EXHIBIT 99.4
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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 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. (formerly
known as Horizon Idaho Publications Inc.); Horizon Ohio Publications Inc.;
Horizon Vermont Publications Inc.; Horizon Washington Publications Inc.
(formerly known as Terra Holdings Inc.); Horizon Publications Management
Services Inc.; Leeming Communications Company; Review Publications Inc.;
Westbourne Investments Inc.; Continental Newspapers Ltd. (formerly known as
Horizon Operations Ltd.); and Continental Newspapers (Canada) Ltd. (formerly
known as Horizon Operations (Canada), Ltd.) (collectively, "Horizon") and
Sun-Times Media Group, Inc., a Delaware corporation (formerly known as
Xxxxxxxxx International Inc., "STMG"), (together, the "Parties").
WHEREAS by transaction agreement dated as of June 30, 1999, Horizon
Publications Inc. purchased newspaper properties from STMG, and provided to
STMG as part of the purchase price a U.S. $8 million subordinated promissory
note that matures on June 30, 2007; and
WHEREAS the current outstanding balance on that subordinated
promissory note is U.S. $4.7 million, plus accrued interest calculated
quarterly at a rate equal to the lesser of 8% or LIBOR + 2% through the
execution date of this Agreement (the "Outstanding Loan 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
Horizon shareholder F. Xxxxx Xxxxxx ("Xxxxxx") 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 (the
"Illinois Action"), and subsequent amendments on May 7 and October 29, 2004;
and
WHEREAS STMG sued Horizon in the Illinois Action in its May 7, 2004
amended complaint, dismissed its claims against Horizon without prejudice in
October 2004, and thereafter entered into agreements with Horizon 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 herein as the "Xxxxxx Settlement Agreement"), and (ii)North American
Newspapers Ltd. formerly known as XX Xxxxxx Ltd.; and
WHEREAS Horizon 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 Horizon agree as follows:
1. HORIZON SETTLEMENT AMOUNT. Upon execution of this Agreement,
Horizon will pay to STMG (i) the sum of U.S. $6.75 million and (ii) the
Outstanding Loan Amount (together, the "Horizon Settlement Amount").
2. MUTUAL RELEASE AND SETTLEMENT. Upon payment in full of (i)
the Horizon Settlement Amount and (ii) the remainder of the Xxxxxx/Horizon
Settlement Amount as that term is defined under the Xxxxxx Settlement
Agreement, STMG and its affiliates, subsidiaries, and divisions, and their
predecessors, successors, and assigns (collectively, the "STMG Releasors") do
hereby fully, finally, and forever release Horizon and its predecessors,
successors, and assigns (collectively, the "Horizon 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 Horizon Releasees (the
"Settled Claims"). Horizon and any and all of its officers, directors,
employees, affiliates, subsidiaries, divisions, agents, and advisors, and their
predecessors, successors, and assigns (collectively, the "Horizon 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 (except Torys LLP and any of its
predecessor partnerships, which are addressed below in paragraph 5) and their
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(1) To the extent that the Horizon Releasors' release extends to Xxxxxx X.
Xxxxx, Xxxxxxx Xxxxx Black, Xxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxx X.
Xxxxxx, The Ravelston Corporation Ltd., or Xxxx X. Xxxx, it is limited to
claims based on their conduct in their capacity as STMG officers, directors,
employees, or agents. In addition, to the extent that the Horizon Releasors
have defenses or affirmative defenses against Xxxxxx X. Xxxxx, Xxxxxxx Xxxxx
Black, Xxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx, The Ravelston
Corporation Ltd., or Xxxx X. Xxxx that are based on their conduct in their
capacity as STMG officers, directors, employees, or agents, the Horizon
Releasors' release does not preclude the Horizon Releasors from pursuing those
defenses or affirmative defenses (but not claims, counterclaims, or
cross-claims) in any pending or future litigation.
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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 Horizon has or will have or that have been or could be asserted by
the Horizon Releasors from the beginning of time through the date hereof
against the STMG Releasees. The releases do not release Horizon or STMG from
their respective obligations under this Agreement.
3. FUTURE SETTLEMENTS BY STMG. STMG shall attempt, in good
faith, to obtain the release of Horizon 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 Horizon; or (ii) prevent STMG from entering into a settlement with a party
that ultimately refuses to release Horizon.
4. MUTUAL WAIVER OF RIGHTS UNDER SECTION 1542 OF THE CALIFORNIA
CIVIL CODE. The STMG Releasors and the Horizon 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."
5. LIMITED RELEASE OF TORYS LLP. The Horizon Releasees agree
that they will not seek contribution, indemnification, reimbursement, or any
other form of claims over from Torys LLP or any of its predecessor partnerships
for any portion of the Horizon Settlement Amount.
6. 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 of
Horizon'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 Horizon. Horizon acknowledges
and agrees that the court or tribunal before which any such STMG action or
claim is brought will have the necessary authority and jurisdiction to make
findings as to the joint tort-feasor status, if at all, and proportionate
liability, if any, or lack thereof, of Horizon for STMG's damages, regardless
of whether Horizon is 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 arms length. Horizon further agrees to cooperate with
all reasonable requests for documents or other evidentiary materials, whether
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(2) To the extent that the Horizon Releasors have claims, counterclaims,
cross-claims, defenses, or affirmative defenses against Xxxxxxxxx Inc. in any
current or future claims brought by or on Xxxxxxxxx Inc.'s behalf against any
of the Horizon Releasors, the Horizon Releasors' release does not preclude the
Horizon Releasors from pursuing those claims, defenses, or affirmative defenses
in any pending or future litigation.
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from STMG or any other party, in connection with any action or claim involving
the Settled Claims in which findings may be required as to the joint
tort-feasor status and/or proportionate liability, or lack thereof, of Horizon.
Horizon also agrees not to move to stay or dismiss a claim or action involving
the Settled Claims brought by STMG against someone other than Horizon.
7. 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.
District Court for the Northern District of Illinois, and Horizon 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.
8. 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.
9. 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.
10. ADMISSIBILITY. This Agreement may be filed and used in any
action or proceeding as may be necessary to enforce or seek relief with respect
to the Agreement.
11. NO ADMISSION. This Agreement does not in any manner
constitute Horizon's or STMG's admission of liability, wrongdoing, or any other
matter.
12. 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.
13. 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: c/o Horizon Publications Management Services Inc.
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
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Attention: Xxxxxx XxXxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxxxxxxxxxxxxxxxxx.xxx
With a copy to: Barack Xxxxxxxxxx Xxxxxxxxxx Xxxxxxx & Xxxxxxxxx LLP
000 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx.xxxxxx@xxxxx.xxx
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
14. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between Horizon and STMG and supersedes and replaces 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 Horizon and STMG. Horizon and STMG
have both been represented by legal counsel in the negotiation, drafting and
execution of this Settlement Agreement. Horizon and STMG fully understand the
meaning and effect of each of the terms and provisions of this Agreement. Each
party has done an independent investigation of the facts relating to this
Agreement and has neither relied on any statement or representation of any
other party nor relied on any party or any alleged duty of any party to supply
information of any kind.
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15. 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. HORIZON PUBLICATIONS INC.
HORIZON PUBLICATIONS (U.S.A.) INC.
HORIZON ARKANSAS PUBLICATIONS INC.
By: /s/ Xxxxxx Xxxxx HORIZON BLACKFOOT PUBLICATIONS INC.
------------------------------------ HORIZON CALIFORNIA PUBLICATIONS INC.
HORIZON CONNECTICUT PUBLICATIONS INC.
Name: Xxxxxx Xxxxx HORIZON FLORIDA PUBLICATIONS INC.
---------------------------------- HORIZON HAWAII PUBLICATIONS INC.
HORIZON ILLINOIS PUBLICATIONS INC.
Title: Chairman, STMG Special Committee HORIZON INDIANA PUBLICATIONS INC.
-------------------------------- HORIZON MISSISSIPPI PUBLICATIONS INC.
HORIZON NORTH CAROLINA PUBLICATIONS INC.
HORIZON NORTH DAKOTA PUBLICATIONS INC.
(FORMERLY KNOWN AS HORIZON IDAHO
PUBLICATIONS INC.)
HORIZON OHIO PUBLICATIONS INC.
HORIZON VERMONT PUBLICATIONS INC.
HORIZON WASHINGTON PUBLICATIONS INC.
(FORMERLY KNOWN AS TERRA HOLDINGS INC.)
HORIZON PUBLICATIONS MANAGEMENT SERVICES INC.
LEEMING COMMUNICATIONS COMPANY
REVIEW PUBLICATIONS INC.
WESTBOURNE INVESTMENTS INC.
CONTINENTAL NEWSPAPERS LTD. (FORMERLY
KNOWN AS HORIZON OPERATIONS LTD.)
CONTINENTAL NEWSPAPERS (CANADA) LTD.
(FORMERLY KNOWN AS HORIZON OPERATIONS
(CANADA), LTD.)
By: /s/ Xxxxxx X. XxXxxxx
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Name: Xxxxxx X. XxXxxxx
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Title: Executive Vice President
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