<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 1997
--------------------------------
Garden State Newspapers, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 22-2675173
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1560 Broadway, Suite 1450, Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 837-0886
------------------------------
No Change
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(Former name or former address, if changed since last report.)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On February 28, 1997, Garden State Newspapers, Inc. (the "Registrant"),
acquired from Thomson Newspapers, Inc., substantially all the assets used in
the publication of the Sentinel & Enterprise, The Daily News and The Daily Non-
Pareil, daily newspapers distributed primarily in Fitzburg and Leominster,
Massachusetts; Lebanon, Pennsylvania; and Council Bluffs, Iowa, respectively,
and five weekly newspapers distributed in and around these same cities, for
approximately $51.4 million in cash. The daily newspapers combined had daily
and Sunday circulation of approximately 58,000 and 60,000 at September 30,
1996.
Proceeds from the sale of the Potomac News and borrowings under the Company's
existing bank revolvers was used to acquire the newspapers described above.
The descriptions of the purchase transaction set forth herein are qualified in
their entirety by the provisions of the purchase agreement, which is attached
hereto as an exhibit.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Businesses Acquired
Because it is impracticable at this time to file the financial
statements required under this Item, such information is not
included in this report. The required financial statements
will be filed at the earliest practicable date and, in any
event, no later than May 14, 1997.
(b) Unaudited Pro Forma Financial Information
Because it is impracticable at this time to file the pro forma
financial information required under this Item, the required
information will be filed at the earliest practicable date
and, in any event, no later than May 14, 1997.
1
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(c) Exhibits
Item No. Description
2.1 Asset Purchase Agreement by and among Thomson
Newspapers, Inc., Seller, and Garden State
Newspapers, Inc., Purchaser, relating to the
Sentinel & Enterprise and various related
publications published in Fitchburg,
Massachusetts; The Daily News and various
related publications published in Lebanon,
Pennsylvania; and The Daily Non-Pareil and
various related publications published in
Council Bluffs, Iowa, dated February 27,
1997.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARDEN STATE NEWSPAPERS, INC.
Date: March 5, 1997 By: /s/ Joseph J. Lodovic, IV
--------------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
3
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
2.1 Asset Purchase Agreement by and among Thomson Newspapers,
Inc., Seller, and Garden State Newspapers, Inc., Purchaser,
relating to the Sentinel & Enterprise and various related
publications published in Fitchburg, Massachusetts; The
Daily News and various related publications published in
Lebanon, Pennsylvania; and The Daily Non-Pareil and various
related publications published in Council Bluffs, Iowa,
dated February 27, 1997.
</TABLE>
<PAGE> 1
Asset Purchase Agreement
By and Among
Thomson Newspapers Inc.
(FEIN 22-2768755)
Seller
And
Garden State Newspapers, Inc.
(FEIN 22-2675173)
Purchaser
Relating to
The Sentinel & Enterprise
And
Various Related Publications
Published in
Fitchburg, Massachusetts
----
The Daily News
And
Various Related Publications
Published in
Lebanon, Pennsylvania
And
The Daily Nonpareil
And
Various Related Publications
Published in
Council Bluffs, Iowa
February 27, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE I Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Agreement to Purchase and Sell . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Enumeration of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II Assumption of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Agreement to Assume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III Purchase Price and Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV Seller's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Organizational . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Advertising and Commercial Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Circulation Matters, Newsprint and
Ink Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Contracts, Benefit Plans, Notes and Other
Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.10 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.12 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Deposits/Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V Purchaser's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . 21
5.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI Conduct Prior to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2 Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.3 Joint Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
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<TABLE>
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ARTICLE VII Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1 Conditions to Seller's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.2 Conditions to Purchaser's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VIII Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1 Form of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2 Purchaser's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3 Seller's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE IX Post-Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.1 Purchaser's Obligations With Respect To Employees
Of The Newspapers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.2 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3 Certain Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Use of Trademarks: References to Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5 Payments of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.6 Transactional Costs/Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Disclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.10 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.11 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.12 Use of Certain Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.13 Payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.14 Certain Structural Repair and Environmental
Remediation Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.15 Certain Syndicated Features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.2 Indemnification Obligations of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Purchaser's Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.4 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.5 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.6 Other Indemnification Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE XI Effect of Termination/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XII Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE XIII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.1 Non-Competition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
<S> <C> <C> <C>
13.2 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.5 Survival: Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.6 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.7 Binding Effect: Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.8 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
13.9 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
13.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Exhibits
--------
Exhibit A Certain Definitions
Exhibit B Form of Opinion of Purchaser's Counsel
Exhibit C Form of Opinion of Seller's Counsel
Exhibit D Form of Bill of Sale
Exhibit E Form of Assignment of Purchased Assets
Exhibit F Schedule of Excluded Employees and Related Severance Obligations
Disclosure Schedule
-------------------
Section 1.3 Schedule of Certain Excluded Assets
Section 2.2 Schedule of Certain Excluded Liabilities
Section 4.1(f) Schedule of Required Consents
Section 4.1(g) Schedule of Conflicts, Breaches and Violations
Section 4.2(a) Financial Statements and Schedule of Exceptions to Financial Statements
Section 4.2(d) Schedule re Tax Returns and Filings
Section 4.2(e) Schedule of Equipment
Section 4.2(g) Schedule of Insurance Policies
Section 4.2(h) Schedule of Seller's Business Relationships
Section 4.3(a) Schedule of Advertising Revenues
Section 4.3(b) Schedule of Advertising Cancellations or Material Modifications
Section 4.3(c) Schedule of Commercial Printing
Section 4.4(a) Circulation Schedule
Section 4.4(d) Schedule of Changes in Circulation Rates
Section 4.4(e) Schedule of Independent Distributors, Dealers, Paid Subscribers, Rack and Box Locations,
Newsprint and Ink Vendors
Section 4.5(a) Schedule of Certain Business Occurrences
Section 4.6(a) Schedule of Contracts
</TABLE>
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<TABLE>
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Section 4.6(b) Schedule of Certain Defaults and Related Occurrences
Section 4.6(c) Schedule of Licenses and Permits
Section 4.7(a) Schedule of ERISA Compliance Matters
Section 4.7(b) Schedule of Pending and Threatened Labor Disputes and Grievances
Section 4.7(b)(v) Schedule of Employees
Section 4.8(a) Schedule of Pending and Threatened Claims, Litigation, Arbitrations and Investigations
Section 4.8(b) Schedule of Decrees, Orders, Etc.
Section 4.8(c) Schedule of Notice of Violations
Section 4.9(a) Schedule of Environmental Permits, Reports, Tests, Etc.
Section 4.9(b) Schedule of Environmental Claims, Violations, Liabilities, Etc.
Section 4.9(c) Schedule of Containers (Above Ground and Underground Storage Tanks)
Section 4.9(d) Schedule of Asbestos, PCB's and Hazardous Materials
Section 4.10(a) Schedule of Real Estate
Section 4.10(d) Schedule of Pending Tax and Assessment Appeals Regarding Real Estate
Section 4.11(a) Schedule of Intellectual Property
Section 7.2 Schedule of Material Consents
Section 4.13 Schedule of Security Deposits, Etc.
Section 9.14 Schedule of Environmental Remediation Matters
Section 13.1 Schedule of U.S. Postal Services Zip Code Areas Covered by Seller's Non-Competition
Covenants
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of February
27, 1997 by and among Thomson Newspapers Inc., a Delaware corporation
("Thomson"), currently engaged in the publication of the Sentinel & Enterprise
and various related publications in Fitchburg, Massachusetts, The Daily News
and various related publications in Lebanon, Pennsylvania and The Daily
Nonpareil and various related publications in Council Bluffs, Iowa (all of such
newspapers and related publications being hereinafter collectively referred to
as the "Newspapers" and Thomson being hereinafter referred to as (the "Seller")
and Garden State Newspapers, Inc., a Delaware corporation, (the "Purchaser").
WHEREAS, Seller desires to sell and Purchaser desires to acquire, as
of the Closing Date, all of Seller's rights, title and interests in and to all
of the assets, property and goodwill of Seller relating to the Newspapers,
which includes assets of every kind and description, wherever located, whether
tangible or intangible, real, personal, or mixed, and irrespective of whether
specifically mentioned or described herein, other than the Excluded Assets, as
defined in Section 1.3 hereof (the "Purchased Assets"), upon the terms of, and
subject to the conditions contained in, this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements and warranties herein contained, the parties agree as
follows:
ARTICLE I
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject to
the conditions contained in this Agreement, at the Closing (as hereinafter
defined):
Purchaser agrees to purchase and Seller agrees to sell, transfer,
convey, assign and deliver all of Seller's rights, title and interests in and
to the Purchased Assets.
1.2. Enumeration of Purchased Assets. Except as otherwise provided
in Section 1.3 hereof the Purchased Assets include, without limitation, the
following items:
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(a) all inventory, including, without limitation,
newsprint, ink, raw materials, work in process, finished goods, service parts
and spare parts and circulation, production, maintenance and office supplies of
the Newspapers, (collectively, the "Inventory");
(b) all furniture, fixtures, improvements, equipment
(including office equipment), on or off site, machinery, parts, computer
hardware, tools, printing presses, vehicles and all other tangible personal
property (other than the Inventory or leased personal property) of the
Newspapers (collectively, the "Equipment");
(c) that certain real property and all appurtenances
thereto and improvements thereon currently owned by Seller and used or held for
potential future use in the operations of the Newspapers, together with all of
Seller's right, title and interest (if any) in and to all easements, rights of
way, servitudes, options, mineral property, mineral deposits, rights of first
refusal and all other real property rights related thereto, commonly known as
follows:
(i) 808 Main Street and a parking lot on
Rollstone Street, Fitchburg, MA 01420,
(ii) 718 Poplar Street, Lebanon, PA 17042, and
(iii) 1100 South 7th Street and 117 Pearl Street,
Council Bluffs, IA 51503.
(d) all accounts receivable, billed or unbilled, notes
receivable, negotiable instruments and chattel paper of the Newspapers,
including credit card receivables relative to subscriptions and advertising
charged by customers to credit cards (collectively, the "Accounts Receivable");
(e) all claims and rights (and benefits arising
therefrom) relating to the Purchased Assets or the Newspapers against all
persons whomsoever, including, without limitation, all rights against suppliers
under warranties covering any of the Inventory or Equipment and all Permits and
Environmental Permits, to the extent they are legally transferable by Seller,
exclusive of rights and claims to Tax Assets or arising under insurance
policies relating to the Newspapers which are not being assigned to Purchaser
as of the Closing, as hereinafter defined;
(f) all Intellectual Property of the Newspapers, and all
goodwill associated with the Intellectual Property;
(g) all sales orders and sales contracts, quotations and
bids of the Newspapers, including, without limitation, all contracts,
agreements and orders for advertising in, distribution of advertising materials
in and subscriptions to the Newspapers and for the providing of commercial
printing services;
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(h) all contracts and other documents relating to the
Newspapers and not also relating to other publications owned by the Seller,
including without limitation those listed in Section 4.6(a) of the Disclosure
Schedule (as said Section 4.6(a) shall be updated to reflect changes prior to
the Closing), to the extent assignable to Purchaser, but excluding all employee
benefit or welfare plans, insurance policies or Personal Property Leases, as
hereinafter defined, and all collective bargaining agreements relating to the
Newspapers which Purchaser elects not to assume and with respect to which
Purchaser agrees to indemnify Seller in the manner provided in Section 9.1 of
this Agreement;
(i) all existing books, papers, files and records of
Seller relating to the Newspapers and not also relating to other publications
owned by the Seller, whether in hard copy, magnetic or other format
(collectively, "Seller's Records"), including, without limitation, the
following types of files and records: books of account and accounting and Tax
information (including without limitation Tax audit and inquiry information
that pertain solely to the Newspapers), contract files, current and former
customer, dealer, advertiser and supplier files, including, without limitation,
advertiser contracts, copies of newsprint contracts, subscriber and
non-subscriber lists (including those of independent contractors which
distribute the Newspapers) and advertiser lists, lists of rack and box
locations, lists of dealers, customer credit information, pricing information,
historical and current circulation draw information, personnel and employment
files, manufacturing and production information, market research and survey
reports and records, equipment maintenance records, equipment warranty
information, sales and advertising material, proprietary software used in
connection with the editorial and classified advertising departments of the
Newspapers (including without limitation, all documentation and source codes
and specifications and drawings for such software), equipment drawings, manuals
and data, written confirmations or certificates relating to Permits and
Environmental Permits, industry information and information relating to the
Newspapers' trade secrets and customer specifications;
(j) all prepaid expenses, all advances and other prepaid
items and credits for or toward the purchase by Seller of goods, services and
Inventory relating to the Newspapers, other than those hereinafter defined as
Excluded Assets, which have not as of the Closing Date been received in full by
Seller (collectively, the "Prepaids");
(k) all addresses for real property locations transferred
to Purchaser and, to the extent assignable, telephone numbers of the
Newspapers;
(l) Seller's rights, title and interest in all security
deposits, surety deposits and bonds presently maintained on behalf of the
Seller relative to the Newspapers which relate to contracts, leases and
agreements being assigned to Purchaser at the Closing;
(m) the library at the Newspapers, including, but not
limited to Seller's right, title and interest in photography, art, clippings,
files, prints, telephone and city directories, historic facts and memorabilia,
all microfilm and microfiche reproductions of
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<PAGE> 9
back issues, proprietary software, books, computer printouts, computer data and
other reference materials, the morgue, all bound copies of back issues, and all
unbound back issues of each of the Newspapers;
(n) all leases of motor vehicles and other tangible
personal property of Seller relating to the Newspapers, to the extent
assignable to Purchaser, other than leases of motor vehicles utilized by the
publishers of the Newspapers ("Personal Property Leases"); and
(o) except for the Excluded Assets, all other assets of
the Newspapers.
1.3 Excluded Assets. Notwithstanding Sections 1.1 and 1.2 or
any other provision of this Agreement, the Purchased Assets shall not include
the assets set forth in Section 1.3 of the Disclosure Schedule and the
following assets of Seller (the "Excluded Assets"):
(a) all cash and cash equivalents on deposit or held by
Seller as of the Closing for the account of or related to the Newspapers;
(b) all Tax Assets of the Newspapers, as defined in
Exhibit A to this Agreement, all employee welfare and benefit plans relating to
the Newspapers and all contracts, leases and agreements relating to the
Newspapers which are not assignable to Purchaser;
(c) all deposits and prepaid expenses of the Newspapers
as of the Closing relating to Excluded Assets or pursuant to contracts which
are not being assigned as of the Closing Date;
(d) all insurance policies relating to the Newspapers,
their employees or the Purchased Assets, all related prepaid expenses and all
rights and claims arising thereunder;
(e) all assets, including, in particular and without
limitation those of a corporate overhead nature, which in addition to being
utilized in the business/operations of the Newspapers are also utilized in the
business/operations of one or more affiliates of the Newspapers, including, but
not limited to (i) operating and financial computer software and hardware
products and services under Seller's agreements with AT&T, Canon Associates,
Hewlett-Packard and SHL Computer Newspapers Group, Chicago; (ii) preprint
services with J.C. Penney; (iii) news wire syndicated features services and
satellite communications services through Thomson News Services in accordance
with the Dataport Service Agreement with Associated Press (except pursuant to
Section 9.15 hereof) and (iv) all video conferencing equipment and related
software used by the Newspapers.
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ARTICLE II
Assumption of Certain Liabilities
2.1 Agreement to Assume. At the Closing, Purchaser shall assume
and agree to discharge and perform the following (and only the following)
liabilities of Seller outstanding as of the Closing Date (the "Assumed
Liabilities"):
(a) all accounts payable incurred with respect to the
Newspapers as of the Closing Date;
(b) all liabilities of Seller as of the Closing Date with
respect to delivery of the Newspapers for the remaining term of any and all
prepaid subscriptions;
(c) all liabilities of Seller (i) under all contracts,
quotations and bids described in Sections 1.2(g) and (ii) under all contracts
and leases described in Section 1.2(h) of this Agreement to the extent those
liabilities become due subsequent to the Closing;
(d) all real estate, personal property, sales and use
Taxes arising out of the operations of the Newspapers prior to the Closing and
accrued as of the Closing Date;
(e) all sick leave and vacation benefits for employees of
Seller on the Closing Date with respect to work performed prior to the Closing
Date and,
(f) all other current liabilities related to the
Newspapers not otherwise expressly excluded under Section 2.2 of this
Agreement.
In each case, Purchaser's assumption shall be only to the extent a
liability is expressly assigned to Purchaser pursuant to this Agreement.
2.2 Excluded Liabilities. Except for the Assumed Liabilities,
Purchaser does not assume or agree to pay any liability or obligation of
Seller, direct or indirect, known or unknown, absolute or contingent,
contractual or otherwise, including, without limitation, liabilities,
obligations or responsibilities under Environmental Laws (all such liabilities
not being assumed by Purchaser being referred to herein as the "Excluded
Liabilities"). Seller shall remain responsible for the Excluded Liabilities
and shall indemnify Purchaser with respect thereto to the extent provided in
Section 10.2 hereof. Without in any manner limiting the foregoing, it shall be
expressly understood that, except as otherwise expressly provided in this
Agreement, Purchaser shall not at the Closing assume (a) any obligation
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under any employee benefit or welfare plan sponsored in whole or in part by the
Seller and relating to the Newspapers (including but not limited to worker's
compensation and other health and welfare plans), or any other obligation
pertaining in any manner to any employees or former employees of the Newspapers
or their dependents, (b) any federal, state or local tax liability of the
Seller relating to the Newspapers or the Purchased Assets, (c) any liability
arising out of the operations of the Newspapers prior to the Closing or arising
prior to the Closing with respect to the Purchased Assets, (d) any long term
debt or capital lease obligations, or any current portions related thereto, (e)
any obligation under any insurance policy relating to the Newspapers, their
employees or former employees, or their dependents, or the Purchased Assets,
(f) any liability payable to any Affiliate of Seller, including but not limited
to the "head office account", or any liability relating to accrued payroll,
including commissions, carrier tips, benefit plan contributions and accrued
payroll taxes, with respect to work performed prior to the Closing Date or from
terminations of employment on or prior to the Closing Date, or (g) any
liability arising under any collective bargaining agreement relating to the
Newspapers which Purchaser elects not to assume and with respect to which
Purchaser agrees to indemnify Seller in the manner set forth in Section 9.1 of
this Agreement. It shall be further understood that notwithstanding any other
provision of this Agreement, Purchaser shall not assume any responsibility for
the payment of $25,000 incurred by Seller relating to Seller's purchase of the
GMA Lincs software program for the Sentinel & Enterprise, as described in
Section 4.5(a) of the Disclosure Schedule, and that Seller shall discharge this
liability in a timely manner, and at Seller's sole expense, following the
Closing.
ARTICLE III
Purchase Price and Closing
3.1 Purchase Price. The Purchase Price for the Purchased Assets
and the non-competition covenants contained herein shall be $51,500,000 (the
"Base Purchase Price"), subject to adjustments as hereinafter provided. The
Base Purchase Price, in the amount of Fifty-One Million Five Hundred Thousand
Dollars ($51,500,000) shall be reduced by (i) the Environmental/Structural
Credit as set forth and defined in Section 9.14 of this Agreement and (ii)
the sum of $22,500, representing Seller's reimbursement of one-half of
Purchaser's Hart-Scott-Rodino filing fees, and shall be increased by the amount
of the severance obligations of Seller with respect to which Purchaser has
agreed to indemnify Seller pursuant to Section 9.1 of this Agreement. The Base
Purchase Price as so adjusted (hereafter, the "Final Purchase Price") shall be
paid by the Purchaser to Seller in its entirety at the Closing, by wire
transfer or bank draft payable in immediately available funds.
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3.2 Time and Place of Closing. The transaction contemplated by
this Agreement shall be consummated (the "Closing") at the offices of Winthrop,
Stimson, Putnam & Roberts, One Battery Park Plaza, New York, New York 10004-
1490, at 10 o'clock a.m. on the later of (a) the fifth business day following
the later to occur of (i) the expiration of all applicable waiting periods
under the HSR ACT and (ii) the satisfaction or waiver of all other conditions
to the obligations of the parties set forth in Article VII, and (b) February
27, 1997, or on such other date, or at such other time or place, as shall be
mutually agreed upon by Seller and Purchaser. The date upon which the Closing
occurs in accordance with the preceding sentence is referred to in this
Agreement as the Closing Date.
3.3 Allocation of Purchase Price. Within 30 days of the Closing
Date, Purchaser and Seller shall agree upon in writing the allocation of the
Purchase Price among the Purchased Assets in accordance with Section 1060 of
the Internal Revenue Code of 1986. Purchaser shall disclose to Seller any
preliminary or final appraisals obtained with respect to the Purchased Assets.
ARTICLE IV
Seller's Representations and Warranties
Seller represents and warrants to Purchaser that, except as set forth
in the schedule delivered by Seller to Purchaser concurrently herewith and
identified as the "Disclosure Schedule":
4.1 Organizational.
(a) Seller is a corporation duly organized, existing and
in good standing under the laws of the jurisdictions under which it was
incorporated. Seller has all necessary power and authority to own its
properties and assets and to conduct its business as now conducted except where
such failure would not have a material adverse effect on the assets,
liabilities, results of operations or future prospects of the Newspapers.
(b) Seller has qualified to conduct business and is in
good standing, under the laws of all jurisdictions where the nature of the
Newspapers or the nature or location of its assets requires such qualification
except where such failure would not have a material adverse effect on assets,
liabilities, results of operations or future prospects of the Newspapers.
(c) Seller has full corporate power and authority to
execute and deliver this Agreement and all documents and instruments to be
executed by Seller pursuant to this
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Agreement (collectively, "Seller's Ancillary Documents"), to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.
(d) All acts required to be taken by Seller to authorize
the execution and delivery of this Agreement and each of Seller's Ancillary
Documents, the performance of each of its obligations hereunder and thereunder
and the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the approval of the each of the Seller's
stockholders and board of directors, if needed, have been duly and properly
taken, and no other proceedings on the part of Seller are necessary to
authorize such execution, delivery and performance.
(e) This Agreement has been, and Seller's Ancillary
Documents will be, duly executed and delivered by duly authorized officers of
Seller. This Agreement and each of Seller's Ancillary Documents that is a
contract constitutes a legal, valid and binding obligation of the Seller
signing the same, enforceable in accordance with its terms.
(f) Other than as set forth in Section 4.1(f) of the
Disclosure Schedule, and except as required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and all applicable regulations
(the "HSR Act") no consent, authorization, order or approval of, or filing or
registration with, any governmental authority is required for the execution and
delivery of this Agreement and Seller's Ancillary Documents and the
consummation by Seller of the transactions contemplated by this Agreement and
Seller's Ancillary Documents.
(g) Other than as set forth in Section 4.1(g) of the
Disclosure Schedule, neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller of the
transactions contemplated hereby and thereby, will conflict with or result in a
breach of any of the terms, conditions or provisions of (i) Seller's charter
documents or By-laws, (ii) any statute or administrative regulation, (iii) any
order, writ, injunction, judgment or decree of any court or any governmental
authority or any arbitration award applicable to Seller, or (iv) any material
contract or agreement to which Seller is a party or by which the Purchased
Assets may be bound, nor give rise to any default, acceleration, or right of
termination under any such contract or agreement.
4.2 Financial.
(a) Other than as set forth in Section 4.2(a) of the
Disclosure Schedule, Seller's financial statements, books, accounts and
records, as they relate to the Newspapers, are, and have been, maintained in
the Newspapers' usual, regular and ordinary manner, in accordance with
generally accepted accounting principles consistently applied, and all
transactions necessary to present fairly the financial position and results of
operations are reflected therein.
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(b) The unaudited balance sheets of the Newspapers as of
December 31, 1994 and December 31, 1995, which were used to prepare the
financial statements of Seller, which were in turn used to prepare the audited
financial statements of the Seller's ultimate parent, and the unaudited balance
sheets of the Newspapers as of September 30, 1996, each as set forth in Section
4.2(a) of the Disclosure Schedule, fairly present the financial position of the
Newspapers as at such dates in accordance with generally accepted accounting
principles consistently applied for the periods covered thereby, except to the
extent that certain 1996 year-end adjustments may not be reflected on the
September 30, 1996 balance sheet and except for information ordinarily
contained in footnotes to audited financial statements. The unaudited
statements of income of the Newspapers for the years ended December 31, 1994
and December 31, 1995, which were used to prepare the financial statement of
Seller, which were in turn used to prepare the audited financial statement of
Seller's ultimate parent, and the unaudited statement of income of the
Newspapers for the nine month period ending September 30, 1996, each as set
forth in Section 4.2(a) of the Disclosure Schedules, fairly present the results
of operations of the Newspapers for the periods then ended in accordance with
generally accepted accounting principles consistently applied except for
information ordinarily contained in footnotes to audited financial statements.
Complete and accurate copies of each of the above described financial
statements are contained in Section 4.2(a) of the Disclosure Schedule (all of
the foregoing financial statements described above are hereinafter referred to
as the "Financial Statements"). Other than as set forth above or in Section
4.2(a) of the Disclosure Schedule, the Financial Statements fairly present the
financial position of the Newspapers as of the respective dates thereof, and
the results of operations of the Newspapers for the respective periods covered
by said statements, in accordance with generally accepted accounting
principles, consistently applied, except for information ordinarily contained
in footnotes to audited financials. There were no material liabilities or
obligations of the Newspapers whatsoever, whether accrued, contingent or
otherwise, which are required under generally accepted accounting principles to
be reflected in such financial statements except as and to the extent reflected
in such financial statements, or in Section 4.2(a) of the Disclosure Schedule.
Furthermore, the Chief Financial Officer of Seller is not aware of any
adjustments, internal or otherwise, which would have been required as of
December 31, 1994 or December 31, 1995 to present fairly the financial position
of the Newspapers on a stand-alone basis as of such dates.
(c) Seller has good and marketable title to, and the
corporate power to sell, or a valid and subsisting leasehold interest in, the
tangible Purchased Assets, free and clear of any Liens, except for Permitted
Liens. As of the Closing, except for Permitted Liens, no unreleased mortgage,
trust deed, chattel mortgage, security agreement, financing statement or other
instrument encumbering any of the Purchased Assets will have been recorded,
filed, executed or delivered.
(d) Except as set forth in Section 4.2(d) of the
Disclosure Schedule, all Tax and information returns required to have been
filed by Seller with any government authority have been duly filed and each
such return correctly reflects Seller's Tax liabilities and all other
information required to be reported on and as of the Closing. As of the
Closing,
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Seller will have paid all Taxes then due and payable by Seller inclusive of all
penalties, assessments or deficits of every nature or description in respect of
Seller, and there currently are and as of the Closing there will be, no Liens
for unpaid Taxes with respect to the Purchased Assets, the Newspapers or the
Excluded Assets (except for Liens for Taxes not yet due and payable).
(e) Section 4.2(e) of the Disclosure Schedule sets forth
as of the date therein set forth a complete and correct list and brief
description of all Equipment material to the Newspapers or the Purchased Assets
(including, without limitation, all vehicles, computer equipment, software and
software licenses). Except for leased equipment covered by the Personal
Property Leases, Seller owns outright and has, and at Closing will convey to
Purchaser, good title to all the Equipment owned by Seller, free and clear of
all Liens other than Permitted Liens. Other than as set forth in Section
4.2(e) of the Disclosure Schedule, all of the Equipment included in the
Purchased Assets, including, without limitation, all press units together with
all accoutrements, attachments and accessories thereto (such as formers,
folders, splicers, inserters, operator consoles and the like), taken as a
whole, is in good operating condition and repair, ordinary wear and tear
excepted, and other than the Excluded Assets, constitute all of the equipment
currently used in connection with the Newspapers.
(f) All of the Inventory is in the physical possession
and control of Seller at its or its suppliers' facilities or in transit from
suppliers. The Inventory is of a quality readily usable and/or saleable in the
normal course of the Newspapers' business as conducted by Seller.
(g) Section 4.2(g) of the Disclosure Schedule contains a
true and correct list and description of all insurance policies which are owned
by Seller or which name Seller as insured and which pertain to the Purchased
Assets, the Newspapers, or employees of the Newspapers. All such insurance
policies are in full force and effect, and Seller has not received notice of
termination or non-renewal of any such insurance policies.
(h) Section 4.2(h) of the Disclosure Schedule sets forth
every business relationship (other than normal employment relationships and
other than as may pertain to the Excluded Assets) between Seller, on the one
hand, and any of Seller's or any of Seller's affiliates, officers or directors,
on the other hand, which is related to the Newspapers. None of said parties
(other than Seller) owns any assets which are used in the Newspapers, except
for Excluded Assets or as reflected in Section 4.2(h) of the Disclosure
Schedule.
(i) All Accounts Receivable are valid and have arisen in
the ordinary course of business, represent indebtedness incurred by the
applicable account debtor in bona fide third party transactions and are net of
reserves. The reserves contained in the Financial Statements have been
reported in accordance with generally accepted accounting principles. Seller
owns the Accounts Receivable free and clear of all liens for borrowed money,
other than liens for borrowed money that will be discharged at the Closing.
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(j) Since September 30, 1996, Seller's payment of its
accounts payable and Seller's collection or other treatment of its Accounts
Receivable have been consistent with past practices and in the ordinary course
of business.
4.3 Advertising and Commercial Printing.
(a) Section 4.3(a) of the Disclosure Schedule sets forth
a complete and correct list of the published rates for advertising lineage for
each of the Newspapers and a complete and correct list of and the amount of
revenues generated by each of the Newspapers largest (by dollar amount) (A) 10
retail advertisers, (B) 10 preprint advertisers, and (C) 10 classified
advertisers for the nine months ending September 30, 1996.
(b) Except as set forth in Section 4.3(b) of the
Disclosure Schedule, since September 30, 1996, Seller has not had any actual or
threatened in writing cancellation, non-renewal or material modification of any
agreements or relationships with advertisers listed in Section 4.3(a) of the
Disclosure Schedule, nor has Seller made any material change in its written
policies for the pricing of advertising for the Newspapers and, to the
knowledge of the Seller, no advertisers listed in Section 4.3(a) of the
Disclosure Schedule have provided written notice of their intent to (A) cancel
previously scheduled or contracted for advertising in the Newspapers for the
period following the Closing, or (B) terminate or modify significantly their
relationship with the Seller.
(c) Section 4.3(c) of the Disclosure Schedule sets forth
the published standard rates for each of the commercial printing activities
included within the Newspapers. This section of the Disclosure Schedule sets
forth a complete and current list of and the amount of revenues generated by
each of the 10 largest (by dollar value) commercial printing customers of each
of the commercial printing activities included within the Newspapers for the
periods indicated therein. Except as set forth in this section of the
Disclosure Schedule, since September 30, 1996, Seller has not had any actual or
threatened in writing cancellations, non-renewal or material modification of
any agreement or relationship with any of the commercial printing customers
listed in such section, nor has Seller made any material changes in its written
policies for the pricing of commercial printing services, nor, to the knowledge
of Seller, does any commercial printing customer listed in such section, have
provided written notice of their intent to cancel previously scheduled or
contracted for commercial printing work for the period following the Closing or
to terminate or modify significantly their business relationship with the
Seller.
4.4 Circulation Matters; Newsprint and Ink Purchases. With
respect to circulation matters and newsprint and ink purchases:
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(a) Attached to Section 4.4(a) of the Disclosure Schedule
pertaining to each of the Newspapers are (i) the most recently completed ABC
annual audit report and (ii) a true and complete copy of the September 30, 1996
publisher's statement submitted to ABC. From September 30, 1996, none of the
Newspapers' paid circulation has fallen more than 3% below the circulation
levels reported to ABC as of September 30, 1996.
(b) To Seller's knowledge, all representations contained in
such publisher's statements and other materials submitted by Seller to the ABC
for the periods covered by such publisher's statements and audit reports have
been true and complete in all material respects.
(c) Since September 30, 1996, Seller has not made any
material change in its policies for the pricing of circulation for the
Newspapers, except such changes as are set forth in Section 4.4(d) of the
Disclosure Schedule.
(d) Section 4.4(e) of the Disclosure Schedule sets forth
current lists as of September 30, 1996 or such later date as is specified in
such lists of all of Seller's (A) independent contractors which distribute the
Newspapers (along with their paid subscriber lists as of that date, (B) rack
and box locations for the Newspapers, (C) current dealers of the Newspapers,
(D) current paid subscribers of the Newspapers, and (E) newsprint and ink
vendors (including prices) to the Newspapers. With respect to the lists of
subscribers, Seller represents and warrants that such lists reasonably
accurately reflect the valid and paid subscribers of each of the Newspapers.
(e) Seller has not, during the past twelve months,
circulated any of the Newspapers whose circulation is audited by the ABC at
discounts more than the discounts reported to the ABC during such twelve month
period.
4.5 Conduct of Business.
(a) Except as set forth in Section 4.5(a) of the
Disclosure Schedule, since September 30, 1996, with respect to the Newspapers,
Seller has not:
(i) sold or in any way transferred or otherwise
disposed of any of its assets or property in excess of $25,000 in any instance,
except (A) in the ordinary course of Business and (B) cash applied in payment
of Seller's liabilities in the ordinary course of business;
(ii) suffered any material casualty, damage,
destruction or loss, or any material interruption in use, of any material
assets or property (whether or not covered by insurance), on account of fire,
flood, riot, strike or other hazard or Act of God;
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(iii) waived any right or canceled or compromised
any debt or claim, other than in the ordinary course of business and not in
excess of $10,000 for any item or $50,000 in the aggregate;
(iv) increased the compensation payable to any
employee of the Newspapers except in the ordinary course of business consistent
with past practices in an amount not to exceed 5% per year;
(v) hired, terminated or lost the services
through death, retirement or resignation of any employee who has or had an
annual salary in excess of $50,000;
(vi) borrowed any money or issued any bonds,
debentures, notes or other corporate securities evidencing money borrowed;
(vii) entered into any leases for real or personal
property requiring annual lease payments in excess of $35,000;
(viii) committed to make any capital expenditure in
excess of $10,000 which as of the date hereof and as of the Closing Date has
not been paid in full;
(ix) made any material change in accounting
methods or principles; or
(x) without limitation by the enumeration of any
of the foregoing, except for the execution of this Agreement, (A) entered into
any transaction or taken any action other than in the usual and ordinary course
of business, or (B) taken any action that, if taken after the date hereof,
would constitute a breach of any of the covenants set forth in Article VI
hereof (other than Section 6.2(d)(ii), (xi), (xii), (xiii), (xiv), (xv) or
(xvi)).
(b) Since September 30, 1996, Seller has not suffered any
material adverse change in the business, operations, assets, liabilities,
financial condition or prospects of the Newspapers, except for changes in the
economy or the newspaper business generally, and, to the Seller's publishers'
knowledge, no business with which Seller does not currently compete with
respect to print advertising has any plans to commence competing with the
Newspapers with respect to the sale of print advertising subsequent to the
Closing Date.
4.6 Contracts, Benefit Plans, Notes and Other Instruments.
(a) Except as described and set forth therein, Section
4.6(a) of the Disclosure Schedule correctly and completely lists and describes
all material contracts, leases, and agreements to which Seller is a party and
which relate to the Purchased Assets, the Real Estate, or the conduct of the
Newspapers, including, without limitation: collective bargaining agreements,
employment and employment related agreements; employee benefit
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plans; covenants not to compete; loan agreements; notes; security agreements;
sales representative, distribution, franchise, advertising and similar
agreements; license agreements; commercial printing contracts; subscriptions;
purchase orders and purchase contracts and sales orders and sales contracts
(but not including purchase orders for any property other than capital items
costing more than $10,000 or advertising contracts or orders for annual amounts
of $25,000 or less). All material contracts, subscriptions, leases and other
instruments referred to in this Section 4.6(a), and all other material
contracts or instruments to which Seller is a party with respect to the
Newspapers, are in full force and binding upon Seller and to Seller's knowledge
the parties thereto. Except as set forth in Section 4.6(a) of the Disclosure
Schedule, (i) no default by Seller has occurred thereunder, (ii) to the best of
Seller's knowledge, no default by the other contracting parties has occurred
thereunder, and (iii) no event, occurrence or condition exists which, with the
lapse of time, the giving of notice, or both, or the happening of any further
event or condition, would become a default by Seller thereunder.
(b) Other than as set forth in Section 4.6(b) of the
Disclosure Schedule, Seller is not a party to, or bound by, any unexpired,
undischarged or unsatisfied written or oral material contract, agreement,
indenture, mortgage, debenture, note or other instrument relating to the
Newspapers under the terms of which performance by Seller according to the
terms of this Agreement will be a default or an event of acceleration, or
whereby timely performance by Seller according to the terms of this Agreement
will be prohibited, prevented or delayed.
(c) Section 4.6(c) of the Disclosure Schedule contains a
true and correct copy of every material license, permit, registration and
governmental approval, agreement and consent applied for, pending by, issued or
given to Seller, and every agreement with governmental authorities (Federal,
state, local or foreign) entered into by Seller, which is in effect or has been
applied for or is pending, in each event with respect to the Newspapers,
exclusive of Environmental Permits (the "Permits"). Such Permits constitute
all material licenses, permits, registrations, approvals and agreements and
consents (other than Environmental Permits) which are required in order for
Seller to conduct the Newspapers as presently conducted.
4.7 Employees.
(a) With respect to employees of the Newspapers:
(i) Except as set forth in Section 4.7(a) of the
Disclosure Schedule, all employee benefit plans, within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") (the
"Employee Benefit Plans"), maintained by Seller or any affiliate of the Seller,
as determined under Section 414(b), (c), (m) or (o) of the Internal Revenue
Code of 1986 (the "Code") ("ERISA Affiliate"), and which provide benefit to
employees of the Newspapers comply in all material respects with and are and
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have been operated in substantial accordance with each applicable provision of
ERISA, the Code (including, without limitation, the requirements of Code
Section 401(a) to the extent any of such plans which is an employee pension
benefit plan (within the meaning of Section 3(a) of ERISA) is intended to
conform to that section), other Federal statutes, and the regulations and rules
promulgated pursuant thereto or in connection therewith.
(ii) Each Employee Benefit Plan which is an
employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) and
which is a group health plan (within the meaning of Section 5000(b)(1) of the
Code) and which provides benefits to employees of the Newspapers complies in
all material respects with and has been and operated in accordance with each of
the requirements of Section 162(i) of the Code as in effect for years beginning
prior to 1989, Section 4980B of the Code for years beginning after December 31,
1988, and Part 6 of Subtitle B of Title I of ERISA ("COBRA"). There are no
pending or, to the best knowledge of Seller, threatened claims, suits or other
proceedings by any employee or former employee of the Newspapers or by the
beneficiary, dependent or representative of any such person, involving the
failure of any group health plan ever maintained with respect to the employees
of the Newspapers to comply with the health care continuation requirements of
COBRA.
(iii) Neither Seller nor any ERISA Affiliate has
incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC") as
a result of the voluntary or involuntary termination of an employee pension
benefit plan pertaining to employees of the Newspapers which is subject to
Title IV of ERISA. There is currently no active filing by Seller or any ERISA
Affiliate with the PBGC (and no proceeding has been commenced by the PBGC) to
terminate any employee pension benefit plan pertaining to employees of the
Newspapers which is subject to Title IV of ERISA, and which has been maintained
or funded, in whole or in part, by Seller or any ERISA Affiliate.
(iv) Except as provided in Section 4.7(a) of the
Disclosure Schedule, neither Seller nor any ERISA Affiliate currently maintains
or is obligated to contribute to, nor has in the past maintained or contributed
to, any multiemployer plan, as defined in Section 3(37) of ERISA, pertaining to
employees of the Newspapers, and neither Seller nor any ERISA Affiliate has
suffered a complete withdrawal or partial withdrawal as such terms are defined
in Sections 4203 and 4205, respectively, of ERISA for which it reasonably
expects to incur any withdrawal liability, with respect to any such plan.
(b) With respect to the Newspapers' employees, except as
provided in Section 4.7(b) of the Disclosure Schedule:
(i) There are no pending or, to the best of
Seller's knowledge, threatened unfair labor practice charges or employee
grievance charges.
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(ii) There is no request for union representation,
labor strike, dispute, slowdown or stoppage actually pending or, to the best of
Seller's knowledge, threatened against or directly affecting Seller.
(iii) No grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or
threatened.
(iv) Other than the Assumed Liabilities, Seller
shall make all payments required to be made prior to the Closing Date under the
Employee Benefit Plans and all payments of accrued salaries or wages and
vacation pay required pursuant to any law or any policy of the Seller to be
made prior to the Closing Date with respect to employment of any persons by the
Newspapers until the close of business on the Closing Date. Except as set
forth in Section 4.7(b) of the Disclosure Schedule, Seller has no liability to
provide medical benefits to former employees of the Newspapers or their spouses
or dependents, other than as required by Section 4980B of the Code.
(v) Section 4.7(b)(v) of the Disclosure Schedule
contains a true and complete list of all of the Newspapers' employees as of the
date therein set forth, and such list correctly reflects their salaries, hours,
wages, other compensation (other than benefits under the Employee Benefit
Plans) including all bonuses paid or accrued as of such date, dates of
employment, positions and all severance pay entitlements.
(c) Seller has complied in all material respects with any
and all obligations arising under WARN relative to all employment losses,
terminations, layoffs and/or hours reductions among its employees occurring
subsequent to September 30, 1996 and prior to the Closing.
4.8 Litigation.
(a) Other than as set forth in Section 4.8(a) of the
Disclosure Schedule, there are no litigation, arbitrations, or proceedings, in
law or in equity, and there are no proceedings or governmental investigations
before any commission or other administrative authority, pending or threatened
in writing, against Seller or its Affiliates, or with respect to the Purchased
Assets or the Real Estate or with respect to the consummation of the
transaction contemplated hereby, or the use of the Purchased Assets (either by
Purchaser after the Closing or by Seller prior thereto).
(b) Other than as set forth in Section 4.8(b) of the
Disclosure Schedule, Seller is not a party to, or bound by, any decree, order
or arbitration award (or agreement entered into in any administrative, judicial
or arbitration proceeding with any governmental authority) with respect to the
Newspapers, their properties, assets, personnel or business activities.
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(c) Seller is not in violation of, or delinquent with
respect to, any decree, order or arbitration award or law, statute, or
regulation of or agreement with, or Permit from, any Federal, state or local
governmental authority (or to which its properties, assets, personnel, business
activities or the Real Estate are subject or to which it, itself, is subject),
including, without limitation, laws, statutes and regulations relating to equal
employment opportunities, fair employment practices, unfair labor practices,
terms of employment, occupational health and safety, wages and hours and
discrimination, and zoning ordinances and building codes, other than violations
or delinquencies which could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the assets, liabilities,
business, condition (financial or otherwise), results of operation or prospects
of the Seller or the Newspapers. Copies of all notices of violation of any of
the foregoing which Seller has received within the past year are attached to
Section 4.8(c) of the Disclosure Schedule.
4.9 Environmental Matters.
(a) Seller and its assets and business relating to the
Purchased Assets, the Real Estate and the Newspapers are in compliance with all
Environmental Laws and all material Environmental Permits. A copy of any
written notice, citation, inquiry or complaint which Seller has received in the
past five years of any alleged violation of or liability or potential liability
under any Environmental Law or Environmental Permit related to the Purchased
Assets, the Real Estate and the Newspapers is contained in Section 4.9(a) of
the Disclosure Schedule, and all material violations alleged in said notices
have been corrected. There have been no environmental investigations, studies,
audits, tests, reviews or analyses relating to the Purchased Assets or the Real
Estate conducted by Seller, or any consultant engaged by Seller, except as
described in Section 4.9(a) or 9.14 of the Disclosure Schedule. True and
complete copies of all reports issued in connection with such investigations,
etc. have previously been provided to Purchaser. Seller possesses all
Environmental Permits which are required for the operation of the Newspapers,
and is in compliance with the provisions of all such material Environmental
Permits. Copies of all material Environmental Permits issued to Seller are
contained in Section 4.9(a) of the Disclosure Schedule. Seller has taken all
appropriate measures to reapply for or renew such material Environmental
Permits where such action is necessary to keep such material Environmental
Permits in effect.
(b) Except as listed in Schedule 4.9(b) or as described
in Section 9.14 of the Disclosure Schedule, there has been no storage,
treatment, generation, transportation or Release of any Hazardous Materials by
the Seller or by any other person or entity for which Seller is responsible
(hereinafter, collectively "Seller or Seller's Agents or Affiliates") at any
Facility included within the Purchased Assets in violation of, or which could
give rise to, any obligation or the incurrence of any damages under,
Environmental Laws.
(c) Section 4.9(c) of the Disclosure Schedule sets forth
a complete list of all Containers that are now present at, or have heretofore
been removed by Seller or
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Seller's Agents or Affiliates from, the Real Estate. All Containers which have
been heretofore removed by Seller or Seller's Agents or Affiliates from the
Real Estate have been removed in accordance with all applicable Environmental
Laws.
(d) Without in any way limiting the generality of the
foregoing, except as disclosed in Section 4.9(d) or 9.14 of the Disclosure
Schedule:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure or office space
owned, operated, leased, managed or controlled by Seller or located on the Real
Estate;
(ii) no polychlorinated biphenyls are used or
stored on the Real Estate;
(iii) there are no locations included within the
Real Estate at which any Hazardous Material generated, used, owned or
controlled by Seller or Seller's Agents or Affiliates have been disposed of or
Released into the Environment; and
(iv) no Lien has been recorded under any
Environmental Law with respect to the Real Estate.
(e) None of the Real Estate is listed or proposed for
listing on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both promulgated
under CERCLA, or on any state or local list of sites requiring removal,
remedial response or corrective action pursuant to any Environmental Law.
4.10 Real Estate.
(a) The real property owned by Seller which is to be
purchased by Purchaser pursuant to this Agreement is identified in Section
4.10(a) of the Disclosure Schedule. Except as described in Section 4.10(a) of
the Disclosure Schedule, Seller holds, or will at the time of Closing hold, fee
simple title to the Real Estate, subject only to real estate taxes not
delinquent and to covenants, conditions, restrictions, easements of record and
such other matters either set forth or described in Section 4.10(a) of the
Disclosure Schedule, none of which makes title to the Real Estate unmarketable
for use in publishing a newspaper and none of which are violated by Seller or
will materially interfere with Purchaser's use thereof. None of the
improvements comprising the Real Estate, nor the businesses conducted by Seller
thereon, are in violation of any use or occupancy restriction, limitation,
condition or covenant of record or any zoning or building law, code or
ordinance or public utility easement other than violations which would not,
individually or in the aggregate, have a material adverse effect on the assets,
liabilities, business, condition (financial or otherwise), results of operation
or prospects of Seller or the Newspapers or the
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use or value of the Real Estate. To Seller's knowledge, no alterations or
improvements to the Real Estate violate the ADA or any other applicable laws or
regulations.
(b) The Real Estate currently is served by utilities
adequate to operate such facility at its current rate of production, and none
of the utility companies serving any such facility has threatened Seller with
any reduction in service. All of said utilities are installed and operating
and all installation and connection charges have been paid for in full.
(c) The continued maintenance and operation of the Real
Estate as currently maintained and operated is not dependent on facilities
located at other property, and the continued maintenance and operation of any
other property is not dependent on facilities located on the Real Estate; no
building or other improvement not part of the Real Estate relies on the Real
Estate or any part thereof or any interest therein to fulfill any governmental
requirement; and no building or other improvement on the Real Estate relies on
any property not included within the Real Estate to fulfill any governmental
requirement.
(d) Except as provided in section 4.10(d) of the
Disclosure Schedule, there are no challenges or appeals pending regarding the
amount of the taxes on, or the assessed valuation of, the Real Estate, and no
special arrangements or agreements exist with any governmental authority with
respect thereto.
(e) There is no Tax assessment (in addition to the
normal, annual general real estate Tax assessment) pending or, to the best of
Seller's knowledge, threatened with respect to any portion of the Real Estate.
(f) There are no condemnation proceedings pending or, to
the best of Seller's knowledge, threatened with respect to any portion of the
Real Estate.
4.11 Intellectual Property.
(a) All of Seller's material (i) trademarks, service
marks, slogans, trade names, trade dress and the like (collectively with the
associated goodwill of each, "Trademarks"); (ii) common law Trademarks; (iii)
proprietary formulations, manufacturing methods, know-how and trade secrets;
(iv) patents on and pending applications to patent any technology or design;
(v) registrations of and applications to register copyrights; and (vi) written
licenses of rights in computer software (other than off-the-shelf licenses),
Trademarks, patents, copyrights, unpatented formulations, manufacturing methods
and other know-how, whether to or by Seller, in each event used exclusively by
the Newspapers, are, with respect to clauses (i), (ii), (iv), (V) and (vi),
identified in Section 4.11(a) of the Disclosure Schedule and are referred to
herein collectively as the "Intellectual Property."
(b) (i) Seller is the owner of the trademarks the
Sentinel & Enterprise, The Daily News, and The Daily Nonpareil (collectively
the "Masthead Trademarks") and, to
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Seller's knowledge, is the owner of each other Trademark and its associated
goodwill; (ii) Seller has not received any written notice from any other firm,
corporation, association or person indicating that any such firm, corporation,
association or person claims the right to use in connection with similar or
closely related goods and in the same geographic area, any mark which is
identical or confusingly similar to any of the Trademarks; (iii) Seller has not
received any written claim that any third party asserts ownership rights in any
of the Intellectual Property; (iv) Seller has not received any written claim
that Seller's use of any Intellectual Property infringes any right of any third
party; (v) Seller has not received any written claim that any third party is
infringing any of Seller's rights in any of the Intellectual Property; (vi)
except pursuant to written licenses disclosed in Disclosure Schedule, Seller is
under no obligation to pay any royalties or similar payments in connection with
any license of Intellectual Property; (vii) subject to Section 9.3, the
consummation of the transaction contemplated by this Agreement will not result
in the impairment of Seller's right to use any of the Intellectual Property nor
infringe upon the rights of any third party; and (viii) to Seller's knowledge,
Seller is the owner of or possesses valid and subsisting licenses for or has
the right to use all Intellectual Property used in the conduct of the
Newspapers and the operation of the Purchased Assets as now conducted and
operated.
4.12 Second Class Mail. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the Newspapers were, to the best of Seller's knowledge, true and
correct in all material respects at the time of their filing.
4.13 Deposits/Bonds. Section 4.13 of the Disclosure Schedule is a
true and correct schedule of all material security deposits, surety deposits
and bonds presently maintained in whole or in part on behalf of Seller.
4.14 General.
(a) The Purchased Assets constitute, except for the
Excluded Assets and except for those assets which are described in Section 4.14
of the Disclosure Schedule, (i) all of the assets and property used, or held
for use by Seller in, or related to the operations of, the Newspapers and (ii)
all of the assets necessary to own and conduct the Newspapers as they are
presently conducted, and there are no properties or assets of the type
described in the definition of Purchased Assets owned, used, or held for use by
Seller in the operation of the Newspapers that are not included in the
Purchased Assets. All the Purchased Assets that constitute tangible real or
personal property are located in either the Commonwealths of Pennsylvania or
Massachusetts or in the State of Iowa.
(b) The representations and warranties of Seller in this
Agreement, Seller's Ancillary Documents, and all other certificates, schedules,
documents or instruments
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delivered or to be delivered to Purchaser in connection with this Agreement do
not and will not contain any untrue statement of a material fact or omit or
will omit to state a material fact required to be stated herein or therein in
order to make the representations, warranties or statements contained herein
and therein not misleading. Seller makes no representations or warranties,
express or implied, other than those expressly provided herein.
(c) Complete and accurate copies of all documents
referred to in the Disclosure Schedule have previously been furnished by Seller
to Purchaser.
(d) Neither Seller nor any of its Affiliates has dealt
with any person or entity who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for arranging the
transaction contemplated hereby or introducing the parties to each other, that
will result in the payment of any fees by Purchaser.
(e) No Phase I environmental assessment or other
assessment conducted by Purchaser with respect to the Purchased Assets prior to
Closing shall be deemed to relieve Seller of any obligation with respect to any
warranties, representations, covenants or other understandings made pursuant to
this Agreement.
ARTICLE V
Purchaser's Representations and Warranties
5.1 General. Purchaser represents and warrants to Seller that:
(a) Purchaser is a corporation duly organized, existing
and in good standing under the laws of the State of Delaware.
(b) Purchaser has full corporate power and authority to
execute and deliver (i) this Agreement and (ii) all documents and instruments
to be executed by Purchaser pursuant to this Agreement (collectively,
"Purchaser's Ancillary Documents") and to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
This Agreement has been, and Purchaser's Ancillary Documents will be, duly
executed and delivered by duly authorized officers of Purchaser and this
Agreement and each of Purchaser's Ancillary Documents that is a contract
constitutes a legal, valid and binding obligation of Purchaser signing the
same, enforceable in accordance with its terms.
(c) No consent, authorization, order or approval of, or
filing or registration with, any governmental authority or other person is
required for the execution and delivery by Purchaser of this Agreement and
Purchaser's Ancillary Agreements, and the consummation by Purchaser of the
transactions contemplated by this Agreement and Purchaser's Ancillary
Documents. All acts required to be taken by Purchaser to authorize
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the execution and delivery of this Agreement and each of Purchaser's Ancillary
Documents, the performance of each of its obligations hereunder and thereunder
and the consummation of the transactions contemplated of Purchaser's
stockholders and board of directors, have been duly and properly taken, and no
other proceedings on the part of Purchaser are necessary to authorize such
execution, delivery and performance.
(d) Neither the execution and delivery of this Agreement
and Purchaser's Ancillary Documents by Purchaser, nor the consummation by
Purchaser of the transactions herein contemplated, will conflict with or result
in a breach of any of the terms, conditions or provisions of (i) Purchaser's
Certificates of Incorporation or By-laws, (ii) any statute or administrative
regulation, (iii) any order, writ, injunction, judgment or decree of any court
or governmental authority or of any arbitration award applicable to Purchaser,
or (iv) any material contract or agreement of which any of Purchaser or
Purchaser's Affiliates may be bound, nor give rise to any default,
acceleration, or right of termination under any such contract or agreement.
(e) Neither the Purchaser, nor any of its Affiliates,
have dealt with any person or entity who is or may be entitled to a broker's
commission, finder's fee, investment banker's fee or similar payment for
arranging the transaction contemplated hereby or introducing the parties to
each other.
ARTICLE VI
Conduct Prior to the Closing
6.1 General. Seller and Purchaser shall have the rights and
obligations with respect to the period between the date hereof and the Closing
Date which are set forth in the remainder of this Article VI.
6.2 Seller's Obligations. The following are Seller's obligations
between the date hereof and the Closing Date as they relate to the Newspapers
and the transactions described herein:
(a) Seller shall give to Purchaser's officers, employees,
attorneys, consultants and accountants reasonable access during normal business
hours to all of the properties, books, contracts, documents, records and
personnel of Seller relating solely to the Newspapers and shall furnish to
Purchaser such information relating solely to the Newspapers as Purchaser may
at any time and from time to time reasonably request.
(b) Seller shall use reasonable, good faith efforts (and
Purchaser shall cooperate with Seller) to obtain all consents and/or approvals
specified by Purchaser to the assignment of, or alternate arrangements
satisfactory to Purchaser with respect to, any
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contract, lease, insurance policy, agreement, purchase order, sales order, or
other instrument, Permit or Environmental Permit, which is to be assigned to
Purchaser hereunder and which may be required for such assignment to be
effective (the "Consents").
(c) Seller shall carry on the Newspapers in the usual and
ordinary course of business, consistent with past practices, and shall use its
reasonable best efforts to preserve its business and the goodwill of its
advertisers, subscribers, customers, suppliers and others having business
relations with the Seller and to retain its business organization intact,
including efforts to keep substantially available the services of its
respective present employees, representatives and agents, and shall maintain
all of its properties in good operating condition and repair, ordinary wear and
tear excepted.
(d) Without the prior written consent of Purchaser, and
without limiting the generality of any other provision of this Agreement,
Seller shall not:
(i) make any payments or distributions to its
respective employees, officers or directors, except in the ordinary course of
business;
(ii) hire any new employee or terminate, other
than for cause, the employment of any employee having an annual salary or wages
in excess of $50,000;
(iii) incur or commit to incur any capital
expenditures in excess of $10,000 not set forth in the Disclosure Schedule;
(iv) incur, assume or guarantee any long-term or
short-term indebtedness for borrowed money;
(v) directly or indirectly, enter into or assume
any contract, agreement, obligation, lease, license or commitment pursuant to
which the aggregate annual obligations or liabilities exceed $50,000 or which
are not cancelable without penalty upon 90 days notice or less;
(vi) adopt or amend any Plan, Welfare Plan or
Employee Benefit Plan;
(vii) increase the compensation payable to any
employee, except as may be required by law or that apply to all of Seller's
employees generally, in excess of 5%, except in accordance with existing
collective bargaining agreements or other employment agreements;
(viii) enter into any new collective bargaining
agreement or modify or extend any existing collective bargaining agreement with
the effect of incurring obligations after the Closing Date;
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(ix) sell, transfer or otherwise dispose of any
material asset or property (other than Excluded Assets) except in the ordinary
course of business and except for cash applied in payment of Seller's trade
liabilities in the ordinary course of business, create any Lien on any asset or
property or compromise or cancel any debts or claims relating thereto, other
than in the ordinary course of Seller's business;
(x) amend, terminate or give notice of
termination with respect to any existing material agreement to which the Seller
is a party, or waive any material rights thereunder;
(xi) sell advertising and subscriptions on terms
inconsistent with past practices with respect to credit and collection
policies;
(xii) directly or indirectly, enter into any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of services) with any Affiliate of
Seller;
(xiii) manage the newsprint and supply inventories
of the Newspapers so that the quantities of newsprint and supplies of all of
the Newspapers which are made available to the Purchaser at the Closing are not
in the aggregate less than the quantities on hand at the Newspapers as of
December 31, 1996;
(xiv) manage the trade accounts payables of any of
the Newspapers so that the average age of any of its Newspapers trade payables
at the Closing Date are greater than the average age of such trade payables at
December 31, 1996, each calculated on a weighted average basis, or otherwise
fail to pay its accounts payables consistent with past practices;
(xv) manage the accounts receivable of any of the
Newspapers other than in the ordinary course of business and in strict
compliance with the established business practices of each of the Newspapers,
or compromise any claims with respect to such accounts, or grant any discounts
for the accelerated payment of such accounts, or otherwise, except in strict
compliance with the established business practices of each of the Newspapers;
or
(xvi) pay, incur, utilize or otherwise manage the
prepaid expenses of each Newspaper other than in the ordinary course of
business and in strict compliance with the established business practices of
each Newspaper.
(e) Seller shall promptly disclose to Purchaser any
information contained in its representations and warranties or the Disclosure
Schedule which, because of an event occurring after the date hereof, is
incomplete or is no longer correct as of all times after the date hereof until
the Closing Date; provided, however, that none of such Disclosures shall
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be deemed to modify, amend or supplement the representations and warranties of
Seller or the Disclosure Schedule hereto for the purposes of Article IV hereof,
unless Purchaser shall have consented thereto in writing.
(f) Seller shall refrain, beginning from the date hereof
through 12:01 a.m. on the day next succeeding the Closing Date, from taking any
action which would result in an employment loss (as such term is defined in
WARN).
6.3 Joint Obligations. The following shall apply with equal force
to Seller and Purchaser:
(a) Without implication that such laws apply to the
transactions contemplated hereby, Seller and Purchaser shall not comply with
the provisions of the laws of any states relating to bulk sales or bulk
transfer laws other than as specifically required herein.
(b) No party shall intentionally perform any act which,
if performed, or omit to perform any act which, if omitted to be performed,
would prevent or excuse the performance of this Agreement by any party hereto
or which would result in any representation or warranty herein contained of
said party being untrue in any material respect as if originally made on and as
of the Closing Date.
(c) Each party hereto will (i) take all commercially
reasonable steps necessary, and proceed diligently and in good faith and use
all commercially reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to governmental or regulatory bodies required of such parties or their
Affiliates to consummate the transactions contemplated hereby, including, but
not limited to, those required under the HSR Act, (ii) provide such other
information and communications to such governmental or regulatory bodies as
such parties or such governmental or regulatory bodies may reasonably request
in connection therewith and (iii) cooperate with each other as promptly as
practicable in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to governmental or regulatory bodies
required of each party or any of its Affiliates to consummate the transactions
contemplated hereby. Each party hereto will provide prompt notification to
each other party hereto or its Affiliates when any such consent, approval,
action, filing or notice referred to in clause (i) above is obtained, taken,
made or given, as applicable, and will advise each other party hereto of any
communications (and, unless precluded by law, provide copies to each other
party hereto of any such communications that are in writing with any
governmental or regulatory body regarding any of the transactions contemplated
by this Agreement). In addition to and not in limitation of the foregoing,
each party hereto will (a) comply at the earliest practicable date with any
request for additional information received by each of them or their Affiliates
from the Federal Trade Commission or the Antitrust Division of the Department
of Justice pursuant to the HSR Act and (b) cooperate with each other in
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connection with any filing under the HSR Act and in connection with resolving
any investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by either the Federal Trade Commission, the Antitrust
Division or the Department of Justice or state attorneys general. Consistent
with past transactions between Purchaser and Seller, Seller shall reimburse
Purchaser at the Closing one-half of Purchaser's total HSR filing fees of
$45,000.
ARTICLE VII
Conditions to Closing
7.1 Conditions to Seller's Obligations. The obligation of Seller
to consummate the transactions contemplated hereby is subject to the
fulfillment or waiver of all of the following conditions on or prior to the
Closing Date, upon the material non-fulfillment of any of which this Agreement
may, at Seller's option, be terminated pursuant to and with the effect set
forth in Article XI hereof:
(a) Each and every representation and warranty made by
Purchaser shall have been true and correct in all material respects when made
and shall be true and correct in all material respects as if originally made on
and as of the Closing Date.
(b) All obligations of Purchaser to be performed
hereunder through, and including on, the Closing Date shall have been performed
in all material respects.
(c) Seller shall have received all of the agreements,
certificates, documents and items specified in Section 8.2.
(d) No suit, proceeding or investigation shall have been
commenced and pending by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to see material damages on account
of, the consummation of the transactions contemplated hereby.
(e) Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Newspapers shall have expired or
shall have been terminated.
7.2 Conditions to Purchaser's Obligations. The obligation of
Purchaser to consummate the transactions contemplated hereby is subject to the
fulfillment or waiver of all of the following conditions on or prior to the
Closing Date, upon the material nonfulfillment of any of which this Agreement
may, at Purchaser's option, be terminated pursuant to and with the effect set
forth in Article XI hereof:
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(a) Each and every representation and warranty made by
Seller shall have been true and correct in all material respects when made
without regard to any schedule updates furnished by Seller thereafter and shall
be true and correct in all material respects as if originally made on and as of
the Closing Date.
(b) All obligations of Seller to be performed hereunder
through, and including on, the Closing Date shall have been performed in all
material respects.
(c) Purchaser shall have received all of the agreements,
certificates, documents and items specified in Section 8.3.
(d) All of the Consents set forth in Section 7.2(d) of
the Disclosure Schedules ("Material Consents").
(e) No suit, proceeding or investigation shall have been
commenced and pending by any governmental authority or private person on any
grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transactions contemplated hereby.
(f) Seller shall assist Purchaser as requested by
Purchaser, in procuring, at Purchaser's expense, an owner's title insurance
policy (ALTA Owner's Policy Form B-1970 (rev. 10/17/70 and 10/17/84)) with
respect to each parcel of the Real Estate the fee simple title which is being
conveyed to Purchaser by Seller insuring Purchaser in an amount not less than
the assessed value of such parcels and issued by a title insurance company
reasonably acceptable to Purchaser and Seller showing fee simple title thereto
to be vested in Purchaser and subject only to the standard general exceptions
in such policy, the exceptions set forth in Section 4.10(a) of the Disclosure
Schedule and such exceptions as are reasonably acceptable to Purchaser.
(g) Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Newspapers shall have expired or
shall have been terminated.
ARTICLE VIII
Closing
8.1 Form of Documents. At the Closing, the parties shall deliver
the documents, and shall perform the acts, which are set forth in this Article
VIII. All documents which Seller shall deliver shall be in form and substance
reasonably satisfactory to Purchaser and Purchaser's counsel. All documents
which Purchaser shall deliver shall be in form and substance reasonably
satisfactory to Seller and Seller's counsel.
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8.2 Purchaser's Deliveries. Subject to the fulfillment or waiver
of the conditions set forth in Section 7.2 of this Agreement, Purchaser shall
execute and/or deliver to Seller all of the following:
(a) the portion of the Purchase Price payable by wire
transfer or bank draft, in immediately available funds, at the Closing;
(b) a certified copy of Purchaser's Certificates of
Incorporation and By-laws;
(c) a certificate of good standing of Purchaser, issued
not earlier than ten (10) days prior to the Closing Date by the Secretary of
State of Delaware;
(d) an incumbency and specimen signature certificate with
respect to the officers of Purchaser executing this Agreement and Purchaser's
Ancillary Documents on behalf of Purchaser;
(e) a certified copy of resolutions of Purchaser's board
of directors, authorizing the execution, delivery and performance of this
Agreement and Purchaser's Ancillary Documents;
(f) a closing certificate executed by the Chief Executive
Officer of Purchaser (or any other officer of Purchaser specifically authorized
to do so), on behalf of Purchaser, pursuant to which Purchaser represents and
warrants to Seller that Purchaser's representations and warranties to Seller
are true and correct as of the Closing Date as if then originally made (or, if
any such representation or warranty is untrue in any respect, specifying the
respect in which the same is untrue), that all covenants required by the terms
hereof to be performed by Purchaser on or before the Closing Date, to the
extent not waived by Seller in writing, have been so performed (or, if any such
covenant has not been performed, indicating that such covenant has not been
performed), and that all documents to be executed and delivered by Purchaser at
the Closing have been executed by duly authorized officers of Purchaser;
(g) an assumption agreement, duly executed by Purchaser,
under which Purchaser assumes the Assumed Liabilities and all other liabilities
to be assumed by Purchaser pursuant to Article III and Section 2.1 of this
Agreement and indemnify Seller and hold Seller harmless from and against any
and all such liabilities assumed by Purchaser; and,
(h) An opinion from Purchaser's counsel, in the form
appended to this Agreement as Exhibit B.
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8.3 Seller's Deliveries. Subject to the fulfillment or waiver of
the conditions set forth in Section 7.1 of this Agreement, Seller shall deliver
to Purchaser physical possession of all tangible Purchased Assets, and shall
execute (where applicable in recordable form) and/or deliver or cause to be
executed and/or delivered to Purchaser all of the following:
(a) certified copies of each of Seller's charter
documents and By-laws;
(b) certificates of good standing of Seller, issued not
earlier than ten (10) days prior to the Closing Date by the Secretaries of
State of the states of its incorporation;
(c) an incumbency and specimen signature certificate with
respect to the officers of Seller executing this Agreement and Seller's
Ancillary Documents on behalf of Seller;
(d) a certified copy of resolutions or consents to action
without a meeting of the board of directors and stockholders of Seller,
authorizing the execution, delivery and performance of this Agreement and
Seller's Ancillary Documents;
(e) a bill of sale, executed by Seller, in the form
appended to this Agreement as Exhibit D;
(f) an assignment to Purchaser executed by Seller, in the
form appended to this Agreement as Exhibit E, assigning to Purchaser all of the
Purchased Assets (other than the Inventory, Equipment, other tangible personal
property and the Real Estate). If necessary in the opinion of Purchaser's
counsel, Seller shall also execute and deliver (in recordable form where
required) separate assignments of any of the Purchased Assets, where
applicable, in the form required by the applicable governmental agencies,
insurance companies, customers, lessors, and other parties with whom the
assignments must be filed;
(g) a closing certificate duly executed by the Chief
Executive Officers of Seller (or any other officer of Seller specifically
authorized to do so) on behalf of Seller, pursuant to which Seller represents
and warrants to Purchaser that Seller's representations and warranties to
Purchaser are true and correct in all material respects as of the Closing Date
as if then originally made (or if any such representation or warranty is untrue
in any respect, specifying the respect in which the same is untrue), that all
covenants required by the terms hereof to be performed by Seller on or before
the Closing Date, to the extent not waived by Purchaser in writing, have been
so performed in all material respects (or, if any such covenant has not been so
performed, indicating that such covenant has not been performed), and that all
documents to be executed and delivered by Seller at the Closing have been
executed by duly authorized officers of Seller;
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(h) a certificate of the Chief Financial Officer of
Seller, on behalf of the Seller, dated as of the Closing Date, stating that
there has been no material change in the information disclosed in Section 4.2
of the Disclosure Schedule which would have a material adverse effect on the
Newspapers;
(i) releases of all Liens other than Permitted Liens on
the Purchased Assets, including without limitation, as applicable, termination
statements and releases of mortgages and collateral assignments of leases and
rents, and all necessary consents of Seller's lenders to the transactions set
forth herein;
(j) a bargain and sale deed with unconditional warranties
against (i) any acts by Seller or any Affiliate and (ii) all occurrences during
the period of Seller's or its Affiliate's ownership of the Real Estate (subject
only to Permitted Liens and in all respects sufficient to permit the title
company issuing the Owner's Title Policy referenced in Section 7.2(f) hereof to
issue such Policy without exceptions which would breach Seller's
representations and warranties in Section 4.10), a standard owner's and
Seller's affidavit to and for the benefit of Purchaser and the title company
issuing the Owner's Title Policy sufficient in form and content to permit the
deletion of standard exceptions (1) and (4) of such Policy and a certificate in
compliance with the Foreign Investment in Real Property Tax Act ("FIRPTA")
certifying that Seller is not a person or an entity subject to withholding
under FIRPTA, with respect to each parcel of the Real Estate, provided, that
anything in this Agreement to the contrary notwithstanding, if Seller shall be
unable to convey title to the real estate properties included within the
Purchased Assets at the Closing in accordance with the provisions of this
Agreement, Purchaser shall inform Seller within five business days of
Purchaser's decision either (i) to accept such title to such properties as
Seller may be able to convey, without any credit against the purchase price or
other liability on Seller's part, including any obligation to cure any title
defect or to otherwise comply with the provisions of Sections 4.10, 8.3(j) or
9.6 hereof with respect to such properties or (ii) as Purchaser's sole and
exclusive right and remedy for Seller's inability to convey title to such
properties in accordance with the terms of this Agreement, to terminate this
Agreement, in which event this Agreement shall be deemed canceled and both
parties shall be relieved of any rights and obligations hereunder. In either
event, Purchaser shall be deemed to have waived its right to seek
indemnification from Seller with respect to Seller's inability to convey title
to such properties in accordance with the terms of this Agreement;
(k) to the extent obtained, all necessary Material
Consents or alternate arrangements with respect thereto, all as reasonably
acceptable to Purchaser;
(l) certificates of title or origin (or like documents)
with respect to all vehicles included in the Purchased Assets and other
Equipment for which a certificate of title or origin is required in order for
title thereto to be transferred to Purchaser; and
(m) an opinion from Seller's counsel in the form appended
to this Agreement as Exhibit C.
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ARTICLE IX
Post-Closing Matters
9.1 Purchaser's Obligations with Respect to Employees of the
Newspapers. Purchaser covenants that it will offer employment, as of the
Closing Date and for such period thereafter as it shall determine, to all of
the employees of the Newspapers other than those employees of the Newspapers
which Purchaser has notified Seller in a letter of even date herewith that it
has elected not to hire (the "Excluded Employees"), at such salaries as
Purchaser determines appropriate. In so doing, Purchaser shall recognize the
vacation benefits of such employees accrued during their previous employment by
the Newspapers and not paid to such employees by Seller on or prior to the
Closing Date. Purchaser shall further offer all such employees health,
welfare, 401(k), holiday, vacation and sick leave benefits, comparable to those
customarily provided to employees of Purchaser, pursuant to which such
employees shall receive service credit for their previous employment by the
Newspapers. Notwithstanding the foregoing, subject to the procedures set forth
in Article X of this Agreement, Purchaser shall indemnify Seller fully against
any Damages incurred by Seller (which shall include without limitation
severance obligations, but only if determined in accordance with Seller's past
practices and which as to any single employee do not exceed one year's base
salary, as agreed upon and confirmed in writing by Purchaser and Seller prior
to Closing) as a consequence of Purchaser's failure to assume any collective
bargaining agreement of Seller relating to the Newspapers or to offer
employment to (i) any of the Excluded Employees, at all or upon terms no less
favorable to those upon which they are employed by Seller as of the Closing and
(ii) any employee covered by any collective bargaining agreement relating to
the Newspapers on terms and conditions no less favorable than those required by
the terms and conditions of those agreements. These covenants are intended to
be solely for Seller's benefit and are not intended to create any rights on
behalf of any employee of the Newspapers, as a third party beneficiary, or
otherwise, nor are these covenants intended to restrict Purchaser's rights in
any manner with respect to such employees after the Closing Date as employees
at will in the same manner as Purchaser would be free to deal with such
employees in the absence of the provisions herein. Purchaser further covenants
and agrees to indemnify and hold Seller harmless (which covenant and agreement
shall survive the Closing hereunder), subject to the procedures set forth in
Article X of this Agreement, with respect to any Damages incurred by Seller
under the WARN Act, or with respect to any severance obligations (as
hereinbefore defined and subject to the limitations hereinbefore set forth), on
account of any action taken by Purchaser on or after the Closing Date,
including without limitation, Purchaser's failure to offer such employees
compensation or benefits equivalent to such employees' current compensation and
benefits.
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9.2 Inspection of Records. Seller shall deliver to Purchaser at
the Closing all of the books and records of Seller relating exclusively to the
Newspapers, as set forth in Section 1.2(i) above. Purchaser shall keep and
make any of such books, records and Tax information of Seller available for
inspection by Seller, or by Seller's duly accredited representatives, for
reasonable business purposes at all reasonable times during normal business
hours, for a seven (7) year period after the Closing Date, with respect to all
transactions occurring prior to and those relating to the Closing and the
historical financial condition, assets, liabilities, results of operations and
cash flows of Seller. As used in this Section 9.2, the right of inspection
includes the right to make extracts or copies.
9.3 Certain Assignments. Any other provision of this Agreement to
the contrary notwithstanding, this Agreement shall not constitute an agreement
to transfer or assign, or a transfer or assignment of, any claim, contract,
lease, Permit, Environmental Permit, commitment, or sales order, or any benefit
arising thereunder or resulting therefrom, if an attempt at transfer or
assignment thereof without the consent required or necessary for such
assignment would constitute a breach thereof or in any way adversely affect the
rights of Purchaser or Seller thereunder. If such a consent or agreement to
transfer or assign is not obtained for any reason, Purchaser and Seller shall
cooperate in any arrangement Purchaser may reasonably request to provide for
Purchaser the benefits under such claim, contract, lease, Permit, Environmental
Permit, commitment or order; but the failure to obtain any such consent shall
not be deemed to be a breach of any representation or warranty or covenant or
agreement under this Agreement.
9.4 Use of Trademarks: References to Seller. Seller shall cease
subsequent to the Closing Date to use and shall not license or permit any third
party to use any of the Trademarks or any name, slogan, logo or trademark which
is similar or deceptively similar to any of the Trademarks. Purchaser may
refer to its business as formerly being Seller's.
9.5 Payments of Accounts Receivable. In the event Seller shall
receive subsequent to the Closing Date any instrument of payment of any of
amounts that belong to the Purchaser, the Seller shall immediately deliver it
to the Purchaser, endorsed where necessary, without recourse, in favor of the
Purchaser, including but not limited to collecting from advertisers under
corporate agreements for advertising in the newspapers for which advertiser
remits payment to Seller under such corporate agreement.
9.6 Transactional Costs/Expenses. Except as otherwise expressly
herein provided, each party shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the consummation of the
transactions contemplated hereby, including, without limitation, attorneys',
accountants, and other professional fees and expenses. All real estate closing
costs shall be paid by Purchaser.
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9.7 Disclosure of Confidential Information. As a further
inducement for Purchaser to enter into this Agreement, Seller agrees that for
the longest period permitted by law after the Closing Date, Seller shall, and
shall cause its Affiliates to, hold in strictest confidence, and not, without
the prior written approval of Purchaser, use for their own benefit or the
benefit of any party other than Purchaser or disclose to any person, firm or
corporation other than Purchaser (other than as required by law) any
confidential information of any kind relating to the Newspapers, except such
information as was publicly available prior to the Closing Date, becomes
publicly available or available to other third parties without restriction, or
is necessary to disclose pursuant to law, regulation, court order or
governmental request.
9.8 Injunctive Relief. Seller specifically recognizes that any
breach of Section 9.7 will cause irreparable injury to Purchaser and that
actual damages may be difficult to ascertain, and, in any event, may be
inadequate. Accordingly (and without limiting the availability of legal or
equitable, including injunctive, remedies under any other provisions of this
Agreement), Seller agrees that in the event of any such breach, Purchaser shall
be entitled to injunctive relief in addition to such other legal and equitable
remedies that may be available. Seller and Purchaser recognize that the time
limitation or absence of a time limitation in Section 9.7 or Section 9.8 is
reasonable and properly required for the protection of Purchaser and in the
event that such limitation or absence is deemed to be unreasonable by a court
of competent jurisdiction, Seller agrees and submits to the imposition of such
a limitation as said court shall deem reasonable.
9.9 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Purchased Assets to Purchaser, on the terms herein contained, and
to otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.
9.10 Maintenance of Insurance. From the date of this Agreement
until the date which is thirty (30) days after the end of the month during
which the Closing occurs, Seller shall, unless otherwise advised in writing by
Purchaser, maintain in full force and effect all of its insurance policies
which relate to employees of the Newspapers which are in effect as of the date
of this Agreement. Promptly, upon Purchaser's receipt of Seller's invoice
therefor, Purchaser shall reimburse Seller for the cost of providing such
insurance coverage for the period following the end of the month during which
the Closing occurs.
9.11 Excluded Liabilities. Seller shall discharge in a timely
manner following the Closing all of the Excluded Liabilities.
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9.12 Use of Certain Software. As of the Closing Date, Seller
shall, at Purchaser's election, make such arrangements on Purchaser's behalf as
may be necessary to enable Purchaser for the 60 day period commencing with the
Closing Date, and at Purchaser's subsequent election, for the remainder of
Seller's existing license for its Newzware software, to continue to use all of
the Newzware software currently used in the operations of the Newspapers upon
terms no less favorable to Purchaser than those relating to the Seller's use of
such software prior to the Closing, subject to Purchaser reimbursing Seller for
the costs properly allocable to Purchaser's use of the Newzware software during
such period or periods.
9.13 Payroll. Not later than five (5) days following the Closing
Date, Seller shall cause to be paid, in a timely manner and consistent with
Seller's past practices, all accrued payroll (including accrued commissions,
carrier tips and benefit plan contributions, if any) and all accrued payroll
taxes relating to work performed prior to the Closing Date or resulting from
termination prior to the Closing Date, with respect to all persons employed by
each of the Newspapers as of or prior to the Closing Date. With respect to the
payment of subsequent payrolls for such of these employees who are employed by
Purchaser subsequent to the Closing Date, it is Purchaser's and Seller's
intention that Purchaser be treated as a successor employer for federal payroll
tax purposes under the alternative procedures set forth in Rev. Proc. 84-77.
To this end, Seller and Purchaser covenant that they will file Internal Revenue
Service Form 941 in compliance with Sections 5.2 and 5.3, respectively.
9.14 Certain Structural Repair and Environmental Remediation
Matters. Section 9.14 of the Disclosure Schedule sets forth and describes
various structural repair and environmental remediation measures with respect
to the Purchased Assets and/or the operations of the Newspapers. That schedule
allocates between Seller and Purchaser the responsibility for dealing with
these structural and environmental matters. In consideration of Seller
granting to Purchaser a credit in the amount of $300,000 toward the Purchase
Price specified in Section 3.1 of this Agreement (the "Environmental/Structural
Credit"), Purchaser agrees to assume sole responsibility for addressing (a) any
and all structural repairs required for any Real Estate whether or not included
in any report prepared by Purchaser or Seller in connection with the
transactions contemplated hereby, and whether or not constituting a breach of
any representation or warranty hereunder, and (b) the structural repair and
environmental remediation measures described as being Purchaser's
responsibility in Section 9.14 of the Disclosure Schedule, and Seller shall be
relieved of all responsibility for such measures under the provisions of
Article X of this Agreement. Seller covenants that at its sole expense, as
soon as practicable following the Closing, and subject to the provisions of
10.6 of this Agreement, Seller will cause to be satisfactorily completed, each
of the repair and remedial measures set forth and described in Section 9.14 of
the Disclosure Schedule as being Seller's responsibility.
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9.15 Certain Syndicated Features. As currently published by
Seller, various of the Newspapers may contain various syndicated columns,
features and/or other materials licensed by Seller and/or its parent
corporation pursuant to various agreements which pertain not only to the
Newspapers, but also to publications owned by Seller which are not being sold
to Purchaser pursuant to this Agreement (collectively, the "Syndicated
Features"). Subject to the provisions of those agreements, Seller covenants to
use its reasonable efforts to cause Purchaser, commencing on the Closing Date
and continuing for a period of not less than one year, to be able to include in
each of the Newspapers each of the Syndicated Features which are currently
included in those publications as currently published by Seller, upon terms no
less favorable to each Newspaper than those currently applicable to such
publications.
ARTICLE X
Indemnification
10.1 General. From and after the Closing, the parties shall
indemnify each other as provided in this Article X. For the purposes of this
Article X, each party shall be deemed to have remade all of its representations
and warranties contained in this Agreement at the Closing with the same effect
as if originally made at the Closing. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation: reasonable attorneys', accountants',
investigators', and experts' fees and expenses sustained or incurred in
connection with the defense or investigation of any such claim.
10.2 Indemnification Obligations of Seller. Notwithstanding any
other provision of this Agreement, Seller shall jointly and severally defend,
indemnify, save and keep harmless Purchaser and its successors and permitted
assigns against and from all Damages sustained or incurred by any of them
resulting from or arising out of or by virtue of:
(a) any breach of any representation or warranty made by
Seller in this Agreement or in any closing document delivered to Purchaser in
connection with this Agreement, irrespective of whether known to Purchaser as
of or prior to the Closing Date;
(b) any breach by Seller of, or failure by Seller to
comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article X);
(c) the failure to discharge when due any of the Excluded
Liabilities, or any claim against Purchaser with respect to any Excluded
Liability;
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(d) any benefit or other liability accruing prior to the
Closing Date with respect to any Employee Benefit Plan or Welfare Plan which
Seller or an ERISA Affiliate have at any time maintained or administered or to
which Seller or any ERISA Affiliate have at any time contributed (including,
without limitation, any liability for health continuation requirements under
Code Section 4980B or Part 6 of Subtitle B of Title I of ERISA) which relate to
employees of the Newspapers and any liability arising pursuant to Title IV of
ERISA for plan termination, withdrawal or partial withdrawal from any
Multiemployer Plan with respect to employees of the Newspapers, or any lien to
enforce any Title IV liability or any liability for retiree benefits accrued
prior to the Closing Date with respect to employees of the Newspapers;
(e) any benefits accrued prior to the Closing Date
pursuant to any Employee Benefit or Welfare Plan maintained in whole or in part
by Seller with respect to the Newspapers, or any action or failure to act, in
whole or in part, by Seller with respect to such plans prior to the Closing
Date; or
(f) without being limited by the foregoing paragraphs (a)
through (e), and without regard to whether any one or more of the items listed
in this paragraph (f) may be disclosed in the Disclosure Schedule or otherwise
known to Purchaser as of the date hereof or the Closing Date as a consequence
of the examination, testing or inspection described in Section 4.9 or 7.2(h) of
this Agreement or otherwise:
(i) any violation by Seller, its agents or
Affiliates of, or delinquency with respect to, any decree, order, arbitration
award, law, statute, or regulation in effect on or prior to the Closing Date or
of any agreement of Seller with, or any license, Permit or Environmental Permit
granted to Seller from, any Federal, state or local governmental authority to
which the properties, assets, personnel or business activities of the
Newspapers are subject (or to which the Seller is subject as it relates to the
properties, assets, personnel or business activities of the Newspapers),
including, without limitation, laws, statutes and regulations relating to
occupational health and safety, building codes, zoning, equal employment
opportunities, fair employment practices and discrimination;
(ii) any generation, transportation, storage,
treatment or Release of any Hazardous Material by Seller, its agents or
Affiliates occurring on or prior to the Closing Date (including without
limitation those that result in any Release or treatment of Hazardous Materials
after the Closing Date), at (A) any Facility included within the Purchased
Assets, or (B) any Offsite Facility with regard to any Hazardous Materials with
which Seller was involved in any way at any time;
(iii) any discharges to or from storm, ground or
surface waters or wetlands, and any air emissions or pollution, emanating from
the Real Estate, which (a) with respect to the real property and all
appurtenances thereto, and improvements thereon described in Section 1.2 of
this Agreement, result from or are caused by any activities of Seller, its
agents or Affiliates, and (b) with respect to all other real property leased by
Seller
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included in the Purchased Assets, and all appurtenances thereto and
improvements thereon, result from or are caused by any activities of Seller,
its agents or Affiliates during the term of Seller's leases with respect
thereto; or,
(iv) any violation or alleged violation by Seller,
its agents or Affiliates of, or obligation imposed by, any Environmental Law as
a result of activities, events, conditions or occurrences with respect to the
Newspapers during the period the Newspapers were owned by Seller prior to the
Closing Date.
(v) any claim by any Third Party arising with
respect to the matters described in Section 2a(3)or 2b(2) of Section 9.14 of
the Disclosure Schedules.
Seller's obligations under this Section 10.2 shall be subject to the procedures
set forth in Article X and shall extend until the applicable statute of
limitations with respect to the filing of Third Party Claims with regard
thereto shall have expired, except that Seller's obligations under Sections
10.2(a) with respect to its warranties and representations under all sections
of this Agreement other than Sections 4.2(d) and 4.9 shall extend for only one
(1) year following the Closing Date, provided, that if at the end of such one
year period there shall then remain pending any claims with respect to such
warranties and representations for which Purchaser has provided Seller with
written notice, Purchaser shall continue to have the right to be indemnified by
Seller with respect thereto until such claims have been definitively resolved.
Notwithstanding anything to the contrary in this Agreement, and except
for claims relating to breaches of Seller's warranties and representations
under Sections 4.2(d) Seller's indemnification obligations under 10.2(d), (e)
and (f), Seller's covenants under Section 6.2(d)(iii), (iv), (ix), (xi), (xii),
(xiii), (xiv), (xv) and (xvi), Section 9.14 and Section 9.15, Seller shall not
be liable to Purchaser unless the aggregate of all Damages suffered by
Purchaser under the provisions of this Agreement, in the aggregate, exceeds
$200,000 and then only to the extent of such excess, but in no event shall
Seller be liable in excess of the Purchase Price.
10.3 Purchaser's Indemnification Obligations. Notwithstanding any
other provision of this Agreement, Purchaser shall jointly and severally
defend, indemnify, save and keep harmless Seller and its successors and
permitted assigns against and from all Damages sustained or incurred by any of
them resulting from or arising out of or by virtue of:
(a) any breach of any representation or warranty made by
Purchaser in this Agreement or in any closing document delivered to Seller in
connection with this Agreement irrespective of whether known to Seller as of or
prior to the Closing Date;
(b) any breach by Purchaser of, or failure by Purchaser
to comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article X);
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(c) Purchaser's failure to pay, discharge or perform any
of the Assumed Liabilities or any claim against Seller with respect to any
Assumed Liability;
(d) any claims incurred subsequent to the Closing Date
which are paid by Seller with respect to the self-insurance portion of any
health insurance, long term disability, accidental death and dismemberment or
life insurance policies of Seller maintained in force subsequent to the Closing
pursuant to Section 9.10 of this Agreement, with respect to persons employed by
Purchaser subsequent to the Closing;
(e) any claims by parties other than Seller to the extent
caused by the acts or omissions of Purchaser after the Closing Date and not
constituting an Excluded Liability, including, without limitation, claims for
Damages which arise out of Purchaser's operation of the Newspapers or ownership
of the Purchased Assets after the Closing Date; or
(f) any liability arising due to Purchaser's failure to
assume any collective bargaining agreement of Seller relative to the
Newspapers.
10.4 Exclusive Remedy. The sole and exclusive remedy of
Indemnified Parties with respect to any and all claims relating to the subject
matter of this Agreement shall be pursuant to the indemnification provisions
set forth in this Article X.
10.5 Third Party Claims. Promptly following the receipt of notice
of a Third Party Claim, the party receiving the notice of the Third Party Claim
shall (a) notify the other party in writing at the address set forth in Section
13.6 hereof of its existence setting forth with reasonable specificity the
facts and circumstances of which such party has received notice and (b) if the
party giving such notice is an Indemnified Party, specifying the basis
hereunder upon which the Indemnified Party's claim for indemnification is
asserted. No failure to give notice of a claim shall affect the
indemnification obligations of the Indemnifying Party hereunder, except to the
extent that the Indemnifying Party can demonstrate that such failure materially
prejudiced such Indemnifying Party's ability to successfully defend the matter
giving rise to the claim. The Indemnified Party shall tender the defense of a
Third Party Claim to the Indemnifying Party.
The Indemnified Party shall not have the right to defend or settle
such Third Party Claim. The Indemnified Party shall have the right to be
represented by counsel at its own expense in any such contest, defense,
litigation or settlement conducted by the Indemnifying Party. The Indemnifying
Party shall lose its right to defend and settle the Third Party Claim if it
shall fail to diligently contest the Third Party Claim. So long as the
Indemnifying Party has not lost its right and/or obligation to defend and
settle as herein provided, the Indemnifying Party shall have the right to
contest, defend and litigate the Third Party Claim and shall have the right, in
its discretion exercised in good faith, and upon the advice of counsel, to
settle any such matter, either before or after the initiation of litigation, at
such
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time and upon such terms as it deems fair and reasonable; provided that in any
event the Indemnifying Party shall consult with the Indemnified Party with
respect to settling such matter which decision shall be made by mutual
agreement of the Indemnifying Party and the Indemnified Party, not to be
unreasonably withheld by either. All expenses (including without limitation
attorneys' fees) incurred by the Indemnifying Party in connection with the
foregoing shall be paid by the Indemnifying Party. Notwithstanding the
foregoing, in connection with any settlement negotiated by an Indemnifying
Party, no Indemnified Party shall be required by an Indemnifying Party to (w)
enter into any settlement that does not include as an unconditional term
thereof the delivery by the claimant or Plaintiff to the Indemnified Party of a
release from all liability in respect of such claim or litigation, (x) enter
into any settlement that attributes by its terms liability to the Indemnified
Party, (y) consent to the entry of any judgment that does not include as a term
thereof a full dismissal of the litigation or proceeding with prejudice or (z)
enter into any settlement which would, or could reasonably be expected to,
result in or relate to either a nonmonetary obligation or restriction of any
kind whatsoever being imposed upon the Indemnified Party (whether with respect
to the conduct of the Newspapers or otherwise) or Damages other than Damages
which are indemnifiable under this Article X; provided, however, that the
Indemnifying Party may enter into the settlements described in (w) and (y)
above if (1) such settlement is not in any way materially damaging or harmful
to the Newspapers or Seller, as the case may be, and (2) the Indemnifying Party
agrees to remain liable to the Indemnified Party for indemnification with
respect to such claim indefinitely thereafter. No failure by an Indemnifying
Party to acknowledge in writing its indemnification obligations under this
Article X shall relieve it of such obligations to the extent they exist. If an
Indemnified Party is entitled to indemnification against a Third Party Claim,
and the Indemnifying Party fails to accept the defense of a Third Party Claim
tendered pursuant to this Section 10.5, or if, in accordance with the
foregoing, the Indemnifying Party shall lose its right to contest, defend,
litigate and settle such a Third Party Claim; provided that the Indemnifying
Party shall be entitled to participate, at its expense, with counsel of its
choice, and any settlement shall be approved by the Indemnifying Party, such
approval not to be unreasonably withheld, the Indemnified Party shall have the
right, without prejudice to its right of indemnification hereunder, in its
discretion exercised in good faith and upon the advice of counsel, to contest,
defend and litigate such Third Party Claim, and subject to the preceding
sentence may settle such Third Party Claim, either before or after the
initiation of litigation. If, pursuant to this Section 10.6, the Indemnified
Party so defends or (except as hereinafter provided) settles a Third Party
Claim, for which it is entitled to indemnification hereunder, as hereinabove
provided, the Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys' fees and other expenses of defending the Third
Party claim which is incurred from time to time, forthwith following the
presentation to the Indemnifying Party of itemized bills for said attorneys'
fees and other expenses.
10.6 Other Indemnification Claims. The Indemnified Party shall
give the Indemnifying Party prompt notice of any Indemnification Claim (other
than a Third Party
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Claim) specifying the basis hereunder upon which the Indemnified Party's claim
for indemnification is asserted. No failure to give notice of a claim shall
affect the indemnification obligations of the Indemnifying Party hereunder,
except to the extent that the Indemnifying Party can demonstrate that such
failure materially prejudiced such Indemnifying Party's ability to successfully
defend or otherwise respond to the matter giving rise to the claim. In respect
of any Indemnification Claim other than a Third Party Claim, where Seller is
the Indemnifying Party (including, without limitation, any Release of any
Hazardous Material or environmental compliance action that is not the subject
of a Third Party Claim and those relating to any of the remedial matters
described in Section 9.14), Purchaser shall provide Seller with the opportunity
and all appropriate access to the applicable Facility or Facilities to conduct
(under Seller's control) any assessment, inspection or work necessary to
respond to or correct the condition giving rise to such Indemnification Claim
(including, without limitation, any necessary environmental investigation,
clean up or corrective action).
ARTICLE XI
Effect of Termination/Proceeding
11.1 Right to Terminate. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing by
prompt notice given in accordance with Section 13.6:
(a) by the mutual written consent of Purchaser and
Seller;
(b) by either of such parties if the Closing shall not
have occurred on or before March 31, 1997; provided, however, that the right to
terminate this Agreement under this Section 11.1(b) shall not be available to
any party whose failure to fulfill any material obligation under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
prior to the aforesaid date; or
(c) by Purchaser, if a material adverse change shall have
occurred relative to the assets, liabilities, operations or business prospects
of any of the Newspapers, or relative to the Purchased Assets, considered as a
whole, subsequent to the date of execution of this Agreement.
11.2 Remedies. In the event of a breach of this Agreement, the
non-breaching party shall not be limited to the remedy of termination of this
Agreement, but shall be entitled to pursue all available legal and equitable
rights and remedies, including the right to specific performance of this
Agreement, and shall be entitled to recover all of its
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<PAGE> 46
reasonable costs and expenses incurred in pursuing them (including, without
limitation, reasonable attorneys' fees).
ARTICLE XII
Risk of Loss
The risk of loss, prior to the Closing, by fire, earthquake, hurricane
or for any other reason, to the Purchased Assets between the date of the
Agreement and the Closing, shall be upon Seller. Seller shall maintain the
existing insurance on all such property at all times prior to the Closing and
shall either promptly take all reasonable steps to repair, replace and restore
any such property which is lost, destroyed or damaged after the date hereof and
prior to the Closing, or at the Purchaser's option, pay to the Purchaser at the
Closing the proceeds from insurance claims with respect to such losses;
provided, that if Purchaser elects to require Seller to take reasonable steps
to repair replace and/or restore any lost, destroyed and/or damaged property
and Seller is unwilling to do so, Seller shall have the option, in its sole
discretion, to terminate this Agreement, whereupon neither party shall have any
further obligations to the other hereunder.
ARTICLE XIII
Miscellaneous
13.1 Non-Competition Covenants. Throughout the 5 year period
following the Closing, the Seller, on behalf of itself and the Thomson
Newspapers group of companies covenant that they will not own any interest in,
manage, operate, control or otherwise be associated with the operation or
ownership of any newspaper or newspaper related business which derives a
significant portion of its circulation or advertising from any of the
geographic areas designated by U.S. Postal Service ZIP Codes in Section 13.1 of
the Disclosure Schedule.
13.2 Publicity. All press releases and other public Disclosures
concerning this transaction shall be made only by mutual agreement of Purchaser
and Seller.
13.3 Notices. All notices required or permitted to be given
hereunder shall be in writing and may be delivered by hand, by facsimile, by
nationally recognized private courier, or by United States mail. Notices
delivered by mail shall be deemed given three (3) business days after being
deposited in the United States mail, postage prepaid, registered
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<PAGE> 47
or certified mail, return receipt requested. Notices delivered by hand, by
facsimile or by nationally recognized private carrier shall be deemed given on
the first business day following receipt; provided, however, that a notice
delivered by facsimile shall only be effective if such notice is also delivered
by hand, or deposited in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, on or before two (2) business days
after its delivery by facsimile. All notices shall be addressed as follows:
If to Seller:
Addressed to:
Thomson Newspaper Holdings, Inc.
c/o Thomson Newspapers
Metro Center at One Station Place
Stamford, Connecticut 06902
Attn: Eric L. Shuman, Senior Vice
President and Chief Financial Officer
If to Purchaser:
Addressed to:
Garden State Newspapers, Inc.
1560 Broadway, Suite 1485
Denver, Colorado 80202
Attn: Joseph J. Lodovic, IV, Executive
Vice President and Chief Financial Officer
Facsimile: (303) 894-9340
with a copy to:
Verner, Liipfert, Bernhard,
McPherson & Hand
901 15th Street, N.W., Suite 700
Washington, D.C. 20005
Attn: Howell E. Begle, Jr., Esq.
Facsimile: (202) 371-6279
and\or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this Section
13.3
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<PAGE> 48
13.4 Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant to the provisions hereof constitute the
entire agreement between the parties. Each exhibit hereto, and the Disclosure
Schedule, shall be considered incorporated into this Agreement.
13.5 Survival: Non-Waiver. All representations, warranties and
indemnification obligations under this Agreement shall survive the Closing
regardless of any investigation or lack of investigation by any of the parties
hereto, provided, however, that the representation, warranty and
indemnification obligations of Seller under this Agreement shall not extend
beyond the time periods specified in the last paragraph of Section 10.2 hereof.
In the event of a breach of any representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made
shall have all rights and remedies for such breach available to it under this
Agreement, Seller's Ancillary Documents, Purchaser's Ancillary Documents or
otherwise, whether at law or in equity, regardless of any Disclosure to, or
investigation made by or on behalf of, such party on or before the Closing
Date. The failure in any one or more instances of a party to insist upon
performance of any of the terms, covenants or conditions of this Agreement or
to exercise any right or privilege in this Agreement conferred, or the waiver
by said party of any breach of any of the terms, covenants or conditions of
this Agreement, shall not be construed as a subsequent waiver of any such
terms, covenants, conditions, right or privileges, but the same shall continue
and remain in full force and effect as if no such forbearance or waiver had
occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
13.6 Applicable Law. This Agreement shall be governed and
controlled as to validity, enforcement, interpretation, construction, effect
and in all other respects by the internal laws of the state of Delaware
applicable to contracts made and wholly to be performed in that state.
13.7 Binding Effect: Benefit. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their successors,
permitted assigns and legal representatives. Nothing in this Agreement,
express or implied, is intended to confer on any person other than the parties
hereto and their respective successors, permitted assigns and legal
representatives any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
13.8 Assignability. This Agreement shall not be assignable by
either party without the prior written consent of the other party, provided,
however, that Seller agrees that the transfer of all or part of the Purchased
Assets to be conveyed hereunder may be structured as part of a like-kind
exchange for the benefit of Purchaser; provided that Seller shall incur
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<PAGE> 49
no additional cost or expense in connection therewith. In order to permit such
an exchange, all or part of Purchaser's rights (or the rights of any permitted
assignee of Purchaser) hereunder shall be assignable to the Chicago Deferred
Exchange Corporation or other intermediary party. In no event shall such
assignment delay the Closing, without Seller's consent. Seller also agrees
that Purchaser may assign all or any portion of its rights hereunder to one or
more wholly owned, direct or indirect subsidiaries of Purchaser. No such
assignment shall relieve any other party hereto of any of their liabilities
under this Agreement.
13.9 Amendments. This Agreement shall not be modified or amended
except pursuant to an instrument in writing executed and delivered on behalf of
each of the parties hereto.
13.10 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THOMSON NEWSPAPERS INC.
By: _______________________
GARDEN STATE NEWSPAPERS, INC.
By: _________________________________
Joseph J. Lodovic, IV
Executive Vice President
and Chief Financial Officer
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<PAGE> 50
EXHIBIT A
CERTAIN DEFINITIONS
"ABC" means the Audit Bureau of Circulations, Inc.
"Accounts Receivable" shall have the meaning specified in Section 1.2.
"ADA" means the Americans with Disabilities Act, 42 U.S.C. Section 1201 et
seq.
"Affiliate" means any person or entity which controls a party to this
Agreement, which that party controls, or which is under common control
with that party. "Control" means the power, direct or indirect, to
direct or cause the direction of the management and policies of a
person or entity through voting securities, contracts or otherwise.
"Agreement" shall have the meaning specified in the introductory paragraph to
this Agreement.
"ALTA" shall have the meaning specified in Section 8.3.
"Assumed Liabilities" shall have the meaning specified in Section 2.1.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 et seq..
"Closing" shall have the meaning specified in Section 3.2.
"Closing Date" shall have the meaning specified in Section 3.2.
"COBRA" shall have the meaning specified in Section 4.7.
"Code" shall have the meaning specified in Section 4.7.
"Consents" shall have the meaning specified in Section 6.2.
"Containers" means (a) underground storage tanks (as defined in RCRA) and (b)
above-ground storage tanks which have a capacity of 100 gallons or
more.
"Covered Claim" shall have the meaning set forth in Section 10.5.
"Damages" shall have the meaning specified in Section 10. 1.
"Disclosure Schedule" shall have the meaning set forth in Section 4.1.
<PAGE> 51
"Employee Benefit Plan" shall have the meaning specified in Section 4.7.
"Environment" means any surface water, groundwater, drinking water supply, land
surface or subsurface strata, or ambient air, including, without
limitation, any indoor location.
"Environmental Laws" means all Federal, state and local statutes, regulations,
ordinances, rules, regulations and written government agency policies,
all court orders and decrees and arbitration awards, and the common
law, which pertain to environmental matters or contamination of any
type whatsoever. Environmental Laws include, without limitation,
those relating to: manufacture, processing, use, distribution,
treatment, storage, disposal, generation, transportation or cleanup of
Hazardous Materials; air, surface or ground water or noise pollution;
Releases; protection of wildlife, endangered species, wetlands, and
natural resources; Containers; health and safety of employees and
other persons; and notification requirements relating to the
foregoing.
"Environmental Permits" means governmental licenses, permits, registrations,
approvals, agreements and consents which are required under or are
issued pursuant to Environmental Laws.
"Equipment" shall have the meaning specified in Section 1.2.
"ERISA" shall have the meaning specified in Section 4.7.
"ERISA Affiliate" shall have the meaning specified in Section 4.7.
"Excluded Assets" shall have the meaning specified in Section 1.3.
"Facility" means any facility as defined in CERCLA.
"Financial Statements" shall have the meaning specified in Section 4.2.
"FIRPTA" shall have the meaning specified in Section 8.3.
"GAAP" shall mean generally accepted accounting principles in effect at the
date when applied, consistent with prior periods.
"Hazardous Materials" means: pollutants, contaminants, pesticides, radioactive
substances, solid wastes or hazardous or extremely hazardous, special,
dangerous or toxic wastes, substances, chemicals or materials
prohibited, limited or regulated by any Environmental Law, including
without limitation any (i) "hazardous substance" as defined in CERCLA,
and (ii) "hazardous waste" as defined in RCRA.
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<PAGE> 52
"Indemnification Claims" means Third Party Claims plus other claims for Damages
or for equitable relief which are asserted or threatened by the
parties hereto, their successors and permitted assigns, against any
Indemnified Party, or to which an Indemnified Party is subject.
"Indemnified Party" means a party entitled to indemnification under this
Agreement.
"Indemnifying Party" means a party from whom indemnification is sought under
this Agreement.
"Intellectual Property" shall have the meaning specified in Section 4.11.
"Inventory" shall have the meaning specified in Section 1.2.
"Liens" shall mean any lien, security interest, mortgage, restriction, pledge,
option, lease or sublease, claim, easement, encroachment or
encumbrance.
"Multiemployer Plan" shall have the meaning assigned to such term in ERISA.
"Newspapers" shall have the meaning assigned to such term in the Recitals
hereto.
"Offsite Facility" means any Facility which is not presently, and has not
heretofore been, owned, leased or occupied by Seller.
"PBGC" shall have the meaning specified in Section 4.7.
"Permits" shall have the meaning specified in Section 4.6.
"Permitted Liens" shall mean liens for current real or personal Property Taxes
not due and payable as of the Closing and worker's, carrier's and
materialman's liens, and other liens or encumbrances incurred in the
ordinary course of business and, in each case, that are immaterial in
character, amount and extent, and which do not detract from the value
or interfere with the present or proposed use of the properties they
affect, together with such other existing liens as are set forth in
Section 4.2(e) of the Disclosure Schedule.
"Prepaids" shall have the meaning specified in Section 1.2.
"Purchase Price" shall have the meaning specified in Section 3.1.
"Purchased Assets" shall have the meaning specified in the recitals.
"Purchaser" shall have the meaning specified in the introductory Paragraph to
this Agreement.
"Purchaser's Ancillary Documents" shall have the meaning specified in Section
5.1.
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<PAGE> 53
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6902 et
seq..
"Real Estate" shall mean the owned real property included in the Purchased
Assets.
"Release" means any spill, discharge, leak, emission, escape, injection,
dumping, disposal or other release or threatened release of any
Hazardous Materials into the environment, whether or not notification
or reporting to any governmental agency was or is required, including,
without limitation, any Release which is subject to CERCLA.
"Seller" shall have the meaning specified in the introductory paragraph to this
Agreement.
"Seller's Ancillary Documents" shall have the meaning specified in Section 4.l.
"Tax" or "Taxes" shall mean all taxes and other charges imposed by any
governmental authority, together with any interest or any penalty
related thereto.
"Tax Assets" shall mean all Taxes receivable from a governmental authority and
all Tax refunds receivable from a governmental authority (but not
including prepaid Taxes).
"Third Party Claims" shall mean any claims for Damages or for equitable relief
which are asserted or threatened by a party other than the parties
hereto, their successors and permitted assigns, against any
Indemnified Party or to which an Indemnified Party is subject.
"Trademark" or "Trademarks" shall have the meaning specified in Section 4.11.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act of
1988, 29 U.S.C. Section 2101 et seq.
"Welfare Plan" shall have the meaning assigned to such term in ERISA.
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