American Publishing
Life Insurance Plan. CNCO shall use its commercially reasonable efforts to
ensure that no Employee shall be subject to any waiting period with respect to
such coverage under such CNCO Life Insurance Plan which would not have applied
absent his or her transfer of employment to CNCO. Effective as of the date
immediately following the Transfer Date, APMS shall provide CNCO with certain
services in connection with the management and the administration of the CNCO
Life Insurance Plan described in Schedule A hereto and such Other Services with
respect to the CNCO Life Insurance Plan as APMS and CNCO may agree upon,
subject to the provisions of this Transitional Services Agreement.
SECTION 5.05 Other Insurance. Effective as of the date immediately
following the Transfer Date, (i) APMS shall terminate all current policies of
liability, fire, extended coverage, fidelity, fiduciary, workers' compensation
and other forms of insurance in force as of the Transfer Date covering the
Transferred Business (the "APMS Insurance Policies") and (ii) CNCO shall obtain
such insurance policies (the "CNCO Insurance Policies") with respect to the
Transferred Business as it deems advisable; provided that CNCO shall cause the
Employees to be covered under a workers' compensation policy on the same basis
and subject to substantially the same conditions that would have applied to
such Employees absent the transactions contemplated by the Equity Purchase
Agreement, the Transfer Agreement and the other documents referred to herein
and therein. Effective as of the date immediately following the
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Transfer Date, APMS shall provide CNCO with certain Services described in
Schedule A hereto in connection with the administration of the CNCO Insurance
Policies and such Other Services with respect to the CNCO Insurance Policies as
APMS and CNCO shall agree upon, subject to the provisions of this Transitional
Services Agreement. Notwithstanding the foregoing, APMS shall not be required
to provide any Services with respect to the CNCO Insurance Policies if such
policies are not with the same insurance carriers which provided coverage to
the Transferred Business under the APMS Insurance Policies prior to the
Transfer Date unless and until the Parties mutually agree on services to be
provided, in which case such services shall be treated as Other Services for
purposes of this Transitional Services Agreement.
SECTION 5.06. Indemnification. Notwithstanding anything to the contrary
herein, all claims for indemnification and other claims relating to any matter
covered in Article V of this Transitional Services Agreement shall be governed
by the terms of the Transfer Agreement.
ARTICLE VI
Force Majeure
SECTION 6.01. Force Majeure. APMS shall not be liable for any
interruption of Service or Other Service, delay or failure to perform under
this Transitional Services Agreement when such interruption, delay or failure
results from causes beyond its reasonable control, including but not limited to
any strikes, lock-outs or other labor difficulties, acts or any government,
riot, insurrection or other hostilities, embargo, fuel or energy shortage,
fire, flood, acts of God, wrecks or transportation delays, or inability to
obtain necessary labor, materials or utilities. In any such event, APMS's
obligations hereunder shall be postponed for such time as its performance is
suspended or delayed on account thereof. APMS will promptly notify CNCO,
either orally or in writing, upon learning of the occurrence of such event of
force majeure. Upon the cessation of the force majeure event, APMS will use
commercially reasonable efforts to resume its performance with the least
possible delay.
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ARTICLE VII
Liabilities
SECTION 7.01. Consequential and Other Damages. APMS shall not be liable,
whether in contract, in tort (including negligence and strict liability), or
otherwise, for any special, indirect, incidental or consequential damages
whatsoever, which in any way arise out of, relate to, or are a consequence of,
its performance or nonperformance hereunder, or the provision of or failure to
provide any Service or Other Service hereunder, including but not limited to,
loss of profits, business interruptions and claims of customers.
SECTION 7.02. Limitation of Liability. In any event, the liability of
APMS with respect to this Transitional Services Agreement or anything done in
connection herewith, including but not limited to the performance or breach
hereof, or from the sale, delivery, provision or use of any Service or Other
Service or product provided under or covered by this Transitional Services
Agreement, whether in contract, tort (including negligence or strict liability)
or otherwise, shall not exceed the fees previously paid to APMS by CNCO in
respect of the Service or Other Service from which such liability flows.
SECTION 7.03. Release and Indemnity. Except as specifically set forth in
this Transitional Services Agreement, CNCO hereby releases APMS, its employees,
agents, officers and directors ("APMS Indemnitees") and agrees to indemnify and
hold harmless APMS, its employees, agents, officers and directors, from any and
all claims, demands, complaints, liabilities, losses, damages (other than
special, indirect, incidental or consequential damages of APMS Indemnitees) and
all costs and expenses arising from or relating to the use of any Service or
Other Service or product provided hereunder by CNCO or any person using such
product or Service pursuant to Section 3.06 of this Transitional Services
Agreement to the extent not arising from the gross negligence or willful
misconduct of APMS. APMS represents and warrants that it has all necessary
right and authority to provide the Services and Other Services to CNCO
hereunder.
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ARTICLE VIII
Termination
SECTION 8.01. Termination. This Transitional Services Agreement shall
terminate on the earliest to occur of (i) the third anniversary of the Transfer
Date, (ii) the date on which the provision of all Services and Other Services
have terminated or been canceled pursuant to Section 4 and (iii) the date on
which this Transitional Services Agreement is terminated pursuant to Section
8.02.
SECTION 8.02. Breach of Transitional Services Agreement. If either of
the Parties shall cause or suffer to exist any breach of any of its obligations
under this Transitional Services Agreement, including but not limited to any
failure to make payments when due, and said Party does not cure such default
within 10 business days after receiving written notice thereof form the
non-breaching Party, the non-breaching Party may terminate this Transitional
Services Agreement, including the provision of Services pursuant hereto,
immediately by providing written notice of termination.
SECTION 8.03. Sums Due. In the event of a termination of this
Transitional Services Agreement, APMS shall be entitled to all outstanding
amounts due from CNCO up to the date of termination.
SECTION 8.04. Effect of Termination. Sections 3.04, 4.01(b), 6.01, 7.01,
8.03 and 9.01 and this Section 8.04 shall survive any termination of this
Transitional Services Agreement.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. All notices or other communications made in
connection with this Transitional Services Agreement shall be in writing. Any
notice or other communication in connection herewith shall be deemed duly given
(i) two business days after it is sent by express,
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registered or certified mail, return receipt requested, postage prepaid or (ii)
one business day after it is sent by overnight courier, in every case,
addressed as follows:
(i) If to CNCO:
Liberty Group Operating, Inc.
c/o Liberty Group Publishing, Inc.
0000 Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy (which shall not
constitute notice) to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(ii) If to APMS:
American Publishing Management Services Inc.
000 Xxxxx Xxx Xxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx XxXxxxx
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with copies (which shall not
constitute notice) to:
Xxxxxxxxx Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Attn: Vice President and General Counsel
Facsimile Number: (000) 000-0000
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
or, in each case, at such other address as may be specified in writing to the
other Parties hereto. Any Party may give notice or other communication in
connection herewith using any other means (including, but not limited to,
personal delivery, messenger service, telecopy, telex or ordinary mail), but no
such notice or other communication shall be deemed to have been duly given
unless and until it is actually received by the individual for whom it is
intended.
SECTION 9.02. Headings. The headings contained in this Transitional
Services Agreement are for purposes of convenience only and shall not affect
the meaning or interpretation of this Transitional Services Agreement.
SECTION 9.03. Schedules. All schedules attached hereto or referred to
herein are hereby incorporated in and made a part of this Transitional Services
Agreement as if set forth in full herein. Capitalized terms used in any
schedule but not otherwise defined therein shall have the respective meanings
assigned to such terms in this Transitional Services Agreement or in the
Transfer Agreement, as applicable.
SECTION 9.04. Entire Agreement. This Transitional Services Agreement and
the other agreements, including the Transfer Agreement, referred to herein and
therein constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the Parties with respect to the
subject matter hereof.
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SECTION 9.05. Counterparts. This Transitional Services Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall together constitute one and the same instrument.
SECTION 9.06. Governing Law. This Transitional Services Agreement shall
be governed in all respects, including, but not limited to, as to validity,
interpretation and effect, by the internal laws of the state of Delaware,
without giving effect to the conflict of laws rules thereof.
SECTION 9.07. Governing Law; Consent to Jurisdiction. This Transitional
Services Agreement shall be construed in accordance with and governed by the
laws of the State of Delaware applicable to agreements made and to be performed
wholly within such jurisdiction. All disputes, litigation, proceedings or
other legal actions by any Party to this Transitional Services Agreement in
connection with or relating to this Transitional Services Agreement or any
matters described or contemplated in this Transitional Service Agreement shall
be instituted in the courts of the State of Delaware or of the United States
sitting in the State of Delaware. Each Party to this Transitional Service
Agreement irrevocably submits to the exclusive jurisdiction of the courts of
the State of Delaware and of the United States sitting in the State of Delaware
in connection with any such dispute, litigation, action or proceeding arising
out of or relating to this Transitional Services Agreement. Each Party to this
Agreement will maintain at all times a duly appointed agent in the State of
Delaware for the service of any process or summons in connection with any such
dispute, litigation, action or proceeding brought in any such court and, if it
fails to maintain such an agent during any period, any such process or summons
may be served on it by mailing a copy of such process or summons to it at its
address set forth, and in the manner provided in Section 9.01, with such
service deemed effective on the fifteenth day after the date of such mailing.
Each Party to this Transitional Services Agreement irrevocably waives the right
to a trial by jury in connection with any matter arising out of this
Transitional Services Agreement and, to the fullest extent permitted by
applicable law, any defense or objection it may now or hereafter have to the
laying of venue of any proceeding under this Transitional Services Agreement
brought in the courts of the State of Delaware or of the United States sitting
in the State of Delaware and
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any claim that any proceeding under this Transitional Services Agreement
brought in any such court has been brought in an inconvenient forum.
SECTION 9.08. Binding Effect. This Transitional Services Agreement shall
be binding upon and inure to the benefit of the Parties hereto and their
respective heirs, successors and permitted assigns.
SECTION 9.09. Assignment. This Transitional Services Agreement shall not
be assignable by any Party without the prior written consent of other Parties;
provided that (a) CNCO may assign this Transitional Services Agreement to (i)
the Investor and (ii) its permitted assigns under the Equity Purchase Agreement
and (b) APMS may delegate performance of all or any part of its obligations
under this Transitional Services Agreement to (i) any subsidiary of APMS and
(ii) third parties to the extent such third parties are routinely used to
provide such Services to other businesses of the Company, provided, further,
that, in each case, no such delegation shall in any way affect APMS's
obligations under this Transitional Services Agreement. Any purported
assignment in violation of this Section 9.07 shall be void.
SECTION 9.10. No Third Party Beneficiaries. Except as provided in
Section 7.02 with respect to release and indemnity, nothing in this
Transitional Services Agreement shall confer any rights upon any person or
entity other than CNCO and APMS and each such Party's respective successors and
permitted assigns.
SECTION 9.11. Amendment; Waivers, etc. No amendment, modification or
discharge of this Transitional Services Agreement, and no waiver hereunder,
shall be valid or binding unless set forth in writing and duly executed by the
Party against whom enforcement of the amendment, modification, discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall in no way impair the
rights of the Party granting such waiver in any other respect or at any other
time.
SECTION 9.12. Severability. If any provision of this Transitional
Services Agreement or the other agreements, including the Transfer Agreement,
referred to herein or therein, or the application thereof to any person
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or circumstance is determined by a court of competent jurisdiction to be
invalid, void or unenforceable, the remaining provisions thereof, or the
application of such provision to persons or circumstances other than those as
to which it has been held invalid or unenforceable, shall remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any Party. Upon any such
determination, the Parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original
intent of the Parties.
SECTION 9.13. (a) Confidentiality. Except as otherwise provided in this
Transitional Services Agreement, APMS will, and will cause its affiliates (and
their respective officers, employees, accountants, counsel, financial advisors
and other representatives to whom they disclose such information) to hold in
strict confidence and not use or disclose all confidential and proprietary
information relating to CNCO in the possession of APMS or to which APMS is
given access without the prior written consent of CNCO and (b) CNCO will, and
will cause its affiliates (and their respective officers, employees,
accountants, counsel, financial advisors and other representatives to whom they
disclose such information) to hold in strict confidence and not use or disclose
all confidential and proprietary information relating to APMS in the possession
of CNCO or to which CNCO is given access that is not information that relates
solely to CNCO without the prior written consent of APMS. Notwithstanding
anything herein to the contrary, the provisions of this Section 9.13 shall not
apply to the disclosure by any Party hereto or their respective affiliates of
any information, documents or materials (i) which are, or become, publicly
available, other than by reason of a breach of this Section 9.13 by the
disclosing party or by any subsidiary or any affiliate of the disclosing party,
(ii) received from a third party not bound by any confidentiality requirement
with the other Parties hereto, (iii) required by applicable law to be disclosed
by such Party, or (iv) necessary to establish such Party's rights under this
Transitional Services Agreement, the Transfer Agreement, the Equity Purchase
Agreement or any other agreement or document referred to herein or therein;
provided that, in the case of clauses (iii) and (iv), the person intending to
make disclosure of confidential
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information will promptly notify the Party to whom it is obliged to keep such
information confidential and, to the extent practicable, provide such Party a
reasonable opportunity to prevent such public disclosure.
(b) Title to Data. CNCO acknowledges that it will acquire no right,
title or interest (including any license rights or rights of use) in any
firmware or software, and the licenses therefor which are owned by APMS, by
reason of APMS's provision of the Services provided hereunder. APMS agrees
that all records, data, files, input materials and other information received
or computed for the benefit of CNCO and which relate to the conduct of the
Transferred Business are the property of CNCO.
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IN WITNESS WHEREOF, the Parties have executed this Transitional Services
Agreement as of the date first written above.
AMERICAN PUBLISHING MANAGEMENT SERVICES INC.
by /s/ X.X. Xxxxxxxx
-----------------------------
Name:
Title:
LIBERTY GROUP OPERATING, INC.
by /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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SCHEDULE A
Services to be provided by APMS pursuant to the Transitional Services
Agreement.
A. Accounting and finance related information systems and administrative
processing support.
1. Maintenance of normal books and records, including, but not
limited to, general and subsidiary ledgers and appropriate
supporting documentation in both hard copy and electronic form.
2. Payroll system and related payroll accounting and payroll tax
processing support for Employees, including, but not limited to, the
following:
(a) Periodic payroll processing, check preparation, check
reconciliation and all related payroll record keeping.
(b) Reports and systems interfaces supporting employee benefits
processing and record keeping for both the employee benefit
programs that continue to be administered by APMS (as described
in paragraph C below) and deductions processing and reporting
for benefit programs that are no longer directly administered
by APMS but are transferred to other insurance carriers or
administrators.
(c) Access to and retrievals or reporting from the employee
information data base including the prior three years of
employee data and payroll statistics.
(d) Record retention archival and storage services.
3. Information systems, processing and administrative support
for fixed asset accounting and related tax functions, including, but
not limited to, capabilities such as the following:
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(a) Storage on APMS's information system of fixed asset records
including asset information, original costs, tax and book
depreciation and net book value (all as determined by taking
into account adjustments to basis, net book value and
depreciation lives and methods resulting from the purchase or
other acquisition of the Assets by CNCO).
(b) Access to APMS's information for the purpose of maintaining
and retrieving fixed asset records.
(c) Calculation of tax and book depreciation in a form sufficient
for generating accounting entries and any and all currently
available management reports (taking into account the
adjustments described in (a), above).
(d) Access to data and administrative processing and technical
support for preparation of personal property tax returns.
(e) Financial statement reporting, including audit support services.
(f) Accounts payable, in the same manner as provided to the
Subsidiaries on the Closing Date.
(g) Capital expenditure tracking and review.
(h) Preparation for tax return preparation.
(i) Preparation for audit preparation.
4. Assistance with the budget process.
B. APMS will provide treasury services for CNCO in connection with all
aspects of investment of funds, cash management and general banking
relations.
C. Employee Benefits and Insurance Coverage, Administration and Information
Systems Processing Support.
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1. APMS will provide administrative support, enrollment, premium
administration, claims processing, record keeping and administration
coordination with insurance carriers, third party administrators,
and utilization review vendors for the following CNCO health and
welfare and insurance plans:
(a) Liberty Group Management Services, Inc. Employee Benefits Plan
administered by Unicare
(b) Liberty Group Publishing Retirement Savings Plan (401K)
administered by Principal Financial Group
(c) Liberty Group Universal Life Insurance Program administered by
Principal Financial Group
(d) Unemployment Compensation
(e) Workers' Compensation
2. APMS will provide services limited to premium payroll deduction
processing for the following benefits:
(a) Fortis Long-Term Disability Plan
3. The following services will not be provided by APMS:
(a) Record keeping and reporting for other employee benefits,
including vacations and holidays
D. Advertising Services.
1. APMS will provide co-op advertising services, including
sourcing of co-op advertising and training newspaper sales staff in
sourcing co-op advertising.
2. Xxxxxx Xxxx will provide classified advertising consulting
services.
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3. APMS will distribute the proceeds of the central cash
receipts collected through the National Classified Advertising
Program.
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