EXHIBIT 99.3
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RELEASE AND SETTLEMENT AGREEMENT
THIS RELEASE AND SETTLEMENT AGREEMENT (this "Agreement") is entered
into this 16th day of March 2007 between Bradford Publishing Company, a
Delaware corporation ("Bradford"), and Sun-Times Media Group, Inc., a Delaware
corporation (f/k/a Xxxxxxxxx International Inc., "STMG"), (together, the
"Parties").
WHEREAS on July 20, 0000, Xxxxxxxx purchased four newspaper properties
from STMG and in consideration for STMG's covenant not to compete provided a $6
million ten-year payment obligation, and the remaining amount of that
obligation is U.S.$5.3 million (the "Outstanding Amount"); and
WHEREAS by resolutions dated June 19, 2003, and January 20, 2004, the
STMG Board of Directors formed and authorized a Special Committee (the "SC") to
investigate and file suit regarding, among other things, various related-party
transactions and payments and to take any actions necessary to recover assets
and damages for STMG; and
WHEREAS on August 30, 2004, STMG filed the SC's report of
investigation (the "SC Report") with the U.S. District Court for the Northern
District of Illinois in the action titled SEC X. XXXXXXXXX INTERNATIONAL INC.,
Case No. 04-C-0366, and with the U.S. Securities & Exchange Commission on SEC
Form 8-K; and
WHEREAS on January 28, 2004, the SC filed a complaint on STMG's behalf
in the U.S. District Court for the Northern District of Illinois against
Bradford shareholders F. Xxxxx Xxxxxx ("Xxxxxx") and Xxxxxx X. Xxxxx ("Black")
and others alleging breaches of fiduciary duties and conversion of company
assets in an action captioned XXXXXXXXX INTERNATIONAL INC. X. XXXXXXXXX INC.,
ET AL., Case No. 04-C-0698, and subsequent amendments on May 7 and October 29,
2004 (the "Illinois Action"); and
WHEREAS STMG sued Bradford in the Illinois Action in its May 7, 2004
amended complaint, dismissed its claims against Bradford without prejudice in
October 2004, and thereafter entered into agreements with Bradford tolling the
statute of limitations on those claims; and
WHEREAS STMG is simultaneously entering into release and settlement
agreements with (i) Xxxxxx (whose release and settlement agreement with STMG is
referred to herein as the Xxxxxx Settlement Agreement); (ii) North American
Newspapers Ltd. (f/k/a XX Xxxxxx Ltd.); and (iii) Horizon Publications Inc;
Horizon Publications (U.S.A.) Inc.; Horizon Arkansas Publications Inc.; Horizon
Blackfoot Publications Inc.; Horizon California Publications Inc.; Horizon
Connecticut Publications Inc.; Horizon Florida Publications Inc.; Horizon
Hawaii Publications Inc.; Horizon Illinois Publications Inc.; Horizon Indiana
Publications Inc.; Horizon Mississippi Publications Inc.; Horizon North
Carolina Publications Inc.; Horizon North Dakota Publications Inc. (f/k/a
Horizon Idaho Publications Inc.); Horizon Ohio Publications Inc.; Horizon
Vermont Publications Inc.; Horizon Washington Publications Inc. (f/k/a Terra
Holdings Inc.); Horizon Publications Management Services Inc.; Leeming
Communications Company; Review Publications Inc.; Westbourne Investments Inc.;
Continental Newspapers Ltd. (f/k/a Horizon Operations Ltd.); and Continental
Newspapers (Canada) Ltd. (f/k/a Horizon Operations (Canada), Ltd.); and
WHEREAS Bradford wishes to settle and finally resolve all actual or
potential claims arising out of certain of the transactions and events
described in the SC Report and to reduce further expense, inconvenience, and
the distraction of burdensome and protracted litigation; and
WHEREAS the SC has approved the settlement reflected in this Agreement
as fair, reasonable, adequate, and in the best interests of STMG and its
shareholders;
NOW THEREFORE IN CONSIDERATION OF THE COVENANTS SET FORTH BELOW AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS
ACKNOWLEDGED, STMG and Bradford agree as follows:
1. BRADFORD SETTLEMENT AMOUNT. Bradford will pay to STMG (i) the
sum of U.S.$1.85 million; and (ii) on an accelerated basis, the Outstanding
Amount (together, the "Bradford Settlement Amount").
2. LOAN COMMITMENT. Bradford has represented that it is
obtaining a letter ("Commitment Letter") from a bank committing to lend
Bradford funds covering some or all of the Bradford Settlement Amount. If
Bradford does not obtain the Commitment Letter in a form reasonably acceptable
to STMG by March 26, 2007, STMG will have the right at its sole option to
declare the payment and release provisions in this Agreement null and void.
STMG may exercise its option to declare the payment and release provisions in
this Agreement null and void under this paragraph at any time after Xxxxx 00,
0000 (xx Bradford fails to provide a reasonably acceptable Commitment Letter),
but such right shall be extinguished if unexercised before Bradford pays the
Bradford Settlement Amount.
3. PAYMENT. Bradford will pay the Bradford Settlement Amount
upon the earlier of (i) Bradford receiving funding from the bank that sent the
Commitment Letter; or (ii) April 30, 2007. If by April 30, 2007, Bradford has
not paid the Bradford Settlement Amount, Bradford will be obligated to pay STMG
interest on the unpaid portion of the Bradford Settlement Amount beginning on
May 1, 2007, at an interest rate of 12.5% per annum (computed on the basis of a
year of 365 days), compounded daily, until Bradford pays the Bradford
Settlement Amount. In addition, if Bradford does not pay the Bradford
Settlement Amount by April 30, 2007, STMG will have the option at its sole
discretion to either (i) declare the payment and release provisions in this
Agreement null and void; or (ii) xxx for enforcement of the payment provisions
of this Agreement. If at any time before Bradford pays the Bradford Settlement
Amount, STMG exercises its option to declare the payment and release provisions
in this Agreement null and void, Bradford shall have no further obligation to
pay the Bradford Settlement Amount or any interest on it, and STMG shall return
to Bradford any portion of the Bradford Settlement Amount that Bradford has
already paid.
4. STATUTE OF LIMITATIONS TOLLING. By previous agreement of the
parties, the statute of limitations on STMG's claims against Bradford has been
tolled through March 22, 2007. If STMG exercises its option to declare the
payment and release provisions in this Agreement null and void, then the
statute of limitations on STMG's claims against Bradford shall be deemed to
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have been further tolled from the date of this Agreement through the date that
such STMG declaration is communicated to Bradford.
5. MUTUAL RELEASE AND SETTLEMENT. Upon payment in full of the
Xxxxxx/Horizon/Bradford Settlement Amount as that term is defined in the Xxxxxx
Settlement Agreement, STMG and any and all of its officers, directors,
employees, affiliates (except Xxxxxxxxx Inc. and its subsidiaries that are not
subsidiaries of STMG), subsidiaries, divisions, agents, and advisors, and their
predecessors, successors, and assigns (collectively, the "STMG Releasors") do
hereby fully, finally, and forever release (a) Xxxx Xxxxxxxxxxx and Xxxxx
Xxxxxxxx and any of their spouses, heirs, family members, successors, assigns,
survivors, and executors, and any entity in which Xxxx Xxxxxxxxxxx or Xxxxx
Xxxxxxxx has an ownership interest and that is a shareholder of Bradford, and
any successor or assign thereof; and (b) Bradford and its subsidiaries,
divisions, attorneys, current officers, and current employees, and their
survivors, executors, predecessors, successors, and assigns (all individuals
and entities collectively, the "Bradford Releasees") from any and all rights,
interests, obligations, debts, dues, sums of money, accounts, reckonings,
damages, claims, actions, allegations, causes of action, counterclaims, or
demands whatsoever, whether known or unknown, in law or in equity, that have
been or that could be asserted by the STMG Releasors from the beginning of time
through the date hereof against the Bradford Releasees (the "Settled Claims").
Bradford and any and all of its officers, directors, employees, affiliates,
subsidiaries, divisions, agents, and advisors, and their predecessors,
successors, and assigns (collectively, the "Bradford Releasors") do hereby
fully, finally, and forever release STMG and its current and former agents(1),
advisors, representatives, affiliates, subsidiaries, divisions, officers,
directors, employees, and attorneys, and their predecessors, successors, and
assigns (collectively, the "STMG Releasees(2)") from any and all rights,
interests, obligations, debts, dues, sums of money, accounts, reckonings,
damages, claims, actions, allegations, causes of action, counterclaims, or
demands whatsoever, whether known or unknown, in law or in equity, that
Bradford has or will have or that have been or could be asserted by the
Bradford Releasors from the beginning of time through the date hereof against
the STMG Releasees. The releases also do not release Bradford or STMG from
their respective obligations under this Agreement.
6. STMG'S LIMITED RELEASE OF BLACK. Upon payment in full of the
Xxxxxx/Horizon/Bradford Settlement Amount, the STMG Releasors do hereby fully,
finally, and forever release Bradford shareholder Black, and any entity in
which Black has an ownership interest and that is a shareholder of Bradford,
and any successor or assign thereof, in his or its capacity as a Bradford
shareholder only, from any claims that have been or that could be asserted
against Black or such entity arising from STMG's July 2000 sale of four
newspaper publications to Bradford, as that transaction is described in
paragraphs 301-317 of the Illinois Action complaint.
7. RETURN OF BRADFORD SETTLEMENT AMOUNT. If after 90 days of
Bradford having paid the Bradford Settlement Amount, any other portion of the
Xxxxxx/Horizon/Bradford Settlement Amount remains unpaid, STMG shall return the
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(1) This release does not preclude Bradford from asserting claims against any
STMG officer, director, employee, or agent that is not based upon his or her
conduct as an STMG officer, director, employee, or agent.
(2) This release does not preclude Bradford from asserting claims against
Xxxxxxxxx Inc. in any current or future claims brought by or on Xxxxxxxxx
Inc.'s behalf against any of the Bradford Releasees.
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Bradford Settlement Amount to Bradford within 10 days following notice thereof
from Bradford to STMG. If STMG returns the Bradford Settlement Amount to
Bradford, the payment and release provisions in this Agreement shall be null
and void, and the statute of limitations on STMG's claims against Bradford will
have been tolled through the date the Bradford Settlement Amount is returned to
Bradford.
8. FUTURE SETTLEMENTS BY STMG. STMG shall attempt, in good
faith, to obtain the release of Bradford for all claims and allegations in the
Illinois Action and the SC Report from each settling party in any and all
future settlements of claims or allegations in the Illinois Action or SC
Report. Nothing in this provision shall (i) require STMG to accept any lesser
settlement consideration from a future settling party in exchange for a release
of Bradford; or (ii) prevent STMG from entering into a settlement with a party
that ultimately refuses to release Bradford.
9. MUTUAL WAIVER OF RIGHTS UNDER SECTION 1542 OF THE CALIFORNIA
CIVIL CODE. The STMG Releasors and the Bradford Releasors are hereby deemed to
have waived any and all rights, to the extent permitted by law, under Section
1542 of the California Civil Code or any other similar state or federal law,
provincial or territorial law, or principle of common law that may have the
effect of limiting the releases set forth herein. Section 1542 of the
California Civil Code provides: "A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him must have materially affected
his settlement with the debtor."
10. POTENTIAL JUDGMENT REDUCTION. In accordance with 10 Del. C.
Sec. 6304(b), and if and to the extent applicable any other statute or law
discharging or barring contribution or similar claims against a released or
settled party, including but not limited to 740 Ill. Comp. Stat. Xxx. 100/2(d),
in the event that judgment reduction is determined to be necessary and
appropriate under applicable law, this Agreement reduces, to the extent, if at
all, appropriate, by Bradford's PRO RATA share, if any, of the liability and
damages recoverable by STMG in any action or claim involving the Settled Claims
that STMG has filed, will file, or could file, or have filed on its behalf
derivatively against any joint tort-feasor, person, or entity other than
Bradford. Without conceding any court's jurisdiction over it (other than as set
forth in paragraph 11 below), Bradford acknowledges and agrees that the court
or tribunal before which any such STMG action or claim is brought will have the
necessary authority to make findings as to the joint tort-feasor status, if at
all, and proportionate liability, if any, or lack thereof, of Bradford for
STMG's damages, regardless of whether Bradford can be made a party to such
action or claim. Neither this Agreement, nor the releases contained herein, is
the product of collusion, but instead is made in good faith and at arm's
length. Bradford agrees not to move to stay or dismiss a claim or action
involving the Settled Claims brought by STMG against someone other than
Bradford. This Agreement is expressly intended and shall be construed to
release and protect Bradford from all claims of contribution or indemnity
arising from the Settled Claims, but a court's failure to construe it in that
manner shall not be a basis for voiding this Agreement or for any claim by
Bradford against STMG.
11. GOVERNING LAW; CHOICE OF FORUM; JURY WAIVER. This Agreement
and any claim related directly or indirectly to this Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to the conflicts of law principles thereof. All disputes arising
out of or relating to this Agreement or its breach may be resolved in the U.S.
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Xxxxxxxx Xxxxx for the Northern District of Illinois, and Bradford and STMG
hereby submit and attorn to the jurisdiction and venue of that court. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE ARISING OUT OF THIS
AGREEMENT.
12. COUNTERPARTS AND DELIVERY. This Agreement may be signed in
any number of counterparts, all of which together shall constitute one and the
same instrument. This Agreement may be executed and delivered by fax
transmission or by transmission in PDF or similar electronic document format.
13. SEVERABILITY. If any provision of this Agreement is found to
be unenforceable in whole or in part, it shall be construed or limited in such
a way as to make it enforceable, consistent with the intentions of the Parties
as set out in this Agreement. If such construction or limitation is not
possible, the unenforceable provision will be stricken, and the remaining
provisions of this Agreement will remain valid and enforceable.
14. ADMISSIBILITY. The Parties agree that no evidence concerning
this Agreement, or any of its incorporated exhibits, and/or their contents or
negotiations relating to them, shall be offered into evidence in any
proceeding, except a proceeding to enforce the terms of this Agreement.
15. NO ADMISSION. This Agreement does not in any manner
constitute Bradford's or STMG's admission of liability, wrongdoing, or any
other matter.
16. NO WAIVER. Any failure by any party to insist upon the strict
performance by the other party of any of the provisions of this Agreement shall
not be deemed a waiver of any of the provisions hereof, and such party,
notwithstanding such failure, shall have the right thereafter to insist upon
strict performance of any and all of the provisions of this Agreement to be
performed by such other party.
17. NOTICE. Any notices required to be given under this Agreement
shall be in writing and shall be made by fax or e-mail transmission to the fax
numbers and e-mail addresses set out below:
To: Bradford Publishing Company
00 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: President
With a copy to: Xxxx Xxxxx LLP
000 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxx.xxx
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To: Sun-Times Media Group, Inc.
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 00 Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. XxXxxxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxxx@xxxxxxxxxxxxx.xxx
With a copy to: O'Melveny & Xxxxx LLP
Times Square Tower
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx Xxxxxxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxxxx@xxx.xxx
18. ENTIRE AGREEMENT. This Agreement and the October 6, 2005
Tolling Agreement between Bradford and STMG, as amended, contain the entire
agreement between Bradford and STMG and together supersede and replace any and
all prior negotiations, understandings, promises, representations, inducements,
and discussions, whether written or oral. This Agreement may not be changed or
modified except in writing signed by both Bradford and STMG.
19. AUTHORITY TO ENTER INTO THIS AGREEMENT. The undersigned
parties represent that they have the full authority necessary to execute this
Agreement.
Agreed to this 16th day of March 2007 by:
SUN-TIMES MEDIA GROUP, INC. BRADFORD PUBLISHING COMPANY
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxxxx Xxxxx Name: Xxxx X. Xxxxxxxxxxx
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Title: Chairman, STMG Special Committee Title: President
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