1
Exhibit 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is dated as of August
26, 1999, between LIBERTY GROUP PUBLISHING, INC., a Delaware corporation
("Liberty"), and XXX ENTERPRISES, INCORPORATED, a Delaware corporation ("Xxx").
BACKGROUND STATEMENT
Xxx is the owner of the Aledo, IL, Times Record, Town Crier, The Ridge and the
publisher of the Target (the "Newspapers"), which Xxx desires to sell to Liberty
and which Liberty desires to purchase from Xxx.
The definitions of certain capitalized terms used herein are set forth
in EXHIBIT A hereto.
Accordingly, in consideration of the premises and of the respective
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF ACQUIRED ASSETS
1.1 Purchase and Sale of Assets. Subject to the terms and conditions
set forth herein, at the Closing, Xxx shall sell, transfer, assign and convey to
Liberty (or one or more Affiliates of Liberty as designated by Liberty) and
Liberty (or one or more Affiliates of Liberty as designated by Liberty) shall
purchase from Xxx all of Xxx'x right, title and interest in and to the Acquired
Assets in exchange for Nine Hundred Thousand Dollars ($900,000.00) (the
"Purchase Price"). The Purchase Price shall be paid by wire transfer of
immediately available funds to an account designated by Xxx on the date any such
payment shall be delivered hereunder.
1.2 Acquired Assets.
As used herein, "Acquired Assets" shall mean all of the assets,
properties, rights, interests and claims (other than Excluded Assets), that are
used or held for use solely in connection with the Business and the operation of
the Newspapers. The Acquired Assets referred to above include, without
limitation, the following assets (other than Excluded Assets):
(i) the Equipment and Motor Vehicles;
2
(ii) all inventory of the Business, including ink,
newsprint, packaging materials and supplies;
(iii) the Intangible Property, including the trademarks,
trade names, licenses and mastheads of the Newspapers and all
derivations thereof;
(iv) all un-expired contracts, leases, licenses and other
agreements (whether written or oral) to which Xxx is a party, and
relating solely to the Business (the "Contracts") but excluding
therefrom Contracts which have already been completed or will expire or
be terminated prior to the Closing;
(v) all licenses, permits or other governmental
authorizations (the "Permits") relating solely to the Business;
(vi) the Records;
(vii) all prepaid expenses relating solely to the Business;
(viii) all warranties and guarantees received from vendors,
suppliers or manufacturers (the "Warranties") relating solely to the
Acquired Assets;
(ix) all customer, sampling and marketing lists relating
solely to the Business;
(x) the Real Property;
(xi) all accounts receivable generated solely from the
Business;
(xii) all promotional material used solely in the Business;
(xiii) all subscription, bulk sales, circulation, dealer and
sub-dealer lists relating solely to the Newspapers, together with all
records, and other lists relating to or concerning routes,
distribution, delivery, sale, returns and pre-paid subscriptions to the
Newspapers; and
(xiv) all of the goodwill in, and going concern value
relating solely to the Newspapers, except for any goodwill relating to
the Xxx Trademarks and Logos.
1.3 Excluded Assets:.
The following assets ("Excluded Assets") are not included in
the Acquired Assets and Xxx shall not transfer, assign or convey to Liberty and
Liberty shall not acquire from Xxx the following assets:
2
3
(i) corporate minute books, seals, stock records and other
corporate documentation of Xxx;
(ii) all tax returns, reports, forms and other tax records
pertaining to Xxx'x operations prior to the Closing (collectively, "Tax
Records");
(iii) any intercompany debt owing to Xxx including all
interest thereon and all other intercompany agreements;
(iv) the name "Xxx" or "Xxx Enterprises" or any trade names,
trademarks, identifying logos or service marks employing the words
"Xxx" or "Xxx Enterprises" or any part or variation thereof or the
tradename, trademark, identifying logo or service xxxx of any Xxx
Affiliate or division not being exchanged hereby or any confusingly
similar trade name, trademark or logo (collectively, the "Xxx
Trademarks and Logos") and such other trademarks stated in Section 4.16
of the Xxx Disclosure Letter and from and after Closing, Liberty hereby
agrees to completely and permanently remove all Xxx Trademarks and
Logos prior to using any item containing such marks and logos,
including promotional materials, packaging materials, stationery,
signs, business cards and such use in the Newspapers. If all Trademarks
and Logos cannot be completely and permanently removed from any such
item, Liberty shall promptly destroy such item. Any destroyed items
shall be considered Excluded Assets;
(v) any rights or claims of Xxx or any of its Affiliates
related to or contingent on the satisfaction of Retained Liabilities or
Excluded Assets;
(vi) all insurance policies and binders owned or held by Xxx
or any of its Affiliates and claims with respect thereto;
(vii) all rights and claims which Xxx or any of its
Affiliates may have for refund or credit with respect to Income Taxes
(including estimated Income Taxes);
(viii) any claim, right or obligation owing to Xxx from any of
its Affiliates, including, without limitation, on account of any inter-
or intra-company indebtedness;
(ix) any corporate allocations to health and welfare, and
property and casualty insurance, including, without limitation, prepaid
insurance expenses, pension expenses and workers' compensation
expenses;
(x) any assets of a Benefit Plan, except as expressly
provided in Section 10.1;
(xi) the items referred to in the proviso to the
definition of Records;
3
4
(xii) all rights of Xxx under (i) this Agreement, (ii) the
LOI, (iii) all documents and analyses prepared by Xxx or any of its
Affiliates for internal evaluation purposes in connection with the sale
of the Business, and (iv) any Ancillary Instrument;
(xiii) cash on hand and in bank accounts and other investment
accounts and cash equivalents, including, but not limited to,
investment securities as of the Closing;
(xiv) the Xxx Employee Computer Purchase Agreements listed in
SCHEDULE 1.3(B)(XIV); and
(xv) the contracts, leases, licenses and other agreements
(whether written or oral) listed in Section 1.3(xv) of the Xxx
Disclosure Letter (collectively the "Excluded Contracts").
1.4 Assumed Liabilities.
Subject to the terms and conditions set forth herein, at the
Closing, Liberty shall assume and be liable and otherwise responsible for the
following liabilities and obligations of the Newspapers:
(i) the liabilities and obligations of the Newspapers,
under the Contracts to the extent arising from and after the Closing
(other than liabilities and obligations relating to pre-closing
breaches);
(ii) all current liabilities of Xxx as of the Closing to the
extent such liabilities are reflected on the Balance Sheet (as defined
in Section 4.6(a)) or incurred after July 31, 1999 and which in each
case are included in the computation of Net Working Capital;
(iii) the liabilities and obligations of Xxx relating to the
Transferred Employees expressly assumed by Liberty pursuant to Article
10; and
(iv) the liabilities and obligations of Xxx under the leases
relating to the leased Real Property to the extent arising from and
after the Closing (other than liabilities and obligations relating to
pre-closing breaches) (all of the foregoing are referred to herein
collectively as the "Assumed Liabilities");
provided, however, that Assumed Liabilities shall not include, among others, (u)
except to the extent included in the Net Working Capital pursuant to clause (ii)
above, any liability or obligation under any Contract required by the terms
thereof to be discharged prior to the Closing, (v) any liability or obligation
incurred in violation of the provisions of this Agreement, (w) any liability or
obligation arising out of a breach or default by Xxx prior to the Closing
(including an event that with the passage of time or the giving of notice, or
both, would become such a breach or default) under any Contract, (x) any
liability for Taxes of Xxx,
4
5
except as expressly provided herein, (y) any liability for deferred compensation
or for post-retirement welfare, medical or life insurance benefits, (z) any
Indebtedness of Xxx and any obligation or liability relating thereto (uu) except
as provided in Section 10.2, any liability or obligation relating to costs and
expenses incurred by Xxx in connection with the sale of the Acquired Assets or
the Business, (vv) any liability or obligation of Xxx under this Agreement, (ww)
any liability or obligation of Xxx owing to any of its Affiliates, including,
but not limited to, management fees, (xx) any liability or obligation of any
current or former Affiliates of Xxx for which Xxx is liable as a member of a
consolidated group, controlled group or affiliated group or otherwise, (yy)
except as provided for in Article 10, any liability or obligation of Xxx
relating to the termination by Xxx at or prior to the Closing of any of its
employees or (zz) the Excluded Contracts.
1.5 Retained Liabilities.
Xxx shall retain as of the Closing (and Liberty shall not assume or be
responsible for) all liabilities and obligations of Xxx, whether arising before
or after the Closing, disclosed or undisclosed, known or unknown, absolute,
contingent or otherwise and whether due or to become due (including, but not
limited to, the Excluded Contracts), except for the Assumed Liabilities (the
"Retained Liabilities").
ARTICLE 2
PURCHASE PRICE; CLOSING
2.1 Assumption of Liabilities. Subject to the terms and conditions
set forth herein, at the Closing, Xxx shall assign to Liberty (or one or more
Affiliates of Liberty designated by Liberty), and Liberty (or one or more
Affiliates of Liberty designated by Liberty) shall assume, the Assumed
Liabilities pursuant to an instrument or instruments in a mutually agreeable
form (the "Assumption Agreement").
2.2 Closing. Unless the parties hereto shall agree in writing upon
a different location, time or date, the closing of the purchase and sale of the
Acquired Assets (the "Closing") shall take place at the offices of Xxx'x
counsel, Lane & Xxxxxxxx, 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxx
00000, at 10:00 A.M. on September 30, 1999. The term "Closing" means the date
and time at which the Closing occurs.
2.3 Deliveries. Subject to the terms and conditions set forth in
this Agreement, as of the date hereof or at the Closing, as the case may be:
(a) Liberty shall deliver to Xxx:
(i) at the Closing, the Assumption Agreement;
5
6
(ii) at the Closing, all certificates and other instruments
and documents which are expressly required or reasonably requested by
Xxx pursuant to this Agreement to be delivered by Liberty to Xxx at the
Closing in form and substance reasonably satisfactory to Xxx;
(iii) as of the date hereof, the Liberty Disclosure Letter in
the form of SCHEDULE 2.3 (A)(III) attached hereto, and again at the
Closing, as provided in Section 3.4;
(iv) at the Closing, the Purchase Price as provided in
Section 1.1; and
(v) at the Closing, a list of the Transferred Employees.
(b) Xxx shall deliver to Liberty:
(i) at the Closing, one or more bills of sale and
assignment for the Acquired Assets in mutually agreeable forms, duly
executed by Xxx;
(ii) at the Closing, the Assumption Agreement, duly executed
by Xxx;
(iii) at the Closing, an instrument of assignment in a
mutually agreeable form, duly executed by Xxx, of all registered (and
applications therefore) Intangible Property;
(iv) at the Closing, title to the Motor Vehicles;
(v) at the Closing, all certificates and other instruments
and documents which are expressly required or reasonably requested by
Liberty pursuant to this Agreement to be delivered by Xxx to Liberty at
the Closing in form and substance reasonably satisfactory to Liberty;
(vi) as of the date hereof, the Xxx Disclosure Letter in the
form of SCHEDULE 2.3(B)(VI) attached hereto, and again at the Closing,
as provided in Section 4.21;
(vii) at Closing, a Lease Assignment and Assumption in a
mutually agreeable form, duly executed by Xxx and the lessors with
respect to the Real Property;
(viii) at the Closing, a list of the Employee Computer
Purchase Agreements; along with a list of outstanding balances as of
Closing for each Transferred Employee, which list shall be certified by
the Secretary or Assistant Secretary of Xxx to be true, accurate and
complete as of the Closing;
(ix) at the Closing, a list of the inventory of newsprint
used solely in the Business as of at least two days prior to the
Closing; and
6
7
(x) at the Closing, an assignment of rights, remedies and
benefits of Xxx and its Affiliates involving existing non-competition
and non-solicitation agreements related to the Business or similar
undertaking for the benefit of Liberty reasonably satisfactory to
Liberty.
2.4 Consent of Third Parties. Anything in this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
assign any of the Contracts, Permits or Warranties or any claim, right or
benefit arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third Person thereto, would constitute a
breach or other contravention thereof or in any way adversely affect the rights
of Liberty thereunder. Xxx will use reasonable best efforts to obtain the
consent of the other parties to any such Contract, Permit, Warranty, as the case
may be, for the assignment thereof to Liberty. If such consent is not obtained
prior to the Closing, or if an attempted assignment thereof would be ineffective
or would adversely affect the rights of Liberty thereunder so that Liberty,
would not in fact receive all such rights, Liberty and Xxx will cooperate to
achieve a mutually agreeable arrangement under which Liberty would obtain the
benefits and assume the obligations thereunder (but only to the extent such
obligations would have constituted Assumed Liabilities if such assignment
occurred on the Closing) from and after the Closing in accordance with this
Agreement, including subcontracting, sublicensing or subleasing to Liberty or
under which Xxx would enforce for the benefit of Liberty with Liberty assuming
Xxx'x obligations to the same extent as if it would have constituted an Assumed
Liability, and any and all rights of Xxx against a third Person thereto. Xxx
will pay promptly to Liberty when received all monies received by Xxx after the
Closing under any of the Contracts, Permits, Warranties, or any claim, right or
benefit arising thereunder to the extent that Liberty would be entitled thereto
pursuant hereto.
2.5 Adjustments to Working Capital.
(a) In determining the Purchase Price to be paid to Xxx by Liberty
for the Acquired Assets, the parties have assumed the Net Working Capital would
be zero, accordingly, the Purchase Price shall be subject to adjustment as
specified in this Section 2.5. In accordance with this Section 2.5, if the Net
Working Capital is greater than zero, Liberty shall pay to Xxx the amount, if
any, by which the Net Working Capital exceeds zero, and if the Net Working
Capital is less than zero, Xxx shall pay to Liberty the amount, if any, by which
zero exceeds the Net Working Capital. The payments to be made pursuant to this
Section 2.5 shall be made by wire transfer of immediately available funds to an
account designated by Xxx or Liberty, as the case may be, as the party entitled
to receive such payment hereunder on the date any such payment shall be
delivered hereunder.
(b) At least five days prior to the Closing, Xxx shall deliver to
Liberty its good faith written determination of the Net Working Capital, which
determination shall be made based upon the most recent balance sheets of the
Newspapers available prior to the Closing (with any adjustments thereto agreed
to by Liberty prior to the Closing, the "Estimated Net Working Capital");
provided, however, if Xxx and Liberty do not agree upon the Estimated
7
8
Net Working Capital prior to the Closing, the Closing shall not be delayed and
the Estimated Net Working Capital shall be deemed to be an amount equal to zero.
Xxx shall make available to Liberty, during normal business hours and on
reasonable notice, all work papers and other books and records utilized in
preparing the Estimated Net Working Capital, and will make available to Liberty
during normal business hours and on reasonable notice, the appropriate personnel
involved in the preparation of such determinations. At the Closing, Liberty
shall pay to Xxx the amount, if any, by which the Estimated Net Working Capital
exceeds zero, or Xxx shall pay to Liberty the amount, if any, by which zero
exceeds the Estimated Net Working Capital.
(c) On or prior to the ninetieth (90th) day following the Closing,
Liberty shall notify Xxx in writing (the "Determination Notice") of its
determination of the final Net Working Capital, which determination shall set
forth in reasonable detail the basis for such determination. Each of Xxx and
Liberty will provide the other party and their respective representatives with
access during normal business hours to its personnel, books and records to
assist it in the preparation of its, and review of the other party's
determination of the final Net Working Capital. If Liberty utilizes the services
of independent, certified public accountants in connection with the
Determination Notice, then Liberty shall cause such firm of independent
certified public accountants to (y) deliver to Xxx, all workpapers and other
books and records utilized by such firm of independent certified public
accountants in preparing, or assisting Liberty in preparing the Determination
Notice and (z) make available to Xxx during normal business hours and on
reasonable notice, the appropriate personnel involved in the preparation of such
determinations. Xxx shall notify Liberty in writing (the "Dispute Notice")
within thirty (30) days after receiving the Determination Notice, if Xxx
disagrees with Liberty's calculation of the final Net Working Capital which
notice shall set forth in reasonable detail the basis for such dispute and the
dollar amounts involved and Xxx'x good faith estimate of the final Net Working
Capital. If no Dispute Notice is given by Xxx during such thirty (30) day
period, then Liberty's determination of the final Net Working Capital set forth
in the applicable Determination Notice shall be final and binding upon the
parties.
(d) Upon receipt of a Dispute Notice, Xxx and Liberty shall negotiate
in good faith to resolve any disagreement with respect to the final Net Working
Capital. To the extent Xxx and Liberty are unable to agree with respect to the
final Net Working Capital within thirty (30) days after either party notifies
the other of a disagreement with respect thereto, Xxx and Liberty shall select a
mutually acceptable national accounting firm with no material relationship to
Xxx or Liberty or their Affiliates, and submit their dispute to such accounting
firm for a binding resolution. The cost of such accounting firm shall be paid
one half by Liberty and one half by Xxx.
(e) Upon the final determination of the Net Working Capital, if any, in
accordance herewith, Liberty or Xxx, as the case may be, will make the
appropriate payment to the other party within two (2) business days of such
final determination.
(f) Within two (2) business days of the final determination required in
(e) above, Liberty will pay Xxx by wire transfer the amount of the outstanding
balance of the Xxx
8
9
Computer Purchase Agreements for any Transferred Employee. Upon receipt of such
payment, Xxx shall provide Liberty within two (2) business days thereof an
executed assignment of the Xxx Employee Computer Purchase Agreements for
Transferred Employees and related accounts receivable in a mutually agreeable
form.
(g) In making the adjustments pursuant to this Section 2.5, all prepaid
expenses, to the extent included in the Acquired Assets and accrued expenses,
including real property, personal property and payroll Taxes, to the extent
included in the Assumed Liabilities, of the Newspapers which are properly
included in the determination of Net Working Capital shall, except as otherwise
expressly provided herein, be adjusted and allocated among Xxx and Liberty to
reflect the principle that all expenses arising from the operation of the
Newspapers before the opening of business on the Closing Date shall be for the
account of Xxx and after the opening of business on the Closing Date shall be
for the account of Liberty.
(h) For purposes of determination of Net Working Capital (i) only those
accounts receivable actually collected on or prior to the 90th day following the
Closing Date shall be included and any accounts receivable not so collected will
be assigned to Xxx on the 91st day following the Closing Date and (ii)
notwithstanding anything herein to the contrary, for purposes of application of
the foregoing, unless otherwise designated by the account debtor based upon a
dispute, all payments made by an account debtor with respect to accounts
receivable outstanding as of the Closing shall be applied in payment of the
oldest outstanding account receivable with respect to said account debtor as of
the Closing. Xxx shall not take any action to induce an account debtor to
designate the application of any accounts receivable payable by such account
debtor.
2.6 Allocation of Purchase Price. Liberty and Xxx shall allocate the
consideration paid for the Acquired Assets in a manner agreed upon the parties
after the Closing. Neither party shall take any position inconsistent with such
allocations, and the parties shall file all Tax returns and reports (including
IRS Forms 8824 and 8594, if required) with respect to the transaction
contemplated hereby, including, but not limited to, all Federal, state and local
tax returns, on a basis consistent with such allocations, and each party shall
promptly give to the other written notice of any disallowance of or challenge to
such reporting by any taxing governmental authority.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LIBERTY
Liberty represents and warrants to Xxx as follows.
3.1 Organization and Good Standing. Liberty is a corporation duly
incorporated and validly existing as a corporation in good standing under the
laws of the State of Delaware. Liberty is duly qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where
qualification as a foreign corporation is required, except for such failures to
9
10
be qualified and in good standing that would not, in the aggregate, have a
Liberty Material Adverse Effect.
3.2 Authority. Liberty has the corporate power and corporate authority
to execute and deliver this Agreement and the other Ancillary Instruments to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions provided for hereby and thereby, and all corporate
action of Liberty necessary for the making and performance of this Agreement by
Liberty has been duly taken. Except as set forth in Section 3.2 of the Liberty
Disclosure Letter, the execution, delivery and performance by Liberty of this
Agreement and the other Ancillary Instruments to which it is a party do not and
will not (i)(A) contravene any provisions of the certificate of incorporation or
by-laws of Liberty, or (B) assuming that the Governmental Actions/Filings
referred to in Section 3.2 of the Liberty Disclosure Letter are obtained or
made, result in any violation by Liberty of any law, rule or regulation
applicable to either of them, (ii) result in any violation by Liberty of any
judgment, injunction or decree of, or any license or permit issued by, any court
or governmental authority applicable to either of them, or (iii) assuming that
the notices referred to in Section 3.2 of the Liberty Disclosure Letter are
made, require any Governmental Action/Filing to be made or obtained by Liberty
except (A) any federal, state or local Tax filings and (B) any PBGC "Notice of
Reportable Event" required under Section 4043(c) of ERISA. This Agreement and
each of the Ancillary Instruments to which Liberty is a party has been duly
executed and delivered by Liberty. This Agreement and each of the Ancillary
Instruments to which Liberty is a party constitutes the valid and binding
obligation of Liberty enforceable against Liberty in accordance with its terms
except that such enforcement may be limited by any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws (whether
statutory, regulatory or decisional), now or hereafter in effect, relating to or
affecting the rights of creditors generally or by equitable principles
(regardless of whether considered in a proceeding at law or in equity).
3.3 Brokers. Neither Liberty nor any of its directors, officers,
employees or Affiliates has employed any broker or finder or has incurred or
will incur any broker's, finder's or similar fees, commissions or expenses, in
each case in connection with the transactions contemplated by this Agreement.
3.4 Accuracy of Representations. No representation or warranty made by
Liberty in this Agreement or any document delivered, or to be delivered, by or
on behalf of Liberty pursuant hereto, including the Liberty Disclosure Letter,
will contain any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading; provided, however, that Liberty may submit, at any time up to the
end of the Business Day two Business Days prior to the Closing, a revised
version of the Liberty Disclosure Letter (and any attachment or schedule
thereto), which shall amend the Liberty Disclosure Letter only upon being
accepted by Xxx in writing. Xxx acknowledges that its sole remedy for any breach
of a representation or warranty caused by Xxx'x refusal to accept an amended
Liberty Disclosure Letter shall be termination of this Agreement in accordance
with Section 9.1(d).
10
11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF XXX
Xxx represents and warrants to Liberty as follows.
4.1 Organization and Good Standing. Xxx is a corporation duly
incorporated and validly existing as a corporation in good standing under the
laws of the State of Delaware, Xxx has the corporate power to carry on the
Business, is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where qualification as a foreign corporation is
required, except for such failures to be qualified and in good standing that
would not, in the aggregate, have a Xxx Material Adverse Effect.
4.2 Authority. Xxx has the corporate power and corporate authority to
execute and deliver this Agreement and the other Ancillary Instruments to which
it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions provided for hereby and thereby, and all corporate
action of Xxx necessary for the making and performance of this Agreement by Xxx
has been duly taken. Except as otherwise provided in Section 4.2 of the Xxx
Disclosure Letter, the execution, delivery and performance by Xxx of this
Agreement and the other Ancillary Instruments to which it is a party do not and
will not (i)(A) contravene any provisions of the certificate of incorporation or
by-laws of Xxx, (B) with or without the giving of notice or the passage of time
or both, result in any breach by Xxx of, or default or permitted or required
acceleration of performance by Xxx under, or the creation of any Lien upon the
Acquired Assets which would remain on the Acquired Assets after the Closing, or
the creation in favor of any third party of any right of termination of, any
contract, lease, license or other agreement to which Xxx is a party or by which
Xxx or the Acquired Assets are bound, or (C) assuming that the Governmental
Actions/Filings referred to in Section 4.2 of the Xxx Disclosure Letter are
obtained or made, result in any violation by Xxx of any law, rule or regulation
applicable to it, (ii) result in any violation by Xxx of any judgment,
injunction or decree of, or any license or permit issued by, any court or
governmental authority applicable to it, or (iii) assuming that the notices
referred to in Section 4.2 of the Xxx Disclosure Letter are made, require any
Governmental Action/Filing to be made or obtained by Xxx except (A) any federal,
state or local Tax filings, and (B) any PBGC "Notice of Reportable Event"
required under Section 4043(c) of ERISA. This Agreement and each of the
Ancillary Instruments to which it is a party has been duly executed and
delivered by Xxx. This Agreement and each of the Ancillary Instruments to which
it is a party constitutes the valid and binding obligation of Xxx, enforceable
against Xxx in accordance with its terms except that such enforcement may be
limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws (whether statutory, regulatory or decisional), now or
hereafter in effect, relating to or affecting the rights of creditors generally
or by equitable principles (regardless of whether considered in a proceeding at
law or in equity).
4.3 Acquired Assets. Except (i) as set forth in Part A of Section 4.3
of the Xxx Disclosure Letter, (ii) for the Excluded Assets and (iii) for such
assets that are consumed or
11
12
disposed of in the ordinary course of the Business and consistent with prior
practice after the date of this Agreement, the Acquired Assets include all of
the assets, properties and rights of every type and description, real, personal
and mixed, tangible and intangible, that are owned, leased or licensed by Xxx or
any of its Affiliates and used solely in the conduct of the Business in the
manner in which the Business is now conducted.
Except as set forth in Part B of Section 4.3 of the Xxx Disclosure
Letter, Xxx does not use any assets solely in the conduct of the Business which
in the aggregate are material to the Business and which it does not own or
lease. Except as set forth in Part C of Section 4.3 of the Xxx Disclosure
Letter, the tangible Acquired Assets are in good operating condition, reasonable
wear and tear excepted, and except for such failures, to be in such good
operating condition, individually or in the aggregate, have not had and are not
reasonably likely to have incurred a Xxx Material Adverse Effect. The Acquired
Assets constitute all of the assets necessary to conduct the Business as
currently conducted. Part A of Section 4.3 of the Xxx Disclosure Letter also
contains a true, accurate and complete list of all material tangible assets and
properties, real, personal and mixed, used primarily, but not solely, in the
conduct of the Business.
4.4 Title to Acquired Assets; Liens. Except as set forth in Section 4.4
of the Xxx Disclosure Letter, Xxx owns good title to or has valid leasehold
interests in all of the Acquired Assets and at the Closing good title to or
valid leasehold interests in (and consents to the assigment thereof) such
Acquired Assets shall be transferred to Liberty, free and clear of any and all
Liens except (i) for Permitted Liens, and (ii) any restriction on assignment of
Contracts which is contained in such Contract or which arises by law.
4.5 Contracts and Agreements; Defaults.
(a) Part A of Section 4.5 of the Xxx Disclosure Letter contains a list
of (i) all outstanding mortgages, indentures, notes, guarantees, installment
obligations or other contracts or instruments evidencing or providing any
Indebtedness to which Xxx is a party and which relate solely to the Business or
by which it or any of its assets are bound and which relate solely to the
Business, (ii) all outstanding contracts containing noncompetition covenants of
Xxx which relate solely to the Business, (iii) all outstanding leases to which
Xxx is a party and which relate solely to the Business or by which it is bound
and which relate solely to the Business, (iv) all outstanding contracts of Xxx
to sell assets, other than in the ordinary course of business, and which relate
solely to the Business, (v) all collective bargaining agreements of Xxx with any
labor union or other employee representative or a group of employees and which
relate to the Business, (vi) any joint venture or partnership agreements to
which Xxx is a party relating solely to the Business, and (vii) all other
outstanding contracts to which Xxx is a party and which relate solely to the
Business or by which it or any of its assets are bound and which relate solely
to the Business, which require or are likely to require the payment by Xxx of an
amount, or require Xxx to provide goods or services having a fair market value
or aggregate sales price, of more than $10,000 per annum, except (1) contracts
entered into in the ordinary course of business of Xxx that can be terminated by
Xxx on 90 or fewer days' notice without penalty, (2) subscriptions to the
Newspapers and contracts for advertising or commercial
12
13
printing which Xxx entered in the ordinary course of business each involving
aggregate amounts of less than $10,000 per annum, and (3) Excluded Assets. Xxx
has delivered to Liberty a correct and complete copy of each written agreement
listed on Part A of Section 4.5 of the Xxx Disclosure Letter (the "Xxx Material
Contracts").
(b) Except as set forth in Part B of Section 4.5 of the Xxx Disclosure
Letter, (i) neither Xxx, nor, to the Knowledge of Xxx, any other party to any
contract, lease, license or other agreement to which Xxx is a party or by which
Xxx or any of the Acquired Assets are bound (other than contracts, licenses,
leases or other agreements that constitute Excluded Assets and do not relate
solely to the Business) is in material breach of or default under any such
contract, lease, license or other agreement and (ii) no event has occurred which
(after notice or lapse of time or both) would become a material breach or
default by Xxx under any such contract, lease, license or other agreement.
4.6 Financial Statements; Undisclosed Liabilities.
(a) Attached as Part A of Section 4.6 of the Xxx Disclosure Letter are
true and complete copies of (i) the unaudited balance sheet of the Newspapers as
at September 30, 1998 and (ii) the unaudited balance sheet of the Newspapers as
at July 31, 1999 (the July 31, 1999 balance sheet is referred to as the "Balance
Sheet"), and the related unaudited statements of income for the twelve month and
ten month periods then ended (collectively, the "Financial Statements"). Except
as disclosed in Part A of Section 4.6 of the Xxx Disclosure Letter, the
Financial Statements fairly present in all material respects the financial
position of Newspapers as at September 30, 1998 and July 31, 1999 and the
results of operations for the twelve months ended September 30, 1998, and the
ten months ended July 31, 1999 in accordance with GAAP, except that the
Financial Statements are summary in nature and do not include the notes and
related disclosures required by GAAP.
(b) Except for Excluded Assets and except for cash distributed to Xxx
and its Affiliates, the Balance Sheet reflects all of the Acquired Assets that
will be acquired by Liberty at the Closing other than such assets as are
disposed of or consumed in the ordinary course of the Business and consistent
with past practice since July 31, 1999 or such additional assets as are acquired
by the Newspapers in the ordinary course of business since July 31, 1999.
(c) Except as set forth in Part B of Section 4.6 of the Xxx Disclosure
Letter or as reflected, reserved against or otherwise disclosed in the Balance
Sheet and liabilities and obligations incurred in the ordinary course of
business since July 31, 1999, Xxx does not have any material liabilities or
obligations related solely to the Business that would have been required to be
reflected or otherwise disclosed by Xxx in the Balance Sheet in accordance with
GAAP.
4.7 Business Since July 31, 1999. Except as disclosed in Section 4.7 of
the Xxx Disclosure Letter and except as required or otherwise contemplated by
this Agreement, since July 31, 1999 (i) the Business has been conducted in all
material respects in the ordinary course, consistent with past practices, (ii)
neither the Business nor its condition nor assets has
13
14
experienced a Xxx Material Adverse Effect and (iii) no event or events has or
have occurred that individually or in the aggregate has or have had or is or are
reasonably likely to have a Xxx Material Adverse Effect. Since July 31, 1999,
except as described in Part B of Section 4.7 of the Xxx Disclosure Letter, there
has not been:
(a) any material damage, destruction, or loss to the Acquired Assets
outside the ordinary course of business;
(b) any making or authorization of any capital expenditure relating
solely to the Business by Xxx in excess of $10,000 individually or the making or
authorization of capital expenditures relating solely to the Business by Xxx of
more than $25,000 in the aggregate;
(c) any sale, transfer, or other disposition of assets or properties,
real, personal, tangible or intangible, or mixed, relating solely to the
Business, by Xxx, other than in the ordinary course of business;
(d) other than pursuant to existing collective bargaining agreements or
pursuant to regular salary reviews in the ordinary course of business consistent
with past practices, any increase in the compensation payable or to become
payable to any employees or agents of Xxx that are involved in the Business, or
any bonus arrangement made with any thereof; or
(e) no material increase in the operating costs of any of the
Newspapers, whether arising from or in connection with the sale of real property
or otherwise, has occurred.
4.8 Compliance with Law; Litigation; Injunctions. Xxx is not in
violation in any material respect of any law, rule, permit, regulation, order,
judgment or decree applicable to it, except as set forth in Part A of Section
4.8 of the Xxx Disclosure Letter, the violation of which could reasonably have a
Xxx Material Adverse Effect. Except for the matters set forth in Part B of
Section 4.8 of the Xxx Disclosure Letter and for claims fully covered by
liability insurance of Xxx, (i) there is no action, suit or other proceeding
pending or, to Xxx'x Knowledge, threatened, at law or in equity, before any
federal, state or municipal court, administrative agency or arbitrator against
Xxx and relating to the Newspapers which, is reasonably expected to have a Xxx
Material Adverse Effect and (ii) Xxx is not a party to, or subject to or bound
by, any order, injunction or decree of any court or governmental authority
relating to the Newspapers.
4.9 Licenses. With such exceptions as are set forth in Section 4.9 of
the Xxx Disclosure Letter (a) all licenses, permits, registrations or
authorizations of any governmental department or agency that are presently
required solely for the operation of the Business as presently conducted have
been duly obtained and are in full force and effect, the absence of which would
have a Xxx Material Adverse Effect and (b) no consent, authorization or approval
is required to transfer such licenses, permits, registrations or authorizations
to Liberty (or one or more Affiliates of Liberty as designated by Liberty)
pursuant to this Agreement.
4.10 Taxes. Except as set forth in Section 4.10 of the Xxx Disclosure
Letter:
14
15
(a) Xxx and any consolidated, combined or unitary group of which Xxx
is or was a member have timely filed all Tax Returns which are required to be
filed, and all Taxes shown to be due on such Tax Returns have been timely paid.
All such Tax Returns were true and correct in all material respects. On July 31,
1999, Xxx had no liability for Taxes (other than Income Taxes) that would have
been required to be reflected in the Balance Sheet in accordance with GAAP,
except to the extent that such Taxes are reflected, reserved against or
otherwise disclosed in the Balance Sheet or will be paid prior to the Closing.
There is no dispute or claim concerning any liability for Taxes of Xxx with
respect to the Business that is either (1) claimed or raised by any authority in
writing or (2) as to which any of the directors and officers (or employees
responsible for Tax matters) of Xxx has any knowledge based upon personal
contact with any agent of such authority. Xxx has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code. Xxx has withheld and paid over all Taxes required to have been
withheld and paid over in connection with amounts paid or owing to any employee,
creditor, independent contractor, or other third Person.
(b) No property of Xxx is subject to a tax benefit transfer lease
subject to the provisions of former Section 168(f)(8) of the Internal Revenue
Code of 1954.
(c) Xxx is not a foreign person subject to withholding under Section
1445 of the Code and the regulations promulgated thereunder, and, at the
Closing, Xxx shall deliver to Liberty a certificate to that effect.
(d) Xxx is not bound by or obligated under any tax sharing or similar
agreement or arrangement, other than related to Xxx'x consolidated Tax return
filing.
4.11 Affiliated Transactions. Section 4.11 of the Xxx Disclosure Letter
sets forth a complete and accurate list of all contracts in connection with the
Business to which Xxx on the one hand, and any of its Affiliates on the other
hand, is a party.
4.12 Brokers. Neither Xxx nor any of its directors, officers, employees
or Affiliates has employed any broker or finder or has incurred or will incur
any broker's, finder's or similar fees, commissions or expenses, in each case in
connection with the transactions contemplated by this Agreement.
4.13 Labor.
(a) Except as set forth in Part A of Section 4.13 of the Xxx
Disclosure Letter, (i) Xxx does not have any contracts of employment with any of
its employees, or consulting agreements with any consultants, involved solely in
the Business, (ii) no union has been certified as representing any of Xxx'x
employees involved in the Business, (iii) Xxx is not a party to or currently
negotiating any collective bargaining agreements with respect to its employees
involved in the Business, (iv) to Xxx'x Knowledge, there is no currently pending
union representation activity involving any employees of Xxx involved in the
Business, (v) to
15
16
Xxx'x Knowledge, no demand has been made for recognition by a labor organization
by or with respect to any employees of Xxx involved in the Business, and (vi)
none of the employees of Xxx involved in the Business is represented by any
labor union or organization. Except as set forth in, Part B of Section 4.13 of
the Xxx Disclosure Letter, there are no pending or, to Xxx Knowledge, overtly
threatened (i) claims of employment discrimination, wage and hour claims, OSHA
claims, unemployment claims or worker's compensation claims or (ii) unfair labor
practice claims before the National Labor Relations Board.
(b) There is not presently pending and during the last five years there
has not been (i) any strike, picketing or work stoppage by any employees
involved solely in connection with the Business or (ii) any application for
certification of a collective bargaining agreement. There is no lockout of any
employee by Xxx involved solely in the Business, and no such action is
contemplated by Xxx.
4.14 Employee Benefits.
(a) For purposes of this Agreement, an "Employee Benefit Plan" is (i)
each "employee benefit plan," within the meaning of Section 3(3) of ERISA and
(ii) each other retirement, deferred compensation, medical, dental, vision,
disability, educational assistance, dependent care, life insurance, flexible
spending account, cafeteria plan (within the meaning of Code Section 125),
workers compensation, stock option, stock purchase, other stock-based
compensation, severance, vacation pay, other fringe or welfare benefits, change
in control or incentive or bonus plan, fund, policy or arrangement. Section
4.14(a) of the Xxx Disclosure Letter lists each Employee Benefit Plan maintained
or contributed to by Xxx or any of its ERISA Affiliates for current or former
employees of Xxx involved solely in the Business (collectively, "Benefit
Plans"). Xxx has delivered or made available to Liberty a copy of each Benefit
Plan (and each trust maintained in connection with any such Benefit Plan) or a
written summary of any material unwritten Benefit Plan and any summary plan
description relating to a Benefit Plan and, with respect to each Benefit Plan
under which liabilities are assumed by Liberty under Section 10.1 (an "Assumed
Benefit Plan") the most recent Internal Revenue Service ("IRS") Form 5500 and,
where applicable, the most recent IRS determination letter.
(b) Except as set forth in Section 4.14(b) of the Xxx Disclosure with
respect to each Assumed Benefit Plan, (i) each such plan is in material
compliance with all applicable laws and regulations and has been administered
substantially in accordance with its terms; and (ii) each such plan intended to
be tax-qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS as to its tax-qualified status under the Code
and, to the Knowledge of Xxx, there are no existing circumstances likely to
result in the revocation of any such determination letter. There are no actions,
suits or claims pending or, to Xxx'x Knowledge, threatened (other than routine
claims for benefits) with respect to any Benefit Plan which are likely to result
in the imposition of liability on Liberty.
(c) Except as set forth in Section 4.14(c) of the Xxx Disclosure
Letter, no Benefit Plan is a "single-employer" plan within the meaning of
Section 4001(a)(15) of ERISA or a "multiemployer plan" within the meaning of
Section 4001(a)(3) of ERISA. Xxx has not
16
17
incurred any liability under Title IV of ERISA with respect to any Assumed
Benefit Plan other than for PBGC premiums not yet due.
(d) To the Knowledge of Xxx, no audit or investigation of any Benefit
Plan by the IRS, the Department of Labor or the PBGC is pending or threatened.
(e) All contributions to the Assumed Benefit Plans that will have been
required to be made with respect to periods prior to the Closing Date under such
Assumed Benefit Plans will have been made or accrued as of the Closing.
(f) Neither Xxx nor any of its ERISA Affiliates nor, to Xxx'x
Knowledge, any other Person, has taken any action or failed to take any action
with respect to any Employee Benefit Plan maintained or contributed to or
previously maintained or contributed to by Xxx or any of its ERISA Affiliates
for which Xxx or any of its ERISA Affiliates may have any liability, contingent
or otherwise, or permitted any circumstance to exist that may subject Liberty or
any Assumed Benefit Plan to any Tax, penalty, fine or other liability under the
Code or ERISA.
(g) Except as set forth in Section 4.14(g) of the Xxx Disclosure
Letter, there is no individual who is not, as of the date of this Agreement, an
active employee of Xxx or an ERISA Affiliate and who would at any future date be
entitled to any form of reemployment rights with Xxx or an ERISA Affiliate with
respect to the Business if (i) there were no sale of assets pursuant to this
Agreement and (ii) Xxx continued to maintain the Business.
4.15 Environmental Matters. Except as set forth on Section 4.15
of the Xxx Disclosure Letter to Xxx'x Knowledge:
(a) there has not been any past or continuing release or threat of
release of any Hazardous Substance in violation of Environmental Laws into the
environment at, on or from the Real Property or any other real property
currently or previously leased or owned by Xxx and used in the Business and
there are no Hazardous Substances at, on or under the Real Property in violation
of Environmental Laws;
(b) there have been no Hazardous Substances generated solely in
connection with the Business that have been disposed of or come to rest at any
site that has been included in any federal, state or local priority list of
hazardous or toxic waste sites published by any governmental body, agency or
authority;
(c) (i) there are no underground or above-ground storage tanks located
on the Real Property, and(ii) there are no PCBs or PCB-containing equipment used
or stored on the Real Property;
(d) a copy of any environmental investigations, studies, audits,
tests, reviews or analyses relating to the Acquired Assets conducted by Xxx or
any consultant engaged by Xxx within the last five years, if any, have
previously been provided to Liberty;
17
18
(e) Xxx has operated in compliance with all applicable Environmental
Laws, the violation of which could reasonably be expected to have a Xxx Material
Adverse Effect;
(f) Xxx has not received any directive, order or notice from any
government body alleging any violation of or failure to comply with
Environmental Laws at the Real Property by Xxx;
(g) Xxx has not received any directive, order or notice from any
government body or any other Person alleging that Xxx is actually or potentially
liable under Environmental Laws for the costs of environmental investigation or
remediation of the Real Property, or other real property to which Hazardous
Substances generated by Xxx in connection with the Business were transferred for
disposal; and
(h) The Real Property is not subject to any Lien, securing the costs of
environmental remediation, arising under Environmental Laws.
4.16 Intangible Property.
(a) Except for Excluded Assets, Xxx owns or possesses valid, adequate
and enforceable licenses or other rights to use all Intangible Property used
solely in connection with the Business as currently conducted. There are no
existing, or to the Knowledge of Xxx, overtly threatened claims of any third
Person based on the use by Xxx, or challenging the ownership, use, scope,
enforceability or validity, of any of the Intangible Property used in the
Business. To the Knowledge of Xxx, there is no infringing use by any Person of
the Intangible Property used in the Business. Xxx'x use of the Intangible
Property does not infringe on the rights of any other Person.
(b) All Copyrights and Trademarks described in Parts A and B,
respectively, of Section 4.16(b) of the Xxx Disclosure Letter are transferable
to Liberty without the consent of any third party, and Schedule 4.16(b)
constitutes a complete listing of all such Copyrights and Trademarks material to
the Business. The Business possesses valid licenses for all material software
used therein.
(c) Except as otherwise disclosed in Section 4.16(c) of the Xxx
Disclosure Letter, any reprogramming required to permit the proper functioning
(but only to the extent that such proper functioning would otherwise be impaired
by the occurrence of the year 2000) in and following the year 2000 of any
software owned by or licensed to or used by the Business, or the computer
systems and other equipment containing embedded microchips of the Business, in
either case owned or operated by or used or relied upon in the conduct of such
business (including any such systems and other equipment supplied by others or
with which the computer systems of the Business interface), and the testing of
all such software, systems and other equipment as so reprogrammed, has been
completed and paid for in full and such software, systems and other equipment
shall function properly, without material errors or omissions, upon the
occurrence of the year 2000 (but only to the extent that such proper functioning
would otherwise be impaired by the occurrence of the year 2000).
18
19
4.17 Insurance. All policies of insurance to which Xxx is a party or
which provide insurance coverage to Xxx, taken together, provide adequate
insurance coverage for the material Acquired Assets and Xxx for all risks to
which the material Acquired Assets and are normally exposed in the ordinary
course of the Business.
4.18 Advertisers, Subscribers, Circulation. Except as disclosed in
Section 4.18 of the Xxx Disclosure Letter, to Xxx'x Knowledge, none of the
advertisers that currently represent the Newspapers' ten largest advertisers
intends to materially reduce such purchases. Set forth on Section 4.18 of the
Xxx Disclosure Letter is (i) the total paid circulation and the total unpaid
circulation for each Newspaper as of December 31, 1998 and as of July 31, 1999,
(ii) a list of the ten businesses or entities that generated the greatest amount
of advertising revenues for each Newspaper during the periods from October 1,
1997 through September 30,1998 and October 1, 1998 through June 30, 1999 and
(iii) a schedule of all sales during the period from October 1, 1998 through
June 30, 1999 of, commitments during such period that it will sell, or
representations during such period that it will sell, advertising space in any
Newspaper to any party involving the receipt of non-cash consideration in excess
of $2,500. The Newspapers have no lifetime subscription liabilities.
4.19 Real Property.
(a) The Real Property complies in all material respects with all
zoning, building, fire, use restriction, air, water or other pollution control,
environmental protection, waste disposal, safety or health codes, ordinances,
laws, rules or regulations. All of the buildings and other improvements located
upon the Real Property are in a good state or repair, reasonable wear and tear
excepted.
(b) No condemnation proceedings have been instituted or, to the
Knowledge of Xxx, threatened against Xxx or the Real Property.
(c) Except as otherwise described in Section 4.19 of the Xxx
Disclosure Letter, all buildings and structures located on the Real Property are
located completely within the boundary lines of the Real Property, no buildings,
structure or other improvements owned by others encroach onto or under the Real
Property, and the Real Property has access to public roads. Xxx has all
easements and rights necessary to conduct the Business on the Real Property in
the manner presently conducted.
4.20 Employment Matters. Except as otherwise disclosed in Section 4.20
of the Xxx Disclosure letter, since July 1, 1999, Xxx has not transferred, or
permitted or solicited the transfer of, any employee involved in the Business to
another newspaper or business owned or operated by Xxx or any of its Affiliates.
4.21 Accuracy of Representations. No representation or warranty made by
Xxx in this Agreement or any document delivered, or to be delivered, by or on
behalf of Xxx pursuant hereto, including the Xxx Disclosure Letter, contains any
untrue statement of a material fact or
19
20
omits to state a material fact necessary to make the statements contained herein
or therein not misleading; provided, however, that Xxx may submit, at any time
up to the end of the Business Day two Business Days prior to the Closing, a
revised version of the Xxx Disclosure Letter (and any attachment or Schedule
thereto), which shall amend the Xxx Disclosure Letter only upon being accepted
by Liberty in writing. Liberty acknowledges that its sole remedy for any breach
of a representation or warranty caused by Liberty's refusal to accept an amended
Xxx Disclosure Letter shall be termination of this Agreement in accordance with
Section 9.1(c).
ARTICLE 5
INTENTIONALLY LEFT BLANK
ARTICLE 6
CONDITIONS TO THE OBLIGATIONS OF LIBERTY
6.1 Liberty's Closing Conditions. The obligations of Liberty under
this Agreement to effect the Closing are, at its option, subject to the
fulfillment of the following conditions prior to or at the Closing, each of
which may be waived (as conditions to its obligations) by Liberty in its
absolute discretion:
(a) Representations, Warranties, Covenants.
(i) The representations and warranties of Xxx contained in
Article 4 of this Agreement shall be true and correct in all material
respects as though such representations and warranties were made, as
written herein, immediately prior to the Closing (except to the extent
changes are permitted, required or otherwise contemplated pursuant to
this Agreement) provided, however, if any such representation or
warranty is already qualified by materiality in any manner (including,
but not limited to, any materiality qualification contained in a
definition of a capitalized term used in such representation or
warranty), for purposes of determining whether this condition has been
satisfied, such representation or warranty as so qualified must be true
and correct in all respects;
(ii) Xxx shall have performed and complied in all material
respects with each and every covenant and agreement required by this
Agreement to be performed or complied with by it at or prior to the
Closing; and
(iii) Xxx shall have furnished Liberty with a certificate,
dated the Closing and duly executed on behalf of Xxx by an officer of
Xxx, to the effect that the conditions set forth in clauses (i) and
(ii) of this Section 6.1(a) have been satisfied.
20
21
(b) Proceedings. No action or proceeding shall have been instituted or
threatened prior to or on the Closing before any court or governmental body or
authority pertaining to the transactions contemplated by this Agreement or the
Ancillary Instruments, the result of which could prevent, or in any way limit or
make illegal, the consummation of such transactions or operation of the
Newspapers after the Closing. No United States or state governmental authority
or other agency or commission or United States or state court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether temporary,
preliminary, or permanent) that is in effect and has the effect of limiting or
prohibiting consummation of the transactions contemplated by this Agreement.
(c) Consents under Contracts. Xxx shall have obtained and delivered to
Liberty all consents, waivers and approvals required under any Xxx Material
Contract (without any materially adverse provision or condition) to (i) permit
the valid execution, delivery, and performance by Xxx of this Agreement and the
Ancillary Instruments, or (ii) prevent any Xxx Material Contract from
terminating or being amended prior to its scheduled termination as a result of
the consummation of the transactions contemplated by this Agreement and the
Ancillary Instruments.
(d) Governmental Approvals. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation of the transactions contemplated by this Agreement and the
Ancillary Instruments shall have consented to, authorized, permitted or approved
such transactions, and the waiting period (and any extensions thereof) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR Act"), applicable to the
transactions contemplated by this Agreement and the Ancillary Instruments shall
have expired or been terminated without any condition attached to such
expiration or termination.
(e) Noncompetition/Nonsolicitation Agreement. Xxx and Liberty shall
have entered into a Noncompetition/Nonsolicitation Agreement, dated the Closing
Date, in a mutually agreeable form.
(f) Closing Documents. Xxx shall have delivered to Liberty the
documents specified in Section 2.3(b) hereof.
(g) Foreign Person. Liberty shall have received from Xxx an affidavit
(1) confirming its representation in Section 4.10(c), (2) setting forth Xxx'x
taxpayer identification number, and (3) granting Liberty permission to furnish a
copy of such affidavit to the Internal Revenue Service.
(h) Transition Services. Liberty shall have received from Xxx a
Transition Services Agreement, referred to in Section 11.20, duly executed by
Xxx and acceptable to Liberty, and such agreement shall be in full force and
effect.
21
22
(i) Leases. Liberty shall have received from each landlord under a
lease of the Real Property one estoppel certificate and consent to assignment in
form and substance reasonably satisfactory to Liberty and covering such other
matters as Liberty reasonably may require.
(j) Additional Financial Statements. Xxx shall have provided to Liberty
the Xxx financial statements, in such form and prepared in accordance with
Section 4.6 (a), for any month-end occurring after July 31, 1999, within fifteen
(15) days of such month-end. If the Closing will occur prior to fifteen (15)
days after month-end, Xxx shall not be obligated to provide such financial
statements for such month-end, but Liberty shall be permitted to make inquiry of
Xxx management of trends and other information with respect to such Xxx
financial statements not yet available for any month then ended, and there shall
be no Xxx Material Adverse Effect shown or expressed therein in the Business.
(k) Asset Exchange Agreement. At the Closing, Liberty and Xxx shall
have consummated the transactions contemplated by the Asset Exchange Agreement.
ARTICLE 7
CONDITIONS TO THE OBLIGATIONS OF XXX
7.1 Xxx'x Closing Conditions. The obligations of Xxx under this
Agreement to effect the Closing are, at its option, subject to the fulfillment
of the following conditions prior to or at the Closing, each of which may be
waived (as conditions to its obligations) by Xxx in its absolute discretion:
(a) Representations, Warranties, Covenants.
(i) The representations and warranties of Liberty contained
in Article 3 of this Agreement shall be true and correct in all
material respects as though such representations and warranties were
made as written herein, immediately prior to the Closing (except to
the extent changes are permitted, required or otherwise contemplated
pursuant to this Agreement) provided, however, if any such
representation or warranty is already qualified by materiality in any
manner (including, but not limited to, any materiality qualification
contained in a definition of a capitalized term used in such
representation or warranty), for purposes of determining whether this
condition has been satisfied, such representation or warranty as so
qualified must be true and correct in all respects;
(ii) Liberty shall have performed and complied in all material
respects with each and every covenant and agreement required by this
Agreement to be performed or complied with by them at or prior to the
Closing; and
22
23
(iii) Liberty shall have furnished Xxx with a certificate,
dated the Closing and duly executed on behalf of Liberty by an
officer of Liberty, to the effect that the conditions set forth
in clauses (i) and (ii) of this Section 7.1(a) have been
satisfied.
(b) Proceedings. No action or proceeding shall have been
instituted or threatened prior to or on the Closing before any court or
governmental body or authority pertaining to the transactions contemplated by
this Agreement or the Ancillary Instruments, the result of which could prevent,
or in any way limit or make illegal, the consummation of such transactions. No
United States or state governmental authority or other agency or commission or
United States or state court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other order (whether temporary, preliminary, or permanent) that is
in effect and has the effect of limiting or prohibiting consummation of the
transactions contemplated by this Agreement.
(c) Governmental Approvals. All governmental agencies,
departments, bureaus, commissions and similar bodies, the consent, authorization
or approval of which is necessary under any applicable law, rule, order or
regulation for the consummation of the transactions contemplated by this
Agreement and the Ancillary Instruments shall have consented to, authorized,
permitted or approved such transactions, and the waiting period (and any
extensions thereof) under the HSR Act applicable to the transactions
contemplated by this Agreement and the Ancillary Instruments shall have expired
or been terminated without any condition attached to such expiration or
termination.
(d) Noncompetition/Nonsolicitation Agreement. Xxx and Liberty
shall have entered into a Noncompetition/Nonsolicitation Agreement, dated the
Closing Date, in a mutually agreeable form.
(e) Closing Documents. Liberty shall have delivered to Xxx the
documents specified in Section 2.3(a) hereof.
(f) Transition Services. Xxx shall have received from Liberty a
Transition Services Agreement referred to in Section 11.20, duly executed by
Liberty and acceptable to Xxx, and such agreement shall be in full force and
effect.
(g) Asset Exchange Agreement. At the Closing, Liberty and Xxx
shall have consummated the transactions contemplated by the Asset Exchange
Agreement.
ARTICLE 8
SURVIVAL; INDEMNIFICATION
8.1 Survival. All representations, warranties, covenants and
agreements contained in this Agreement, the Liberty Disclosure Letter, the Xxx
Disclosure Letter or in any exhibit, certificate, agreement, document or
statement delivered pursuant hereto (an "Ancillary
23
24
Instrument") shall survive (and not be affected in any respect by) the Closing
and any investigation conducted by any party hereto. Notwithstanding the
foregoing, the representations and warranties contained in or made pursuant to
this Agreement or any Ancillary Instrument, respectively, shall terminate on,
and no claim or action with respect thereto may be brought after, the date that
is twelve months after the Closing, except that (1) the representations and
warranties contained in Sections 4.10, 4.14 and 4.15 hereof shall terminate on,
and no claim or action with respect thereto may be brought after, the expiration
date of the applicable statute of limitations (giving effect to any waiver, stay
or extension thereof), and (2) the representations and warranties contained in
Section 4.4 hereof shall survive in perpetuity. The representations and
warranties which terminate on the date that is twelve months after the Closing,
and upon the expiration date of the applicable statute of limitations (giving
effect to any waiver, stay or extension thereof), and the liability of any party
hereto with respect thereto pursuant to this Article 8, shall not terminate with
respect to any claim, whether or not fixed as to liability or liquidated as to
amount, with respect to which the Indemnifying Party (as defined in Section
8.2(c)) has been given written notice setting forth the material facts upon
which the claim for indemnification is based and, if feasible, a reasonable
estimate of the amount of the claims prior to the date that is twelve months
after the Closing or that is the date of expiration of the applicable statute of
limitations, as the case may be.
8.2 Indemnification. The parties hereto shall indemnify each other as
set forth below:
(a) Subject to Section 8.1 and to the other provisions of this
Section 8.2, Liberty hereby agrees to indemnify and hold Xxx harmless from, and
to reimburse Xxx for any Losses (including, without limitation, any reasonable
Legal Expenses) which result from or arise out of:
(i) the breach of any representation or warranty of
Liberty contained in this Agreement or any Ancillary Instrument;
(ii) the breach by Liberty of, or failure by Liberty, to
perform any of its respective covenants or agreements contained
in this Agreement or any Ancillary Instrument;
(iii) the Assumed Liabilities; or
(iv) the operation of the Business or the ownership of the
Acquired Assets following the Closing Date;
provided, however, that (A) Liberty shall not be responsible for any Losses with
respect to the matters referred to in clause (i) of this Section 8.2(a) until
the cumulative aggregate amount of such Losses exceeds $10,000 (the "Liberty
Basket Amount"), in which case Liberty shall then be liable only for such Losses
in excess of the Liberty Basket Amount and (B) the cumulative aggregate
indemnity obligation of Liberty under Section 8.2(a)(i) shall in no event exceed
$100,000.
24
25
As used herein, "Legal Expenses" shall mean the fees, costs and
expenses of any kind incurred by any Person indemnified herein and its counsel
in investigating, preparing for, defending against or providing evidence,
producing documents or taking other action with respect to any threatened or
asserted claim.
(b) Subject to Section 8.1 and to the other provisions of this Section
8.2, Xxx hereby agrees to indemnify and hold Liberty harmless from, and to
reimburse Liberty for any Losses (including, without limitation, any reasonable
Legal Expenses) which result from or arise out of:
(i) the breach of any representation or warranty of Xxx
contained in this Agreement or any Ancillary Instrument;
(ii) the breach by Xxx of or failure by Xxx to perform any of
its respective covenants or agreements contained in this Agreement or
any Ancillary Instrument;
(iii) the Retained Liabilities; or
(iv) non-compliance with any applicable bulk sales law
insofar as it relates to the Acquired Assets;
provided, however, that (A) Xxx shall not be responsible for any Losses with
respect to the matters referred to in clause (i) of this Section 8.2(b), until
the cumulative aggregate amount of such Losses exceeds $10,000 (the "Xxx Basket
Amount"), in which case Xxx shall then be liable only for such Losses in excess
of the Xxx Basket Amount and (B) the cumulative aggregate indemnity obligation
of Xxx under Section 8.2(b)(i) shall in no event exceed $100,000.
(c) As promptly as practicable, and in any event within 30 days,
after Xxx or any of its Affiliates, on the one hand, or Liberty or any of its
Affiliates, on the other hand, shall receive any notice of, or otherwise become
aware of, the commencement of any action, suit or proceeding, the assertion of
any claim, or the incurrence of any Loss, for which indemnification is provided
for (assuming, only for the purposes of this Section 8.2(c) and of the terms
defined in this Section 8.2(c), that the Liberty Basket Amount or the Xxx Basket
Amount, as the case may be, was zero) by Section 8.2(a) or 8.2(b) (an
"Indemnification Event"), the party entitled to such indemnification (an
"Indemnified Party") shall give written notice (an "Indemnification Claim") to
the party from which such indemnification is (or, under such assumption, could
be) sought (an "Indemnifying Party") describing in reasonable detail the
Indemnification Event and the basis on which indemnification is (or, under such
assumption, could be) sought. If the Indemnifying Party is not so notified by
the Indemnified Party within 30 days after the date of the receipt by the
Indemnified Party or any of its Affiliates of notice of, or of the Indemnified
Party or any of its Affiliates otherwise becoming aware of, any particular
Indemnification Event, the Indemnifying Party shall be relieved of all liability
hereunder in respect of such Indemnification Event (or the facts or
circumstances
25
26
giving rise thereto) to the extent that such Indemnifying Party is prejudiced or
harmed as a consequence of such failure (and, to such extent, the Losses
resulting from such Indemnification Event shall be disregarded for purposes of
determining whether the Liberty Basket Amount or the Xxx Basket Amount, as the
case may be, has been exceeded).
(d) If any Indemnification Event involves the claim of any third party
(a "Third-Party Claim"), the Indemnifying Party shall (whether or not the
Indemnified Party is entitled to claim indemnification under Section 8.2(a) or
8.2(b), as the case may be) be entitled to, and the Indemnified Party shall
provide the Indemnifying Party with the right to, participate in, and assume
sole control over, the defense and settlement of such Third-Party Claim (with
counsel reasonably satisfactory to the Indemnified Party); provided, however,
that (i) the Indemnified Party shall be entitled to participate in the defense
of such Third-Party Claim and to employ counsel at its own expense to assist in
the handling of such Third-Party Claim, and (ii) the Indemnifying Party shall
obtain the prior written approval of the Indemnified Party before entering into
any settlement of such Third-Party Claim or ceasing to defend against such
Third-Party Claim, such approval not to be unreasonably withheld or delayed, if
(x) as a result of such settlement or ceasing to defend, injunctive or other
equitable relief would be imposed against the Indemnified Party or (y) in the
case of a settlement, the Indemnified Party would not thereby receive from the
claimant an unconditional release from all further liability in respect of such
Third-Party Claim. After written notice by the Indemnifying Party to the
Indemnified Party of its election to assume control of the defense of any such
Third-Party Claim, the Indemnifying Party shall not be liable hereunder to
indemnify any Person for any Legal Expenses subsequently incurred in connection
therewith except as provided below. If the Indemnifying Party does not assume
sole control over the defense or settlement of such Third-Party Claim as
provided in this Section 8.2(d) within a reasonable period of time, or, after
assuming such control, fails to defend against such Third-Party Claim (it being
agreed that settlement of such Third-Party Claim does not constitute such a
failure to defend), the Indemnified Party shall have the right (as to itself) to
defend and, upon obtaining the written consent of the Indemnifying Party, which
shall not be unreasonably withheld or delayed, settle the claim in such manner
as it may deem appropriate, and the Indemnifying Party shall promptly reimburse
the Indemnified Party therefor in accordance with (and to the extent provided
for (subject to, and not disregarding, the provisos to Section 8.2(a) or 8.2(b)
in Section 8.2(a) or 8.2(b)), as appropriate. Notwithstanding the foregoing
provisions of this Section 8.2(d), the Indemnified Party shall have the right at
all times to take over and assume the control (as to itself) of the defense or
settlement of any Third-Party Claim; provided, however, that in such event (x)
the Indemnifying Party shall cease to have any obligation under Section 8.2(a)
or 8.2(b), as the case may be, in respect of such Third-Party Claim and (y) all
Losses resulting from such Third-Party Claim will not be considered for purposes
of determining whether the Liberty Basket Amount or the Xxx Basket Amount, as
the case may be, has been exceeded. The Indemnifying Party shall not be liable
under this Section 8.2 for any settlement or compromise effected without its
consent.
(e) The Indemnified Party and the Indemnifying Party shall each
cooperate (and shall each cause its Affiliates to cooperate) with the other in
the defense of any Third-Party Claim pursuant to Section 8.2(d). Without
limiting the generality of the foregoing, each such
26
27
Person shall furnish the other such Person with such documentary or other
evidence as is then in its or any of its Affiliate's possession as may
reasonably be requested by the other Person for the purpose of defending against
any such Third-Party Claim.
(f) Upon payment of any amount pursuant to any Indemnification Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all of the Indemnified Party's rights of recovery against any third party with
respect to the matters to which such Indemnification Claim relates.
(g) Liberty and Xxx each agree that: (i) if the Closing occurs, the
rights to indemnification set forth in Section 8.2 (a) or 8.2 (b) shall except
as otherwise required by law, be the sole and exclusive remedy that any
Indemnified Party has against the other party with respect to breaches of
representations or warranties under this Agreement; (ii) prior to the Closing,
the sole and exclusive remedies of Liberty and Xxx for breaches of
representations or warranties hereunder shall be either of the following: (A) to
enforce its rights set forth in Section 11.18 or (B) to terminate this Agreement
as provided in Section 9.1; and (iii) at the Closing each party will confirm to
the other in writing whether it has actual knowledge of an Indemnification Event
existing at the Closing and a description of any such claim. Neither party shall
have any obligation to the other under Section 8.2(a) or 8.2(b) with respect to
any Indemnification Event actually known to the other party and not so disclosed
at the Closing. All claims for indemnification must be asserted, if at all, in
good faith and in accordance with the provisions of Section 8.2(c) hereof and,
to the extent applicable to such claims, within the relevant time period set
forth in the last sentence of Section 8.1 hereof.
(h) If at any time subsequent to the receipt by an Indemnified Party of
an indemnity payment hereunder, such Indemnified Party (or any Affiliate
thereof) receives any recovery, settlement or other similar payment with respect
to the Loss for which it received such indemnity payment (the "Recovery"), such
Indemnified Party shall promptly pay to the Indemnifying Party an amount equal
to the amount of such Recovery, less any expense, including reasonable attorneys
fees, incurred by such Indemnified Party (or its Affiliates) in connection with
such Recovery, but in no event shall any such payment exceed the amount of such
indemnity payment.
ARTICLE 9
TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated at
any time on or prior to the Closing:
(a) by the mutual written consent of Liberty and Xxx;
(b) by either Liberty or Xxx, if the Closing has not taken place by
September 30, 1999 and the terminating party is not in material breach of its
obligations hereunder;
27
28
(c) by Liberty as provided in Section 4.21;
(d) by Xxx as provided in Section 3.4;
(e) by either Liberty or Xxx, if any court or governmental body of
competent jurisdiction in the United States shall have issued an order, stay,
judgment or decree, or taken any other action, permanently prohibiting the
transactions contemplated by this Agreement, and such order, stay, judgment,
decree, or other action, shall have become final and non-appealable; or
(f) by either Liberty or Xxx in the event that the Asset Exchange
Agreement is terminated by either Liberty or Xxx in accordance with its terms.
If Liberty or Xxx shall terminate this Agreement pursuant to the
foregoing provisions of this Section 9.1, such termination shall be effected by
written notice to the other party specifying the provision pursuant to which
such termination is made.
9.2 Liabilities Upon Termination. Except for the terms of Section 11.2
hereof (and, to the extent relevant thereto, the terms of Sections 8.2, 11.4,
11.5, 11.6, 11.7, 11.14, 11.16, 11.17 and 11.19 hereof), which shall survive any
termination of this Agreement, upon the termination of this Agreement pursuant
to Section 9.1 hereof, this Agreement shall forthwith become null and void, and
no party hereto or any of its officers, directors, employees, agents,
consultants, stockholders or principals shall have any rights, liabilities or
obligations hereunder or with respect hereto; provided, however, that nothing
contained in Section 9.1 or this Section 9.2 shall (i) relieve any party from
liability for any willful failure to comply with any covenant or agreement
contained herein (and the terms of Sections 8.2, 11.4, 11.5, 11.6, 11.7, 11.14,
11.16, 11.17 and 11.19 hereof shall apply to any such failure) or (ii) affect
the Confidentiality Agreement, which shall survive any termination of this
Agreement in accordance with the Confidentiality Agreement's terms and
conditions.
ARTICLE 10
EMPLOYEE AND CERTAIN TAX MATTERS
10.1 Xxx Employee Matters.
(a) (i) Xxx shall, after notifying Liberty of its intent thereto and
after first allowing Liberty to be present at and to participate during
or in connection with such notification (if Liberty desires), provide
all current Xxx employees involved solely in the Business with all
appropriate notification of the sale of the Business and the
termination of each such employee's employment with Xxx as a result
thereof.
28
29
(ii) Liberty shall have no obligation to hire any of Xxx
current or former employees involved in the Business. Promptly after
the date hereof Liberty shall have the right to review all employment
records and files of Xxx involved solely in the Business, after Xxx
obtains a written release of such employee's personnel file from such
employee, and to interview current Xxx employees involved solely in the
Business for employment after the Closing Date. Liberty may make an
offer of employment to any Business employee involved solely in the
Business, which offer shall be subject to, and effective, immediately
following the Closing Date. Any employee of Xxx involved in the
Business who commences employment with Liberty (or one or more
Affiliates of Liberty as of the Closing Date designated by Liberty) is
referred to herein as a "Transferred Employee."
(b) Except to the extent prohibited by the Code, ERISA, or other
applicable law, each Employee Benefit Plan established or maintained by Liberty
or its ERISA Affiliates for Transferred Employees ("Liberty Plan") shall grant
credit to each Transferred Employee for all service on or prior to the Closing
Date with Xxx or any predecessor or ERISA Affiliate of the foregoing, for
purposes of eligibility, vesting and seniority; provided, however, that such
credit shall only be provided to the extent that such service is documented by
Xxx substantially contemporaneously with the Closing Date and in a manner
reasonably satisfactory to Liberty; provided further, no such credit shall be
provided with respect to any group health plan (other than a health flexible
spending arrangement) maintained by Liberty or an ERISA Affiliate; provided
further, that credit for such service shall not be required for any purpose
under any post-retirement medical or life insurance plan or for purposes of
benefit accrual under any plan; and provided further, that any Liberty Plan may
be designed to offset, or otherwise avoid duplication of, any benefits to which
a Transferred Employee is entitled under any comparable Benefit Plan on or prior
to the Closing Date.
(c) During the period that begins on the Closing Date and ends on the
last day of the calendar month in which the Closing occurs, Xxx shall continue
group health plan coverage for Transferred Employees and their family members in
the same manner and under the same terms as if such Transferred Employees had
remained employees of Xxx. As of the first day after the period described in the
preceding sentence, Liberty shall establish or maintain a group health plan
which shall cover all Transferred Employees and their family members (as defined
in the plan established or maintained by Liberty) who immediately prior to the
Closing were covered under any group health plan (other that a health flexible
spending arrangement) maintained by Xxx. As of the same date, any such group
health plan (other than a health flexible spending arrangement) established or
maintained by Liberty shall, with respect to Transferred Employees and their
family members (as defined in the plan established or maintained by Liberty),
(i) waive any waiting period, (ii) waive any exclusion or limitation for
preexisting conditions which were covered (generally and/or specifically as to
any individual) under any group health plan maintained by Xxx prior to the
Closing Date and (iii) grant credit (for purposes of annual deductibles,
co-payments and out-of-pocket limits) for any covered claims incurred or
payments made prior to the Closing during the plan year in which the Closing
Date occurs.
29
30
(d) A 401(k) Plan maintained by Liberty shall accept direct rollovers
of distributions from Xxx'x 401(k) Plan for electing Transferred Employees, but
only to the extent that:
(i) the plan administrator of Liberty's 401(k) Plan receives
such statements, certifications, and documentation as are considered by
such plan administrator to be necessary or appropriate for such plan
administrator to reasonably conclude that such rollovers are valid
rollover contributions;
(ii) the plan administrator of Liberty's 401(k) Plan does not
subsequently determine that one or more of such rollovers was an
invalid rollover contribution;
(iii) the electing Transferred Employee is an employee of
Liberty or an ERISA Affiliate as of the date of the rollover
contribution; and
(iv) the rollover contribution consists exclusively of cash.
(e) Liberty will assume and satisfy Xxx'x liability with respect to all
earned and unpaid vacation pay to which Transferred Employees are entitled, if
any, as of the Closing Date, either by providing such employees with their
eligible paid vacation time or a payment in lieu thereof consistent with
Liberty's past practices. Liberty will give the Transferred Employees credit for
past service with Xxx and its Affiliates in determining the amount of paid
vacation to which they may become entitled after the Closing Date, in accordance
with Liberty's vacation policies in effect from time to time; provided, however,
that such credit shall only be provided to the extent that such service is
documented by Xxx substantially contemporaneously with the Closing Date and in a
manner reasonably satisfactory to Liberty.
(f) Xxx shall remain liable for and shall pay all short-term disability
benefits payable to any Transferred Employee with respect to any illness or
injury which occurred or existed on or prior to the Closing. Liberty shall be
liable for and shall pay all short-term disability benefits payable to any
Transferred Employee with respect to any illness or injury which occurred or
existed on or after the Closing Date in accordance with the terms of any
applicable Liberty employee benefit plan.
(g) Xxx shall be responsible for providing long-term disability
benefits to any current or former employees of Xxx who are receiving long-term
disability benefits as of the Closing Date in accordance with the terms of Xxx'x
long-term disability plan and to any employees on short-term disability leave as
of the Closing Date who subsequently qualify for long-term disability benefits.
(h) Xxx shall be responsible for any covered claims incurred by any
Transferred Employee under Xxx'x medical, dental or vision plans prior to the
Closing Date in accordance with the terms of such plans. Liberty shall be
responsible for any claims incurred by any Transferred Employee participating in
Liberty's medical, dental or vision plans after the
30
31
Closing Date, to the extent such claims are covered by, and in accordance with
the terms of, Liberty's plans.
(i) Xxx shall be responsible for providing COBRA coverage to any
current or former employee of Xxx or any "qualified beneficiary" (within the
meaning of Section 4980B of the Code) of any such current or former employee who
has incurred a "qualifying event" (within the meaning of Section 4980B of the
Code) under any Benefit Plan on or prior to the Closing Date. Liberty shall not
require, recommend or encourage any Transferred Employee to elect continuation
of coverage under a Xxx group health plan pursuant to COBRA. Liberty shall be
responsible for providing COBRA coverage to any Transferred Employee or any
"qualified beneficiary" of a Transferred Employee who incurs a "qualifying
event" under any Liberty Benefit Plan after the Closing Date.
(j) Xxx shall be responsible for providing any post-employment
benefits, including medical and life insurance benefits, to any employees or
former employees of Xxx (and their family members) in accordance with the terms
of Xxx'x Plans, if applicable.
(k) Xxx shall be responsible for any workers compensation claims which
are reported or incurred by any Transferred Employee prior to the Closing Date.
Liberty shall be responsible for any workers compensation claims which are
incurred by any Transferred Employee on or after the Closing Date.
(l) Except as otherwise specifically provided herein, Liberty, its
Affiliates, and its ERISA Affiliates shall have no responsibility for, and Xxx
shall be solely responsible for, all benefits, compensation, or other
liabilities attributable to (i) services rendered to Xxx on or prior to the
Closing Date by a Transferred Employee or by any other individual as an employee
of Xxx or otherwise, or (ii) any act or omission of Xxx with respect to any
individual described in clause (i), including any agreement, plan, fund, policy,
or arrangement maintained at any time by Xxx. No other provision of this Section
10.1 describing Xxx'x liability or responsibility shall be interpreted to limit
the liability or responsibility that Xxx has under this paragraph (l) except to
the extent that such other provision specifically makes Liberty liable or
responsible. For purposes of this paragraph (l), references to Xxx shall include
Xxx, its Affiliates, its ERISA Affiliates, and all predecessors of any of such
entities.
(m) The parties agree that, to the extent permissible under applicable
law (i) Liberty shall be a successor employer with respect to the Transferred
Employees for purposes of the Federal Insurance Contributions Act, as codified
at 26 U.S.C. xx.xx. 3101-3128 and the Federal Unemployment Tax Act, as codified
at 26 U.S.C. xx.xx. 3301-3311, and (ii) to the extent that Liberty elects, it
shall be treated as a successor employer under any applicable state unemployment
compensation laws. Xxx and Liberty agree to provide each other with such wage,
tax and other information as may reasonably be required for those purposes.
(n) Xxx shall, upon the request of Liberty deliver such documents,
personnel or benefit information and other information in its possession, as may
be necessary or desirable from time to time for the administration, analysis and
operation of the Liberty Plans. Such
31
32
documents and information may be provided at such times and in such form
(including any electronic media) as may reasonably be requested by either party.
10.2 Certain Tax Matters. All federal, state, local and other transfer,
sales and use Taxes imposed upon the transfer to Liberty (or one or more
Affiliates of Liberty as designated by Liberty) of the Acquired Assets will be
shared equally by Liberty and Xxx.
ARTICLE 11
MISCELLANEOUS
11.1 Exclusivity of Representations, Reliance on Representations.
(a) THE REPRESENTATIONS AND WARRANTIES MADE BY LIBERTY AND XXX,
RESPECTIVELY, IN THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE AND ANY OTHER
IMPLIED WARRANTIES, OF LIBERTY AND XXX RESPECTIVELY. LIBERTY AND XXX EACH HEREBY
DISCLAIMS ANY SUCH OTHER OR IMPLIED REPRESENTATIONS OR WARRANTIES,
NOTWITHSTANDING THE DELIVERY OR DISCLOSURE BY LIBERTY OR ANY OTHER PERSON TO XXX
OR ANY OF ITS DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR REPRESENTATIVES, OR BY
XXX OR ANY OTHER PERSON TO LIBERTY, ANY OF ITS RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR REPRESENTATIVES, OF ANY DOCUMENTATION OR OTHER INFORMATION
IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
(b) Xxx represents and warrants to Liberty that in making its decision
to enter into this Agreement it is not relying on any information provided or
statements made by Liberty or any of its respective agents, representatives,
employees or affiliates other than the specific representations and warranties
made by Liberty in this Agreement.
(c) Liberty represents and warrants to Xxx that in making its decision
to enter into this Agreement it is not relying on any information provided or
statements made by Xxx or any of their respective agents, representatives,
employees or affiliates other than the specific representations and warranties
made by Xxx in this Agreement.
11.2 Expenses. Except as expressly set forth in this Section 11.2 and
Sections 10.2 and 11.13 regardless of whether the Closing occurs, each party
hereto shall bear all of its expenses incurred in connection with the
transactions contemplated by this Agreement, including, without limitation,
accounting and legal fees incurred in connection herewith. Notwithstanding the
foregoing, the fees of all filings required under the HSR Act in connection
32
33
with the transactions contemplated by this Agreement and the Ancillary
Instruments will be shared equally by the parties.
11.3 Further Assurances, Bulk Transfer. Subject to Section 9.1 hereof,
from time to time prior to, at and after the Closing, without the payment of any
additional consideration except as otherwise set forth in this Agreement, each
party hereto will execute all such instruments and take all such actions as the
other party shall reasonably request in connection with carrying out and
effectuating the intent and purpose hereof and all transactions and things
contemplated by this Agreement. The parties hereby waive compliance with the
provisions of any applicable bulk sales law of any jurisdiction in connection
with the transactions contemplated hereby and no representation, warranty or
covenant contained in this Agreement shall be deemed to have been breached as a
result of such non-compliance.
11.4 Notices. Notices and other communications provided for herein
shall be in writing (which shall include notice by facsimile transmission) and
shall be delivered or mailed (or if by facsimile communications equipment of the
sending party hereto, delivered by such equipment), addressed as follows:
If to Liberty: Liberty Group Publishing, Inc.
0000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
with a copy to: Xxxxxx Xxxxxx & Zavis
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
If to Xxx: Xxx Enterprises, Incorporated
000 Xxxxx Xxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
with a copy to: Lane & Xxxxxxxx
000 X. Xxxx Xxxxxx, Xxx. 000
Xxxxxxxxx, XX 00000
Attn: C. Xxxx Xxxxxxxx III, Esq.
or to such other address as a party may from time to time designate in writing
in accordance with this section. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.
33
34
11.5 Assignment. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement nor any of the rights, interests, or obligations hereunder may be
assigned by any of the parties hereto without the prior written consent of the
other parties, except that Liberty and Xxx may assign any or all of their
respective rights and obligations hereunder to any of their Affiliates without
the consent of the other parties; provided, that any such assignment shall not
relieve Liberty or Xxx, as the case may be, from any liability hereunder.
11.6 Construction.
(a) Unless otherwise expressly specified herein, (i) defined terms in
the singular shall also include the plural and vice versa, (ii) the words
"hereof", "herein", "hereunder" and other similar words refer to this Agreement
as a whole, (iii) Article, Section and Schedule references in this Agreement are
to Articles of, Sections of, Schedule to and Exhibits to this Agreement and (iv)
words of any gender (masculine, feminine, neuter) mean and include correlative
words of the other genders.
(b) The captions in this Agreement are for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
(c) All references to "days" shall be to calendar days unless business
days are specified.
(d) Unless the context otherwise requires, (i) "or" is not exclusive
and (ii) "including" means "including but not limited to" and "including without
limitation".
(e) As used herein, the phrases "date of this Agreement" and "date
hereof' and any other phrases of similar import shall mean August 26, 1999
(regardless, with respect to representations and warranties, of the date or time
as of which such representations and warranties are made or deemed to have been
made or as of which the accuracy or inaccuracy thereof is measured or
determined).
11.7 Law Governing. THIS AGREEMENT IS INTENDED AS A CONTRACT UNDER AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LOCAL LAW OF THE STATE OF ILLINOIS,
INCLUDING WITHOUT LIMITATION AS TO ALL MATTERS OF CONSTRUCTION, VALIDITY,
ENFORCEABILITY AND PERFORMANCE.
11.8 Waiver of Provisions. The provisions, terms, covenants,
representations, warranties and conditions of this Agreement may be waived only
by a written instrument executed by the party hereto waiving compliance. The
failure of any party hereto at any time or times to require performance of any
provision of this Agreement shall in no manner affect the right of such party at
a later date to enforce the same. No waiver by any party hereto of any condition
or the breach of any provision, term, covenant, representation or warranty
34
35
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
11.9 Counterparts. This Agreement may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that such parties are not
signatory to the same counterpart.
11.10 Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes and cancels any and all prior agreements
between them relating to the subject matter hereof, excluding the
Confidentiality Agreement (which shall remain in full force and effect in
accordance with its terms and conditions), and may not be amended or modified
except by a written agreement signed by Xxx and Liberty.
11.11 Access to Books and Records.
(a) After the Closing, Xxx shall, upon Liberty's request from time to
time, and upon reasonable notice, in connection with the preparation by Liberty
or its Affiliates of Tax returns, audited financial statements incorporating the
Newspapers and the Business and all requisite securities law filings (including,
but not limited to, a Form 8K filing, if required, with respect to the
transactions contemplated by this Agreement) and the initiation or defense of
litigation with third parties involving Assumed Liabilities, (i)(A) provide to
the officers and other authorized representatives of Liberty, and its Affiliates
reasonable access, during normal business hours, to any and all files, books,
records, documents and other information (including, but not limited to,
workpapers in the possession of current and former accountants of the
Newspapers) relating to the Business with respect to the period prior to the
Closing (including, but not limited to, with respect to liabilities for Taxes
included in the computation of Net Working Capital, Tax Records), (B) make
available to Liberty, and its authorized representatives personnel of Xxx to
consult with such personnel and (ii) make available for inspection and copying
by Liberty at Liberty's expense true and complete copies of any documents
relating to the foregoing. In exercising its rights under the foregoing
provisions of this Section 11.11(a). In addition, after the Closing, upon
Liberty's request from time to time, Xxx shall cause each of the Persons from
whom Xxx acquired the Newspapers and their Affiliates and predecessors to (i)
provide to the officers and other authorized representatives (including, but not
limited to, accountants) of Liberty and its Affiliates reasonable access, during
normal business hours, to any and all files, books, records, documents,
financial and operating data and other information (including, but not limited
to, workpapers in the possession of current and former accountants of the
Newspapers relating to the Newspapers and the Business (collectively, the
"Historical Books and Records"), (ii) cause its officers to furnish to, or make
available for inspection and copying, at Liberty's expense, by, Liberty and its
Affiliates and their authorized representatives (including, but not limited to,
accountants) true and complete copies of all such Historical Books and Records,
and (iii) make available to Liberty and its Affiliates and their authorized
representatives its personnel to consult with such representatives, in each case
in connection with, and as necessary in relation to, the
35
36
preparation by Liberty and its Affiliates of audited financial statements
incorporating the Newspapers and the Business and all requisite securities law
filings (including, but not limited to, a Form 8-K filing, if required, with
respect to the transactions contemplated by this Agreement).
(b) After the Closing, Liberty shall, upon Xxx'x request from time to
time, and upon reasonable notice, in connection with the preparation by Xxx or
its Affiliates of Tax returns and the initiation or defense of litigation with
third parties involving Assumed Liabilities, (i)(A) provide to the officers and
other authorized representatives of Xxx and its Affiliates reasonable access,
during normal business hours, to any and all premises, properties, files, books,
records, documents and other information relating to the Business with respect
to the period prior to the Closing (including, with respect to liabilities for
Taxes included in the computation of Net Working Capital, Tax Records), (B)
cause its officers to furnish to Xxx and its authorized representatives any and
all financial, technical and operating data and other information pertaining to
the Business with respect to the period prior to the Closing, and (C) make
available to Xxx and its authorized representatives personnel of Liberty to
consult with such personnel and (ii) make available for inspection and copying
by Xxx, at Xxx'x expense, true and complete copies of any documents relating to
the foregoing. In exercising its rights under the foregoing provisions of this
Section 11.11(b), Xxx and its representatives shall not interfere with the
normal operations of the Business. Liberty shall retain the files, books,
records and documents relating to the Business for at least six years after the
Closing.
11.12 Disclosure Letters. Any information disclosed in any section of
the Liberty Disclosure Letter delivered on the date hereof or the Xxx Disclosure
Letter if reasonably related to any other section or sections of the Liberty
Disclosure Letter or the Xxx Disclosure Letter, as the case may be, and
described in reasonable detail to allow a reasonable person to make the
applicable connection to such section, shall be deemed fully disclosed for the
purposes of all such applicable sections of the Liberty Disclosure Letter or the
Xxx Disclosure Letter, as the case may be. Neither the specification (directly
or indirectly by reference to a defined term hereof) of any dollar amount in the
representations and warranties set forth in Article 3 or Article 4 or the
indemnification provisions of Article 8 nor the inclusion of any items in the
Liberty Disclosure Letter or the Xxx Disclosure Letter shall be deemed to
constitute an admission by Liberty or Xxx, or otherwise imply, that any such
amount or such items so included are material for the purposes of this
Agreement. The inclusion of, or reference to, any item within any particular
section of the Liberty Disclosure Letter or the Xxx Disclosure Letter does not
constitute an admission by either Liberty or Xxx that such item meets any or all
of the criteria set forth in this Agreement for inclusion in such section of the
Liberty Disclosure Letter or the Xxx Disclosure Letter, as the case may be.
11.13 Cooperation.
(a) From and after the Closing, Liberty will cooperate with Xxx in
the investigation, defense or prosecution of any action, suit, proceeding or
other litigation, at law or in equity, which is pending or threatened against
Xxx or any of its Affiliates and which relates to the Business or the
Newspapers. Without limiting the generality of the foregoing, Liberty will
36
37
make available its employees engaged in the Business to give depositions or
testimony and will furnish all documentary or other evidence in each case as Xxx
may reasonably request. Xxx shall reimburse Liberty for all reasonable and
necessary out-of-pocket expenses incurred in connection with the performance of
its obligations under this Section 11.13(a).
(b) From and after the Closing, Xxx will cooperate with Liberty in
the investigation, defense or prosecution of any action, suit, proceeding or
other litigation, at law or in equity, which is pending or threatened against
Liberty or any of its Affiliates and which relates to the Business or the
Newspapers. Without limiting the generality of the foregoing, Xxx will make
available its employees to give depositions or testimony and will furnish all
documentary or other evidence in each case as Liberty may reasonably request.
Liberty shall reimburse Xxx for all reasonable and necessary out-of-pocket
expenses incurred in connection with the performance of its obligations under
this Section 11.13(b).
11.14 No Third Party Beneficiary. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
11.15 Insurance. Liberty acknowledges that all insurance policies
maintained by Xxx and its Affiliates with respect to the Business and Acquired
Assets will be terminated effective on the Closing Date.
11.16 No Presumption. With regard to each and every term and condition
of this Agreement and any and all agreements and instruments subject to the
terms hereof or referred to herein, the parties hereto understand and agree that
the same have or has been mutually negotiated, prepared and drafted, and if at
any time the parties hereto desire or are required to interpret or construe any
such term or condition or any agreement or instrument subject hereto, no
consideration shall be given to the issue of which party hereto actually
prepared, drafted or requested any term or condition of this Agreement or any
agreement or instrument subject hereto.
11.17 Severability. To the fullest extent that they may effectively do
so under applicable law, the parties hereto hereby waive any provision of law
which renders any provision of this Agreement invalid, illegal or unenforceable
in any respect. Such parties further agree that any provision of this Agreement
which, notwithstanding the preceding sentence, is rendered or held invalid,
illegal or unenforceable in any respect in any jurisdiction shall be
ineffective, but such ineffectiveness shall be limited as follows: (i) if such
provision is rendered or held invalid, illegal or unenforceable in such
jurisdiction only as to a particular Person or Persons or under any particular
circumstance or circumstances, such provision shall be ineffective, but only in
such jurisdiction and only with respect to such particular Person or Persons or
under such particular circumstance or circumstances, as the case may be; (ii)
without limitation of clause (i), such provision shall in any event be
ineffective only as to such jurisdiction and only to the extent of such
invalidity, illegality or unenforceability, and such invalidity, illegality or
unenforceability in such jurisdiction shall not render invalid, illegal or
37
38
unenforceable such provision in any other jurisdiction; and (iii) without
limitation of clause (i) or (ii), such ineffectiveness shall not render invalid,
illegal or unenforceable this Agreement or any of the remaining provisions
hereof. Without limitation of the preceding sentence, (A) it is the intent of
the parties hereto that, in the event that in any court proceeding, such court
determines that any provision of this Agreement is illegal, invalid or
unenforceable in any jurisdiction to any extent, such court shall have the power
to, and shall, (1) modify such provision (including by limiting the Persons
against whom, or the circumstances under which, such provision shall be
effective in such jurisdiction) for purposes of such proceeding to the minimum
extent necessary so that such provision, as so modified, may then be enforced in
such proceeding and (2) enforce such provision, as so modified pursuant to
clause (1), in such proceeding and (B) upon any determination that any provision
of this Agreement is invalid, illegal or unenforceable, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of such parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the greatest extent possible.
11.18 Specific Performance. Each of Liberty and Xxx acknowledges that
the rights of each party to consummate the transactions contemplated hereby are
unique and recognizes and affirms that in the event of a breach of this
Agreement by any party, money damages may be inadequate and the non-breaching
party may have no adequate remedy at law. Accordingly, the parties agree that
such non-breaching party shall have the right, in addition to any other rights
and remedies existing in their favor at law or in equity, to enforce their
rights and the other party's obligations hereunder not only by an action or
actions for damages but also by an action or actions for specific performance,
injunctive and/or other equitable relief (without posting of bond or other
security).
11.19 Announcements. None of the parties hereto will (and each such
party will cause its Affiliates not to) issue any press release or otherwise
make any public statement with respect to the transactions contemplated hereby
without the prior written consent of the other parties, except as and to the
extent that such party or any of its Affiliates determines in good faith that it
is so obligated by law or stock exchange rules, in which case such party shall
use reasonable efforts to give notice to the other parties in advance of such
party's or its Affiliate's intent to make such announcement or issue such press
release and the parties hereto shall use reasonable efforts to cause a mutually
agreeable release or announcement to be issued.
11.20 Transition Services Agreement.
(a) In order to allow Liberty to make suitable alternative
arrangements, for a period of 3 months following the Closing, Xxx shall use its
reasonable efforts to provide or cause to be provided to Liberty or its
designated Affiliates the transition services (the "Transition Services") listed
and described in the Transition Services Agreement consistent with the
provisions hereof which Xxx or the Newspapers are currently receiving from Xxx,
an outside third party vendor or from another newspaper owned by Xxx (the
"Transition Services Provider"). The Transition Services shall be provided in a
manner consistent with the manner in which they were provided to the Newspapers
by the applicable Transition Services Provider
38
39
prior to the Closing. Without limiting the generality of the previous sentence,
Xxx will make payment (including, without limitation, the payment for the
service) to the Transition Services Provider and Liberty will submit such
payment to Xxx within 30 days of receiving Xxx'x invoice therefor. If any such
payments were previously made by inter-company journal entries, after the
Closing, such payments will be made by check at the same time as the payment
would have been made by inter-company journal entry.
(b) The obligation of Xxx to provide, or cause to be provided,
Transition Services under this Section shall be suspended with respect to any
specified Transition Services to the extent that any Transition Services
Provider is prevented or hindered from providing such services by any law or
governmental order, rule, regulation or direction, whether domestic or foreign
or by any cause beyond the control of such Transition Services Provider,
including acts of God, strikes, lockouts and other labor and industrial disputes
and disturbances, civil disturbances, accidents, acts of war or conditions
arising out of or attributable to war (whether declared or undeclared), shortage
of necessary equipment, failures of equipment or information systems, materials
of labor or restrictions thereon or limitations upon the use thereof and delays
in transportation or the refusal of the Transition Services Provider to allow
the Transition Services to be provided to the Newspapers following the Closing.
In such event, Xxx shall give written notice as soon as reasonably practicable
to Liberty stating the date and extent of such suspension and the cause thereof,
and Xxx shall resume the performance of other obligations under this section as
soon as reasonably practicable after the removal of the cause.
(c) Neither Xxx nor Liberty shall have any duties or responsibilities
pursuant to this section other than those specifically set forth herein and no
implied obligations shall be read into this section. Neither Xxx or Liberty nor
any of their respective officers, directors, employees, agents, attorneys in
fact or Affiliates shall be liable for any act taken or omitted to be taken by
it under or in connection with this section except that Xxx, shall only be
liable for losses incurred by Liberty arising out of its gross negligence or
willful misconduct in the performance of the Transition Services.
(d) Liberty may terminate or partially limit any Transition Services
being provided to it at any time, in its sole discretion, upon 10 days' prior
written notice Xxx.
(e) The Transition Services shall be billed at Xxx'x commercial
customer charges and rates, or at commercially reasonable hourly rates, as the
case may be, with reimbursement for the Xxx'x long distance line charges. The
Transition Services Agreement shall provide such reasonable provisions necessary
to insure Xxx'x license agreements, confidential information and proprietary
systems are not breached.
39
40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
LIBERTY GROUP PUBLISHING, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: Authorized Representative
XXX ENTERPRISES, INCORPORATED
By: /s/ Xxxxx Xxxxx
Name: Xxxxx Xxxxx
Its: Authorized Representative
40
41
EXHIBIT A
For purposes of the Agreement to which this EXHIBIT A is attached (the
"Agreement"), the following terms shall have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, through one or more intermediaries, controls, is controlled by or
is under common control with, such Person. For the purposes of this definition,
"control" means the possession, directly or indirectly of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Ancillary Instrument" shall have the meaning ascribed to such term in
Section 8.1.
"Asset Exchange Agreement" means that certain Asset Exchange Agreement
dated as of the date hereof, between Liberty and Xxx.
"Business" shall mean the business and the operation of the Newspapers,
including without limitation the publication of such Newspapers.
"Copyrights" means all copyrights, including copyrights for printed
matter, databases, software, CD/ROM discs, software and CD/ROM disc source
codes, copyright registrations and all pending applications for copyright
registration owned by Xxx and used solely in connection with the Business,
including those items described in Part A of Section 4.16(b) of the Xxx
Disclosure Letter.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidentiality Agreement" means the Confidentiality and Negotiation
Agreement between Xxx and Liberty dated June 1, 1999.
"Employee Computer Purchase Agreements" means the agreements between
Xxx and the Xxx employees listed in Schedule 1.3(b)(xiv) involving a Xxx
employee's installment purchase of a personal computer for personal use outside
of the workplace.
"Environmental Laws" means all federal, state and local laws,
regulations, ordinances and rules of common law relating to environmental
matters, including those relating to fines, orders, injunctions, penalties,
damages, contribution, cost recovery compensation, losses, or injuries resulting
from the release or threatened release of Hazardous Substances and the
generation, use, storage, transportation, or disposal of Hazardous Substances in
any manner applicable to the Business or as to the Acquired Assets, including,
but not limited to, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (42 U.S.C. xx.xx. 9601 et seq. ), the Hazardous Materials
Transportation Act (49 U.S.C. xx.xx. 1801 et seq.), the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. xx.xx. 6901 et seq.), the Federal
41
42
Water Pollution Control Act (33 U.S.C. xx.xx. 1251 et seq.), the Clean Air Act
(42 U.S.C. xx.xx. 7401 et seq.), the Toxic Substances Control Act of 1976 (15
U.S.C. xx.xx. 2601 et seq.), the Safe Drinking Water Act (42 U.S.C. xx.xx.
000x-xx.xx. 300j-11 et seq.), and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. xx.xx. 1101 et seq.), each as heretofore amended
and supplemented, or any analogous present federal, state or local statutes,
rules, and regulations promulgated thereunder or pursuant thereto, and any other
present law, ordinance, rule, regulation, permit, order, or directive addressing
environmental, safety or health issues, of or by the federal government, any
state or political subdivision thereof, or any agency, court, or body of the
federal government or any state or political subdivision thereof.
"Equipment" means all machinery, presses, equipment, furniture,
computer equipment (including software), fixtures, furnishings, toolings, parts
and other items of tangible personal property owned or leased by Xxx and used
solely in connection with the Business.
"ERISA Affiliate" shall mean, with respect to any specified Person, any
other Person which is treated as a single employer with such specified Person
under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.
"GAAP" means generally accepted United States accounting principles,
applied on a consistent basis.
"Hazardous Substances" means (a) any chemical, material or substance
defined as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous waste," "restricted
hazardous waste," "medical waste, "toxic pollutants," "contaminants,"
"pollutants," "toxic substances," or words of similar import under any
applicable Environmental Law, (b) any oil, petroleum, petroleum product or
petroleum derived substance, any flammable substances or explosives, any
radioactive materials, (c) asbestos and asbestos containing materials in any
form which is or could become friable, and (d) radon gas, urea formaldehyde,
lead-based paint, dielectric fluid, and polychlorinated biphenyl's.
"Income Taxes" means Taxes in the nature of any federal, state, local
or foreign income or franchise taxes, including interest, penalties and
additions to tax with respect thereto.
"Indebtedness" means, with respect to Xxx, (a) all indebtedness of such
party for borrowed money, whether current or funded, secured or unsecured, (b)
all indebtedness of such party for the deferred purchase price of any assets or
services, (c) all indebtedness of such party created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such party (even though the rights and remedies of such party or
lender under such agreement in the event of a default may be limited to
repossession or sale of such property), (d) all indebtedness of such party
secured by a purchase money mortgage or other lien to secure all or part of the
purchase price of property subject to such mortgage or lien, (e) all obligations
of such party under leases which shall have been or must be, in accordance with
generally accepted accounting principles, recorded as capital leases in respect
42
43
of which such party is liable as lessee, (f) any liability of such party in
respect of banker's acceptances or letters of credit, (g) any indebtedness,
whether or not assumed by such party, secured by liens on property acquired by
such party at the time of acquisition thereof and (h) all guaranties by such
party of the obligations, indebtedness or liabilities of any other Person or
which such party has agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which it has otherwise assured a creditor against loss.
"Intangible Property" means solely in connection with the
Business: (i) the Copyrights; (ii) the Trademarks; (iii) the Trade Secrets; and
(iv) all goodwill, if any, associated therewith.
"Knowledge of Xxx" or "Xxx'x Knowledge" (or words of similar import)
means the actual knowledge of any of the officers or directors of Xxx or the
employee at each respective Newspaper who is the highest ranking manager at such
Newspaper.
"Knowledge of Liberty" or "Liberty's Knowledge" (or words of similar
import) means the actual knowledge of any of the officers or directors of
Liberty.
"Xxx Disclosure Letter" means the disclosure letter, dated the date of
the Agreement (or if accepted by Liberty, the Closing), delivered to Liberty.
"Xxx Material Adverse Effect" means any material adverse changes in, or
material adverse effect on, (i) the operations, results of operations or
condition (financial or otherwise) of Xxx or the Business or (ii) the Acquired
Assets taken as a whole; provided, however, no change or effect shall be
considered a "Xxx Material Adverse Effect" if (a) such change or effect is
caused primarily by, and is of similar magnitude to, changes in the newspaper
industry generally; (b) such change or effect is substantially the result of
circumstances that are not likely to recur and have been substantially remedied
and any material reduction in the revenues of the Business attributable to such
change or effect has been restored; or (c) such change or effect is related to
the announcement of the transactions contemplated by this Agreement.
"Letter of Intent" or "LOI" shall have the meaning ascribed to such
term in Section 1.3(xii).
"Legal Expenses" shall have the meaning ascribed to such term in
Section 8.2(a).
"Legal Requirements" means all governmental statutes, ordinances, codes
and regulations.
"Liberty Disclosure Letter" means the disclosure letter, dated the date
of the Agreement (or if accepted by Xxx, the Closing), delivered to Xxx.
"Lien" means any lien (including any Tax lien), mortgage, security
interest, claim, charge, defect in title or other encumbrance.
43
44
"Losses" means all losses, damages, liabilities and claims, and fees,
costs and expenses of any kind related thereto.
"Motor Vehicles" means all motor vehicles owned by Xxx and used solely
in the operation of the Business, including those listed in Section 1.2(b)(i) of
the Xxx Disclosure Letter.
"Net Working Capital" means an amount equal to current assets included
within the Acquired Assets, minus current liabilities included within the
Assumed Liabilities, in each case calculated in accordance with GAAP and past
practice and applied on a basis consistent with the Balance Sheet, including the
exceptions to GAAP listed in Part A of Section 4.6 of the Xxx Disclosure Letter,
except for purposes of determining Net Working Capital:
(a) newsprint inventory shall be valued at $600 per metric ton without
the inclusion of any additional costs or fees;
(b) prepaid insurance and other prepaid expenses, to the extent Liberty
will not receive a dollar for dollar monetary benefit after the Closing Date,
will not be included;
(c) accounts receivable that are not collected on or prior to the 90th
day after the Closing Date will not be included;
(d) current liabilities shall include an accrual for the vacation pay
liability assumed by Liberty pursuant to Section 10.1; and
(e) current liabilities shall include deferred subscription revenue.
"Newspapers" shall have the meaning ascribed to such term in the
Background Statement.
"Permitted Liens" means (i) Liens for Taxes not yet due and payable,
that are payable without penalty or that are being contested in good faith and
for which adequate reserves have been taken, (ii) Liens arising or resulting
from any action taken by Liberty or any of its Affiliates, (iii) Liens created
by, arising out of or specifically contemplated by the Agreement, (iv) Liens
identified as Permitted Liens in the Xxx Disclosure Letter, (v) materialmen's,
mechanics', workmen's, repairmen's, employees' or other similar Liens arising in
the course of construction or in the ordinary course of operations or
maintenance in each such case securing obligations which are not delinquent or
are being contested in good faith and for which adequate reserves have been
taken or securing obligations which are bonded in a reasonable manner, (vi)
zoning restrictions, easements, licenses or other restrictions on the use of
real property or other minor irregularities in title thereto, so long as the
same do not, individually or in the aggregate, materially interfere with or
impair the use of such real property in the manner normally used, and (vii)
Liens arising out of judgments or awards with respect to which at the time an
appeal or proceeding for review is being prosecuted in good faith if adequate
reserves with respect thereto have been established and are being maintained
44
45
and with respect to which there shall have been secured a stay of execution
pending such appeal or proceeding for review.
"Person" includes any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or association,
government or any agency or political subdivision thereof.
"Real Property" means Xxx'x fee simple, leasehold or other interest in
the real property listed in Section 1.2 (x) of the Xxx Disclosure Letter and all
buildings, improvements and fixtures thereon, together with all strips and
gores, rights of way, easements, privileges and appurtenances pertaining
thereto, including any right, title and interest of Xxx in and to any street
adjoining any portion of the Real Property.
"Records" means files and records, including schematics, technical
information and engineering data, programming information, correspondence, books
of account, employment records, customer files, purchase and sales records an
correspondence, advertising records, files and literature, and other written
materials of Xxx relating solely to the Acquired Assets, or the Business, other
than duplicates of such files and records retained by Xxx; provided, however,
that Records shall not mean or include the corporate minute books and stock
records of Xxx and any shares of capital stock of Xxx nor shall they include any
communications that do not relate solely to the Acquired Assets or the Business
that are currently protected from disclosure by Xxx by virtue of the
attorney-client privilege.
"Subsidiary" means, with respect to any Person, any other corporation,
partnership, joint venture, association or other entity in respect of which such
Person directly, or indirectly through one or more other Subsidiaries, both (i)
owns not less than a majority of the overall economic equity and (ii) has the
power to elect a majority of the board of directors (or individuals serving a
function similar to that of a board of directors of a corporation).
"Taxes" means any federal, state, local or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, real property or other capital gains, registration, value added,
excise, natural resources, severance, stamp, occupation, windfall profits,
environmental (under Section 59A of the Code), customs duties, real property,
personal property, capital stock, social security (or similar), unemployment,
disability, payroll, license, employee or other withholding, or other tax, of
any kind whatsoever, including any interest, penalties or additions to tax or
similar items in respect of the foregoing (whether disputed or not).
"Third Party Claim" shall have the meaning ascribed to such term in
Section 8.2(d).
"Trade Secrets" means all formulae, processes, procedures, designs,
ideas, research records, inventions, records of inventions, test information,
technical information, marketing know-how, proprietary information, know-how,
and trade secrets (and all related manuals, books, files, journals, models,
instructions, patterns, drawings, blueprints, plans, designs
45
46
specifications, equipment lists, parts lists, descriptions, data, art work,
software, computer programs and source code data related thereto including all
current and historical data bases) owned, used or held for use by Xxx solely in
connection with the Newspapers or the Business.
"Trademarks" means, all of those trade names, trademarks, service
marks, slogans, logos, trademark and service xxxx registrations and trademark
and service xxxx applications owned, used, held for use, licensed by or leased
by Xxx solely in connection with the Newspapers or the Business, but including
those items described in Part B of Section 4.16(b) of the Xxx Disclosure Letter.
46
47
SCHEDULE 1.3(b)(xiv)
Aledo
XxXxxxxxx $ 1,716.30
Berenger $ 845.37
Xxxxxx $ 401.77
Xxxxxxx $ 653.68
Polk $ 1,312.29
47
