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ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 31, 2000
BETWEEN
MID-ILLINOIS NEWSPAPERS, INC.,
AS THE COMPANY
AND
LIBERTY GROUP ILLINOIS HOLDINGS, INC.
AS THE BUYER
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of October 31,
2000, is by and between Mid-Illinois Newspapers, Inc., an Illinois corporation
(the "Company"), and Liberty Group Illinois Holdings, Inc., a Delaware
corporation (the "Buyer").
RECITALS
A. The Company is engaged in the business of publishing, marketing and
distributing the Pekin Daily Times, a daily newspaper in Pekin, Illinois, and
The Review, a weekly total market coverage publication distributed to all
non-subscribers to the Pekin Daily Times, in the Pekin, Illinois area (each
individually a "Publication" and collectively, the "Publications"). Such
business is referred to herein as the "Business".
B. The Buyer desires to purchase from the Company, and the Company
desires to sell, transfer, assign and convey to the Buyer, the assets of the
Company used or held for use in connection with the operation of the Business,
for the consideration, upon the terms and subject to conditions set forth in
this Agreement.
AGREEMENT
In consideration of the premises and the respective representations,
warranties and covenants of the Buyer and the Company set forth below and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. PURCHASE AND SALE OF THE ASSETS.
1.1. Assets to be Sold. Subject to compliance with all the terms and
conditions of this Agreement and in reliance on the representations and
warranties set forth in this Agreement, the Company agrees to sell, convey,
assign, transfer and deliver to the Buyer, and the Buyer agrees to purchase from
the Company, for the consideration hereinafter set forth, all of the Company's
right, title and interest in and to all of the assets of the Company used or
held for use in connection with the operation of the Business, whether tangible,
intangible, real, personal or mixed, including, but not limited to, the
Company's rights under all Contractual Obligations (as hereinafter defined)
other than the Excluded Contracts (as hereinafter defined), the Real Estate (as
hereinafter defined) located in Pekin, Illinois, the machinery, equipment,
inventory and supplies listed on Schedule 1.1 attached hereto and the
proprietary rights, licenses, permits, business and technical records (including
proprietary and other records) of the Company used or held for use in connection
with or related to the operation of the Business (other than the employment and
personnel records of employees engaged in the Business who (i) are not hired by
the Buyer or (ii) are hired by the Buyer but from whom neither the Company nor
the Buyer has obtained, or does thereafter obtain, written releases or consents
regarding the release or transfer thereof to the
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Buyer) and the Company's right, title and interest in and to the names "Pekin
Daily Times" and "The Review" and all derivations thereof (collectively, the
"Assets").
1.2. Consideration. Subject to adjustment as provided in Section 1.4
hereof, as consideration for the Assets, the Buyer shall pay to the Company
$9,000,000 (the "Initial Purchase Price") and assume on the Closing Date and
thereafter satisfy and discharge the Assumed Liabilities. For purposes hereof,
the term "Assumed Liabilities" shall mean (a) Current Liabilities (as
hereinafter defined) to the extent and in the amounts set forth on the Closing
Balance Sheet (as hereinafter defined), and (b) all payment and performance
obligations arising after the Closing Date (other than obligations arising from
breaches or defaults occurring prior to the Closing Date and obligations under
any Plan of the Company) under any Contractual Obligations that relate
exclusively to the Business (other than Excluded Contracts). Notwithstanding the
foregoing, the term "Assumed Liabilities" does not include (i) any Environmental
Liabilities, (ii) any Liabilities (as hereinafter defined) for income Taxes (as
hereinafter defined), (iii) any Liabilities for other Taxes (except to the
extent of the accruals for such Taxes reflected on the Closing Balance Sheet as
Current Liabilities) for any period, or portion thereof, on or prior to the
Closing Date, or arising from the transactions contemplated by this Agreement,
(iv) any Liabilities arising in tort, arising out of or based upon any state,
federal or local statutory cause of action, (v) any Liabilities relating to or
arising in respect of (A) any breach of, default under or noncompliance with any
Contractual Obligation or (B) any Excluded Contract, (vi) notwithstanding any
applicable law, statute or Code (including, but not limited to any provision of
ERISA) to the contrary, any Liabilities with respect to any Plan (as defined
herein), (vii) any Liabilities relating to the payment of severance or other
amounts, or the provision of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA") or disability benefits, to current or former
employees of the Company, (viii) any Liabilities relating to or arising out of
or with respect to any trade accounts payable, current liabilities, accrued
liabilities or other accounts payable or other Trade Debt (as hereinafter
defined) owed by the Company to any shareholder of the Company or any of its
affiliates, (ix) any Liabilities with respect to Indebtedness, (x) any
Liabilities under any real property lease of the Company or otherwise which
relates to Real Estate included in the Assets or arising from, out of or in
connection with the pre-Closing operations of the Company or the Business or any
conditions existing as of or events occurring prior to the Closing or (xi) any
Liabilities under or relating to any Excluded Asset (as hereinafter defined).
Without limiting the generality of the foregoing, the Buyer shall not assume, or
be liable or responsible for, any liabilities, obligations or commitments of the
Company, other than the Assumed Liabilities.
1.3. Adjustment to Purchase Price. In determining the purchase price to be
paid to the Company by the Buyer for the Assets, the parties have assumed that
the Net Working Capital (as hereinafter defined) would be zero. Accordingly, the
Purchase Price shall be subject to adjustment after the Closing as specified in
this Section 1.3.
(a) As promptly as practicable after the Closing Date, and in any event on
or before the expiration of ninety (90) days from the Closing Date, the Company
shall prepare or cause to be prepared, and shall furnish to the Buyer, a balance
sheet of the Business (the "Closing Balance
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Sheet") as of 11:59 p.m. (Central Standard time) on the day prior to the Closing
Date (the "Price Determination Time"). Except as set forth in paragraph (d) of
this Section 1.3, the Closing Balance Sheet shall be prepared in a manner
consistent with the preparation of the April Balance Sheet (as hereinafter
defined), as the April Balance Sheet is adjusted to reflect the adjustments
necessary to conform the April Balance Sheet to the accrual method of
accounting, after giving effect to the transactions contemplated by this
Agreement to occur on or prior to the Closing Date but prior to the application
of purchase accounting to reflect the acquisition of the Assets pursuant to this
Agreement. The Company shall also prepare (or cause to be prepared) and furnish
to the Buyer not later than the date by which the Closing Balance Sheet is
required to be delivered, a written statement based upon the Closing Balance
Sheet reflecting only those assets and liabilities of the Company as of the
Price Determination Time which are required to be included in the determination
of the Net Working Capital in accordance with this Section 1.3 and calculating
the Net Working Capital (collectively the "Statement"). The Buyer and the
Buyer's accountants shall have access during normal business hours to all
documents, records, work papers, facilities and personnel reasonably necessary
to review the Closing Balance Sheet and the Statement.
(b) If the Net Working Capital (as hereinafter defined) is less than zero,
the Company shall pay to the Buyer (by wire transfer of immediately available
funds to the account or accounts designated by the Buyer), within two (2)
business days of the final determination of the Net Working Capital (the
"Settlement Date"), an amount equal to the Net Working Capital. If the Net
Working Capital is greater than zero, the Buyer shall pay to the Company (by
wire transfer of immediately available funds to the account or accounts
designated by the Company) on or prior to the Settlement Date an amount equal to
the Net Working Capital.
(c) If the Buyer disputes any of the elements or amounts reflected on the
Closing Balance Sheet or the Statement or the Company's determination of the Net
Working Capital (a "Dispute"), the Buyer shall give the Company written notice
of such Dispute within thirty (30) days of receipt of the Closing Balance Sheet,
the Statement and the Company's determination of the Net Working Capital. If,
after good faith negotiations, the Company and the Buyer are unable to resolve
the Dispute within thirty (30) days of the Buyer giving the Company notice of
the Dispute, the Buyer and the Company shall promptly submit the Dispute to
Arthur Andersen LLP or another independent public accountant selected by mutual
agreement of the Company and the Buyer (the "Independent Accountant") for
resolution. In connection with the resolution of any Dispute, the Independent
Accountant shall have reasonable access during normal business hours to all
documents, records, work papers, facilities and personnel of the parties
reasonably necessary to perform its functions hereunder. The Independent
Accountant's function shall be to review only those items set forth on the
Closing Balance Sheet, the Statement or the Company's calculation of the Net
Working Capital that are the subject of the Dispute. The decision of the
Independent Accountant shall be final and binding on the parties. The fees and
expenses of the Independent Accountant shall be shared equally by the Company
and the Buyer.
(d) For purposes of this Agreement, "Net Working Capital" means an amount
equal to the difference between (A) the sum of the aggregate book value of the
Current Assets as of the
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Price Determination Time and (B) the sum of the aggregate book value of the
Current Liabilities as of the Price Determination Time, all as determined in
accordance with this Section 1.3 and the Closing Balance Sheet. For such
purposes, (1) "Current Assets" means the following current assets of the Company
to the extent included in the Assets: (i) accounts receivable, including
classified and advertising receivables included in the Assets but only to the
extent that they are collected by the Buyer within ninety (90) days after the
Closing Date, (ii) inventory included in the Assets (which shall be valued for
such purposes at its current market value as of the Price Determination Time and
which shall consist for these purposes solely of newsprint, ink, plates, and
film, and (iii) prepaid expenses (other than prepaid insurance) and deposits
included in the Assets, but the following assets shall not be included in
Current Assets: (A) the Excluded Assets, (B) all deferred income tax benefits or
similar assets, and (C) receivables from any shareholder of the Company or any
of the Company's affiliates and (2) "Current Liabilities" means the current
liabilities of the Company incurred in connection with the operation of the
Business and set forth on the Closing Balance Sheet including, but not limited
to, (i) all accounts and notes payable and expenses accrued or required to be
accrued in accordance with the accrual method of accounting, including, without
limitation, the following (whether or not required to be accrued in accordance
with the accrual method of accounting: an accrual with respect to rent,
utilities, sick pay, wages, commissions, real property Taxes (with respect to
such real property Taxes for any real property based upon 110% of the most
recent ascertainable real property Taxes for such real property) and withholding
Taxes and (ii) unearned subscription and advertising income.
(e) For purposes of this Agreement, "Indebtedness" shall mean (i) any
indebtedness of the Company for borrowed money, whether current or funded,
secured or unsecured, (ii) any indebtedness of the Company for the deferred
purchase price of any assets or services (other than trade payables and accruals
incurred in the ordinary course of business consistent with past practice),
(iii) any indebtedness of the Company created or arising under any conditional
sale or other title retention agreement with respect to property acquired by the
Company (even though the rights and remedies of the seller or lender under such
agreement in the event of a default may be limited to repossession or sale of
such property), (iv) any indebtedness of the Company secured by a purchase money
mortgage, lien or other encumbrance to secure all or part of the purchase price
of property subject to such mortgage, lien or other encumbrance, (v) any
obligations under leases which shall have been or must be, in accordance with
GAAP, recorded as capital leases in respect of which the Company is liable as
lessee, (vi) any liability of the Company in respect of banker's acceptances or
letters of credit (contingent or otherwise), (vii) any indebtedness, whether or
not assumed, secured by mortgages, liens or other encumbrances on property
acquired by the Company at the time of acquisition thereof, or (viii) any
indebtedness referred to in clause (i), (ii), (iii), (iv), (v), (vi) or (vii),
above which is directly or indirectly guaranteed by the Company or which it has
agreed (contingently or otherwise) to purchase or otherwise acquire or in
respect of which it has otherwise assured a creditor against loss.
1.4. Excluded Assets. Notwithstanding Section 1.1, the term "Assets" shall
not include the Excluded Assets (as hereinafter defined). The Company shall not
sell, but shall retain its
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right, title and interest in and to, the Excluded Assets. For purposes of this
Agreement, "Excluded Assets" means the following assets of the Company:
(i) cash and cash equivalents;
(ii) the Company's existence, articles of incorporation and other
corporate records;
(iii) the Contractual Obligations listed on Schedule 1.4(iii) and any
Contractual Obligations between the Company and any affiliate
of the Company (collectively, the "Excluded Contracts");
(iv) the Company's rights under this Agreement;
(v) all tangible assets of the Company which are not used or held
for use in connection with the operation of the Business;
(vi) all intangible assets of the Company which are not used or held
for use in connection with the operation of the Business;
(vii) the employment and personnel records of any employees listed in
Schedule 2.17 who (i) are not hired by the Buyer or (ii) who
are hired by the Buyer but from whom neither the Company nor
the Buyer has obtained, or does thereafter obtain, written
releases or consents regarding the release or transfer thereof
to the Buyer; and
(viii) those assets described on Schedule 1.4(viii).
1.5. The Closing. The closing (the "Closing") shall be held by mail and/or
telephonically at the offices of Katten Muchin Zavis, 525 W. Monroe, Chicago,
Illinois, at 10:00 a.m. (Central Standard Time) on November 1, 2000 or on such
other date and at such place as the Buyer and the Company may agree upon in
writing (the "Closing Date"). With respect to the Owned Real Estate (as
hereinafter defined), the Closing shall be effected through an escrow closing in
accordance with the terms of this Section 1.5 in order to have the Buyer's title
to the Owned Real Estate insured at, and contemporaneously with, the Closing
without a "gap" in coverage from the time of the Closing until the time of
recording of the deeds with respect to the Owned Real Estate. The closing escrow
shall be established with and administered by First American Title Insurance
Company (the "Title Insurance Company") on the Closing Date. The closing escrow
shall be established and administered pursuant to written escrow instructions in
the form of Exhibit A attached hereto (the "Escrow Instructions"). This
Agreement shall not be merged into or otherwise modified by said Escrow
Instructions. On the Closing Date, the Initial Purchase Price will be paid to
the Company (by wire transfer of immediately available funds to the account
designated by the Company.
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1.6. Allocation of the Purchase Price. The consideration for the Assets set
forth in Section 1.2, as adjusted pursuant to Section 1.3, shall be allocated
among the Assets in accordance with Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code"), and as set forth on Schedule 1.6 attached hereto.
The parties agree to make all filings required under Section 1060 of the Code
consistent with the allocation of such consideration so agreed upon.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Buyer that:
2.1. Due Authorization and Existence. The Company has the requisite power
and authority to enter into, execute, deliver and perform this Agreement and the
Noncompetition Agreement (collectively, the "Transaction Documents"), and to
consummate all transactions contemplated hereby and thereby, and has taken all
action required to authorize such execution, delivery and performance. Each of
the Transaction Documents to which the Company is a party is a valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, moratorium, reorganization
and similar laws of general applicability affecting the rights and remedies of
creditors and to general principles of equity, regardless of whether enforcement
is sought in proceedings in equity or at law.
2.2. Corporate Organization and Good Standing of the Company. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Illinois. The Company has full requisite power and
authority to carry on the Business and to own and use the properties owned and
used by it in connection with the operation of Business. The Company is duly
qualified to do business in and is in good standing under the laws of the State
of Illinois. All necessary action on the part of the Company required for the
execution, delivery and performance of this Agreement and the other Transaction
Documents and the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents, has been taken. The principal
place of business of the Company is at 100 Broadway, Mattoon, Illinois 61938,
and the books and records of the Company related to the Business are kept at
such office. The books and records of the Company related to the Business, as
made available to the Buyer and its representatives, are accurate and complete
in all material respects.
2.3. No Violation or Approval. The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not result in a breach or
violation of, or a default under, the articles of incorporation or bylaws of the
Company, any statute applicable to the Company or any agreement to which the
Company is a party or by which the Company or any of the Assets are bound, any
fiduciary duty or any order, judgment, decree, rule or regulation of any court
or any governmental agency or body having jurisdiction over the Company or the
Assets. No consent, approval, order or authorization of, or negotiation,
declaration or filing with, any governmental authority or entity or other party
is required of the Company in connection with the execution,
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delivery and performance of this Agreement and the other Transaction Documents
or the consummation of any of the transactions contemplated hereby or thereby.
2.4. Financial Statements. (a) The Company has furnished the Buyer with
copies of the following financial statements: (i) unaudited financial statements
of the Company for the year ended April 30, 2000 consisting of a balance sheet
as of such date and operating statements prepared for internal use for the year
ended on such date (the "April Company Financial Statements"), (ii) the
unaudited financial statements of the Business for the year ended April 30, 2000
consisting of a balance sheet of the Business as of April 30, 2000 (the "April
Balance Sheet") and operating statements prepared for internal use for the year
ended on such date (together with the April Balance Sheet, the "April Financial
Statements"), (iii) the unaudited financial statements of the Company for the
five months ended September 30, 2000 consisting of a balance sheet as of such
date and operating statements prepared for internal use for the five-month
period ended on such date (the "September Company Financial Statements;"
together with the April Company Financial Statements, the "Company Financial
Statements"), and (iv) the unaudited financial statements of the Business for
the five months ended September 30, 2000 consisting of a balance sheet as of
such date (the "September Balance Sheet") and operating statements prepared for
internal use for the five-month period ended on such date (together with the
September Balance Sheet, the "September Financial Statements").
(b) The April Financial Statements and the September Financial Statements
present fairly the financial condition of the Business as of their respective
dates and the results of operations for the periods referred to therein and were
prepared on a basis consistent from period to period in accordance with the cash
method of accounting, and all necessary adjustments to conform such Financial
Statements to the accrual method of accounting are set forth on such Financial
Statements. Set forth on Schedule 2.4(b) is an accurate and complete description
of the adjustments to the April Financial Statements and the September Financial
Statements that would be necessary for such Financial Statements to comply with
United States generally accepted accounting principles, consistently applied
("GAAP"). The accounts receivable included in the Assets represent bonafide
receivables that will be collected by the Buyer within ninety (90) days of the
Closing Date. The Company Financial Statements present fairly the financial
condition of the Company as of their respective dates and the results of
operations for the periods referred to therein and were prepared on a basis
consistent from period to period in accordance with the cash method of
accounting, with all necessary adjustments to conform to the accrual method of
accounting.
2.5. Liabilities; Absence of Changes; Operations in Ordinary Course.
2.5.1. Except as set forth on Schedule 2.5.1 and except for Permitted
Liabilities (as hereinafter defined), the Company does not have any
Liabilities related to, or arising out of or in connection with the
operation of, the Business. For purposes of this Agreement, (i) "Liability"
or "Liabilities" means any, direct or indirect, Indebtedness, liability,
claim or obligation, fixed or unfixed, matured or unmatured, known or
unknown,
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asserted or unasserted, liquidated or unliquidated, secured or unsecured,
contingent or otherwise, including but not limited to Environmental
Liabilities and Liabilities for Taxes (as hereinafter defined), (ii)
"Permitted Liabilities" means (A) trade accounts payable and accruals of
expenses of the Company arising exclusively out of or in connection with
the operation of the Business (other than Liabilities with respect to
income Taxes) and reflected on the September Balance Sheet or arising in
the ordinary course of the Business in accordance with past practices since
September 30, 2000 ("Trade Debt"), and (B) Liabilities of the Company
arising after the Closing under or with respect to the executory portion of
the Contractual Obligations (as hereinafter defined) (other than
Liabilities relating to breaches or defaults by the Company under, or with
respect to, any such Contractual Obligations prior to the Closing), (iii)
"Tax" or "Taxes" shall mean any income, corporation, gross receipts,
profits, gains, capital stock, duty, franchise, withholding, social
security (including any social security charge or premium), unemployment,
disability, property, wealth, welfare, stamp, excise, occupation, sales,
use, transfer, value added, alternative minimum, estimated or other tax
(including any fee, assessment or other charge in the nature of or in lieu
of any tax) imposed by any governmental entity (whether national, local,
municipal or otherwise) or political subdivision thereof, and any interest,
penalties, additions to tax or additional amounts in respect of the
foregoing, and including any transferee or secondary Liability in respect
of any tax (whether by applicable tax law, contractual agreement or
otherwise) and any Liability in respect of any tax as a result of being a
member of any affiliated, consolidated, combined, unitary or similar group,
and (iv) "Environmental Liabilities" shall mean (x) Liabilities and
obligations, under any federal, state, local and foreign statutes (civil
and criminal), laws, ordinances, regulations, rules, notices, permits,
judgments, orders and decrees and the common law applicable to the Business
or the Company or any of its properties, assets, operations and businesses
relating to the protection of the environment or contamination of any type
whatsoever, including but not limited to, contamination resulting from
Hazardous Substances (as hereinafter defined) (collectively, "Environmental
Laws"), including, without limitation, Environmental Laws relating to air,
water, land and the generation, storage, use, handling, transportation,
treatment or disposal of Hazardous Substances and (y) any other Liabilities
arising out of or in connection with or relating to Hazardous Substances or
relating to the protection of the environment generally. All Trade Debt
outstanding as of the Closing shall be included as Current Liabilities on
the Closing Balance Sheet.
2.5.2. Except as set forth on Schedule 2.5.2, since May 1, 2000, none
of the tangible Assets has undergone any adverse change in its condition or
suffered any damage, destruction or loss (whether or not covered by
insurance), except for inventory consumed in the ordinary course of
business. Since May 1, 2000, the Business has been conducted in the
ordinary course, in accordance with past practices, and there has been no
(a) material adverse change in the Business or its condition (financial or
otherwise), assets, operations or prospects, or (b) event or condition
which, directly or indirectly, individually or collectively, could
reasonably be expected to have such an effect.
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2.5.3. Since May 1, 2000, except as expressly contemplated by this
Agreement, the Company has not: (i) increased the compensation of any of
the officers of the Company or employees of the Business other than in the
ordinary course of the Business consistent with past practices; (ii)
incurred any Indebtedness in connection with the operation of the Business
not paid or discharged in full at or prior to the Closing; (iii) entered
into or performed any contract, agreement, deed, mortgage, lease, license,
other instrument, commitment, undertaking, arrangement or understanding, or
other transaction in connection with the Business, not in the ordinary
course of the Business and consistent with past practices; (iv) made any
loan or advance of funds or assets of the Business of any kind to, or
forgiven any loan or advance relating to the Business to, any person,
entity or business organization, other than in the ordinary course of
business consistent with past practices; (v) made any distribution of fixed
assets of the Business to any person, entity or business organization; (vi)
made or authorized any individual capital expenditure relating to the
Business in excess of $10,000 or made or authorized capital expenditures
relating to the Business of more than $100,000 in the aggregate; (vii)
sold, transferred or otherwise disposed of assets or properties, real,
personal, tangible or intangible, or mixed relating to the Business, having
a value in excess of $10,000 in the aggregate, other than newspapers sold,
or inventory used or consumed, in the ordinary course of business
consistent with past practices; (viii) made any change in or revoked any
tax election or any agreement or settlement relating to the Business with
any taxing authority; (x) paid, discharged or satisfied any Liability
relating to or arising in connection with the Business, other than the
payment, discharge, or satisfaction of Liabilities in the ordinary course
of business, (xi) made any change in any method of accounting or keeping of
books of account or accounting practices or principles relating to the
Business; (xii) paid any amounts to obtain the consents or approvals
required by this Agreement or the transactions contemplated hereby; (xiii)
paid any Taxes relating to the Business, except in the ordinary course of
business consistent with past practices; or (xiv) entered into any
agreement, whether oral or written, to do any of the foregoing.
2.6. Taxes. The Company has duly filed on a timely basis all Tax returns
that are required to be filed in respect of the Company or any of the Plans (as
hereinafter defined), and all such Tax returns were true, accurate and complete
in all respects. The Company has paid all Tax Liabilities of the Company
(including interest and penalties) that have become due. The Company has paid as
of the date hereof, and will have paid as of the Closing Date, all required
withholding Taxes due on or prior to the date hereof and the Closing Date,
respectively, with respect to current or former employees, independent
contractors, creditors, shareholders, or other third parties.
2.7. Title to Assets. The Company has good and marketable title to all of
the assets used or held for use in connection with the operation of the Business
that are reflected in the September Balance Sheet as owned by it (other than
assets disposed of or consumed since September 30, 2000 in the ordinary course
of business or as permitted by this Agreement) or acquired by the Company since
September 30, 2000, including, but not limited to, title to or unfettered right
to the use of
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the mastheads, trade names, trademarks, service marks and other marks, names and
proprietary rights set forth on Schedule 2.7 hereto, free and clear of any and
all liens, claims, charges, encumbrances, security interests or other rights of
any other persons and entities (collectively, "Liens"). No claim has been
asserted by any person or entity to prevent or in any way limit the use by the
Company of any of the Assets or challenging the validity or effectiveness of the
Company's ownership thereof and the Company is not aware of any such claims.
Other than assumed business name filings filed with the Secretary of State of
the State of Illinois, the Company has not registered the mastheads, trade
names, trademarks, service marks or other marks and names the Company uses in
connection with the operation of the Business. None of the Company's rights in
the Assets arises pursuant to contract rights (i) that by their terms are not
assignable without the consent of the other contracting party or parties, (ii)
that may be terminated by the other party thereto as a result of the
consummation of the transactions contemplated hereby or (iii) in respect of
which the consummation of the transactions contemplated hereby would create a
default. The Assets include all assets necessary to conduct the Business as
presently conducted by the Company. Without limiting the generality of the
foregoing, except as indicated on Schedule 2.7, the Company uses no furniture,
fixtures or equipment in connection with the operation of the Business which it
does not own. Except as disclosed on Schedule 2.7, no affiliate of the Company
owns, leases, uses or possesses any property or assets, whether real or
personal, tangible or intangible which are used or held for use by the Company
in connection with the operation of the Business.
2.8. Real Estate. (a) (i) Schedule 2.8(a)(i) lists all real property and
improvements owned by the Company and used or held for use in connection with
the Business (the "Owned Real Estate"). The Company has good and clear record
and marketable fee simple title to the Owned Real Estate, free and clear of any
pledge, Lien, security interest, mortgage, deed of trust, right, restriction,
easement, lease, encumbrance, claim of equitable interest (collectively
"Encumbrances"), other than the Encumbrances set forth on Schedule 2.8(a)(ii)
attached hereto ("Permitted Exceptions").
(b) Schedule 2.8(b) lists all other real property used or held for use by
the Company in connection with the Business, all of which is leased by the
Company from third parties, and indicates with respect to each such parcel of
real property, the owner thereof (the "Leased Real Estate"; the Owned Real
Estate and the Leased Real Estate are collectively referred to herein as the
"Real Estate"). Accurate and complete copies of all existing lease agreements
with respect to the Leased Real Estate have heretofore been delivered to the
Buyer. The Company has not exercised any option to purchase any parcel of Leased
Real Estate.
(c) The Real Estate is in compliance with the terms of the instruments
that constitute the Permitted Exceptions. None of the Permitted Exceptions
interferes with the Company's current use or operations at or on the Real
Estate. Except as set forth in Schedule 2.8(c), to the Company's knowledge, all
buildings located on the Real Estate are in compliance with all applicable
statutes, ordinances, rules and regulations, federal, state and local
(including, but not limited to, applicable zoning and other land use
restrictions) ("Legal Requirements"). There has
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been no construction on the Real Estate within the six (6) months prior to the
date hereof. No work for municipal improvements has been commenced on or in
connection with any of the Real Estate or any street adjacent thereto. No notice
from any county, township or other governmental body has been received by the
Company or has been served upon the Real Estate requiring or calling attention
to the need for any work, repair, construction, alteration or installation on or
in connection with the Real Estate. No notice has been received by the Company
or has been served upon the Real Estate stating that, and the Company has no
knowledge that, the buildings on the Real Estate, or the business presently
conducted thereon by the Company, are not in compliance with any applicable
Legal Requirements.
2.9. Operating Condition and Repair. The tangible Assets, including, but
not limited to, the Owned Real Estate, comprise all of the tangible assets that
the Company has used in connection with the operation of the Business and such
assets have been sufficient for the Company to operate the Business in
accordance with past practices. Except as set forth in this Agreement, the
Company makes no representations or warranties with respect to the condition or
fitness for use or purpose of the tangible Assets, or any of them, including,
but not limited to, the Owned Real Estate.
2.10. Advertisers; Subscribers; Circulation. The Company has no knowledge
that any person or entity that currently purchases advertising space on a
regular basis from either Publication intends to reduce such purchases or that
any existing or potential competitor intends to take any action with respect to
any market in which either Publication is sold or distributed (including, but
not limited to, the publication and marketing of a new newspaper or expanded
circulation into the geographic area served by either Publication or the
alteration of the format, schedule, advertising rates, subscription price,
distribution methods or practices or marketing efforts of an existing
newspaper). The Company has furnished to the Buyer (i) the total paid
circulation and the total unpaid circulation for each Publication as of April
30, 2000 and as of September 30, 2000, (ii) a list of the 10 businesses or
entities that generated the greatest amount of advertising revenues for each
Publication during the period from May 1, 1999 through April 30, 2000 and during
the period from May 1, 2000 through September 30, 2000, (iii) a list of all
advertisements published in each Publication during the period from May 1, 1999
through April 30, 2000 and during the period from May 1, 2000 through September
30, 2000 in exchange for goods or services, as opposed to cash payment, (iv) a
schedule of all sales during the period from May 1, 2000 through September 30,
2000 of, commitments during such period to sell, or representations during such
period that it will sell, advertising space in either Publication to any party
at a rate below the published rate for the type of advertising sold or to be
sold, (v) an accounts receivable aging as of September 30, 2000 of the Business,
and (vi) a description of any circulation drives, including, but not limited to,
any discounting or other promotional programs relating to the Business,
occurring in the period from May 1, 2000 through September 30, 2000. All of the
information specified in subsection (i) of the preceding sentence as furnished
to the Buyer is true, correct and complete in all respects and all of the
information specified in subsections (ii) through (vi) of the preceding sentence
as furnished to the Buyer is true, correct and complete in all material
respects. To the Company's knowledge, the Company has met and
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fulfilled all qualification standards and done all acts under any state or local
law, rule, regulation or ordinance with respect to requirements to publish legal
notices insofar as those requirements relate to the types of legal notices
heretofore published in the Publications. The Company has delivered to the Buyer
an accurate and complete copy of the current published rates for advertising in
each Publication. The average daily paid circulation for the Pekin Daily Times,
as determined for reporting to the Audit Bureau of Circulation, for each of the
twelve month period ended April 30, 2000 and the one month period ended
September 30, 2000 will equal or exceed 12,500.
2.11. Operations in Conformity With Law; Litigation. To the Company's
knowledge, the Company is not, and has not been, in violation of, or in default,
in any material respect, under, any law, statute, standard, ordinance, code,
order, rule, regulation, judgment or decree, whether heretofore or now in
effect, relating to the ownership or operation of the Business or the
Publication or the ownership or use of the Assets. Without limiting the
foregoing, to the Company's knowledge, each of the tangible Assets owned by the
Company, including, but not limited to, the Real Estate, is in compliance, in
all material respects, with all applicable Legal Requirements. Except to the
extent set forth on Schedule 2.11 hereto, to the Company's knowledge, there are
no pending or threatened claims, investigations, lawsuits, administrative
proceedings (including, but not limited to, with respect to harassment or
discrimination with respect to an employee, or with respect to libel or slander)
against the Company or any employee of the Company who performs services for or
in connection with the Business (in its capacity as such or as a result of
conduct during the course of employment) or any basis therefor.
2.12. Welfare and Benefit Plans. Schedule 2.12 is a list of all severance
pay, vacation, sick leave, medical, dental, life insurance, disability or other
welfare plans, savings, profit sharing or other retirement plans and all bonus
or other incentive plans, contracts, arrangements or practices maintained or
contributed to by the Company and in which any one or more of the current or
former employees of the Company (including beneficiaries of employees or former
employees) who perform or who performed services for or in connection with the
Business participates, is eligible to participate or has participated within the
immediately preceding six years (the "Plans"). Each of the Plans maintained by
the Company which is intended to be "qualified" within the meaning of section
401(a) of the Code and any trust maintained in connection with any of the Plans
which trust is exempt under section 501(a) of the Code (a) has been determined
by the IRS to be so qualified and exempt, as the case may be, and such
determinations have not been modified, revoked or limited and nothing has
occurred (or failed to occur) since the receipt of such determination letters
that would adversely affect any such Plan's qualification or any such trust's
exempt status or (b) is a prototype standardized plan with respect to which the
prototype plan sponsor has received an opinion letter from the IRS.
2.13. Labor Relations. Except as set forth on Schedule 2.13, the Company is
not a party to, bound by or operating under, any employment agreement,
collective bargaining agreement or other agreement with any union in connection
with the Business. To the Company's knowledge, there presently is no material
existing dispute or controversy between the Company and any of its employees who
perform services for or in connection with the Business. None of the Company's
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employees who perform services for or in connection with the Business is
represented by a labor union and there has not been any labor union organizing
activity by or among such employees. Neither the Company nor the Publication has
engaged in any unfair labor practice. There is no labor strike, slowdown,
stoppage, grievance or other labor difficulty pending or threatened against the
Company or the Publication (and the Company is not aware of any basis therefor).
2.14. Licenses. All material governmental or regulatory licenses and
permits necessary in connection with the Company's possession, use and operation
of the Real Estate and the other Assets or the operation of the Business are
held by the Company and are in full force and effect and are listed in Schedule
2.14, no uncured violations have occurred in respect thereof, and there are no
such potential violations, and no proceeding or investigation is pending or
threatened that could have the effect, directly or indirectly, of revoking or
limiting in any way any such licenses or permits, and neither the Company nor
the Publication is currently the subject of any audit to determine compliance
with any postal permits held in connection with the operation of the Business or
to any order or determination arising out of any completed audit and affecting
continued operations under such a permit. All reports filed with the United
States Postal Service in connection with any postal permits held in connection
with the operation of the Business were true and correct at the time such
reports were filed. The Company makes no representation that any such licenses
or permits may be assigned or assumed by the Buyer.
2.15. Proprietary Rights; Year 2000 Matters. (a) Schedule 2.15(a) lists all
trade names, trademarks, Internet domain names, patents, mastheads, service
marks and copyrights owned or used by the Company in connection with the
operation of the Business, together with the date of registration (if any) of
each such mark or copyright. The Company holds common law rights to use all
unregistered trademarks and copyrights used in connection with the operation of
the Business in the geographic areas in which they are currently used. No other
person uses or has used, in the geographic areas in which they are used by the
Company, the mastheads, trade names, trademarks, service marks and other marks,
names, copyrights and proprietary rights owned or used in connection with the
operation of the Business. The Company's rights to each of such trade names,
trademarks, mastheads, service marks and other marks, names, copyrights and
proprietary rights are held by it free and clear of all Liens, and no claims
have been asserted or are threatened by any person or entity to prevent or in
any way limit the use or exercise by the Company of any of such Assets or
challenging the validity or effectiveness of the ownership thereof by the
Company.
(b) To the knowledge of the Company, except as disclosed in Schedule
2.15(b), 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 Company in connection with the operation
of the Business, or the computer systems and other equipment containing embedded
microchips of the Company included in the Assets in either case owned or
operated by or used in the conduct of the Business (including any such systems
and other equipment supplied by others or with which the computer systems of the
Company interface), and the testing
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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
currently functions properly, without material errors or omissions.
2.16. Environmental Matters. Except as set forth on Schedule 2.16,
(a) The Company has complied and the Company and the Real Estate are in
compliance with all federal, state and local laws, ordinances, orders, rules
regulations, and moratoria relating to the operation and occupancy of the
Business and the Real Estate or any other real property previously leased or
owned by the Company in connection with the operation of the Business,
including, but not limited to, the Clean Air Act, as amended, the Federal Water
Pollution Control Act, as amended, the Safe Drinking Water Act, as amended, the
Resource Conservation and Recovery Act, as amended ("RCRA"), the Toxic
Substances Control Act, as amended, the Emergency Planning and Community
Right-To-Know Act of 1986, the Hazardous Material Transportation Act, as
amended, and the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, and all other applicable environmental laws.
(b) To its knowledge, the Company does not have any Liability under any
federal, state or local environmental laws or regulations, including any
liability, responsibility, or obligation for fines or penalties, or for
investigation, expense, removal, or remedial action to effect compliance with or
discharge any duty, obligation, or claim under any such laws or regulations in
connection with the operation of the Business. To the knowledge of the Company,
there is no reason to believe that any such claims, actions, suits, proceedings,
or investigations under such laws or regulations exist.
(c) There never has been any and is no past or continuing release or
threat of release of any hazardous or toxic substance, including, but not
limited to, a "hazardous substance" as defined in 42 U.S.C. ss.9601(14),
hazardous waste or other hazardous materials, oil, gasoline and other
petroleum-based substances, PCBs and asbestos and asbestos containing materials
(each, a "Hazardous Substance"), into the environment at, on or from the Real
Estate or any real property previously leased or owned by the Company and used
in connection with the Business.
(d) There have been no Hazardous Substances of, or generated by, the
Company that have been disposed of or come to rest at any site that has been
included in any published federal, state or local "Superfund" site list or any
other list of hazardous or toxic waste sites. There never have been any and are
no underground or above-ground storage tanks located on, no polychlorinated
biphenyls ("PCBs") or PCB-containing equipment used or stored on, and no
hazardous waste, as defined by the RCRA or comparable state or local laws,
stored on, the Real Estate or any other real property previously owned or leased
by the Company and used in connection with the Business.
(e) There is no Hazardous Substance or other condition or use of the Real
Estate or, during the Company's ownership or lease thereof, any other real
property previously leased or
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owned by the Company and used in connection with the Business or their
vicinities, whether natural or man-made, which poses a present or potential
threat of damage to the health of persons, to property, to natural resources, or
to the environment.
(f) Schedule 2.16 identifies all environmental audits or assessments
undertaken by or on behalf of the Company, or any third person, entity, business
organization or governmental agency with respect to the Real Estate or any other
real property previously owned, leased or used by the Company in connection with
the Business and the results of groundwater and soil testing, underground
storage tank tests, soil samples, and written communications with federal,
state, or local governments on environmental and Occupational Safety and Health
Act of 1970 matters relating thereto which are in the possession of, or
reasonably obtainable by, the Company, and the Company has heretofore provided
the Buyer with true, correct and complete copies of all such audits,
assessments, studies, results tests samples and communications.
2.17. Employees. Schedule 2.17 contains a true and complete list of the
names, full, part-time or temporary status, annual salary and any salary, bonus,
commission or other compensation arrangements, whether oral or written, of all
of the employees of the Company who perform services for or in connection with
the Business, as of the date hereof. Except as indicated on Schedule 2.17, each
of such employees is actively engaged in employment with the Company, as of the
date hereof, and is not currently receiving, and does not have pending any
filings, claims or applications in connection with, disability benefits or
workers' compensation with respect to their employment by the Company. Schedule
2.17 contains a true and complete list of names, titles, full, part-time, or
temporary status, of any employees of the Company hired after June 30, 2000 to
perform work related to the Business and the names of all whose employment with
the Company has terminated since June 30, 2000.
2.18. Contractual Obligations. Schedule 2.18 hereto contains a true and
complete list of all contracts, agreements, deeds, mortgages, leases, licenses,
instruments, commitments, undertakings, arrangements or understandings, written
or oral which require or are likely to require the payment by the Company of an
amount, or require the Company to provide goods or services having a fair market
value or aggregate sales price, of more than $5,000 per annum, to which or by
which the Company is a party or otherwise bound or to which or by which any of
the Assets is subject or bound that are currently in effect and relate to or
arise out of or in connection with the operation of the Business (collectively,
"Contractual Obligations") other than advertising contracts and subscription
agreements for the Publications entered into in the ordinary course of business
consistent with the Company's past practices), including but not limited to:
2.18.1. All outstanding offers of employment and all employment and
consulting agreements;
2.18.2. All Contractual Obligations (including, but not limited to,
options) to sell or lease (as lessor) any property or asset used in the
Business except newspapers in the ordinary course of business consistent
with past practice;
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2.18.3. All Contractual Obligations pursuant to which the Company
possesses or uses or has agreed to acquire (including, but not limited to,
leases) any properties or assets;
2.18.4. All other Contractual Obligations (including licenses)
pursuant to which the Company possesses or uses any computer software,
other than "off-the-shelf" personal computer software licensed pursuant to
"shrink wrap" licenses;
2.18.5. All Contractual Obligations with advertising customers of
the Publications, except advertising contracts entered into in the ordinary
course of business consistent with the Company's past practices;
2.18.6. All Contractual Obligations involving profit participation
features;
2.18.7. All Contractual Obligations that would be violated, or
pursuant to which a breach or default would occur, by the consummation of
the transactions contemplated hereby; and
2.18.8. All Contractual Obligations with suppliers or providers of
goods or services to the Company, including, but not limited to, purchase
orders, excluding any contract for the purchase of newsprint which will not
be assigned to the Buyer.
2.18.9. All Contractual Obligations for or relating to the borrowing
of money, extensions of credit or Indebtedness;
2.18.10. All Contractual Obligations involving or relating to
indemnification;
2.18.11. All Contractual Obligations limiting or restraining the
Company from engaging or competing in any lines of business or geographic
areas with any person, entity or business organization; and
2.18.12. All Contractual Obligations with, or for the benefit of, any
shareholder or any of its affiliates.
The Company has heretofore made available to the Buyer a true and complete copy
of each of the written Contractual Obligations and a written description of each
of the oral Contractual Obligations described above and in effect on the date
hereof, including, but not limited to, all amendments and supplements thereto
and all waivers thereunder. Neither the Company nor, to the Company's knowledge,
any other party is in material default under or in material breach or material
violation of, nor has an event occurred that (with or without notice, lapse of
time or both) would constitute a default by the Company or any other party under
any Contractual Obligation. The Company has a valid license for all computer
software (including all copies) possessed or used
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by it in connection with the Business, including, but not limited to,
"off-the-shelf" software, and the Company is in compliance with the terms of
each such license in all material respects.
2.19. Transactions with Affiliates. Except as set forth in Schedule 2.19
hereto, none of the officers, directors, members of management of the Company or
affiliates of any such persons or entities, and no member of the immediate
family of any such individuals, and no entity in which any such person or entity
owns any beneficial interest, is a party to any agreement, arrangement,
contract, commitment or transaction with the Company related to the Business or
has any interest in any property used by the Company in connection with the
Business.
2.20. Inventories. All of the inventory of the Company included in the
Assets is useful or saleable in the normal course of the Business.
2.21. Brokers and Finders. Except for Dirks, VanEssen & Murray, whose fee
will be payable solely by the Buyer, all negotiations relating to this Agreement
and the Noncompetition Agreement and the transactions contemplated hereby and
thereby have been carried on without the intervention of any person or entity
acting on behalf of the Company or any of its affiliates in such manner as to
give rise to any valid claim against the Buyer for any brokerage or finder's
commission, fee or similar compensation.
2.22. Insurance. Schedule 2.22 is a true, complete, and correct list of all
policies of insurance of which the Company is the owner or insured or covering
any of the Assets, that are currently effective, indicating for each policy the
carrier, risks insured, amounts of coverage, deductible, and expiration date.
The Buyer acknowledges that such policies will no longer cover any of the Assets
after the Closing Date.
2.23. Corporate Names. The Company has not used during the last five (5)
years and is not currently using any corporate, fictitious or assumed name other
than the names listed on Schedule 2.23. The Company is entitled to use the name
of the Publication and any other name under which it previously conducted or
presently conducts the Business, without any liability or obligation to any
other person, entity or business organization wherever the Company conducts the
Business.
2.24. Disclosure. Neither this Agreement, nor any of the other Transaction
Documents nor any Schedule attached hereto or thereto nor any document furnished
to the Buyer by the Company contains any untrue statement of a fact. To the
Company's knowledge, there is no fact known by the Company relating to the
Assets, the Publications or the Business which could materially adversely affect
the Assets, the Publications or the Business which has not been disclosed in
writing to the Buyer.
3. REPRESENTATIONS OF THE BUYER. The Buyer represents and warrants to
the Company as follows:
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3.1. Due Organization, Authorization and Good Standing. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the requisite corporate power and authority to
execute, deliver and perform this Agreement and the other Transaction Documents
and its obligations hereunder and thereunder and has taken all action required
by law and its Certificate of Incorporation and bylaws to authorize such
execution, delivery and performance. Each of the Transaction Documents is the
valid and legally binding obligation of the Buyer, enforceable against the Buyer
in accordance with its respective terms, subject to bankruptcy, insolvency,
moratorium, reorganization and similar laws of general applicability affecting
the rights and remedies of creditors and to general principles of equity,
regardless of whether enforcement is sought in proceedings in equity or at law.
3.2. No Violation or Approval. The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby will not result in a breach or
violation of, or a default under, its Certificate of Incorporation or bylaws,
any statute applicable to it, any agreement to which it is a party or by which
it or any of its properties are bound, any fiduciary duty or any order,
judgment, decree, rule or regulation of any court or any governmental agency or
body having jurisdiction over it or its properties. No consent, approval, order
or authorization of, or negotiation, declaration or filing with, any
governmental authority, other entity or person is required of, and has not been
obtained or made by, the Buyer in connection with the execution and delivery of
this Agreement or the other Transaction Documents or the consummation of the
transactions contemplated hereby and thereby.
3.3. Brokers and Finders. All negotiations relating to this Agreement and
the other Transaction Documents and the transactions contemplated hereby and
thereby have been carried on without the intervention of any person or entity
acting on behalf of the Buyer in such manner as to give rise to any valid claim
against any of the Company or any of its affiliates for any brokerage or
finder's commission, fee or similar compensation.
3.4. Experience. Buyer is experienced in the purchasing, publication and
distribution of newspapers and is making its own determination to proceed with
the transaction contemplated under this Agreement on the basis of its own
evaluation of the information and assets it has reviewed and examined and its
own evaluation as to the prospects for success. Notwithstanding the foregoing,
nothing in this Section 3.4 shall limit in any way any of the representations
and warranties made by the Company herein or any right of the Buyer and its
Indemnitees to indemnification hereunder.
4. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER. The Buyer's
obligation to purchase the Assets and to consummate the other transactions
contemplated hereby is subject to the satisfaction on or prior to the Closing
Date of each of the following conditions, unless expressly waived in writing by
the Buyer at or prior to the Closing.
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4.1. Representations and Warranties. The representations and warranties
made by the Company in this Agreement shall have been true and correct as of the
date hereof and shall be true and correct as of the Closing Date as if made on
and as of the Closing Date and the Company shall have delivered to the Buyer a
certificate to such effect executed by an officer of the Company.
4.2. Performance of Obligations. The Company shall have performed and
complied with all agreements and conditions required by this Agreement or any
other written agreement executed pursuant hereto to be performed or complied
with by it at or prior to the Closing Date and the Company shall have delivered
to the Buyer a certificate to such effect executed by an officer of the Company.
4.3. Legal Opinion. The Buyer shall have received an opinion of Betts,
Patterson & Mines, counsel to the Company, dated the Closing Date in
substantially the form of Exhibit B attached hereto.
4.4. Injunctions. No action or proceeding shall have been instituted or
threatened prior to or on the Closing Date before any court or governmental body
or authority pertaining to the transactions contemplated by this Agreement or
the other Transaction Documents, 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 the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents.
4.5. Consents Under Contracts. The Company shall have obtained and
delivered to the Buyer all consents, waivers and approvals required under any
Contractual Obligations (other than Excluded Contracts) and under any permits,
licenses and other governmental approvals included in the Assets to (i) permit
the valid execution, delivery and performance by the Company of this Agreement
or (ii) permit the valid assignment (without any adverse effect or modification)
of any such Contractual Obligations, permits, licenses or other governmental
approvals of the Company in connection with the consummation of the transactions
contemplated hereby.
4.6. Real Estate Documents. The Company shall have delivered to the Buyer,
at the Company's expense, each of the following, in form and substance
reasonably satisfactory to the Buyer, covering the Owned Real Estate:
4.6.1. At the Closing, an ALTA 1990 owner's title policy (including
extended coverage over the standard printed exceptions, access, location,
environmental lien, survey and comprehensive endorsements and the
endorsements listed in Schedule 4.6.1) insuring title in the Buyer to each
parcel of Owned Real Estate and all recorded easements appurtenant thereto
upon Closing, subject only to Permitted Exceptions, from First
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American Title Insurance Company (the "Title Insurance Company") in the
amount of $412,000, together in each case with any title insurance
affidavit signed by the Company required by the Title Insurance Company and
copies of all documents referenced in the policy as exceptions.
4.6.2. At least seven days prior to the Closing Date, an as-built
survey relating to each parcel of Owned Real Estate from a surveyor duly
licensed in Illinois which survey shall: (i) be certified to the Buyer, the
Title Insurance Company and to such other parties as the Buyer may
indicate, (ii) be dated within six months of the Closing Date, (iii)
indicate the location, legal description and area and square feet of each
parcel of Owned Real Estate, (iv) locate all easements, utilities
(including connections to public streets), parking facilities, covenants
and restrictions and rights of way, (v) indicate adjoining streets,
building lines, surface improvements, encroachments, vehicular access and
parking requirements, (vi) identify which portions of the owned Real Estate
are located in a 100 year flood plain area as identified under the National
Flood Insurance Program and (vii) satisfy the Minimum Standard Detail
Requirements for ALTA/ACSM (1997) Land Title Surveys, including Table A
requirements 3, 4, 6, 7, 8, 9, 10, 11 and 13.
4.6.3. All keys, key cards, combinations, access devices, manuals (if
any) and instructional materials (if any) necessary to obtain full access
to and use of the Real Estate.
4.6.4. A stamped general warranty deed to the Owned Real Estate, duly
executed and acknowledged by the Company and in proper form for recording,
conveying to the Buyer fee simple title to the Owned Real Estate, free and
clear of all Liens and leases and any other matters affecting title, except
the Permitted Exceptions.
4.6.5. A written certification in accordance with section 1445 of the
Code certifying that the Company is not a "foreign person" as defined in
section 1445 of the Code and that the Company is therefore exempt from the
withholding requirements of said section.
4.6.6. Such other documents as may be reasonably necessary to
consummate the Buyer's acquisition of the Owned Real Estate in such a way
as to insure the Buyer's title to the Owned Real Estate at, and
contemporaneous with, the Closing without a "gap" in coverage from the time
of the Closing until the time of recording of the deeds with respect to the
Owned Real Estate, including, but not limited to, the Escrow Instructions,
an ALTA statement in the form of Exhibit C attached hereto and any releases
and settlement agreements from existing creditors of the Company which may
be necessary to assure delivery of title to the Owned Real Estate, subject
only to the Permitted Exceptions.
4.7. 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
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contemplated by this Agreement shall have consented to, authorized, permitted or
approved such transactions.
4.8. Noncompetition Agreements. The Company and Howard Publications, Inc.,
a Delaware corporation (the "Parent"), and David Simpson shall have entered into
Noncompetition Agreements with the Buyer in the forms of Exhibit D and Exhibit E
attached hereto, respectively (the "Noncompetition Agreements").
4.9. No Material Adverse Change. There shall have been no material adverse
change in the Business or the condition (financial or otherwise), operations,
Assets or prospects of the Business since May 1, 2000.
4.10. Additional Deliveries. The Company shall have delivered (or caused to
be delivered) the following documents to the Buyer:
(i) a bill of sale and assignment, in the form of Exhibit F
attached hereto, executed by the Company, conveying the Assets
to the Buyer;
(ii) an assignment and assumption agreement, in the form of Exhibit
G attached hereto, executed by the Company and the Buyer, with
respect to the assignment of the Contractual Obligations (other
than Excluded Contracts) and the assumption of the Assumed
Liabilities (the "Assumption Agreement");
(iii) such other assignment documents, in forms reasonably acceptable
to the Buyer, as may be reasonably requested by the Buyer to
effectively convey to the Buyer all right, title and interest
in and to the proprietary rights of the Company which
constitute part of the Assets;
(iv) any and all certificates of title to vehicles owned by the
Company which constitute part of the Assets, duly endorsed to
Buyer; and
(v) such other certificates or documents as the Buyer may
reasonably request.
4.11. Elimination of Liabilities, Liens and Encumbrances. As of the
Closing, the Company will not have any Liability related to or arising in
connection with the Business (including, but not limited to, any Liability in
respect of Indebtedness), other than Permitted Liabilities and Current
Liabilities as will be set forth in the Closing Balance Sheet, and the Company
shall have delivered to the Buyer a certificate to such effect executed by an
officer of the Company. As of the Closing, all of the Assets shall be free and
clear of any and all Liens (including, but not limited to, those Liens and
Encumbrances listed on Schedule 2.7), other than Permitted Exceptions, and the
Company shall have delivered to the Buyer a certificate to such effect executed
by an officer of the Company.
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<PAGE> 23
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY. The Company's
obligation to sell the Assets to the Buyer and the other obligations of the
Company to consummate the other transactions contemplated hereby is subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions, unless expressly waived in writing by the Company at or prior to
Closing:
5.1. Representations and Warranties. The representations and warranties of
the Buyer in this Agreement shall have been true and correct as of the date
hereof and shall be true and correct as of the Closing Date as if made on and as
of the Closing Date and the Buyer shall have delivered to the Company a
certificate to such effect executed by the President of the Buyer.
5.2. Performance of Obligations. The Buyer shall have performed and
complied with all agreements and conditions required by this Agreement or any
other agreement to be performed or complied with by it at or prior to the
Closing Date and the Buyer shall have delivered to the Company a certificate to
such effect executed by the President of the Buyer.
5.3. Injunctions. No action or proceeding shall have been instituted or
threatened prior to or on the Closing Date before any court or governmental body
or authority pertaining to the transactions contemplated by this Agreement or
the other Transaction Documents, 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 the consummation of the transactions
contemplated by this Agreement or the other Transaction Documents.
5.4. 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 shall have
consented to, authorized, permitted or approved such transactions.
5.5. Assumption Agreement. The Buyer shall have executed and delivered the
Assumption Agreement.
6. MISCELLANEOUS COVENANTS OF THE PARTIES.
6.1. Access to Premises and Information. On and prior to the Closing Date,
the Company will permit the Buyer and its authorized representatives to have
reasonable access to the records and books of account of the Company in
possession of the Company that relate in any manner to the conduct or operations
on or prior to the Closing Date of the Business (the "Records"), including, but
not limited to, Records in respect of accounts payable, bank
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<PAGE> 24
statements, financial statements and general ledgers. In addition, prior to the
Closing Date, the Company will permit the Buyer and each of its authorized
representatives reasonable access to the premises of the Company and the
Business for the purpose of inspecting the tangible assets included in the
Assets and reasonable access to the Real Estate, including, but not limited to,
access sufficient to allow the Buyer or its representatives to conduct such
environmental site assessment (including subsurface investigation) and
environmental compliance review as it deems appropriate.
6.2. Conduct of Business Prior to Closing. After the date hereof and prior
to the Closing, the Company will conduct its Business, including publishing the
Publications, only in the ordinary course consistent with the Company's past
practice. Without limiting the generality of the foregoing, without the prior
consent of the Buyer (which shall not be unreasonably withheld), the Company
will not (a) increase the compensation (including, but not limited to, bonuses
and employee benefits) payable on or after Closing or to become payable on or
after Closing to any employee, director, agent or consultant of the Company who
performs services for or in connection with the Business, (b) make any change to
any benefit plan for the Company's employees who perform services for or in
connection with the Business, (c) sell or permit the sale of advertising or
subscription orders for the Publications, or enter into other transactions with
respect to the Publications, at rates or prices lower than the rates and prices
in effect for such transactions on the date hereof, other than discounts offered
to advertisers in the ordinary course of business at levels consistent with the
Company's past practice and other than promotion discounts offered to
subscribers in the ordinary course of business consistent with the Company's
past practice, (d) alter its methods, practices or terms in respect of billing
or collection of accounts receivable or sale of subscriptions or pre-paid
advertising in connection with the operation of the Business, (e) incur any
liabilities of any kind other than amounts incurred in the ordinary course of
business consistent with the Company's past practice, or (f) make any dividend
or other distribution of assets used or held for use in connection with the
Business (other than cash dividends) to its shareholders.
6.3. No Solicitation of Other Offers. Prior to the Closing, the Company
will not permit any of its representatives or agents, directly or indirectly, to
entertain, solicit, initiate or enter into discussions, transactions or
contractual obligations with, or encourage or provide any information to, any
person or entity (other than the Buyer and its designees) concerning the sale of
the Business (in whole or in part) or any interest therein, either by the sale
of substantially all of the Assets or otherwise.
6.4. Preparation for Closing. Each of the parties hereto agrees to use
commercially reasonable efforts to bring about the fulfillment of the conditions
precedent contained in this Agreement including, but not limited to, the
obtaining of all necessary consents, approvals and waivers for the consummation
of the transactions contemplated by this Agreement.
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<PAGE> 25
6.5. Public Announcements. Subject to applicable legal requirements, each
party hereto agrees that any public announcement regarding the transactions
contemplated by this Agreement will be made only upon the mutual agreement of
the Buyer and the Company. The foregoing shall encompass any so-called "farewell
editorials" published in either of the Publications on or prior to the Closing.
No provision of this Section 6.6 shall be construed as prohibiting the following
disclosures: (i) disclosures of such information as may be required for federal
securities, tax, accounting or other reporting purposes, (ii) disclosures to
employees or independent contractors concerning changes in their status and/or
benefits, (iii) disclosures to legal counsel, independent accountants and other
representatives, (iv) disclosures to company parents and other company
affiliates, (v) disclosures pursuant to the terms of an order of a court or
other governmental authority of competent jurisdiction, (vi) disclosures
required in connection with legal proceedings, (vii) disclosures required under
the terms of loan, credit or similar agreements or (viii) disclosures of matters
of which there is public knowledge other than as a result of disclosures made in
breach hereof.
6.6. Environmental Reports. The Buyer will have the right to retain an
environmental consultant to prepare, at the Buyer's expense, an environmental
assessment evaluation report with respect to each parcel of the Real Estate (an
"Environmental Report"). The Buyer shall specify the scope of investigation to
be conducted by such environmental consultant in the preparation of the
Environmental Report. In the event that the Environmental Report discloses
conditions or the possibility of conditions which, in the Buyer's sole
discretion, (a) might be expected to impose a liability on the Buyer or the
Company under applicable laws for clean up or other costs, (b) may make it
difficult to obtain financing secured by the Real Estate or (c) are otherwise
unsatisfactory to the Buyer, the Buyer may elect to terminate this Agreement at
any time prior to Closing.
6.7. Further Assurances. From time to time after the Closing, at the
request of the Buyer, the Company shall execute and deliver any further
instruments consistent with the terms of this Agreement, and take such other
action as the Buyer may reasonably request consistent with the terms of this
Agreement, in a form or manner reasonably acceptable to the Buyer, to vest or
confirm in the Buyer ownership of the Assets, free and clear of any Liens and
Encumbrances, or otherwise carry out the transactions contemplated hereby.
6.8. Employees; Payments to Employees. (a) Effective as of the Closing, the
Company shall terminate the employment of all employees engaged in the Business,
including, but not limited to, those listed in Schedule 2.17. The Company shall
cooperate reasonably with and assist the Buyer in connection with the hiring of
employees of the Company who perform services for or in connection with the
Business after the Closing on a case by case basis as requested by Buyer. As
promptly as practicable prior to the Closing, the Buyer will provide the Company
with a list of such employees of the Company that the Buyer intends to offer
employment. Notwithstanding the foregoing, nothing contained in this Agreement
or otherwise shall be construed to require the Buyer, contractually or
otherwise, to hire any of the Company's employees.
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<PAGE> 26
(b) At or prior to the Closing, with respect to the employees listed in
Schedule 2.17, the Company shall: (i) pay to such employees all of the vacation
pay and employee bonuses accrued for such employees through the Closing Date, if
any, and (ii) make contributions to or for the account of such employees under
or with respect to the Company's Profit Sharing and 401(k) Plan (the "Company's
401(k) Plan"), which have accrued for such employees through the Closing Date,
if any.
6.9. Tax Returns. The Company shall be responsible for the preparation and
filing of all Tax returns with respect to the operations of the Business that
occur prior to the Closing Date. The Buyer will afford to the Company, its
counsel, and its accountants, during normal business hours, reasonable access to
books, records and other data of the Company with respect to such periods, to
the extent that such access may be reasonably required by the Company to
facilitate the preparation of such tax returns.
6.10. Post-Closing Consents. The Company agrees to use its best efforts,
and to cooperate with the Buyer in efforts, to obtain all third party consents
which may be necessary to assign from the Company to the Buyer all Contractual
Obligations relating to the Business which, despite the best efforts of the
Company, have not been obtained prior to the Closing. If a third party consent
is needed for such an assignment and such consent is not obtained, then the
Buyer shall, in its sole discretion, determine whether it wants to assume and
perform any such Contractual Obligation, and with respect to any such
Contractual Obligation which the Buyer elects to assume and perform, the Company
shall cooperate with and assist the Buyer in connection with the protection and
enforcement of the Buyer's rights under such Contractual Obligation, as if such
Contractual Obligation had been effectively assigned to the Buyer, including,
but not limited to, allowing the Buyer to file claims, actions or suits in the
name of the Company to protect and enforce such rights.
6.11. Access to Books and Records. After the Closing, and upon agreement by
the Buyer to reimburse the Company for all of its reasonable internal and
external costs and expenses directly relating thereto, the Company shall (and
shall cause each of the persons and entities from whom the Company acquired the
Publications and their affiliates and predecessors to), upon the Buyer's request
from time to time, and upon reasonable notice, in connection with the
preparation by the Buyer or its affiliates of Tax returns, audited financial
statements incorporating the Publications 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
initiation or defense of litigation and third parties involving the Assumed
Liabilities, (i)(A) provide to the officers and other authorized representatives
of the Buyer and its affiliates reasonable access, during normal business hours,
to any and all premises, properties, files, books, records, documents and other
information (including, but not limited to, work papers in the possession of
current and former accountants of the Publications) relating to the Business
with respect to the period prior to the Closing, (B) cause its officers to
furnish to the Buyer and its authorized representatives any and all financial,
technical and operating data and other information (including, but not limited
to, work papers in the possession of current and former accountants
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<PAGE> 27
of the Publications) pertaining to the Business with respect to the period prior
to the Closing, and (C) make available to the Buyer and its authorized
representatives personnel of the Company to consult with such personnel and (ii)
make available for inspection and copying by the Buyer and its authorized
representatives true and complete copies of any documents relating to the
foregoing.
6.12. Accounts Receivable. From the Closing Date, the Company constitutes
and appoints the Buyer and its successors and assigns as the Company's
attorney-in-fact, with full power of substitution, to execute, sign, endorse or
deliver, in the Company's name, receipts or any other documents necessary to
evidence, collect or otherwise realize upon any accounts receivable included in
the Assets and to institute and prosecute, in the name of the Company or the
Buyer all proceedings and actions which the Buyer may deem desirable to collect,
assert or enforce any claim, right or title of every kind in and to any such
receivables. The Company agrees that the foregoing powers are coupled with an
interest and are not and shall not be revocable by the Company in any manner or
for any reason (including, but not limited to, the liquidation or dissolution of
any Company). Buyer shall use commercially reasonable efforts to collect all of
the accounts receivable which arose from transactions prior to the Closing
("Uncollected Receivables"). Payments received by the Buyer from any payee on or
after the Closing, unless otherwise specified to the Buyer by a payee based on a
dispute with respect to such payee's account, shall be applied first to the
oldest Uncollected Receivable of such payee. At the end of ninety (90) days
after the Closing, Buyer shall provide the Company with a written summary of all
Uncollected Receivables which are then owing and outstanding. Within ten (10)
days of receipt of such summary, the Company shall pay to the Buyer the sum of
all Uncollected Receivables which have not been collected by the Buyer and the
Buyer shall assign such Uncollected Receivables to the Company.
6.13. Personnel Records. The Buyer and the Company acknowledge and agree
that the Company may retain a copy of all personnel records included in the
Assets.
7. INDEMNIFICATION.
7.1. Representations and Warranties. (a) The Company hereby agrees to
indemnify the Buyer and to hold the Buyer harmless from, against and in respect
of the following: any and all damages, deficiencies, actions, suits,
proceedings, demands, assessments, judgments, claims, losses (including, but not
limited to, the reasonable cost of required repair, clean-up or other remedial
action), diminution in value (including loss or damage to the goodwill of the
Business or the Publications), costs, expenses, fees, obligations and
Liabilities (including costs of collection and reasonable attorneys' fees and
expenses) (herein called a "Loss" or "Losses") arising from or related to any
breach of, or inaccuracy in, any representation or warranty made by the Company
in this Agreement or in any schedule or exhibit hereto or in any certificate or
agreement executed or delivered pursuant to this Agreement.
(b) The Buyer hereby agrees to indemnify the Company, and to hold the
Company harmless from, against and in respect of any Losses arising from or
related to any breach of, or
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<PAGE> 28
inaccuracy in, any representation or warranty made by or on behalf of the Buyer
in this Agreement or in any schedule or exhibit hereto or in any certificate or
agreement executed or delivered pursuant to this Agreement (a Buyer Indemnitee
and the Company are sometimes referred to herein as an "Indemnitee").
(c) The representations and warranties of the parties contained in this
Agreement will survive the Closing and will remain in full force and effect
thereafter, notwithstanding any investigation or access to information by or on
behalf of any party, until December 31, 2001, except that (i) the
representations and warranties made by the Company in Sections 2.1 and 2.2, the
first sentence of Section 2.7, the second sentence of Section 2.8 and Section
2.16 shall survive without limitation as to time and (ii) the representations
and warranties contained in Section 2.6 shall survive until 30 days after the
expiration of all applicable statutes of limitations; provided, however, that
all such representations and warranties shall survive without time limitation
with respect to any inaccuracy therein or breach thereof, notice of which shall
have been duly given within such applicable period to the Company. A party shall
not be entitled to any indemnification for breach of a representation or
warranty if notice of a claim of a breach of such representation or warranty is
not received within the applicable survival period.
7.2. Other Liabilities; Guaranty. (a) The Company agrees to indemnify the
Buyer and to hold the Buyer harmless from, against and in respect of any Loss to
the extent it: (i) arises from any breach by the Company of a covenant made by
it in this Agreement, (ii) arises from or relates to any Liability of the
Company existing as of the Closing or arising out of the consummation of the
transactions contemplated hereby, other than an Assumed Liability, (iii) arises
from the publication of the Publications or the ownership, use or operation of
the Publications or Assets prior to the Closing, (iv) arises from any violation
by the Company of any Legal Requirements prior to the Closing, (v) arises from
any Liabilities or obligations of the Company relating to the presence,
disposal, spillage, discharge, transportation, emission, leakage, release or
threatened release ("Presence or Release"), on or prior to the Closing Date, of
any Hazardous Substances which are at, in, on, under, about, from or affecting
any Real Estate on the Closing Date or (vi) arises from any Liability with
respect to any Plan maintained or contributed to by the Company or any affiliate
of the Company. Notwithstanding anything else to the contrary in this Agreement,
the Company shall not have any indemnification or other liability to the Buyer
for any Assumed Liability.
(b) The Buyer hereby agrees to indemnify the Company and its
affiliates, officers, directors, employees and agents, and hold each of them
harmless from, against and in respect of any Loss to the extent it arises from:
(i) any breach by Buyer of a covenant made by it in this Agreement, including,
but not limited to, Section 6.12 hereof, (ii) arises from the publication of the
Publications or the ownership, use or operation of the Publications or Assets
after the Closing, or (iii) any Assumed Liability.
7.3. Notice of Claims. As soon as reasonably possible, and in any event
within 30 days after the receipt by an Indemnitee of notice of any claim against
such Indemnitee or the
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<PAGE> 29
commencement of any action or proceeding against such Indemnitee, such
Indemnitee shall, if a claim with respect thereto is or may be made against an
Indemnifying Party pursuant to this Section 7, give such Indemnifying Party
written notice thereof. The failure to give any notice required by this Section
7 shall not relieve any Indemnifying Party of any obligations contained in this
Section 7 except and only to the extent that the failure to give such notice
actually and materially prejudices the rights of such Indemnifying Party. Each
and every claim, action, proceeding or remedial action referenced in this
Section 7.3 shall hereinafter be referred to as a "Claim."
7.4. Defense of Claims. (a) The Indemnitee and the Indemnifying Party shall
use its best efforts to cooperate in the defense or compromise of any Claim in a
manner reasonably calculated to minimize the liability of the Indemnifying Party
under Section 7.
(b) If the Indemnifying Party, or any insurance carrier of such
Indemnifying Party, agrees to assume the defense of Indemnitee with respect to
such Claim, from and after the date of such assumption, the Indemnifying Party
shall have no further liability for counsel fees or expenses of separate counsel
of the Indemnitee; provided that in such case such Indemnitee shall retain the
right to employ its own counsel and to participate in the defense of any Claim,
but such Indemnitee shall bear and shall be solely responsible for its own costs
and expenses in connection with such participation.
(c) In the case of such an assumption, the Indemnifying Party shall
have the authority to negotiate, compromise and settle such Claim, provided
that, unless the relevant Indemnitee shall have previously agreed otherwise in
writing (which agreement will not be unreasonably withheld or delayed), any
compromise or settlement of such Claim shall include a complete release of all
other Claims by the third party bringing the Claim against such Indemnitee and
provided further that, except for the settlement of a Claim that involves the
payment of money only (in which case the Indemnifying Party shall give the
Indemnitee the opportunity to discuss with it such payment, which opportunity
shall not affect the right of the Indemnifying Party to effect such settlement
in its discretion without the Indemnitee's consent), the Indemnifying Party
shall not settle or compromise any claim without the prior written consent of
Indemnitee (which consent shall not be unreasonably withheld unless such claims
can diminish the value of the Indemnitee's business, in which case such consent
may be withheld in the Indemnitee's sole discretion).
(d) The Indemnitee may compromise or settle any Claim against it at
any time, but if such compromise or settlement is made without the prior written
consent of the Indemnifying Party (which prior written consent may not be
unreasonably withheld or delayed), the Indemnifying Party shall not be required
to pay such Indemnitee in respect of any liability resulting from such
compromise or settlement; provided, however, that if in the reasonable judgment
of the Indemnitee it would be materially harmed or otherwise prejudiced by not
entering into a proposed settlement or compromise and the Indemnifying Party
unreasonably withholds consent to such settlement or compromise, the Indemnitee
may enter into such settlement or
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compromise and such settlement or compromise shall not be conclusive as to the
liability of the Indemnifying Party to the Indemnitee.
7.5. Limitations on Liability
(a) Notwithstanding anything contained herein to the contrary, except as
set forth in this sentence and the following sentence, the Company shall be
obligated to indemnify the Buyer and its Indemnitees for Losses pursuant to
Section 7.1(a) only if the aggregate amount of such Losses exceeds $15,000 (the
"Basket") provided, that in the event that the aggregate amount of such Losses
exceeds such amount, the Company shall be obligated to indemnify the Buyer and
its Indemnitees to the full extent of such Losses, provided, however, that in no
event will the Company be obligated to pay any amounts to the Buyer in excess of
the Purchase Price (the "Cap"). Nothing contained herein shall in any way limit,
or be deemed to limit, or otherwise affect the rights of the Buyer and its
Indemnitees to indemnification under or with respect to, and the Basket and the
Cap shall not apply to, (i) Losses arising from breaches of the representations
and warranties of the Company in Sections 2.6, 2.16 and 2.21 or (ii) Losses for
which the Buyer and its Indemnitees are entitled to indemnification pursuant to
Section 7.2(a) with respect to Environmental Liabilities and Tax Liabilities.
(b) Notwithstanding Section 7.1, the Buyer shall be obligated to indemnify
the Company for Losses pursuant to Section 7.1(b) only if the aggregate amount
of such Losses exceeds $15,000 (provided, that in the event that the aggregate
amount of such Losses exceeds such amount, the Buyer shall be obligated to
indemnify the Company to the full extent of such Losses). Nothing contained
herein shall in any way limit, or be deemed to limit, or otherwise affect the
rights of the Company to indemnification under or with respect to, and the
Basket shall not apply to, Losses for which the Company is entitled to
indemnification pursuant to Section 7.2(b).
8. NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be sent by hand delivery or overnight
courier delivered or addressed as follows or to such other address or addresses
of which the respective party shall have notified the other parties.
If to the Company to:
Howard Publications
770 - 11th Avenue
P.O. Box 3003
Longview, WA 98632-0303
Attention: Richard Newell
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<PAGE> 31
with a copy to:
Betts, Patterson & Mines
800 Financial Center
1215 Fourth Ave.
Seattle, Washington 98161-1090
Attention: Gary A. Bergquist, Esq.
If to the Buyer, to:
Liberty Group Illinois Holdings, Inc.
3000 Dundee Road
Northbrook, Illinois 60062
Attention: Kenneth L. Serota
President
with a copy to:
Katten Muchin Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attention: Kenneth W. Miller, Esq.
9. EXPENSES OF TRANSACTION. Whether or not the transactions provided for
herein are consummated, each of the parties hereto will assume and bear all
expenses, costs and fees incurred by such party in connection with the
preparation, negotiation and execution of this Agreement and the other
agreements and documents contemplated hereby and the consummation of the
transactions contemplated hereby and thereby, including without limitation, fees
for lawyers and accountants. All transfer and other Taxes incurred in connection
with the consummation of the transactions contemplated hereby shall be paid by
the Company when due, and the Company will, at its own expense, file all
necessary Tax returns and other documentation with respect to such transaction
and other Taxes.
10. ENTIRE AGREEMENT. The agreement of the parties that is comprised of
this Agreement, the Exhibits and Schedules hereto and the other documents
referred to herein, sets forth the entire agreement and understanding between
the parties and supersedes any prior agreement or understanding, whether oral or
written, relating to the subject matter of this Agreement.
11. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the successors and assigns of the Company and
the Buyer.
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12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
13. WAIVER OF JURY TRIAL. The Company and the Buyer hereby irrevocably
waive, to the fullest extent permitted by law, all rights to trial by jury in
any action, proceeding, or counterclaim (whether based upon contract, tort or
otherwise) arising out of or relating to this Agreement or any of the
transactions contemplated hereby.
14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original for all purposes and all
of which together shall constitute one and the same instrument.
15. TELECOPY EXECUTION AND DELIVERY. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
by facsimile or similar electronic transmission device pursuant to which the
signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party, all parties agree to execute an original of this
Agreement as well as any facsimile, telecopy or other reproduction hereof.
16. HEADINGS. The headings contained in this Agreement are inserted only
for convenience of reference and in no way define, limit, or describe the scope
or intent of this Agreement.
17. KNOWLEDGE. The phrases "to the knowledge", "to the best of the
knowledge", "knowledge" or similar terms as used in this Agreement shall mean to
the current and actual knowledge or belief of the party, or any of the directors
or officers of the party to whose knowledge reference is being made.
18. TERMINATION. If the Closing shall not have occurred on or before
forty-five (45) days after the date hereof (other than as a result of a breach
by the terminating party of its obligations hereunder), this Agreement may be
terminated, and the transactions contemplated hereby may be abandoned at any
time prior to the Closing, (i) by the Buyer by giving written notice to the
Company as provided herein, (ii) by the Company giving written notice to the
Buyer as provided herein or (iii) by the Buyer within ten (10) days of receipt
of any supplements to the Schedules to this Agreement if such supplements
together with all other supplements, reflect a material change of a fact or a
correction of a representation or warranty (if the Buyer does not terminate this
Agreement within such ten (10) day period it will be deemed to have accepted
such supplement) and in any such case, except for obligations as to the
confidentiality, the parties shall have no further obligations to each other
under this Agreement.
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19. CONFIDENTIALITY. Except as otherwise necessary to complete the
transaction contemplated by this Agreement or as required by law, each party
agrees that it shall keep confidential and shall not disclose to any third
person or entity the terms of this Agreement or the other Transaction Documents
or any related transactions without the prior written consent of the other
party. It is understood that the Company and the Parent may now have or
hereafter obtain confidential information concerning the Business which, if
known to competitors thereof, may damage the Buyer. The Company and the Parent
agree that from and after the Closing Date, they will not divulge to any third
party any confidential information which they may now have or hereafter obtain
concerning the Business.
20. NONWAIVER. No waiver of any party of any condition or of any breach of
any term, covenant, representation or warranty contained in this Agreement shall
be deemed or construed as a further or continuing waiver of any such condition
or breach or waiver of any such condition or breach or waiver of any other
condition or of the breach of any other term, covenant, representation or
warranty of this Agreement.
21. AMENDMENT. This Agreement may be modified or amended only by an
instrument in writing duly signed by the parties hereto.
(Signature page follows)
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<PAGE> 34
The parties to this Agreement have duly executed it as of the day and year
first above written.
MID-ILLINOIS NEWSPAPERS, INC.
By:
-------------------------------------
Its: Secretary
LIBERTY GROUP ILLINOIS HOLDINGS, INC.
By:
-------------------------------------
Its:
------------------------------------
Solely for the purposes
of Paragraph 19 hereof:
HOWARD PUBLICATIONS, INC.
By:
-------------------------------------
Its:
------------------------------------
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LIST OF SCHEDULES
Schedule 1.1 Machinery, Equipment, Inventory and Supplies
Schedule 1.4(iii) Excluded Contracts
Schedule 1.4(viii) Other Excluded Assets
Schedule 1.6 Allocation of Purchase Price
Schedule 2.4(b) Adjustments Necessary to Comply with GAAP
Schedule 2.5.1 Liabilities
Schedule 2.5.2 Adverse Changes in the Assets
Schedule 2.7 Title to Assets
Schedule 2.8(a)(i) Owned Real Estate
Schedule 2.8(a)(ii) Permitted Exceptions
Schedule 2.8(b) Leased Real Estate
Schedule 2.8(c) Compliance with Legal Requirements
Schedule 2.11 Operations in Conformity with Law; Litigation
Schedule 2.12 Welfare and Benefit Plans
Schedule 2.13 Labor Relations
Schedule 2.14 Material Licenses and Permits
Schedule 2.15(a) Proprietary Rights
Schedule 2.15(b) Year 2000 Matters
Schedule 2.16 Environmental Matters
Schedule 2.17 Employees
Schedule 2.18 Contractual Obligations
Schedule 2.19 Transactions with Affiliates
Schedule 2.22 Insurance Policies
Schedule 2.23 Corporate Names
Schedule 4.6.1 Endorsements
LIST OF EXHIBITS
Exhibit A Form of Escrow Instructions
Exhibit B Form of Legal Opinion
Exhibit C Form of ALTA Statement
Exhibit D Form of Noncompetition Agreement (Entities)
Exhibit E Form of Noncompetition Agreement (Individual)
Exhibit F Form of Bill of Sale and Assignment
Exhibit G Form of Assignment and Assumption Agreement
