ASSET PURCHASE AGREEMENT by and among GATEHOUSE MEDIA, INC., GATEHOUSE MEDIA OPERATING, INC., MORRIS PUBLISHING GROUP, LLC, MPG ALLEGAN PROPERTY, LLC, BROADCASTER PRESS, INC., MPG HOLLAND PROPERTY, LLC, THE OAK RIDGER, LLC, YANKTON PRINTING COMPANY...
by
and among
GATEHOUSE
MEDIA, INC.,
GATEHOUSE
MEDIA OPERATING, INC.,
XXXXXX
PUBLISHING GROUP, LLC,
MPG
ALLEGAN PROPERTY, LLC,
BROADCASTER
PRESS, INC.,
MPG
HOLLAND PROPERTY, LLC,
THE
OAK RIDGER, LLC,
YANKTON
PRINTING COMPANY
AND
XXXXXX
COMMUNICATIONS COMPANY, LLC
Effective
as of October 23, 2007
i
TABLE
OF CONTENTS
ARTICLE
I. SALE OF ACQUIRED ASSETS AND TERMS OF PAYMENT
1.1 Transfer
of Acquired Assets
1.2 Excluded
Assets
1.3 Liabilities.
1.4 Purchase
Price; Payment of Purchase Price
1.5 Manner
of Payment
1.6 Adjustments
1.7 Allocation
of Purchase Price
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ARTICLE
II. THE CLOSING[
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2.1 Time
and Place of Closing
2.2 Deliveries
by Seller
2.3 Deliveries
by Buyer
2.4 Taking
of Necessary Action; Further Action 16
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ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF SELLERS AND XXXXXX
COMMUNICATIONS
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3.1 Organization;
Qualification
3.2 Authority
Relative to this Agreement
3.3 Income
Statements
3.4 Business
Since the Income Statement Date
3.5 Non-Contravention;
No Defaults
3.6 Undisclosed
Liabilities
3.7 Licenses
and Authorizations
3.8 Condition
and Adequacy of the Acquired Assets; Title
3.9 Contracts
and Arrangements
3.10 Real
Property
3.11 Intellectual
Property
3.12 Litigation
and Compliance with Laws
3.13 Labor
Relations and Employee Issues; Employee Benefit Programs;
ERISA
3.14 INTENTIONALLY
OMITTED
3.15 Changes
3.16 Environmental
Matters
3.17 INTENTIONALLY
OMITTED
3.18 Insurance
3.19 Taxes
3.20 Investment
Representations
3.21 Brokers
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ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF
BUYER
|
4.1 Organization
4.2 Authority
Relative to this Agreement
4.3 No
Defaults
4.4 Non-Contravention;
No Defaults
4.5
Financial
Capability
4.6 Reports
and Financial Statements
4.7 Absence
of Certain Changes or Events
4.8 Brokers
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ARTICLE
V. PRE-CLOSING COVENANTS OF SELLERS AND BUYER PENDING THE
CLOSING DATE.
|
5.1 Maintenance
of Business
5.2 Organization;
Goodwill
5.3 Access
to Facilities, Files and Records
5.4 Representations
and Warranties
5.5 Corporate
Action
5.6 Consents
5.7 Confidential
Information
5.8 Consummation
of Agreement
5.9 Notice
of Proceedings
5.10 Interim
Financial Statements
5.11 Taxes
5.12 Audited
Financial Statements; Interim Financial Statements
5.13 Title
Matters
5.14 Buyer's
Representations and Warranties
5.15 Corporate
Action
5.16 Consummation
of Agreement
5.17 Notice
of Proceedings
5.18 No
Solicitation; Acquistion Proposals
5.19 Phase
I Environmental Site Accessment
5.20 Bulk
Transfer Laws
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ARTICLE
VI. ADDITIONAL
COVENANTS47
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6.1 No
Securities Transactions
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ARTICLE
VII. CONDITIONS TO THE OBLIGATIONS OF
SELLERS
|
7.1 Representations,
Warranties and Covenants
7.2 Proceedings.
7.3 Xxxx-Xxxxx-Xxxxxx.
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ARTICLE
VIII. CONDITIONS TO THE OBLIGATIONS OF GATEHOUSE MEDIA AND
BUYER
|
8.1 Representations,
Warranties and Covenants
8.2 Proceedings
8.3 Xxxx-Xxxxx-Xxxxxx.
8.4 Consents.
8.5 Title
Insurance
8.6 Real
Property Phase I Reports
8.7 Landlord
Estoppel Certificates
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ARTICLE
IX. INDEMNIFICATION
|
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9.1
|
Survival;
Limitations
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9.2 Indemnification
of Buyer and GateHouse Media
9.3 Indemnification
of Sellers and Xxxxxx Communications
9.4 Notice
of Claims
9.5 Defense
of Third Party Claims
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ARTICLE
X. MISCELLANEOUS
PROVISIONS
|
10.1 Risk
of Loss
10.2 Termination
of Agreement
10.3 Liabilities
Upon Termination
10.4 Expenses
10.5 Employees
and Employee Benefits
10.6 Further
Assurances and Consents
10.7 Waiver
of Compliance
10.8 Notices
10.9 Assignment
10.10 Governing
Law
10.11 Public
Announcements
10.12 No
Third Party Rights
10.13 Waiver
of Jury Trial
10.14 Counterparts
10.15 Headings
10.16 Specific
Performance
10.17 Severability
10.18 Entire
Agreement; Amendments
10.19
Guaranties
10.20
Knowledge
ii
.List
of Schedules
(Delivered Concurrently)
Schedule
1.1(f) Names of Publications
Schedule
1.2(h) Excluded Assets
Schedule
1.6(a) Sellers Accounting Practices
Schedule
3.3 Income Statements
Schedule
3.4 Business Since Income Statement
Date
Schedule
3.5 Non-Contravention; No
Defaults
Schedule
3.7 Material Permits
Schedule
3.8 Condition and Adequacy of the Acquired Assets;
Title
Schedule
3.9 Material Contracts
Schedule
3.10(a) Owned Real Property
Schedule
3.10(b) Leased Real Property
Schedule
3.10(f) Flood Plains
Schedule
3.10(g) Facilities
Schedule
3.10(h) Improvements
Schedule
3.11 Intellectual Property
Schedule
3.12 Litigation and Compliance with
Laws
Schedule
3.13(a) Employees; Salaries
Schedule
3.13(b) Labor Agreements
Schedule
3.15 Changes Since Income Statement
Date
Schedule
3.16 Environmental Matters
Schedule
3.18 Insurance
Schedule
3.19 Taxes
Schedule
4.4 Non-Contravention; No
Defaults
Schedule
5.1 Maintenance of
Business
Exhibits
Exhibit
A Publications
iii
THIS
ASSET PURCHASE AGREEMENT (this “Agreement”), is made effective as of _____ ,
2007, by and among GateHouse Media Operating, Inc., a Delaware corporation
(“Buyer”), GateHouse Media, Inc., a Delaware corporation (“GateHouse Media”),
Xxxxxx Communications Company LLC, a Georgia limited liability company (“Xxxxxx
Communications”), Xxxxxx Publishing Group, LLC, a Georgia limited liability
company (“Xxxxxx Publishing”), MPG Allegan Property, LLC, a Georgia limited
liability company (“MPG Allegan”), Broadcaster Press, Inc., a South Dakota
corporation (“Broadcaster”), MPG Holland Property, LLC, a Georgia limited
liability company (“MPG Holland”), The Oak Ridger, LLC, a Tennessee limited
liability company (“Oak Ridger”) and Yankton Printing Company, a South Dakota
corporation (“Yankton” and collectively, with Xxxxxx Publishing, MPG Allegan,
Broadcaster, MPG Holland and Oak Ridger, are referred to herein as “Sellers” and
each individually as a “Seller”. As used herein, and as the context
requires, the term “Sellers” shall also refer to “Seller”).
WHEREAS,
Sellers operate businesses which own and publish various daily and non-daily
publications which are distributed in South Dakota,
Florida, Kansas, Michigan, Missouri, Nebraska, Oklahoma and Tennessee, together
with all related publications (as set forth on Exhibit A hereto) and
services and assets and facilities, all related domain names, with related
HTML
design and data and all of Sellers’ rights to prepare, publish, sell and
distribute any of the foregoing in all languages (collectively, the
“Publications”) and the mastheads and certain other intellectual property
associated with the Publications (collectively, the “Mastheads”, which term is
more particularly defined in Section 1.1);
WHEREAS,
Sellers operate the Publications from facilities in South Dakota, Florida,
Kansas, Michigan, Missouri, Nebraska, Oklahoma and Tennessee which are owned
or
leased by Sellers, together with all printing sites, buildings, offices,
structures, residences, fixtures, and improvements, including all real property,
whether developed or undeveloped, owned or leased by Sellers or associated
with
any of the foregoing (collectively, the “Facilities”); and
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WHEREAS,
Sellers desire to sell and Buyer desires to purchase substantially all of the
assets related to the operation, publication and distribution of the
Publications as a going concern, together with the Mastheads.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements hereinafter
set forth and based upon the representations and warranties made by each of
the
parties to the other in this Agreement, the parties have agreed to consummate
the sale of the Publications and the Mastheads on the terms contained
herein.
ARTICLE
I.
SALE
OF ACQUIRED ASSETS AND TERMS OF PAYMENT
1.1 Transfer
of Acquired Assets. Upon the terms and
subject to the conditions of this Agreement, on the Closing Date (as defined
in
Section 2.1 hereof) Sellers will sell, assign, convey or cause to be
conveyed, transfer and deliver to Buyer, and Buyer will purchase and accept
from
Sellers, all of the assets and properties of Sellers, tangible or intangible,
of
every kind and description, used by Sellers that relate primarily to the
business and operation of the Publications as a going concern (all such assets
being referred to herein as the “Sellers’ Assets”), but excluding the Excluded
Assets described in Section 1.2 below.
In
addition, upon the terms and subject to the conditions of this Agreement, on
the
Closing Date, Sellers will sell, assign, convey or cause to be conveyed,
transferred and delivered to Buyer, and Buyer will purchase and accept from
Sellers, the Publications’ “Mastheads” which consist of the mastheads,
trademarks, trade dress, trade names, service marks, registrations, domain
names, and other property rights relating thereto and all goodwill associated
therewith. The Sellers’ Assets along with the Mastheads are
hereinafter collectively referred to as the “Acquired Assets.” The
Acquired Assets include, without limitation, the following:
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(a) The
Owned Real Property (as defined in Section 3.10(a));
(b) All
Real Property Leases for the Leased Real Property (as such terms are defined
in
Section 3.9 and Section 3.10(b) respectively);
(c) All
tangible personal property, editorial material, work in process, finished goods,
manuscripts, notes and drafts, graphic artwork, cuts, photographs and negatives
owned by Sellers to the extent they relate primarily to the Publications; all
promotional materials, inserts, and direct mail materials owned by Sellers
to
the extent they relate primarily to the Publications; all stationery, supplies,
purchase orders, forms, labels, shipping materials and catalogs owned by Sellers
to the extent they relate primarily to the Publications; and all lists owned
by
Sellers of contributors, authors, correspondents, reviewers, photographers,
illustrators and editors who contribute or have contributed to the Publications;
all other inventory and supplies, and other assets and equipment relating
primarily to the Publications;
(d) All
contracts, agreements and similar documents that relate primarily to the
operation of the Publications or are otherwise specifically assumed pursuant
hereto, together with all subscriptions and all orders and agreements for the
sale of advertising, space reservations and insertion orders relating to the
Publications, including without limitation those described in
Schedule 3.9;
(e) All
of Sellers’ right, title and interest in and to all licenses, Permits (as
defined in Section 3.16), variances, franchises, certifications, approvals
and
other governmental authorizations relating primarily to the Publications,
together with any renewals, extensions or modifications thereof and additions
thereto;
(f) All
publishable materials of any nature primarily used by the Publications, the
names used by each Publication including but not limited to those set
forth on Schedule 1.1(f), all copyrights, patents,
trademarks, service marks, logotypes and trade names (including registrations
and applications for registration of any of the foregoing), domain names
(including HTML design and data related to said domain names), processes,
inventions, computer software, computer programs and software and program
rights, trade secrets, goodwill and other intangible rights and interests issued
to or owned by Sellers and used primarily in connection with the operation,
publication and distribution of the Publications or primarily in connection
with
the ownership of any of the Acquired Assets (collectively referred to herein
as
the “Rights”), it being understood that computers and servers located at
Sellers’ home office in Augusta, Georgia, and
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software
developed by Sellers for use beyond the Publications are not used primarily
by
the Publications and are not “Rights”;
(g) All
of Sellers’ accounts or other receivables, claims, evidences of debt owed to
Sellers, utility deposits and other deposits and prepaid expenses arising out
of
Sellers’ operation of the Publications, together with all records relating
thereto;
(h) All
of the Publications’ files and other records, in whatever form is reasonably
practicable, relating to the operation of the Publications, including without
limitation all of the historical materials relating to the Publications’
advertising, circulation and distribution, all circulation, subscriber, delivery
and mailing lists and carrier routes maintained by Sellers, all data related
to
such lists, all circulation readership studies, audience surveys and research
owned by Sellers, and all other mailing lists, together with all records,
reports and disks of computer data owned by Sellers, rate cards, verification
cards, advertising insertion orders, specimen copies of all advertisements
carried in the Publications, and copies of current price lists, discount lists,
catalogs, public relations materials, sales correspondence, call reports, call
books, advertiser lists and sales promotion lists, in each case to the extent
they relate primarily to the Publications;
(i) All
claims, causes of action, rights of recovery and rights of set-off of any kind
(including, without limitation, rights under and pursuant to all warranties,
representations and guarantees made by suppliers, distributors or vendors of
products, materials or equipments, or components thereof) to the extent they
relate to the Publications, which are owned by Sellers and relate to the period
of time following the Closing;
(j) All
of Sellers’ libraries of back and current issues of the Publications, in
whatever medium;
(k) All
of Sellers’ goodwill in and going concern value of the
Publications;
(l) Any
prepaid Taxes of Sellers which are included as Acquired Assets on the Closing
Date Balance Sheet (as defined in Section 1.6(c));
(m) All
of Sellers’ right, title and interest in and to any non-solicitation,
non-competition and non-disclosure agreements to the extent benefiting the
Publications;
(n) The
bank accounts and the cash contained therein as of the Closing Date used as
operating accounts for the Publications, a list of which shall be provided
by
Sellers to Buyer prior to Closing and the balances of which shall be included
on
the Closing Date Balance Sheet; and
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(o) Without
duplication, all assets relating primarily to the operations of the Publications
reflected in the Closing Date Balance Sheet.
1.2 Excluded
Assets. The following assets relating
to the business of operating, publishing and distributing the Publications
shall
be retained by Sellers and shall not be sold, assigned, conveyed, transferred
or
delivered to Buyer (the “Excluded Assets”):
(a) Claims
by Sellers with respect to the Excluded Assets and liabilities not assumed
by
Buyer, including without limitation all refunds and claims for Tax refunds
(except for prepaid Taxes acquired by Buyer pursuant to Section 1.1(l) above)
and counterclaims with respect to obligations and liabilities not being assumed
by Buyer hereunder;
(b) All
contracts of insurance, Tax records and Tax Returns;
(c) All
Employee Benefit Programs (as defined in Section 3.13(g));
(d) The
right to use the “Xxxxxx” and “Xxxxxx Publishing” names and, except for the
agreements described in Schedule 3.9, the right to participate in any
plan, procedure or right that was made available to the Publications by or
through Xxxxxx Communications, or any of its Affiliates (as defined below),
including but not limited to any Employee Benefit Program (as defined in Section
3.13(g));
(e) All
claims, refunds, causes of action, choses in action, rights of recovery, rights
of set off and rights of recoupment of Sellers related to the businesses of
the
Publications on or prior to the Closing, exclusive of the rights granted in
Section 1.1(g) ;
(f) (i)
the franchise to be a limited liability company or corporation; (ii) the
organizational documents (including articles or certificate of formation or
bylaws (as applicable)); (iii) the minute books; (iv) the stock and/or
membership interest ledgers and all stock and/or membership
certificates; (v) the qualifications to transact business as a foreign entity;
(vi) the arrangements with registered agents relating to foreign qualifications,
taxpayer and other identification numbers; (vii) other records or similar
documents relating to the organization, maintenance and existence of Sellers
as
limited liability companies and/or corporations; and (vii) any other corporate
records relating to the limited liability company and/or corporate organization
or capitalization (as applicable) of Sellers;
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(g) All
items that are located at the headquarters offices of Xxxxxx Communications
or
otherwise not located at the Real Property (as defined in Section 3.10) included
in the Acquired Assets except for the data relating to the Publications
described in Section 1.1(h) stored on Sellers’ server at the headquarters
offices, copies of which will be delivered or transmitted to Buyer in whatever
form is reasonably practicable for the parties;
(h) Any
right, property or asset described in Schedule 1.2(h), including the
property and rights which are shared with any Affiliates of any Seller and
not
used primarily in the businesses of the Publications;
(i) Any
assets or properties of Sellers, tangible or intangible, of every kind and
description which are not used primarily in connection with the businesses
and
operation of the Publications and are not included in the Closing Date Balance
Sheet;
(j) Sellers’
rights under this Agreement;
(k) Cornerstone
Property, 2.86 acres (Block 69, Parcel B) at corner of Highway 50 and Burleight
Street, Yankton, Yankton County, South Dakota;
(l) All
tax sharing agreements and management agreements with Xxxxxx Communications;
and
(m) All
equity interests in third parties, including but not limited to equity interests
of any Seller in any Affiliate of Xxxxxx Communications;
(n) For
purposes of this Agreement, “Affiliate” of a person means any other person that
directly or indirectly controls, is controlled by, or is under common control
with, such person. The term “control”, “controlled by” and “under
common control with”, as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of
securities, by contract or otherwise.
-6-
1.3 Liabilities.
(a) The
Acquired Assets shall be sold and conveyed to Buyer free and clear of all Liens
(as defined in Section 3.8), except for Permitted Encumbrances (as defined
in
Section 3.10), except that Buyer shall assume, discharge and perform the
following liabilities (the “Assumed Liabilities”):
(i) those
liabilities and obligations of Sellers under the contracts assigned to Buyer
which are described in Section 1.1(d) (other than any obligation under any
such
contract related or arising prior to the Closing Date, including, without
limitation, any liability for breach or nonperformance); provided, however,
that
if any such contract requires a consent to the assignment thereof to Buyer
and
such consent has not been obtained, then this Agreement, to the extent permitted
by law, shall constitute an equitable assignment by Sellers to Buyer of all
rights, benefits, title and interest, liabilities and obligations under such
contract;
(ii) those
liabilities and obligations of Sellers as of the Closing Date under agreements
for advertising to the extent to be run in issues of the Publications published
after the Closing Date (subject to the adjustment provisions of Section 1.6
below);
(iii) those
liabilities and obligations of Sellers for trade accounts payable, advertising
rebates payable and taxes which are included on the Closing Date Balance Sheet
(as defined Section 1.6(c) below) (to the extent of the amount reflected on
such
balance sheet as a liability) and any expenses for which Buyer is responsible
under Section 1.6(a); and
(iv) those
liabilities and obligations of the Publications included on the Closing Date
Balance Sheet, which shall include paid in advance subscriptions and accrued
liabilities of Sellers to employees of Sellers for unused vacation, sick leave,
holiday and personal days (to the extent of the amounts reflected on such
balance sheet and only to the extent Sellers do not have a legal obligation
to
pay such amounts upon termination of employment on or before the Closing
Date).
(b) Except
as set forth in Section 1.3(a) above or as otherwise expressly set forth herein,
Buyer does not assume and will not be liable for, and Sellers shall remain
unconditionally liable for, any other liabilities or obligations of Sellers
(or
any other person, in the case of liabilities or obligations for Taxes) (the
“Excluded Liabilities”), including, but not limited to:
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(i) any
liability or obligation arising prior to the Closing under any contract not
described in Section 1.1(d) above;
(ii) any
liability under any contract of insurance or relating to any Excluded
Assets;
(iii) any
liability to any of Sellers’ employees of any nature whatsoever related to the
period on or prior to the Closing Date, including under any employee benefit
plan of any nature and including, but not limited to, any Employee Benefit
Programs, and any unemployment or workers compensation claims;
(iv) any
liability arising out of any termination by any of Sellers of the employment
of
any employee, consultant or independent contractor of any of Sellers on or
prior
to the Closing Date, or who retired on or prior to the Closing
Date;
(v) any
liability under any litigation, proceeding or claim of any nature related to
the
Publications arising during, or brought by any person or entity with respect
to,
the period of time on or prior to the Closing Date, whether or not such
litigation, proceeding or claim is pending, threatened or asserted before,
on or
after the Closing Date;
(vi) any
liability for (A) any Taxes (other than Taxes of Sellers assumed by Buyer
pursuant to Section 1.3(a)(iii) above) with respect to the Publications or
the
Acquired Assets for periods ending on or prior to the Closing Date and Taxes
deemed, pursuant to Section 1.6(b), payable for the portion ending on the
Closing Date of a Straddle Period (as defined in Section 1.6(b)), (B) except
as
allocated in Section 10.4, any Taxes imposed on the transfer of the Acquired
Assets or the Publications on or prior to the Closing Date and, (C) any estate
or gift Taxes imposed with respect to Sellers, the Acquired Assets or the
Publications on or prior to the Closing Date; provided, however, that Transfer
Taxes (as defined in Section 10.4) on the transfer of the Acquired Assets
pursuant to this Agreement shall be paid by Buyer as provided in Section
10.4;
(vii) except
as otherwise set forth in this Agreement, any and all liabilities incurred
by
Sellers in connection with the negotiation, execution or performance of this
Agreement (including, without limitation, all legal, accounting, brokers,
finders and other professional fees and expenses);
(viii) any
and all obligations, liabilities and/or commitments, including but not limited
to obligations, liabilities and/or commitments pursuant to any Environmental
Law
(as defined in Section 3.16), arising out of or related to facts, circumstances,
conditions or
-8-
events
arising from or related to the Real Property (as defined in Section 3.10) and/or
the operation of the Publications thereon that occurred on or prior to the
Closing Date; and
(ix) the
Bank Liens (as defined in Section 3.10(l)).
1.4 Purchase
Price; Payment of Purchase
Price. Subject to the conditions
contained in this Agreement, and in consideration of the sale of the Acquired
Assets as set forth herein, Buyer agrees to pay the Purchase Price to Sellers,
at Closing, in an amount equal to One-Hundred Fifteen Million dollars
($115,000,000.00) (the “Base Purchase Price”), as adjusted by the Closing Date
Working Capital Adjustment pursuant to Section 1.6 below (the “Purchase
Price”).
The
Base
Purchase Price will be payable as follows: (a) One Hundred Five Million Dollars
($105,000,000) in cash (the “Cash Portion”) and (b) the balance by GateHouse
Media issuing a promissory note (the “Note”) in favor of Sellers (or their
designee) in the principal amount of Ten Million Dollars
($10,000,000). The Note shall have a one year term; accrue interest
on the unpaid balance at the rate of eight percent (8%) per annum (which
interest shall be payable quarterly); and may be prepaid at any time without
penalty. The Note will also provide that except pursuant to corporate
credit facilities, finance leases and purchase money security interests,
GateHouse Media will not grant any third party a position senior to that of
Buyer as the Note holder. The form of the Note, which shall be in
accordance with the above, unless agreed otherwise, will be agreed upon by
Sellers and Buyer prior to the Closing Date.
1.5 Manner
of Payment. The Cash Portion shall be
paid to Sellers on the Closing Date in immediately available funds by wire
transfer to a bank account or bank accounts designated by Sellers in writing
at
least two (2) business days prior to the Closing Date. At the
Closing, GateHouse Media shall deliver the Note to Sellers.
1.6 Adjustments.
(a) Closing
Date Working Capital Adjustment. Sellers shall be entitled to all
income earned and collected and be responsible for all expenses incurred in
connection with the business and operation of the Publications on or prior
to
the Closing Date. Buyer shall be entitled to all
-9-
income
earned and be responsible for all expenses incurred in connection with the
business and operation of the Publications after the Closing
Date. The Purchase Price is subject to a further adjustment for
working capital (the “Closing Date Working Capital Adjustment”) as determined in
accordance with Section 1.6(c) below. The Closing Date Working
Capital Adjustment shall be an amount, as of the Closing Date, equal to the
dollar value of the current assets of the Publications less the dollar
value of the current liabilities of the Publications (including, but not limited
to, accounts payable, prepaid advertising, unearned subscription revenue,
accrued salary, payroll and wages, vacation and sick pay, and similar items
with
respect to New Employees (as defined in Section 10.5), and net of Sellers’
reserves for uncollectible receivables established by Sellers in the ordinary
course of business consistent with past practice, in each case only to the
extent included in the Acquired Assets or the Assumed Liabilities and as set
forth in the Closing Date Balance Sheet).
In
computing the Closing Date Working Capital Adjustment, components of the Closing
Date Balance Sheet (as defined in Section 1.6(c)) shall be derived from
subsidiary ledgers maintained in accordance with Sellers’ historical accounting
practices which reflect accrual basis accounting and are utilized by Xxxxxx
Publishing in the preparation of consolidated financial statements in accordance
with generally accepted accounting principles in the United States (“GAAP”). The
Closing Date Balance Sheet shall be prepared in a manner consistent with the
notes to the Working Capital History set forth on Schedule 1.6(a), each
line item of which shall reflect components derived from and prepared
consistently with the methods used in the preparation of Xxxxxx Publishing’s
balance sheets which methods are used by Sellers in the ordinary cause of
business consistent with past practice and are in accordance with GAAP (“Sellers
Accounting Practices”). All intercompany and Affiliate receivables or
liabilities will be treated as shareholders’ equity and will be excluded from
the Closing Date Working Capital Adjustment and will not be assumed by
Buyer. All prepaid advertising and unearned subscription revenue
shall be accrued as liabilities in the amount of such prepayments.
(b) Other
Adjustments. All items of income and expense directly relating to
the business of operating the Publications, other than the income and expenses
referred to above, shall be prorated between Sellers and Buyer as of the close
of business on the Closing Date. Such items
-10-
to
be
prorated shall include, without limitation, power and utility charges, personal
property Taxes and real property Taxes. The portion of any personal
property Taxes and real property Taxes for a taxable period that includes the
Closing Date (a “Straddle Period”) that shall be deemed to be payable for the
portion of the period ending on the Closing Date shall be the amount of such
Taxes for the entire period (or, in the case of such Taxes determined on an
arrears basis, the amount such Taxes for the immediately preceding period)
multiplied by a fraction the numerator of which is the number of calendar days
in the period ending on the Closing Date and the denominator of which is the
number of calendar days in the entire period. The portion of any
other item of income or expense for a Straddle Period that shall be deemed
to be
payable for the portion of the period ending on the Closing Date shall be
determined based on an interim closing of the books to the extent practicable
and otherwise based on the formula described in the immediately preceding
sentence.
(c) Adjustment
Calculations. Three (3) business days prior to the Closing Date,
to the extent practicable, the adjustments provided in this Section 1.6 shall
be
made to the Cash Portion of the Base Purchase Price on the basis of the then
most recently available financial statements of the Publications, which shall
be
reflected on a preliminary balance sheet for the Publications (the “Preliminary
Balance Sheet”) prepared by Sellers in accordance with Sellers Accounting
Practices. Within ninety (90) days after the Closing Date,
Sellers will prepare an adjusted balance sheet for the Publications (the
“Closing Date Balance Sheet”) as of the close of business on the Closing Date,
reflecting the adjustments provided in this Section 1.6 and showing the
recalculation of adjustments reflected on the Preliminary Balance Sheet, along
with back-up materials necessary for Buyer’s understanding of the Closing Date
Balance Sheet and Buyer’s confirmation of the calculations
thereof. Sellers and their accountants will provide Buyer’s
accountants with reasonable access to the books, records and working papers
of
Sellers necessary to review such calculations. Within one-hundred
fifty (150) days after the Closing Date, final adjustments pursuant to this
Section 1.6 and any required refund or payment shall be made on the basis
of the Closing Date Balance Sheet (the “Adjustment Payment Date”), provided that
if any amounts are in dispute, the Adjustment Payment Date for the disputed
amounts shall be the date payment is required to be made as required
below. If any dispute arises over the amount to be refunded or paid,
such refund or payment shall nonetheless be promptly made to the
extent
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such
amount is not in dispute. If Buyer does not notify Sellers within
forty-five (45) days of receiving the Closing Date Balance Sheet that Buyer
disputes the information contained therein, then Buyer shall be deemed to agree
to the Closing Date Balance Sheet and to
have
waived all further right to dispute the information contained therein and its
use in applying the provisions of this Agreement. If Buyer does
notify Sellers of a dispute regarding the Closing Date Balance Sheet within
the
forty-five (45) day period of receiving the Closing Date Balance Sheet, and
if
such dispute cannot be resolved by the parties within thirty (30) days
thereafter, such dispute shall be referred to a mutually satisfactory
independent public accounting firm of national stature which has not been
employed by any of the parties herein for the two (2) years preceding the
Closing Date. If Buyer and Sellers cannot agree upon an independent
public accounting firm to perform the valuation of the Acquired Assets, then
Buyer and Sellers shall each select an independent public accounting firm which
firms shall select and engage an independent public accounting firm to perform
and prepare a written determination of the adjustments or dispute between the
parties. The determination of such independent accounting firm shall be
conclusive and binding on each party and any required payment or refund in
accordance therewith shall be made in immediately available funds within ten
(10) days of such determination. The fees of such firm shall be
shared equally by Xxxxxx Publishing and Buyer.
1.7 Allocation
of Purchase Price. Buyer and Sellers shall reasonably
cooperate and, at the request of the other party, exchange information,
including copies of IRS Form 8594, regarding allocation of the Purchase Price
to
the Acquired Assets. Notwithstanding anything herein to the contrary, Buyer
and
Sellers agree that the allocation of the Purchase Price attributable to the
Real
Property shall be determined as follows. As soon as practicable after
the date of this Agreement but in no event later than ten (10) days after the
date of this Agreement, Buyer and Sellers shall agree, and Sellers shall engage
an independent and mutually acceptable appraiser to perform and prepare a
written valuation of the Real Property. The cost of the valuation
prepared by an agreed appraiser shall be borne by Buyer. If
Buyer and Sellers cannot agree upon an independent appraiser to perform the
valuation of the Real Property, then Buyer and Sellers shall each select an
independent appraiser which appraisers shall select and engage an independent
appraiser to perform and prepare a written valuation of the Real
Property. In such event, the cost of the valuation shall be
borne equally between Buyer and Sellers. The
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written
valuation shall be binding on and used by Buyer and Sellers in allocating the
Purchase Price to the Real Property. The entire portion of the
Purchase Price allocated to the Real Property shall be paid from the Cash
Portion of the Purchase Price.
ARTICLE
II.
THE
CLOSING
2.1 Time
and Place of Closing. The closing (the “Closing”) of the
sale and purchase of the Acquired Assets shall be held in the offices of
Sellers’ counsel, Hull, Xxxxxx, Xxxxxx, Xxxxxxx & Xxxxxx, on the third
(3rd) business
day following the satisfaction or waiver of all of the conditions to closing
set
forth in Articles VII and VIII, or at such other time and place as shall be
mutually agreed upon by the parties (the “Closing Date”). Closing
shall be deemed effective at 11:59 p.m. local time on the Closing
Date.
2.2 Deliveries
by Seller. At the Closing, Sellers,
will deliver to Buyer the following, each of which shall be in form and
substance satisfactory to the parties hereto:
(a) Bills
of sale, special warranty deeds, assignments and other instruments of transfer
and documents as shall be appropriate to carry out the intent of this Agreement
and sufficient to sell, assign, convey and transfer good and valid (or in the
case of Real Property, good and marketable) title to the Acquired Assets to
Buyer, subject only to Permitted Encumbrances;
(b) Assignments
of all Sellers’ domain names and other Rights relating to the
Publications;
(c) Any
consents to assignments from third parties obtained by Sellers relating to
the
Material Contracts that require such consent as shown on Schedule 3.9, as
well as any other consents obtained by Sellers;
(d) Receipt
for the Purchase Price;
(e) If
agreed upon prior to Closing, commercially reasonable transition services
agreements among Sellers and Buyer executed by Sellers, in form and substance
mutually agreeable to Sellers and Buyer, which, among other things, shall
provide for Sellers to continue to provide certain services with respect to
the
Publications for various periods of time after the Closing Date (the “Transition
Services Agreements”);
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(f) Non-competition
and non-solicitation agreements among Xxxxxx Communications, Sellers and Buyer
executed by Xxxxxx Communications and Sellers in form and substance mutually
agreeable to Sellers and Buyer (the “Non-Competition
Agreements”). The Non-Competition Agreements shall provide that,
among other things, until the fifth anniversary (or, with respect to
non-newspaper products, the third anniversary) of the Closing Date, none of
Xxxxxx Communications or Sellers will, whether as a partner, principal,
stockholder, member of in any other equity investment or profits interest
capacity, directly or indirectly, either alone or in concert with others, (i)
establish or launch, be connected with or and or otherwise assist any daily,
bi-weekly or weekly newspaper or other publication, either in print or online,
which is primarily targeted at and is primarily intended to serve any portion
or
portions of or any or all of the counties which any of the Publications
currently serve (collectively, the “Territory”), or (ii) acquire any equity or
profits or other financial interest in any such daily, bi-weekly or weekly
newspaper or other publication (other than a non-controlling or non-management
interest of any publicly owned company), Notwithstanding anything to the
contrary contained herein, the foregoing restrictions in clauses
(i)–(ii) will not apply with respect to (A) any of Xxxxxx Communications or
Sellers’ businesses (other than the Publications) as in effect (and to the same
scope and extent) as of the date hereof, (B) any “national” publications not
intended to primarily or exclusively serve any or all of the Territory, (C)
non-newspaper publications focused on the metropolitan areas of Kansas City,
Kansas or Missouri; Orlando, Florida; Knoxville, Tennessee; or
Wichita, Kansas which do not directly or indirectly solicit local advertisers
within or focused on the Territory, and (D) new publications similar to existing
(on the date hereof) Xxxxxx Communications visitor, niche or other non-newspaper
publications (such as Where, Guest Informant, Best Read Guides or Skirt
Magazines) focused on the Kansas City, Kansas or Missouri metropolitan area
which may solicit advertisers within such area. For purposes of the
Non-Competition Agreements, “newspapers” shall include daily and weekly
publications, as well as similar on-line publications, which deal with the
general dissemination of news. In addition, none of Xxxxxx
Communications or Sellers will, whether as a partner, principal, stockholder,
member of in any other equity investment or profits interest capacity, directly
or indirectly, either alone or in concert with others, until the third
anniversary of the Closing Date, recruit or hire (other than as a result of
a
general solicitation), or otherwise solicit for employment, any employees,
or
former employees of the Publications hired by Buyer or its
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Affiliates
at the Closing within six (6) months following their termination of employment
with Buyer or its Affiliates (provided that the restriction in this sentence
shall not apply to any such employees terminated by Buyer or its Affiliates;
and
provided further that the restrictions in this sentence shall only apply until
the first anniversary of the Closing Date with respect to any such
employees who voluntarily leave the employ or Buyer or its Affiliates without
any solicitation, inducement or influence of any type by Xxxxxx Communications
or Sellers);
(g) Certificates,
dated as of the Closing Date, of an appropriate officer of Xxxxxx Communications
and each Seller as to approval of Xxxxxx Communications and each Seller relating
to this Agreement and the transactions contemplated hereby;
(h) Certificates
of an appropriate officer of Xxxxxx Communications and each Seller certifying
the fulfillment of the conditions set forth in Sections 8.1(a) and 8.1(b)
below;
(i) A
certificate of an appropriate officer of each Seller as to its status as a
non-foreign entity; and
(j) Such
other certificates, instruments and documents as are required to be delivered
by
Xxxxxx Communications and Sellers pursuant to the terms of this Agreement or
as
may be reasonably requested by Buyer.
2.3 Deliveries
by Buyer. At the Closing, Buyer will
deliver to Sellers the following, each of which shall be in form and substance
satisfactory to the parties hereto:
(a) Funds
equal to the Cash Portion in such manner as described in Section 1.5
above;
(b) The
Note, duly executed by GateHouse Media;
(c) An
instrument of assumption pursuant to which Buyer shall assume the Assumed
Liabilities as provided in Section 1.3 hereof
(d) The
Transition Services Agreements, if agreed upon prior to Closing, executed by
Buyer;
(e) The
Non-Competition Agreements, executed by Buyer;
(f) Certificate
dated the Closing Date, of an officer of Buyer and GateHouse Media as to the
approval of Buyer and GateHouse Media relating to this Agreement and the
transactions contemplated hereby;
(g) Certificate
of an officer of Buyer and GateHouse Media certifying the fulfillment of the
conditions set forth in Sections 7.1(a) and 7.1(b) below; and
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(h) Such
other certificates, instruments and documents as are required to be delivered
by
Buyer and GateHouse Media pursuant to the terms of this Agreement or as may
be
reasonably requested by Sellers.
2.4 Taking
of Necessary Action; Further Action. If, at any time after the
Closing, any further action is necessary to carry out the intent or purposes
of
this Agreement and to vest Buyer with full right, title and possession to all
assets, property, rights, privileges, powers and franchises of Sellers in the
Acquired Assets and the Publications, Sellers will take all such lawful and
necessary action and execute all such documents or agreements as may be
reasonably requested by Buyer.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF SELLERS AND XXXXXX COMMUNICATIONS
Xxxxxx
Communications and Sellers, jointly and severally represent and warrant to
Buyer
and GateHouse Media that the statements contained in this Article III
are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date, except as may be set forth in the
disclosure schedules delivered pursuant hereto. Disclosure made in a
specific section or subsection of the disclosure schedules shall not be deemed
to have been made with respect to any other section or subsection herein unless
an explicit cross-reference appears in such disclosure schedule to that effect
or such disclosure is reasonably apparent on its face.
3.1 Organization;
Qualification. Each Seller is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its respective organization or incorporation. Each
Seller has the full power and authority to own and operate the Acquired Assets
(excluding the Mastheads) and carry on the business and operations of the
Publications as are now being conducted. Each Seller has the full
power and authority to own the Masthead and the Rights. Each Seller
(a) is duly qualified to do business and in good standing, and is duly
licensed, authorized or qualified to transact business in each jurisdiction
in
which the ownership or lease of real property or the conduct of its business
related to the Publications requires it to be so
-16-
qualified,
and (b) has all Permits (as defined in Section 3.16) necessary to own its
properties and assets and carry on its business related to the Publications
as
it is now being conducted, except in each case, for any failures to be so
qualified or licensed, or to have such Permits which would not, individually,
or
in the aggregate have or be reasonably expected to have a Material Adverse
Effect (as defined in Section 3.4 hereof). Any applications for the
renewal of any such Permits related to the Publications that are due prior
to
the Closing Date have been timely made or filed by Sellers prior to the Closing
Date. No proceeding to renew, suspend, modify, suspend, revoke, withdraw,
terminate or otherwise limit any such Permit related to the Publications is
pending or threatened.
3.2 Authority
Relative to this Agreement. Each of Xxxxxx
Communications and each Seller has the full power, authority and legal right
to
execute and deliver this Agreement and to consummate the transactions and
perform its obligations as contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary action, and this
Agreement has been duly and validly executed and delivered by Xxxxxx
Communications and Sellers and, assuming due authorization, execution and
delivery by Buyer and GateHouse Media, constitutes a legal, valid and binding
obligation of Xxxxxx Communications and Sellers enforceable against Xxxxxx
Communications and Sellers in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency or similar law affecting the rights
of creditors generally.
3.3 Income
Statements.Schedule 3.3 sets forth (a) the
unaudited consolidated statement of income (before taxes and interest) of the
Publications for the fiscal year ended December 31, 2006 and (b) unaudited
consolidated statement of income (before taxes and interest) of the Publications
for the period through June 30, 2007 (the “Income Statement Date”) (the
financial statements referred to in clauses (a) and (b) being “Income
Statements”). Xxxxxx Publishing operates (and reports its financial
results) as a single operating segment. Accordingly, separate balance
sheets, income statements or other financial statements are not maintained
for
the Publications as a group, or for any individual Publication. The
Income Statements were prepared, (i) specifically in contemplation of
this Agreement, (ii) following the guidance of the Securities and Exchange
Commission (the “SEC”) for preparing full carve-out income
-17-
statements
(but disregarding interest and taxes, as described in Schedule 3.3),
(iii) from Xxxxxx Publishing’s consolidated statements of income, and (iv)
on the accrual basis in accordance with GAAP. Schedule 3.3
also sets forth a true and complete line item reconciliation of such Income
Statements to GAAP and to the requirements for “carve out” financial
statements. The Income Statements reflect fees for management and
shared services paid to Affiliates and allocations of shared expenses based
upon
various factors (such as a percentage of circulation, advertising revenue,
total
revenue, newsprint consumption or employees) deemed by Xxxxxx Publishing as
of
the Income Statement Date to be appropriate for such expenses, but no attempt
has been made to determine what such costs would have been if the Publications
had been operated on a stand-alone basis. Subject to the foregoing,
the Income Statements fairly present in all material respects the results of
operations of the Publications (before interest and taxes) for the periods
covered thereby and have been prepared in conformity with Sellers Accounting
Practices. The Working Capital History has been prepared in
accordance with Sellers Accounting Practices and consistent with past
practice. Sellers shall deliver on the Closing Date to Buyer a
schedule of the Publications’ outstanding accounts receivable as of the Closing
Date. All such accounts receivable have arisen in the ordinary course
of business consistent with past practice and represent bona fide indebtedness
incurred by the applicable account debtor and have been properly adjusted for
bankrupt and other uncollectible accounts in accordance with Sellers Accounting
Practices. Assuming reasonable collection efforts by Buyer, Xxxxxx
Communications and Sellers have no reason to believe that such accounts
receivable would not be collectible (net of Sellers’ reserves for uncollectible
receivables established by Sellers in the ordinary course of business consistent
with past practice).
3.4 Business
Since the Income Statement Date. Except
as set forth on Schedule 3.4, since the Income Statement Date, the
business of the Publications has been conducted in the ordinary course of
business and in substantially the same manner as it was before the Income
Statement Date. Since the Income Statement Date, there has been no
change in the business, condition (financial or otherwise), properties,
operations or prospects of the Publications or other event or occurrence which
has had or would reasonably be expected to have a material adverse effect on
the
business, operations, properties, condition or prospects (financial or
otherwise) of the Publications taken as a whole (“Material Adverse Effect”) as
of the Closing Date.
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3.5 Non-Contravention;
No Defaults.
(a) Except
as disclosed in Schedule 3.5, the execution, delivery and performance of
this Agreement by Sellers and Xxxxxx Communications will not (i) conflict
with any provision of the governing documents of Xxxxxx Communications or
Sellers, (ii) result in a default (or give rise to any right of
termination, cancellation or acceleration), with notice or passage of time
or
both, under or conflict with any of the terms, conditions or provisions of
any
Material Contract (as defined in Section 3.9), note, bond, mortgage or other
instrument, obligation or agreement relating to the business or operation of
the
Publications or to which any of the Acquired Assets may be subject, except
for
any such defaults which would not, individually or in the aggregate, have or
be
reasonably expected to have a Material Adverse Effect or a material adverse
effect on Xxxxxx Communications’ or Sellers’ ability to consummate the
transactions contemplated hereby, (iii) violate any law, statute, rule,
regulation, order, injunction or decree of any government or any agency, bureau,
board, commission, court, department, officer, official, employee, agent,
political subdivision, tribunal or other instrumentality of any government,
whether federal, state, local or foreign (each a “Governmental Authority”)
applicable to Sellers or any of the Acquired Assets except for any such
violations which would not individually or in the aggregate, have, or be
reasonably expected to have a Material Adverse Effect or a material adverse
effect on Sellers’ ability to consummate the transactions contemplated hereby,
or (iv) result in the creation or imposition of any Lien of any nature
whatsoever on any of the Acquired Assets.
(b) Except
for the required consents with respect to the contracts referred to in
Section 3.9 and the requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “Xxxx-Xxxxx-Xxxxxx Act”), neither
Xxxxxx Communications nor any Seller is required to submit any notice, report
or
other filing with, or obtain any consent, approval or waiver from, any
Governmental Authority or any other third party in connection with the
execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby, except for any such
failure which would not individually or in the aggregate have or
be
-19-
reasonably
expected to have a material adverse effect on Sellers’ ability to consummate the
transactions contemplated hereby.
3.6 Undisclosed
Liabilities. Sellers have no obligation
or liability required to be reflected or reserved against in any of the Income
Statements in accordance with GAAP which is not fully reflected or reserved
against in such Income Statements except for liabilities which have arisen
after
the Income Statement Date in the ordinary course of business consistent with
past practice, liabilities disclosed in the disclosure schedules delivered
pursuant hereto, Excluded Liabilities and Taxes payable to Xxxxxx Communications
pursuant to Sellers’ Tax sharing agreement with Xxxxxx Communications as set
forth in Section 1.2(l).
3.7 Licenses
and Authorizations. All Permits
required to own the Acquired Assets and to conduct the business of the
Publications are held by Sellers and are in full force and effect with no
violations of any of them having occurred except for any such violations which
would not, individually or in the aggregate, have or be reasonably expected
to
have a Material Adverse Effect. All such material Permits known by
Sellers without further inquiry are listed in Schedule
3.7. Prior to the Closing, Sellers shall update Schedule
3.7 to include all material Permits. Except as disclosed in
Schedule 3.7, no proceeding is pending or, to the knowledge of
Sellers, threatened, seeking the suspension, revocation, modification,
cancellation or limitation of any such Permit and, to the knowledge of Xxxxxx
Communications and Sellers, there is no basis for taking any such
action.
3.8 Condition
and Adequacy of the Acquired Assets;
Title. Except as disclosed in
Schedule 3.8, the material tangible assets included
in the Acquired
Assets, taken as a whole, are in adequate operating condition and repair,
ordinary wear and tear excepted, and are adequate and suitable in accordance
with general industry practices and applicable law for the purposes for which
they are currently used. Each of Sellers has good, valid and
marketable title to all of the Acquired Assets which such Seller purports to
own
free and clear of all security interests, mortgages, conditional sales
agreements, charges, liens and other encumbrances (collectively, the “Liens”),
except for Permitted Encumbrances (as defined in Section 3.10(c)
below). All inventory of Sellers included in the Acquired Assets is
useful in the ordinary course of business
-20-
and
operation of the Publications and none of which is slow-moving, obsolete,
damaged or defective. Without limiting the generality of any of the
foregoing, except as indicated on Schedule 3.8, Sellers do not use
furniture, fixtures, equipment, inventory or supplies in connection with the
operation of the Publications which they do not own. Except for the
Excluded Assets or as indicated on Schedule 3.8, the Acquired Assets are,
in the aggregate, all of the assets which are necessary to operate the
Publications in the manner in which the Publications were operated during the
12-month period ending on the Income Statement Date and since such time, except
for additions thereto and deletions therefrom in the ordinary course of business
and consistent with past practice. No asset primarily used in the
Publications or the Acquired Assets is located in Xxxxxx Communications
corporate headquarters or at any location not included in the Acquired
Assets.
3.9 Contracts
and Arrangements.Schedule 3.9 lists the
following written, oral, implied or other agreements, contracts, understandings,
arrangements, instruments, notes, guaranties, indemnities, representations,
warranties, deeds, assignments, powers of attorney, certificates, purchase
orders, work orders, insurance policies, benefit plans, commitments, covenants,
assurances and undertakings of any nature relating primarily to the Publications
or the Acquired Assets (collectively, the “Material Contracts”), to which any of
Sellers is a party:
(a) Sales
agency or advertising representation contracts involving annual consideration
of
more than $100,000;
(b) Contracts
for the future construction or purchase of capital improvements, purchase of
materials, supplies or equipment, or for the sale of assets involving annual
consideration of more than $100,000;
(c) Consulting
contracts, employment agreements or freelance agreements involving annual
consideration of more than $100,000;
(d) Licenses
or agreements involving annual consideration of more than $100,000 under which
Sellers are authorized to publish materials supplied by others in future issues
of the Publications;
(e) Leases
or subleases of Real Property (collectively, the “Real Property
Leases”);
(f) Leases
of any personal property involving annual consideration of more than
$100,000;
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(g) All
contracts which are licenses and sublicenses (in which any of Sellers is
licensor or licensee) involving annual consideration of more than
$100,000;
(h) Any
contract for the purchase or sale of products, or other personal property,
or
for the furnishing or receipt of services, involving annual consideration of
more than $100,000;
(i) Any
contract concerning a partnership or joint venture;
(j) Any
contract under which Sellers have created, incurred, assumed, or guaranteed
any
indebtedness for borrowed money or pursuant to which Sellers have advanced
or
loaned money;
(k) Any
contract with any Affiliates of Sellers, or any entity in which any Affiliates
of Sellers holds an equity or any other economic interest;
(l) Any
contract concerning non-disclosure, confidentiality or
noncompetition;
(m) Any
contract under which the consequences of a default or termination could have
an
effect on the business, financial condition, operations, results of operations,
or future prospects of any of Sellers in an amount in excess of $100,000;
or
(n) Any
other contract (or group of related contracts) the performance of which involves
consideration in excess of $100,000, or cannot be terminated without penalty,
payment or breach on ninety (90) days or less notice.
Schedule
3.9 also specifies those Material Contracts, the assignment of which
requires the consent of a third party. Provided that any requisite
consent to the assignment of Material Contracts to Buyer is obtained, each
of
the contracts and leases which is assigned to and assumed by Buyer on the
Closing Date is valid and in full force and effect. There is no
existing default, event of default or other event under such Material Contracts
which, with or without notice or lapse of time or both, would constitute a
default or an event of default by Sellers under any such contract. To
the knowledge of Seller, there is not, under any of the Material Contracts,
any
existing default or event of default which, with or without notice or lapse
of
time or both would constitute a default or event of default on the part of
any
other party thereto. Prior to the Closing Date, Sellers will make
available to Buyer true, correct and complete copies (or written summaries
of
oral contracts) of all of the Material Contracts.
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3.10 Real
Property.
(a) All
of the real property owned by Sellers and used primarily in the business and
operation of the Publications is identified on Schedule 3.10(a), together
with all buildings, structures, residences, fixtures, landscaping, utility
lines, roads, driveways, fences, parking areas, contiguous and adjacent entry
rights, construction in progress, and all other improvements to such real
property that are owned by Sellers or any Affiliate, located in and upon such
real property, and used primarily in the business and operation of the
Publications, together with all rights, privileges, and easements appurtenant
to
the foregoing (all of the foregoing collectively referred to as the “Owned Real
Property”);
(b) Schedule
3.10(b) sets forth a complete and accurate list of all leasehold interests
of Sellers used primarily in the business and operation of the Publications
(the
“Leased Real Property”). The Leased Real Property and the Owned Real
Property are collectively referred to as the “Real Property”.
(c) Good
and marketable fee title to each parcel of Owned Real Property disclosed on
Schedule 3.10(a) is owned by Sellers set forth on such schedule, free and
clear of any Liens, easements, rights-of-way, licenses, use restrictions,
claims, charges, options, rights of first offer, rights of first refusal or
title defects, of any nature whatsoever, except for Permitted Encumbrances
(as
defined below). As used in this Agreement, the term “Permitted
Encumbrances” means (i) Liens for Taxes not yet due and payable; (ii) Liens for
Taxes which are being contested in good faith and by appropriate proceedings
in
the amount of which a reserve has been created and set forth on the Closing
Date
Balance Sheet; (iii) carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of business
consistent with past practice or which are being contested in good faith and
by
appropriate proceedings in the amount of which a reserve has been created on
the
Closing Date Balance Sheet (which reserve under clauses (ii) or (iii) shall,
to
the extent Sellers are successful in finally, definitively and irrevocably
contesting any such Liens and Buyer effectively gets the benefit thereof, will
upon written notice and delivery of satisfactory proof thereof, be refunded
to
Sellers); (iv) easements, rights-of-way, encroachments, licenses,
restrictions, conditions and other similar encumbrances which do not materially
interfere with the current use of any of the Owned Real
Property;
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(d) Each
Seller has a valid and enforceable interest in each parcel of Leased Real
Property disclosed in Schedule 3.10(b) as being leased by such Seller;
and
(e) There
is no action or proceeding pending or, to the knowledge of Sellers, threatened
by any Governmental Authority for assessment or collection of past-due Taxes,
impact fees or special assessments affecting any part of any Owned Real
Property, and no condemnation or eminent domain proceeding is pending or, to
the
knowledge of Sellers, threatened against any part of any Real
Property.
(f) Except
as set forth in Schedule 3.10(f), none of the Real Property is located
within a flood plain or lakeshore erosion hazard area, fresh water wetlands
as
defined under applicable laws or coastal zone management area protected,
regulated or controlled by any laws.
(g) Except
as set forth in Schedule 3.10(g) (which schedule is as of the date hereof
prepared to Sellers’ knowledge without further inquiry and which schedule will,
prior to Closing, be updated to Sellers’ knowledge after due
inquiry), (i) the Facilities are in an adequate state of repair and
condition, ordinary wear and tear excepted; (ii) there are no conditions or
defects which pose a significant danger to life or human health existing upon
or
in the Facilities; (iii) there are no structural defects in the Real Property
that would adversely affect the operation of any of the Facilities as presently
conducted; and (iv) there are no life safety code deficiencies or other survey
requirements which are not subject to waiver or currently the subject of a
plan
of correction which is being implemented.
(h) Except
as set forth in Schedule 3.10(h) (which schedule is as of the date hereof
prepared to Sellers’ knowledge without further inquiry and which schedule will,
prior to Closing, be updated to Sellers’ knowledge after due inquiry), all
buildings, structures, fixtures, building systems and equipment, and all
components thereof, including the roof, foundation, load-bearing walls and
other
structural elements thereof, heating, ventilation, air conditioning, mechanical,
electrical, plumbing and other building systems, environmental control,
remediation and abatement systems, sewer, storm and waste water systems,
irrigation and other water distribution systems, parking facilities, fire
protection, security and surveillance systems, and telecommunications, computer,
wiring and cable installations, included in any Real Property (collectively,
the
“Improvements”) are in adequate condition and repair, have been appropriately
and routinely maintained, and are sufficient for the business and operation
of
the Publications. Except as set forth in Schedule 3.10(h), to Sellers’
and Xxxxxx Communications’ knowledge,
-24-
there
are
no structural deficiencies or latent defects affecting any of the Improvements
and there are no facts or conditions affecting any of the Improvements which
would, individually or in the aggregate, interfere in any respect with the
use
or occupancy of the Improvements or any portion thereof in the operation of
the
Publications as currently conducted thereon.
(i) The
current use and occupancy of the Real Property and the business and operation
of
the Publications as currently conducted thereon do not violate any easement,
covenant, condition, restriction or similar provision in any instrument of
record or other unrecorded agreement affecting such Real Property except for
any
such violations, which would not, individually or in the aggregate, have or
be
reasonably expected to have a material adverse effect on such Real Property
or
Buyer’s intended use of such Real Property or the continued business and
operation of the Publications as currently conducted therein. Sellers have
not
received any notice of violation of any such documents, and to their knowledge
there is no basis for the issuance of any such notice or the taking of any
action for such violation.
(j) None
of the Improvements encroach on any land which is not included in the Real
Property or on any easement affecting such Leased Real Property, or violate
any
building lines or set-back lines, and there are no encroachments onto any of
the
Real Property, or any portion thereof, which encroachment would interfere with
the use or occupancy of such Real Property or the continued business and
operation of the Publications as currently conducted thereon except for any
such
violations, which would not individually or in the aggregate, have or be
reasonably expected to have a material adverse effect on such Real Property
or
Buyer’s intended use of such Real Property or the continued business and
operation of the Publications as currently conducted therein.
(k)
There are no taxes, assessments, fees, charges or similar costs or expenses
imposed by any Governmental Authority, association or other entity having
jurisdiction over the Real Property with respect to any Real Property or portion
thereof which are delinquent.
(l) Prior
to the Closing, all Liens under all of Sellers’ existing secured financing
arrangements will be released (the “Bank Liens”). Notwithstanding
anything to the contrary contained herein, the existence of Bank Liens shall
not
be considered a breach of any representation or warranty hereunder, provided
such Bank Liens are released at Closing.
-25-
3.11 Intellectual
Property. Except for the Excluded
Assets (as defined in Section 1.2) and any matter relating thereto, all Rights
are valid, in good standing and uncontested. The Rights include, but
are not limited to, those Rights of Sellers relating to the business and
operation of the Publications or related to the ownership of any of the Acquired
Assets as set forth in Schedule 3.11. Sellers possess adequate
rights, licenses or other authority necessary to use and own the Acquired
Assets, to use and own the Rights and to conduct the business and operations
of
the Publications as currently conducted. Sellers have not received
any notice with respect to any alleged infringement or unlawful or improper
use
of any Rights owned or alleged to be owned by others. Neither any
Affiliate of Sellers nor any officer or employee of Sellers has any interest
in
any Rights, all of which are free and clear of any Lien. Sellers have
no knowledge of any infringement of any of the Rights.
3.12 Litigation
and Compliance with Laws. Except as set
forth on Schedule 3.12: (a) the Publications have not
been operating under or subject to, or in default with respect to, any order,
writ, injunction, judgment or decree of any Governmental Authority;
(b) neither Sellers nor any of their agents or Affiliates has received any
inquiry, written or oral, from any such authority concerning any of the
operations or business of the Publications during the two (2) year period prior
to the date of this Agreement; (c) there is no litigation, claim or arbitration
pending by or against, or to the knowledge of Seller or its Affiliates,
threatened against, Sellers, the Publications or Sellers’ agents or
Affiliates related to or affecting any of the Acquired Assets or the operation
of the Publications, including without limitation, any litigation, arbitration
or claim relating to any union or union activities; and (d) Sellers and
their Affiliates have complied with all laws, regulations, orders or decrees
applicable to Sellers, the Acquired Assets and the Publications and the present
uses by Seller of the Acquired Assets and the business and operation of the
Publications do not violate any such laws, regulations, orders or decrees except
for any such violations, which would not individually or in the aggregate,
have
or be reasonably expected to have a Material Adverse Effect.
3.13 Labor
Relations and Employment Issues; Employee Benefit Programs;
ERISA.
(a) Schedule 3.13(a)
lists as of the date shown thereon, which date shall be no earlier than ten
(10)
days prior to the date hereof, the names and salaries, compensation, wages
or
rates of
-26-
commission,
date of employment (with Sellers or, if applicable, the prior owner of any
of
the Publications) and job title of all the full and part-time employees of
Sellers primarily serving the Publications and/or the Acquired Assets (the
“Publication Employees”); provided, however, that the Schedule 3.13(a)
delivered concurrently with this Agreement does not include (i) independent
contractors or other non-employees, or (ii) local incentive arrangements for
local department heads. Schedule 3.13(a) will be updated by
Sellers prior to the Closing to reflect a date no earlier than ten (10) days
prior to the Closing and to include the omitted information described in clause
(ii) of the provisio of the preceding sentence. The term “Publication
Employees” does not include any of Sellers’ employees based in Sellers’ home
offices in Augusta, Georgia but for purposes of this Section 3.13 does include
employees, independent contractors or other persons providing services for
or on
behalf of the Publications.
(b) Except
as set forth in Schedule 3.13(b), (i) Sellers have not entered into any
collective bargaining agreement or other contract with any employee, union,
labor organization or other employee representative or group of employees and,
to the knowledge of Sellers and Xxxxxx Communications, no such organization
or
person has made or is making any attempt to organize or represent any employees
of Sellers, in each case related to the Publications and/or the Acquired Assets;
(ii) there is no pending grievance or arbitration and no unsatisfied or
unremedied grievance or arbitration award against Sellers or any agent,
representative or employee of Sellers, in each case related to the Publications
and/or the Acquired Assets and, to the knowledge of Sellers, there is no basis
for any such grievance or arbitration; (iii) there is no unfair labor practice
charge, pending trial of unfair labor practice charges, unremedied unfair labor
practice finding or adverse decision of the National Labor Relations Board
or
any Governmental Authority, against Sellers or any agent, representative or
employee of any of Sellers, in each case related to the Publications and/or
the
Acquired Assets and, to the knowledge of Sellers, there is no basis for any
such
unfair labor practice charge; and (iv) there is no labor dispute, strike or
work
stoppage pending or, to the knowledge of Sellers, threatened, in writing, with
respect to Sellers or their employees, in each case related to the Publications
and/or the Acquired Assets.
(c) Without
limiting the generality of Section 3.12, Sellers are in full compliance with
all
applicable laws, rules, regulations, standards and contracts relating to
employment, in each case related to the Publications and/or the Acquired Assets,
including those relating to wages, hours,
-27-
working
conditions, hiring, promotion, occupational health and safety (including those
dealing with employee handling or use of or exposure to hazardous or toxic
substances and the training of employees with respect to such substances),
except for any instances of non-compliance which would not, individually or
in
the aggregate, have or be reasonably expected to have a Material Adverse Effect
and the payment and withholding of Taxes and other similar obligations, and
neither Sellers nor any of their Affiliates have received any notice of any
actual or alleged violation of any such law, rule, regulation, standard or
contract. Sellers are in full compliance with all applicable
affirmative action and equal employment opportunity obligations arising under
any state or Federal law, regulation, executive order or ordinance or any
contract or subcontract with any Governmental Authority or other entity or
person except for any instances of non-compliance which would not individually
or in the aggregate, have or be reasonably expected to have a Material Adverse
Effect. Sellers have withheld from the wages and salaries of its
Publication Employees as is required by law and are not liable for any arrears
of wages or any tax or penalty in connection therewith.
(d) Without
limiting the generality of Section 3.13, except as set forth in Schedule
3.13, and except as would not, individually or in the aggregate have or
reasonably be expected to have a Material Adverse Effect, there is no
employment-related claim, cause of action, grievance, judgment or other adverse
charge, allegation or decision of any kind, in each case related to the
Publications and/or the Acquired Assets (including any in the nature of
employment discrimination of any type, breach of contract, wrongful discharge,
retaliation, health, safety or right-to-know violations, child labor violations
or non-payment of wages, benefits or wage supplements), under any law, rule,
regulation, standard, collective bargaining agreement or other contract, pending
or threatened against Sellers or any of their officers, employees or agents,
and, to the knowledge of Sellers, there is no basis for any such claim, cause
of
action, grievance, judgment or other adverse charge or decision.
(e) No
current or former employee of Sellers has made or, to the knowledge of Xxxxxx
Communications or Sellers, threatened any claim against Sellers or any of their
officers, employees or agents under any law, rule, regulation, standard or
contract on account of or for overtime pay (other than overtime pay for the
current payroll period), wages or salary for any period other than the current
payroll period, vacation, holiday or other time off or pay in lieu thereof
(other than time off or pay in lieu thereof earned in respect of the current
year), or any
-28-
violation
of any law, rule, regulation, standard or contract relating to the payment
of
wages, fringe benefits, wage supplements or hours of work in each case as it
relates to the Publications and/or the Acquired Assets.
(f) Neither
Sellers nor Buyer are, nor immediately after the Closing will be, liable for
severance pay or any other payment of monies to any Publication Employees as
a
result of the execution of this Agreement or the parties’ performance of its
terms, or for any other reason in any way related to the consummation of the
transactions contemplated hereby, including any change of ownership of the
Publications.
(g)
(i)
Sellers have delivered (or will deliver supplementally prior to Closing)
to Buyer true, complete and accurate summaries of each employment, bonus,
incentive, deferred compensation, pension, stock purchase, stock option, stock
appreciation right, profit-sharing or retirement plan, arrangement or practice,
each material medical, vacation, retiree medical, group insurance and severance
pay plan, and each other material agreement or fringe benefit plan, arrangement
or practice, of Xxxxxx Communication or Sellers, whether legally binding or
not,
including all “employee benefit plans,” as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which
currently cover one or more Publication Employees (“Employee Benefit
Programs”). Xxxxxx Communications and Sellers and their respective
ERISA Affiliates (as defined below) have complied, in all material respects,
with the terms of all Employee Benefit Programs and all laws with respect to
such programs, including the Code (as defined in Section 3.19) and ERISA, and
no
default exists with respect to the obligations of Xxxxxx Communications or
Sellers or any of their respective ERISA Affiliates under any such Employee
Benefit Programs as it relates to the Publication Employees. The
Buyer shall not incur, and could not reasonably be expected to incur (by
operation of law or otherwise), any liability under any Employee Benefit Program
and/or other employee benefit or compensation plans, programs or arrangements
associated with the Publications, Xxxxxx Communications, Sellers or their
respective ERISA Affiliates, as part of the transactions contemplated by this
Agreement or otherwise, except to the extent of liabilities for paid
time off that are included as Assumed Liabilities pursuant to Section
1.3(a)(iv).
(ii) Except
as set forth on Schedule 3.13(g), neither Xxxxxx Communications, Sellers
nor any of their respective ERISA Affiliates has made a complete or partial
withdrawal, within the meaning of Section 4201 of ERISA, from any multiemployer
plan which covered one or more
-29-
employees
of Sellers, in each case related to the Publications and/or the Acquired Assets
which has resulted in, or could result in, any withdrawal
liability. Except as set forth on Schedule 3.13(g) none of
Sellers nor, to Sellers’ knowledge, any predecessor owner of any of the
Publications have, nor have Sellers’ or Xxxxxx Communications’ or any of their
respective ERISA Affiliates, ever maintained or contributed to a multiemployer
plan.
(iii) Neither
Xxxxxx Communications, Sellers nor any of their respective ERISA Affiliates
has
provided or is required to provide, security to any pension plan or to any
single-employer plan which covered one or more employees of the Publications
at
any time during 2006-2007 pursuant to Section 401(a)(29) of the
Code.
(iv) Xxxxxxx,
Xxxxxx Communications and their respective ERISA Affiliates have complied in
all
material respects with the health care continuation coverage provisions of
the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, Section
4980B of the Code, Title I Part 6 of ERISA, in each case related to the
Publication Employees and any similar state group health plan continuation
law,
together with all regulations and proposed regulations promulgated thereunder
with respect to any events occurring prior to and including the Closing
Date.
(v) “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and
the
regulations thereunder. “ERISA Affiliate” means, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same “controlled group” as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
3.14 [INTENTIONALLY
OMITTED]
3.15 Changes. Except
as shown on Schedule 3.15 to this Agreement, since the Income Statement
Date, Sellers have not, with respect to the business and operation of the
Publications: (a) mortgaged, pledged or subjected to a Lien, any of the Acquired
Assets; (b) sold, leased, removed or transferred any material asset used or
useful in the business or operation of the Publications; or (c) increased
the compensation payable or to become payable to any Publication Employee or
agent, except increases in accordance with historical
practices.
-30-
3.16 Environmental
Matters.
(a) Except
as set forth on Schedule 3.16, Sellers have, with respect to the
ownership and operation of the Publications and Real Property, obtained all
Permits (as defined below) required under all Environmental Laws and are in
compliance with all Environmental Laws and with all such Permits and there
have
been no violations of the Environmental Laws or Permits having or reasonably
expected to have a Material Adverse Effect. For purposes of this
Agreement, “Environmental Law” means all Legal Requirements and Permits
concerning land use, public health, safety, welfare, or the environment,
including without limitation the Resource Conservation and Recovery Act, (42
U.S.C. §§ 6901 et seq.), as amended, and the Comprehensive Environmental
Response, Compensation, and Response Act (42 U.S.C. §§ 9601 et seq.), as amended
(“CERCLA”). For purposes of this Agreement, “Legal Requirements”
means any statute, ordinance, code or other law (including the common law),
rule, regulation, order, notice, standard, procedure, guideline, or requirement
enacted, adopted, applied or issued by any Governmental Authority, including,
without limitation judicial decisions applying or interpreting any
such Legal Requirement. For purposes of this Agreement, “Permit”
shall mean any permit, license, consent, authorization, approval, franchise
privilege, waiver, exception, variance, exclusionary or inclusionary orders
and
other concessions. All such Permits are current and in full force and
effect;
(b) Except
as set
forth on Schedule 3.16, with respect to the business, ownership and/or
operation of the Publications and Real Estate, Sellers have not received and,
to
the knowledge of Sellers, no other person has received, any notice from any
Governmental Authority to the effect that Sellers have performed, failed to
perform, or suffered any act, or that a condition exists, which might reasonably
give rise to liability to Sellers under CERCLA, nor have Sellers, or, to the
knowledge of Sellers, any other person, submitted any notice pursuant to
section 103 of CERCLA to, or responded to any request for information
pursuant to section 104 of CERCLA from, any Governmental Authority;
(c) Except
as set
forth on Schedule 3.16, Sellers have not caused or contributed to the
release or threat of release of any Hazardous Substance, and to the knowledge
of
Sellers there exists no Hazardous Substance released, threatened to be released,
disposed, discharged, dumped or spilled on, at, beneath, from or to the Real
Property (including without limitation any surface waters or groundwaters
thereon). For purposes of this Agreement, “Hazardous Substance” means
any element, material,
-31-
chemical,
compound, mixture or solution defined, designated, listed, classified or
regulated under any Environmental Law;
(d) Except
as set
forth on Schedule 3.16, to the knowledge of Sellers, no Hazardous
Substance used, generated or handled by the Publications on the Real Property
or
elsewhere has been released, disposed, discharged, dumped or spilled on, or
migrated to or from, any other real property;
(e) Sellers
have
provided to Buyer true and complete copies of all non-proprietary audits, data,
reports, investigations or other materials conducted in respect of or concerning
the environmental condition of the Real Property or the Publications that are
in their possession, custody or control; and
(f) Except
as set
forth on Schedule 3.16, to the knowledge of Sellers, no underground
storage tanks or asbestos containing materials are or have been located in,
on
or under any portion of the Real Property or structures thereon.
3.17 [INTENTIONALLY
OMITTED]
3.18 Insurance. Schedule
3.18
sets forth a true, correct and complete list of all claims made by Sellers
or
Xxxxxx Communications under insurance policies of any kind or nature maintained
as of the date of this Agreement by or on behalf of Sellers or Xxxxxx
Communications and relating to the Publications and/or the Acquired Assets
which
are still outstanding, setting forth as to each claim the date, nature and
amount thereof and its current status, excluding claims for employee health
benefits or other amounts under Employee Benefit Programs, which amounts and
claims are Excluded Liabilities.
3.19 Taxes.
(a)
“Code” means the Internal Revenue Code of 1986, as amended.
(b) “Tax”
or “Taxes” means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code § 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, whether computed on a separate
or consolidated, unitary or combined basis or in any other manner, including
any
interest, penalty, or addition
-32-
thereto,
whether disputed or not and including any obligation to indemnify or otherwise
assume or succeed to the tax liability of any other person or
entity.
(c) “Tax
Return” means any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
(d) Except
as set forth in Schedule 3.19, with respect to the Publications and/or
the Acquired Assets Sellers have timely filed, after giving effect to any
applicable extensions, all Tax Returns required to be filed by them, and all
such Tax Returns were complete and correct at the time of filing and continue
to
be complete and correct and were prepared in substantial compliance with
all applicable laws and regulations. Sellers have timely paid, after
giving effect to any applicable extensions, all taxes required to be paid by
them with respect to the Publications and/or the Acquired Assets whether or
not
shown on a Tax Return except amounts being contested in good faith by
appropriate proceedings. Sellers are currently not the beneficiary of
any extension of time within which to file any Tax Return.
(e) No
representative of any taxing authority is asserting in writing or orally any
material Tax deficiency with respect to the Publications and/or the Acquired
Assets that has not been adequately reserved for, and no liens in respect of
Taxes exist (other than liens for Taxes not yet due or for Taxes being contested
in good faith), with respect to the Acquired Assets or the
Publications. All required Tax estimates, deposits, prepayments and
similar reports or payments with respect to the Publications and/or the Acquired
Assets for current periods have been properly made with respect to the
Publications and/or the Acquired Assets. There are no actions, suits,
proceedings, investigations or claims pending or, to the knowledge of Sellers,
threatened against Sellers in respect of Taxes, nor are any material matters
under discussion with any Governmental Authority relating to Taxes, to the
knowledge of Sellers, no claim has ever been made by any Governmental Authority
in a jurisdiction where Sellers do not file a Tax Return that any Seller is
or
may be subject to taxation in that jurisdiction. No Tax Returns of
Sellers currently are the subject of audit.
(f) All
Taxes that are required to be collected or withheld by Sellers with respect
to
the Publications and/or the Acquired Assets have been duly collected and
withheld, and any such amounts that are required to have been remitted to any
taxing authority have been duly remitted.
-33-
(g)
Sellers have not waived any statute of limitations in respect of Taxes with
respect to the Publications and/or the Acquired Assets or agreed to an extension
of time with respect to a Tax assessment or deficiency.
(h) It
is understood that Sellers are not making any representation to GateHouse Media
or Buyer that Sellers’ methodologies for calculating Taxes are appropriate or
correct for Tax Returns to be filed by Buyer to the extent that such Tax Returns
relate to any periods after the Closing.
3.20 Investment
Representations.
(a) Sellers
and Xxxxxx Communications are acquiring the Note for investment for their own
account and not with a view to, or for resale in connection with, the
distribution thereof in contravention of securities laws.
(b) Sellers’
and Xxxxxx Communications’ knowledge and experience in financial and business
matters are such that Sellers and Xxxxxx Communications are capable of
evaluating the merits and risks of their acquisition of the
Note. Sellers acknowledge that GateHouse Media has made available to
Sellers and Xxxxxx Communications, their legal and tax counsel, and their
advisors, prior to the date hereof, the opportunity to ask questions of, and
to
receive answers from, GateHouse Media and its representatives, about GateHouse
Media and access to any information, documents, financial statements, records
and books (i) relative to GateHouse Media and its business and an investment
in
the Note, and (ii) necessary to verify the accuracy of any information furnished
to Sellers and Xxxxxx Communications, including, but not limited to, the
information set forth in the GateHouse Media’s reports filed under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).
(c) Sellers
and Xxxxxx Communication are “accredited investors” as defined in Rule 501
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”).
(d) Sellers
and Xxxxxx Communications acknowledge that GateHouse Media and its advisors
will
rely on the representations and warranties of Sellers and Xxxxxx Communications
contained in this Section 3.20. for purposes of determining whether
the issuance of the Note, if any, is exempt from registration under the
Securities Act and other applicable securities laws.
(e) Sellers
and Xxxxxx Communications have carefully reviewed the section of
GateHouse
-34-
Media’s
Annual Report on Form 10-K for the year ended December 31, 2006 entitled “Risk
Factors”.
3.21 Brokers. Neither
Sellers nor Xxxxxx Communications have incurred any liability or obligation
to
pay any fees or commissions to any broker, finder, or agent with respect to
the
transactions contemplated by this Agreement for which the Buyer or GateHouse
Media could become liable or obligated.
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF BUYER
Buyer
and
GateHouse Media represent and warrant to Sellers that the statements contained
in this Article IV are correct and complete as of the date of this Agreement
and
will be correct and complete as of the Closing Date, except as may be set forth
in a disclosure schedule delivered to Sellers pursuant hereto.
4.1 Organization. Buyer
is a corporation validly existing and in good standing under the laws of the
State of Delaware. GateHouse Media is a corporation validly existing
and in good standing under the laws of the State of Delaware.
4.2 Authority
Relative to this Agreement. Buyer and
GateHouse Media have the full power, authority and legal right to execute and
deliver this Agreement and to consummate the transactions and perform its
obligations as contemplated hereby without a vote of the shareholders of
GateHouse Media. The execution and delivery of this Agreement by
Buyer and GateHouse Media and the consummation of the transactions contemplated
hereby by Buyer and GateHouse Media have been duly and validly authorized by
all
necessary action, and this Agreement has been duly and validly executed and
delivered by Buyer and GateHouse Media and assuming due authorization, execution
and delivery by Sellers and Xxxxxx Communications, constitutes a legal, valid
and binding obligation of Buyer and GateHouse Media enforceable against Buyer
and GateHouse Media in accordance with its terms, except as may be limited
by
applicable bankruptcy, insolvency or similar law affecting the rights of
creditors generally. Upon the execution and delivery by GateHouse
Media, the Note will constitute the legal, valid
-35-
and
binding obligation of GateHouse Media, enforceable against GateHouse Media
in
accordance with its terms.
4.3 No
Defaults. The execution, delivery and
performance of this Agreement by Buyer and GateHouse Media will not
(a) conflict with or result in any breach of any provision of the
certificate of incorporation, by-laws or other organizational documents of
Buyer, or (b) violate any law, statute, rule, regulation, order, injunction
or decree of any Governmental Authority applicable to Buyer or GateHouse
Media.
4.4 Non-Contravention;
No Defaults.
(a) Except
as disclosed in Schedule 4.4, the execution, delivery and performance of
this Agreement by Buyer and GateHouse Media will not (i) conflict with any
provision of the governing documents of GateHouse Media or Buyer,
(ii) result in a default (or give rise to any right of termination,
cancellation or acceleration), with notice or passage of time or both, under
or
conflict with any of the terms, conditions or provisions of any contract, note,
bond, mortgage or other instrument, obligation or agreement material to the
business of GateHouse Media and its subsidiaries as a whole, except for any
such
defaults which would not, individually or in the aggregate, have or be
reasonably expected to have a material adverse effect on GateHouse Media and
its
subsidiaries taken as a whole or a material adverse effect on GateHouse Media’s
or Buyer’s ability to consummate the transactions contemplated hereby, or
(iii) violate any law, statute, rule, regulation, order, injunction or
decree Governmental Authority applicable to GateHouse Media or Buyer except
for
any such violations which would not individually or in the aggregate, have,
or
be reasonably expected to have a material adverse effect on GateHouse Media
and
its subsidiaries taken as a whole or a material adverse effect on GateHouse
Media’s Buyer’s ability to consummate the transactions contemplated
hereby.
(b) Except
for notices and filings required to be delivered to GateHouse Media’s banks and
except for the requirements of the Xxxx-Xxxxx-Xxxxxx Act, neither GateHouse
Media nor Buyer is required to submit any notice, report or other filing with,
or obtain any consent, approval or waiver from, any Governmental Authority
or
any other third party in connection with the execution, delivery or performance
of this Agreement or the consummation of the
transactions
-36-
contemplated
hereby, except for any such failure which would not individually or in the
aggregate have or be reasonably expected to have a material adverse effect
on
GateHouse Media’s or Buyer’s ability to consummate the transactions contemplated
hereby.
4.5 Financial
Capability. Buyer, on the Closing Date
will have, sufficient funds unconditionally available to it (without the need
to
obtain any additional bank or other additional third party financing commitment)
to pay to Sellers the Purchase Price and otherwise to satisfy all of its
obligations under this Agreement.
4.6 Reports
and Financial Statements. Since October
26, 2006, GateHouse Media has filed with the SEC all forms, reports and
documents required to be filed by it under each of the Securities Act and the
Exchange Act, and the respective rules and regulations thereunder, all of which
complied in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. The audited
consolidated financial statements of GateHouse Media included in such reports
have been prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of GateHouse Media as at the dates thereof and the results
of
its operations and changes in financial position for the periods then ended
subject, in the case of
unaudited
interim financial statements, to normal year-end and audit adjustments and
any
other adjustments as described therein.
4.7 Absence
of Certain Changes or Events. Since
June 30, 2007, except as disclosed in any of GateHouse Media’s Current Reports
on Form 8-K or Quarterly Reports on Form 10-Q filed subsequently to June 30,
2007, there has not been any material adverse change in the financial condition
or in the results of operations or the businesses, properties, assets,
liabilities or prospects of GateHouse Media and its subsidiaries, taken as
a
whole.
4.8 Brokers. There
is no broker or finder or other person who would have any valid claim against
any Sellers or Xxxxxx Communications for a commission or brokerage in connection
with this Agreement or the transactions contemplated hereby as a result of
any
agreement, understanding or action by Buyer or GateHouse Media.
-37-
ARTICLE
V.
PRE-CLOSING
COVENANTS OF SELLERS AND BUYER PENDING THE CLOSING
DATE
Each
of
Xxxxxx Communications, Sellers, Buyer and GateHouse Media, as applicable,
covenant and agree that from the date hereof to and including the Closing
Date:
5.1 Maintenance
of Business. Sellers shall continue to
carry on the business and operation of, and maintain the books, accounts and
records of, the Publications in substantially the same manner as heretofore
in
the ordinary course of business and shall maintain the properties, machinery,
equipment and other Acquired Assets used in the business of the Publications
in
substantially the same manner as heretofore in the ordinary course of business
consistent with past practice.
Except
as
set forth on Schedule 5.1, prior to the Closing Date, Sellers will not,
with respect to the Publications, without the prior written consent of Buyer,
which will not be unreasonably withheld, conditioned or delayed:
(a) (i)
Make any change in circulation practices, or promotional, marketing or premium
practices of the Publications, other than changes in the ordinary course of
business which changes are not material, or (ii) make any change in policies
for
the pricing of circulation or advertising of the Publications except for changes
in the ordinary course of business which changes are not material;
(b) Sell,
lease, remove, transfer or agree to sell, lease, remove or transfer any of
the
Acquired Assets without replacement thereof with an asset of substantially
equivalent kind, condition and value and except in the ordinary course of
business consistent with past practice;
(c) Enter
into or amend any contract of employment or collective bargaining agreement,
or
permit or commit to any increases or changes in the compensation (including,
but
not limited to, bonus, pension, profit-sharing, incentive, deferred
compensation, stock purchase, stock option, stock appreciation right, group
insurance, severance pay, retirement or other employee benefit plan, agreement
or arrangement) of any Publication Employee or any independent contractor
or
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other
person providing services to any of Sellers primarily as it relates to the
Publications and/or the Acquired Assets, except for increases in accordance
with
historical practices and except in the ordinary course of business consistent
with past practice;
(d) Enter
into or amend any contract or commitment as it relates to any of the
Publications involving annual consideration of more than $25,000 individually
or
$250,000 in the aggregate, waive any right or enter into any other transaction,
other than as permitted by other provisions of this Agreement;
(e) Sell,
assign, transfer, license or permit to lapse any material Right;
(f) Make
any material change in any of the Real Property or fail to maintain the Real
Property or other Acquired Assets in adequate repair and condition, ordinary
wear and tear excepted; or cancel or fail to renew any of the current insurance
policies or any of the coverage thereunder maintained for the protection of
any
of the Real Property or the other Acquired Assets;
(g) Except
for Permitted Encumbrances, encumber any of the Acquired Assets or permit any
of
the Acquired Assets to become subject to any Lien;
(h) Enter
into any contracts, agreements or arrangements (written or oral) with any
Affiliate except those that would not create an Assumed Liability;
or
(i) Take
any action that would otherwise require disclosure to be made on Schedule
3.4.
5.2 Organization;
Goodwill. Sellers shall use its
reasonable efforts to preserve the business organization of the Publications
intact and preserve the goodwill of the Publications’ suppliers, customers and
others having business relations with them.
5.3 Access
to Facilities, Files and Records. At
the reasonable request of Buyer and subject to the need to preserve the
confidentiality of this transaction prior to Closing in order to preserve
relationships with employees and customers, Sellers and Xxxxxx Communications
shall give or cause to be given to the officers, employees, accountants, counsel
and authorized representatives of Buyer (a) access after prior notice during
normal business hours to all Facilities, property, accounts, books, minute
books, deeds, title papers, licenses, agreements, contracts, Tax Returns (other
than Federal and State income Tax Returns), records and files of every
character, equipment, machinery, fixtures, furniture, vehicles, notes and
accounts payable and receivable
-39-
and
inventories primarily related to the Publications, and (b) all such other
information concerning the Acquired Assets and affairs of the Publications
as
Buyer may reasonably request. With the consent and supervision of
Sellers, Sellers and Xxxxxx Communications shall permit representatives of
Buyer
to perform inspections of the Real Property and the structures located thereon
and to perform surveys, environmental assessments, sampling and audits as Buyer
may request with respect to the Acquired Assets.
5.4 Representations
and Warranties. Sellers and Xxxxxx Communications shall
give detailed written notice to Buyer and GateHouse Media promptly upon the
occurrence of or becoming aware of the impending or threatened occurrence of
any
event which would cause or constitute a breach, or would have caused a breach
had such event occurred or been known to Sellers or Xxxxxx Communications prior
to the date hereof, of any of Sellers’ or Xxxxxx Communications’ representations
or warranties contained in this Agreement or in any schedule delivered pursuant
hereto. Buyer and GateHouse Media shall give detailed written notice
to Sellers promptly upon becoming aware of any inaccuracy in any of the
representations or warranties in Article III or any other breach of this
Agreement, which notice shall not waive or otherwise limit any
of GateHouse Media’s or Buyer’s rights or remedies
hereunder. From time to time on or prior to the Closing, Sellers and
Xxxxxx Communications shall supplement or amend any schedules delivered in
connection herewith with respect to any matter arising after the date hereof,
which, if arising prior to the date of this Agreement, would have been required
to be set forth or described in such schedule or which is necessary to correct
any information in such schedule which has been rendered inaccurate as a result
of a matter arising after the date hereof and such amendment shall not be deemed
to create a breach of any representation or warranty.
5.5 Corporate
Action. Subject to the provisions of
this Agreement, Sellers and Xxxxxx Communications will take all necessary action
required of them to carry out the transactions contemplated by this
Agreement.
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5.6 Consents.
(a) Sellers
will use commercially reasonable efforts to obtain or cause to be obtained
prior
to the Closing Date consents to the assignment to or assumption by Buyer of
all
of the Material Contracts which require the consent of any third party by reason
of the transactions provided for in this Agreement as shown on Schedule
3.9 and Schedule 3.10(b); provided, however, that Sellers shall not
be required to make any payments or to incur any obligations to third parties
in
connection with the obtaining of any such consent.
(b) Nothing
in this Agreement shall be deemed to be a condition to Closing or to constitute
or require the transfer or assignment or the attempt to transfer or assign
any
of the Acquired Assets if the attempted transfer or assignment thereof, without
the consent of a third party, would adversely affect in any way the rights
of
any of Sellers or Xxxxxx Communications, on the one hand, or Buyer or GateHouse
Media, on the other hand or, in Buyer’s opinion, would adversely affect any of
the Publications or the Acquired Assets. If any such consent shall
not have been obtained at or prior to the Closing, or the attempted transfer
or
assignment of any of the Acquired Assets at the Closing would have an adverse
effect on Sellers or Xxxxxx Communications, on the one hand, or Buyer, GateHouse
Media, the Publications or the Acquired Assets on the other hand, or on Buyer’s
rights thereto or Buyer would not in fact receive the rights thereto, (i)
Sellers will cooperate with Buyer in any reasonable arrangement designed to
provide for Buyer the rights thereto and benefits thereunder, including, without
limitation, (A) enforcing for the benefit of Buyer any or all rights of Sellers
under any contract, commitment or other agreement against any other party
thereto, or (B) at Buyer’s election, not transferring, conveying, assigning or
delivering to Buyer at the Closing, and retaining legal title to such Acquired
Asset, while permitting Buyer the possession and use of such Acquired Asset
for
Buyer’s account and with Buyer receiving the benefits and bearing the burdens of
such Acquired Asset as if such Acquired Asset had been so transferred, conveyed,
assigned and delivered, and (ii) Sellers will take all reasonable appropriate
further action to obtain such consents, approvals or novations as may be
required under applicable laws or otherwise to effect the transfer or assignment
of such Acquired Asset to Buyer. Pending the obtaining of such
consents, approvals or novations, Buyer will continue performance of any
remaining unfulfilled obligations of Sellers under any
contract,
-41-
commitment
or other agreement constituting such an Acquired Asset in the same manner as
though Buyer rather than Sellers was a party to such contract, commitment or
agreement, with Buyer receiving the benefits and bearing the burdens
thereof. Sellers agree to remit to Buyer all collections received in
respect of any such Acquired Asset promptly on receipt thereof less any amount
due Sellers from Buyer with respect to such Acquired Assets. Expenses
incurred in connection with actions taken pursuant to this Section 5.6(b) shall
be borne in such a manner as to place Sellers and Buyer in the economic
positions in which they would have been had such Acquired Asset been
transferred, conveyed, assigned or delivered at Closing.
5.7 Confidential
Information. If for any reason the
transactions contemplated in this Agreement are not consummated, none of Sellers
nor Xxxxxx Communications shall disclose to third parties any information
designated as confidential and received from Buyer, GateHouse Media or their
respective agents in the course of investigating, negotiating and completing
the
transactions contemplated by this Agreement. Nothing shall be deemed
to be confidential information with respect to the preceding sentence
which: (a) is known to Sellers or Xxxxxx Communications at the time
of its disclosure to it; (b) becomes publicly known or available other than
through disclosure by Sellers or Xxxxxx Communications; (c) is rightfully
received by Sellers from a third party not known by Sellers or Xxxxxx
Communications to be subject to an obligation of confidentiality; or (d) is
independently developed by Sellers or Xxxxxx Communications. If for
any reason the transactions contemplated in this Agreement are not consummated,
the parties acknowledge and agree that the terms of the Confidentiality
Agreement dated July 19, 2007 shall continue to apply to all confidential
information.
5.8 Consummation
of Agreement. Subject to the provisions
of Section 10.2 of this Agreement, Sellers and Xxxxxx Communications shall
use
reasonable efforts to fulfill and
perform
all conditions and obligations on their part to be fulfilled and performed
under
this Agreement and to cause the transactions contemplated by this Agreement
to
be fully carried out.
5.9 Notice
of Proceedings. Sellers and Xxxxxx Communications will
promptly notify Buyer in writing upon becoming aware of any order or decree
or
any complaint praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions
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contemplated
hereunder, or upon receiving any notice from any Governmental Authority of
its
intention to institute an investigation into, or institute any action or
proceeding to restrain or enjoin consummation of this Agreement or such
transactions, or to nullify or render ineffective this Agreement or such
transactions if consummated.
5.10 Interim
Financial Statements. Sellers and
Xxxxxx Communications shall deliver to Buyer and GateHouse Media unaudited
interim balance sheets and statements of income, changes in stockholders’ equity
and cash flows for the Publications promptly but not later than twenty (20)
days
after the close of each of the Publications’ periodic accounting periods (and in
no event less frequently than on a monthly basis), if any, that occurs between
the Income Statement Date and the Closing Date. Such interim periodic
financial statements shall include financial information both for the current
accounting period and for the fiscal year to date, as well as comparisons with
the respective corresponding periods in the prior fiscal year.
5.11 Taxes. Sellers
shall pay all Taxes relating to the Publications or the Acquired Assets as
they
become due.
5.12 Audited
Financial Statements; Interim Financial Statements. If
and when requested by Buyer, Sellers and Xxxxxx Communications will, within
60
days of Closing provided such request is made by November 1, 2007, cause to
be
delivered to Buyer an audit of the Publications’ financial statements for up to
the three years ending December 31, 2006 and interim financial statements of
Publications as required by financial reporting standards affecting Buyer or
GateHouse Media. Buyer shall pay Sellers’ reasonably incurred and
necessary incremental third party costs and expenses for such
audit. It is understood that Sellers shall not be responsible for any
delays to the extent caused by the outside auditors provided Sellers and Xxxxxx
Communications use commercially reasonable efforts to promptly and fully
cooperate with such auditors and timely comply with their
requests.
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5.13 Title
Matters.
(a) Within
five (5) days after the date of this Agreement, Sellers and Xxxxxx
Communications will provide Buyer with copies of all title information in the
possession of Sellers or Xxxxxx Communications, any of their respective
Affiliates, or their respective agents relating to the Owned Real Property,
including abstracts of title, surveys and policies of title
insurance.
(b) Within
thirty (30) days after the date of this Agreement, Buyer will obtain
title commitments for a 2006 ALTA Owner’s Title Insurance Policy or Policies
with respect to the Owned Real Property (each a “Title Commitment”), issued by a
title company reasonable acceptable to Buyer and its lenders (the “Title
Company”), in form and substance reasonably satisfactory to Buyer and its
lenders. Each Title Commitment will be accompanied by readable copies
of all documents cited as exceptions to title therein (the “Underlying
Documents”), which will be certified by the Title Company as true, correct and
complete copies of the Underlying Documents. Buyer, at its option,
may obtain survey maps of the Owned Real Property (each a “Survey”) acceptable
to the title insurance company providing the Title Commitments, prepared and
certified in accordance with generally accepted professional standards by a
duly
licensed land surveyor, dated after the date of this Agreement. Buyer
shall provide Sellers with legible copies of the Title Commitments, exception
documents and other instruments referenced therein and survey maps, if any,
promptly following Buyer’s receipt thereof. Buyer will bear all costs
of any surveys and the costs of such Title Commitments and any title policies
issued pursuant to the Title Commitments.
(c) Buyer
will have twenty (20) days after its receipt of a Title Commitment and the
related Survey to review each of them and to notify Sellers in writing of any
exceptions other than exceptions to the Title Commitment to which Buyer
reasonably objects, other than Permitted Encumbrances (the “Title
Objections”). If prior to Closing any Title Objection or other Lien
is asserted against any of the Owned Real Property by, through or under Sellers
or any of their Affiliates that is not a Permitted Encumbrance, Sellers and
Xxxxxx Communications will, at their sole expense, either (i) obtain the release
of such Title Objection or Lien, (ii) obtain title insurance covering such
Title
Objection or Lien, (iii) provide alternative arrangements, satisfactory to
Buyer
in its sole discretion, which provide Buyer the full economic benefit of the
ownership of the affected Owned Real Property without any of the risk associated
with or
-44-
relating
to such Title Objections or Lien or (iv) remove such particular parcel of the
Owned Real Property from the Acquired Assets being transferred upon written
notice to Buyer, and with an equitable adjustment to the Purchase Price in
accord with the agreed upon allocation of Purchase Price described in Section
1.7 If Sellers fail to cure or address, prior to Closing, all
Title Objections with respect to any particular parcel of the Owned Real
Property as provided above, then Buyer may either (A) consummate the
transactions contemplated hereby, notwithstanding the Title Objections, with
an
equitable adjustment to the Purchase Price described in Section 1.7 or (B)
terminate this Agreement.
(d) Any
matters shown on a Title Commitment or Survey to which Buyer does not object
during the twenty (20) day period set forth in Section 5.13(c), or to which
any
Title Objection is waived by Buyer, will become Permitted
Encumbrances.
5.14. Buyer’s
Representations and Warranties. Buyer and GateHouse
Media shall give detailed written notice to Sellers promptly upon the occurrence
of or becoming aware of the impending or threatened occurrence of any event
which would cause or constitute a breach, or would have caused a breach had
such
event occurred or been known to Buyer and GateHouse Media prior to the date
hereof, of any of the representations and warranties of Buyer contained in
this
Agreement.
5.15 Corporate
Action. Subject to the provisions of
this Agreement, each of Buyer and GateHouse Media, on one hand, and Sellers
and
Xxxxxx Communications, on the other hand, will take all necessary corporate
and
other action required of them to carry out the transactions contemplated by
this
Agreement.
5.16 Consummation
of Agreement. Subject to the provisions
of Section 10.2 of this Agreement, each of Buyer and GateHouse Media shall
use
its reasonable efforts to fulfill and perform all conditions and obligations
on
its part to be fulfilled and performed under this Agreement and to cause the
transactions contemplated by this Agreement to be fully carried
out.
5.17 Notice
of Proceedings. Buyer and GateHouse Media will promptly notify
Sellers in writing upon becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the consummation of
this
Agreement or the transactions
-45-
contemplated
hereunder, or upon receiving any notice from any Governmental Authority of
its
intention to institute an investigation into, or institute any action or
proceeding to restrain or
enjoin
the consummation of this Agreement or such transactions, or to nullify or render
ineffective this Agreement or such transactions if consummated.
5.18 No
Solicitation; Acquisition
Proposals. Except following a
termination in accordance with Section 10.2, Xxxxxx Communications and Sellers
agree that they will not, directly or indirectly, through any officer, director,
employee, partner, stockholder, agent, or Affiliate or otherwise, except in
furtherance of the transactions of the type contemplated by this Agreement
(a)
solicit, initiate, or encourage submission of proposals or offers from any
person relating to any transactions of the type contemplated herein or to the
direct or indirect purchase of any of the Acquired Assets, the Publications
(collectively, an “Acquisition Proposal”), (b) participate in any discussions or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with or assist, facilitate, or
encourage, any Acquisition Proposal by any person, (c) enter into any agreement,
arrangement, or understanding with respect to any Acquisition Proposal, or
(d)
sell, transfer, or otherwise dispose of, or enter into any agreement,
arrangement, or understanding with respect to, any interest in the Acquired
Assets.
5.19 Phase
I Environmental Site Assessment. Buyer
may obtain Phase I Environmental Reports (prepared in accordance with ASTM
standards) for the Real Property certified to Buyer and prepared by independent
consultants approved by Buyer (“Real Property Phase I Reports”), the results of
which shall be satisfactory to Buyer in its sole discretion, subject to the
remainder of this Section 5.19. Sellers and Xxxxxx Communications
shall fully cooperate with Buyer and Buyer’s representatives and exercise
commercially reasonable efforts to cause all third parties to fully cooperate
with Buyer and Buyer’s representatives in obtaining the Real Property Phase I
Reports. Upon Buyer’s review of the Real Property Phase I Reports,
Buyer shall notify Sellers in writing of any matters set forth therein to which
Buyer reasonably object or has concerns (the “Environmental
Objections”). Sellers may cure prior to Closing, at their sole
expense, all of the Environmental Objections, to the sole satisfaction of Buyer
either by (i) the remediation/repair of such Environmental Objections, (ii)
the
procurement of insurance endorsements for the benefit
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of
GateHouse Media and Buyer providing full and complete coverage against loss
or
damage as a result of such Environmental Objections, (iii) providing
alternative arrangements, satisfactory to Buyer in its sole discretion,
providing Buyer the full economic benefit of the ownership of the affected
Owned
Real Property without any of the risk associated with or relating to such
Environmental Objections or (iv) remove such particular parcel of the Owned
Real
Property from the Acquired Assets being transferred upon written notice to
Sellers, and with an equitable adjustment to the Purchase Price in accord with
the agreed upon allocation of Purchase Price described in Section
1.7. If Sellers fail to cure or address, prior to Closing, all
Environmental Objections with respect to any particular parcel of the Owned
Real
Property as provided above, then Buyer, in its sole discretion may either (A)
consummate the transactions contemplated hereby, notwithstanding the
Environmental Objections, with an equitable adjustment to the Purchase Price
described in Section 1.7 or (B) terminate this Agreement.
5.20 Bulk
Transfer Laws. The parties hereby waive
compliance with the provisions of the applicable bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement.
ARTICLE
VI.
ADDITIONAL
COVENANTS
|
6.1
|
No
Securities
Transactions.
|
(a) Neither
Xxxxxx Communications, Sellers nor any of their respective managers, members
or
officers or any of their Affiliates, directly or indirectly, shall engage in
any
transactions involving the securities of GateHouse Media prior to the time
of
the making of a public announcement of the transactions contemplated by this
Agreement. Xxxxxx Communications and Sellers shall use their commercially
reasonable efforts to ensure compliance with the foregoing
requirement.
(b) None
of GateHouse Media, Buyer nor any of their respective managers, members or
officers or any of their Affiliates, directly or indirectly, shall engage in
any
transactions involving the securities of Xxxxxx Publishing prior to the time
of
the making of a public
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announcement
of the transactions contemplated by this Agreement. GateHouse Media and Buyer
shall use their commercially reasonable efforts to ensure compliance with the
foregoing requirement.
ARTICLE
VII.
CONDITIONS
TO THE OBLIGATIONS OF SELLERS
The
obligations of Sellers and Xxxxxx Communications under this Agreement are,
at
their option, subject to the fulfillment of the following conditions prior
to or
at the Closing Date:
7.1 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Buyer and GateHouse Media contained in this
Agreement and in any statement, certificate, schedule or other document
delivered by Buyer and GateHouse Media pursuant hereto or in connection with
the
transactions contemplated hereby, shall have been true and accurate as of the
date when made and shall be deemed to be made again on and as of the Closing
Date and shall then be true and accurate, except for untrue or inaccurate
representation or warranties which would not, in the aggregate, impair Buyer’s
or GateHouse Media’s ability to fulfill its obligations under this Agreement or
have a Material Adverse Effect on GateHouse Media and its subsidiaries, taken
as
a whole;
(b) Buyer
and GateHouse Media shall have performed and complied in all material respects
with each and every covenant and agreement required by this Agreement to be
performed or complied with by them prior to or at the Closing Date, and shall
have delivered all agreements and documents contemplated by Section 2.3, other
than the delivery by Buyer and GateHouse Media of the Purchase Price and the
instrument of assumption, each of which shall be delivered as of the Closing;
and
(c) Buyer
and GateHouse Media shall have delivered to Sellers a certificate of an
appropriate officer of Buyer and GateHouse Media, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in Sections 7.1(a)
and
7.1(b) above.
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7.2 Proceedings.
(a) No
action or proceeding shall have been instituted before
any Governmental Authority to restrain or prohibit, or to obtain
substantial damages in respect of, the consummation of the transactions
contemplated by this Agreement which, in the reasonable opinion of Sellers,
may
be expected to result in an award of substantial damages or have a Material
Adverse Effect on GateHouse Media and its subsidiaries, taken as a
whole;
(b) None
of the parties to this Agreement shall have received written notice from any
Governmental Authority of (i) its intent to institute any action or proceeding
to restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry), into the consummation of this Agreement, or (ii) the actual
commencement of such an investigation. In the event such a notice of
intent is received or such an investigation is commenced, this Agreement may
not
be terminated by Sellers for a period of ninety (90) days from the date of
such
notice of intent or notice of commencement, but Closing shall be delayed during
such period. This Agreement may be terminated after this ninety
(90)-day period if, in the reasonable opinion of Sellers, there is a likely
probability that an investigation will result in an action or proceeding of
the
type described in clause (a) of this Section 7.2; and
(c) At
the Closing Date, there shall be no injunction, restraining order or decree
of
any nature of any Governmental Authority in effect which restrains or prohibits
the consummation of the sale and purchase of the Acquired Assets as contemplated
by this Agreement.
7.3 Xxxx-Xxxxx-Xxxxxx. The
waiting period (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated, and all other authorizations,
consents and approvals of Governmental Authority required for consummation
of
the transactions contemplated hereby shall have been obtained.
ARTICLE
VIII.
CONDITIONS
TO THE OBLIGATIONS OF GATEHOUSE MEDIA AND BUYER
The
obligations of GateHouse Media and Buyer under this Agreement are, at their
option, subject to the fulfillment of the following conditions prior to or
at
the Closing Date.
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8.1 Representations,
Warranties and Covenants.
(a) The
representations and warranties of Sellers and Xxxxxx Communications contained
in
this Agreement and in any statement, deed, certificate, schedule or other
document delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby, shall have been true and accurate as of the
date when made and shall be deemed to be made again on and as of the Closing
Date and shall then be true and accurate;
(b) Sellers
and Xxxxxx Communications shall have performed and complied in all material
respects with each and every covenant and agreement required by this Agreement
to be performed or complied with by them prior to or at the Closing Date, and
shall have delivered all agreements and documents contemplated by Section 2.2,
other than delivery to Buyer of the instruments conveying the Acquired Assets
to
Buyer which shall be delivered as of the Closing; and
(c) Sellers
and Xxxxxx Communications shall have delivered to Buyer certificates of
appropriate officers of Sellers, dated the Closing Date, certifying to the
fulfillment of the conditions set forth in Sections 8.1(a) and 8.1(b)
above.
8.2 Proceedings.
(a) No
action or proceeding shall have been instituted before any Governmental
Authority to restrain or prohibit, or to obtain substantial damages in respect
of, the consummation of this Agreement which, in the reasonable opinion of
Buyer, may be expected to result in an award of such substantial
damages;
(b) None
of the parties to this Agreement shall have received written notice from any
Governmental Authority of (i) its intent to institute any action or proceeding
to restrain or enjoin or nullify this Agreement or the transactions contemplated
hereby, or to commence any investigation (other than a routine letter of
inquiry), into the consummation of this Agreement, or (ii) the actual
commencement of such an investigation. In the event such a notice of
intent is received or such an investigation is commenced, this Agreement may
not
be terminated by Buyer for a period of ninety (90) days from the date of such
notice of intent or notice of
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commencement,
but Closing shall be delayed during such period. This Agreement may
be terminated after this ninety (90)-day period if, in the reasonable opinion
of
Buyer, there is a likely probability that an investigation will result in an
action or proceeding of the type described in clause (a) of this Section 8.2;
and
(c) At
the Closing Date, there shall be no injunction, restraining order or decree
of
any nature of any Governmental Authority or body in effect which restrains
or
prohibits the consummation of the sale and purchase of the Acquired Assets
contemplated by this Agreement.
8.3 Xxxx-Xxxxx-Xxxxxx. The
waiting period (and any extensions thereof) under the Xxxx-Xxxxx-Xxxxxx Act
shall have expired or otherwise been terminated, and all other authorizations,
consents and approvals of Governmental Authority required for consummation
of
the transactions contemplated hereby shall have been obtained.
8.4 Consents. Sellers
shall have obtained the consents set forth on Schedule 3.9 and
Schedule 3.10(b), all of which shall be reasonably satisfactory to Buyer
in form and substance.
8.5 Title
Insurance. Buyer shall have received
and be satisfied with the Title Commitments for the Owned Real Property in
accordance with the requirements of Section 5.13.
8.6 Real
Property Phase I Reports. The
Real Property Phase I Reports shall be performed at each Real Property and
a
copy of the Real Property Phase I Reports shall be satisfactory to Buyer in
accordance with the requirements of Section 5.19.
8.7 Landlord
Estoppel Certificates. Sellers shall
have obtained and delivered to Buyer an estoppel certificate with respect to
each of the Leases dated no more than thirty (30) days prior to the Closing
Date, from the other party to such Lease, in form and substance reasonably
satisfactory to Buyer.
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ARTICLE
IX.
INDEMNIFICATION
9.1 Survival;
Limitations.
(a) The
representations and warranties of the parties contained in or made pursuant
to
this Agreement shall be deemed to have been made on the date hereof and on
the
Closing Date, shall survive the Closing Date and shall remain operative and
in
full force and effect for the period ending 18 months thereafter (the “Survival
Period”); provided that if on or prior to the expiration of the Survival Period,
a notice of claim for indemnification shall have been given in accordance with
Section 9.4 hereof, the indemnified party shall continue to have the right
to be indemnified with respect to such indemnification claim until such claim
for indemnification has been satisfied or otherwise resolved as provided in
this
Article IX; and provided further that the representations and warranties
contained in, Section 3.16 (‘Environmental Matters’), Section 3.19
(‘Taxes’)
and
Section 3.20 (‘Investment Representations’) shall survive until the expiration
of the applicable statute of limitations period plus 90 days and the
representations and warranties contained in Sections 3.2 (‘Authority Relative to
the Agreement’), 3.21 (‘Brokers’), 4.2 (‘Authority Relative to the Agreement’)
and 4.8 (‘Brokers’) and all covenants and agreements made by any party hereunder
which are to be performed after the Closing Date shall survive without time
limit, with the exception of Sections 9.2(a) and 9.3(a), which shall only
remain operative and in full force and effect as long as indemnification with
respect to the underlying representation and warranty remains available in
accordance with the foregoing provisions of this Section 9.1(a) (including
as extended pursuant to the first proviso hereof).
(b) Except
for any Loss and Expense (as defined in Section 9.2) suffered by Buyer based
on
the breach of any representation or warranty contained in Section 3.16
(‘Environmental Matters’), Section 3.19 (‘Taxes’) and Section 3.20 (‘Investment
Representations’) or resulting from fraud or willful misconduct by Sellers or
Xxxxxx Communications, Buyer and/or GateHouse Media shall not be entitled to
indemnification under this Agreement for any indemnification claim under Section
9.2(a) until the aggregate Loss and Expense suffered by Buyer and/or GateHouse
Media subject to indemnification under Section 9.2(a) of this Agreement
exceeds $1,000,000 (the “Threshold”). Once the Threshold has been
reached, Buyer and/or GateHouse Media shall be entitled to full indemnification
from Sellers pursuant to Section 9.2(a) below for
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the
aggregate amount of Loss and Expense suffered by Buyer and/or GateHouse Media,
in excess of the Threshold. Notwithstanding the foregoing, the
Threshold shall not apply to any adjustments under Section 1.6, any Loss and
Expense suffered by Buyer and GateHouse Media based on any breach of any
representation or warranty contained in , Section 3.16 (‘Environmental
Matters’), Section 3.19 (‘Taxes’) or Section 3.20 (‘Investment Representations’)
or resulting from fraud or willful misconduct by Sellers or Xxxxxx
Communications or to any indemnification claim related to covenants and
agreements made by any party hereto which are to be performed after the Closing
Date.
(c) Sellers’
and Xxxxxx Communication’s maximum aggregate liability to Buyer and GateHouse
Media for indemnification claims under Section 9.2(a) of this Agreement with
respect to any Loss and Expense shall be $11.5 million (the “Cap”); provided
that the Cap shall not apply to any Loss and Expense suffered by Buyer and
GateHouse Media based on any breach of any representation or warranty contained
in Section 3.16 (‘Environmental Matters’), Section 3.19 (‘Taxes’) or Section
3.20 (‘Investment Representations’) or resulting from fraud or willful
misconduct by Sellers or Xxxxxx Communications or any covenants and agreements
made by any party hereto which are to be performed after the Closing
Date. Except with regard to compensation for claims paid to third
parties, no indemnifying party shall have any liability to an indemnified party
for any punitive, indirect, incidental or consequential damages or loss
including, without limitation, loss of revenue or loss of profits.
(d) Except
for enforcement of the Note or equitable remedies (including, without
limitation, injunctive relief) and in the absence of fraud, the parties hereto
acknowledge and agree that the sole and exclusive remedy of the parties, as
the
case may be, from and after the Closing Date with respect to any Loss and
Expense whatsoever and any and all claims for breach or liability under this
Agreement or any of the transactions contemplated hereby shall be solely in
accordance with, and limited by, the indemnification provisions set forth in
this Agreement.
9.2 Indemnification
of Buyer and GateHouse Media. Xxxxxx
Communications and Sellers, jointly and severally agree to indemnify, defend
and
hold Buyer and GateHouse Media harmless from and against any and all damages,
claims, losses, expenses, costs, fines, penalties, obligations and liabilities,
including without limitation, liabilities for reasonable attorneys’ fees and
disbursements net of the benefit of Tax deductions and insurance claims
(collectively, “Loss
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and
Expense”), suffered directly or indirectly by Buyer and/or GateHouse Media by
reason of, or arising out of:
(a) any
breach of any representation or warranty made by Xxxxxx Communications or
Sellers pursuant to this Agreement, in each case as read without regard to
any
materiality qualifiers or references to material adverse effect if any single
Loss or Expense (or series of related Losses or Expenses in the aggregate)
exceeds $50,000 (the “Materiality Threshold”), in which case Buyer and GateHouse
Media shall be indemnified from the first dollar of such Loss or Expense;
provided however that the Materiality Threshold shall not apply where there
are
no such qualifiers or references;
(b) any
failure by Xxxxxx Communications or any of Sellers to perform or fulfill any
of
their covenants or agreements set forth in this Agreement, in each case as
read
without regard to any materiality qualifiers or references to material adverse
effect if any single Loss or Expense (or series of related Losses or Expenses
in
the aggregate) exceeds the Materiality Threshold, in which case Buyer and
GateHouse Media shall be indemnified from the first dollar of such Loss or
Expense; provided however that the Materiality Threshold shall not apply where
there are no such qualifiers or references;
(c) any
failure by Xxxxxx Communications or any of Sellers to pay or perform when due
any of their liabilities or obligations arising out of or related to the
business and operation of the Publications on or prior to the Closing Date
which
have not been assumed by Buyer hereunder, including, but not limited to, the
Excluded Liabilities;
(d) any
litigation, proceeding or claim by any third party relating to the business
or
operations of the Publications on or prior to the Closing Date which have not
been expressly assumed by Buyer;
(e) the
Excluded Assets; or
(f) any
liability, including but not limited to any liability pursuant to any
Environmental Law, arising from or related to conditions or events that occurred
prior to the Closing arising from or related to the ownership of the Real
Property and/or the operations of the Publications on the Real Property on
or
prior to the Closing Date; provided, however, that Xxxxxx Communications and
Sellers shall have no liability pursuant to (i) any changes in use of the Real
Property after the Closing Date which trigger clean-up standards that are more
stringent than the
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clean-up
standards applicable based on the use of the Real Property as of the Closing
Date and any reasonably foreseeable or related uses and (ii) any changes in
Environmental Laws after the Closing Date which result in clean-up standards
that are more stringent than the clean-up standards applicable as of the Closing
Date with respect to the uses of the Real Property as of the Closing Date and
any reasonably foreseeable or related uses.
9.3 Indemnification
of Sellers and Xxxxxx
Communications. Buyer and GateHouse
Media, jointly and severally, agree to indemnify, defend and hold Sellers and
Xxxxxx Communications harmless from and against any and all Loss and Expense
suffered directly or indirectly by such Sellers and/or Xxxxxx Communications
by
reason of, or arising out of:
(a) any
breach of any representation or warranty made by Buyer or GateHouse Media
pursuant to this Agreement;
(b) any
failure by Buyer or GateHouse Media to perform or fulfill any of their covenants
or agreements set forth in this Agreement or the Note;
(c) any
failure by Buyer or GateHouse Media to pay or discharge on or subsequent to
the
Closing Date any Assumed Liabilities hereunder or any liabilities or obligations
arising out of or related to the business of the Publications incurred or first
required to be performed by Buyer or GateHouse Media after the Closing
Date;
(d) any
litigation, proceeding or claim by any third party relating to the business
or
operation of the Publications after the Closing Date; or
(e) claims
made by New Employees with respect to termination of employment by Buyer after
the Closing Date, including, but not limited to, any claims for improper
termination or severance payments.
9.4 Notice
of Claims. If any party to the
Agreement believes that it has suffered or incurred any Loss and Expense, it
shall notify the other party(ies) promptly in writing and within the applicable
time period specified in Section 9.1, describing such Loss and Expense, the
amount thereof, if known, and the method of computation of such Loss and
Expense, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such Loss and Expense shall
have occurred; provided, however, that the amount of the Loss
and
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Expense
set forth in the notice shall not be a limitation on any claim for the actual
amount of such Loss and Expense.
9.5 Defense
of Third Party Claims. If any action at
law or suit in equity is instituted by a third party (a “Claim”) with respect to
which any of the parties intends to claim a Loss and Expense under this
Article IX, such party shall promptly notify the indemnifying party(ies) of
such action or suit. The indemnifying party(ies) shall have the right
to conduct and control any Claim through counsel of its own choosing, but the
indemnified party may, at its election, participate in the defense of any such
Claim at its sole cost and expense. If the indemnifying party(ies)
does not notify the indemnified party within 10 days after receipt of the
notice specified in this Section 9.5 that it is defending any such Claim,
then the indemnified party may defend such Claim, and settle such Claim, through
counsel of its own choosing, and recover from the indemnifying party the amount
of any such settlement or of any judgment and the costs and
expenses
of such defense, including, but not limited to, reasonable attorneys’ fees and
disbursements.
Notwithstanding
the foregoing, the failure by a party to abide by these terms and conditions
shall not affect the other party’s obligations to indemnify such party against
Loss and Expense under this Article IX, except to the extent the indemnifying
party(ies) is actually prejudiced thereby.
ARTICLE
X.
MISCELLANEOUS
PROVISIONS
10.1 Risk
of Loss. The risk of any loss, damage
or destruction to any of the Acquired Assets to be transferred to Buyer
hereunder from any cause shall be borne by Sellers at all times prior to the
Closing hereunder. Upon the occurrence of any loss or damage in
excess of $100,000 to any of the Acquired Assets to be transferred hereunder
prior to the Closing, Sellers shall notify Buyer of same in writing immediately
stating with particularity the extent of the loss or damage incurred, the cause
thereof if known and the extent to which restoration, replacement and repair
of
the Acquired Assets lost or destroyed will be reimbursed under any insurance
policy with respect thereto. In the event the loss exceeds $1,000,000
and the Acquired Assets cannot be substantially repaired or restored within
ninety (90) days after such loss, or, without regard to the
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amount
or
duration of such loss, if production of any publication is interrupted for
three
(3) consecutive days resulting in a loss or expected loss of revenues following
the Closing Date of $1,000,000 or more, Buyer shall have the option, exercisable
by giving written notice to Sellers within 30 days after such loss,
to:
(a) Accept
alternative arrangements proposed by Sellers to provide Buyer the full economic
benefit of the ownership of the effected Acquired Assets or
Publications;
(b) Remove
such particular Acquired Assets or the entire Publication with an equitable
adjustment to the Purchase Price, in an amount subject to the reasonable consent
of Sellers;
(c) If
such loss is a Material Adverse Event, either:
(i) Terminate
this Agreement unless the parties can agree to an equitable adjustment to the
Purchase Price;
(ii) Postpone
the Closing until such time as the Acquired Assets have been substantially
repaired, replaced or restored; or
(d) Elect
to consummate the Closing and accept the Acquired Assets in their “then”
condition, in which event Sellers shall assign to Buyer all rights under any
insurance claim covering the loss and pay over to Buyer any proceeds under
any
such insurance policy thereto received by Sellers with respect
thereto.
10.2 Termination
of Agreement. This Agreement may be
terminated by Sellers or Buyer at any time prior to the Closing
Date:
(a) By
the mutual consent of the parties hereto;
(b) Subject
to extension under Section 7.2(b), by Sellers and Xxxxxx Communications if
any
of the conditions provided in Article VII hereof has not been timely met and
cannot be met on or before December 31, 2007 (in each case other than as a
result of a breach of this Agreement by Sellers or Xxxxxx Communications) and
has not been waived, provided Sellers or Xxxxxx Communications is not then
in
material breach of this Agreement;
(c) Subject
to extension under Section 8.2(b), by Buyer and GateHouse Media if any of the
conditions provided in Article VIII hereof has not been timely met by and cannot
be met on or before December 31, 2007 (in each case other than as a result
of a
breach of this Agreement by
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Buyer
or
GateHouse Media) and has not been waived, provided Buyer or GateHouse Media
is
not then in material breach of this Agreement;
(d) As
provided in Sections 1.4, 5.13, 5.19 or 10.1;
(e) By
Buyer if any amendment, update or supplement made by Sellers and/or Xxxxxx
Communications after the date hereof to the Schedules delivered to them by
or on
behalf of Seller pursuant to this Agreement or any materials supplementally
delivered by or on behalf of Sellers and/or Xxxxxx Communications discloses
any
facts or circumstances which, individually or in the aggregate, which have,
or
may be reasonably expected to have, a Material Adverse Effect;
or
(f) By
either Buyer or Sellers if the Closing has not occurred prior to April 1, 2008
and the other Party has not provided notice of an intention to pursue a claim
for a breach of this Agreement by the terminating Party.
10.3 Liabilities
Upon Termination. In the event this
Agreement is terminated pursuant to Section 10.2 above, no party hereto shall
have any liability to any other party for costs, expenses, damages, loss of
anticipated profits or otherwise, unless the termination occurs because of
a
willful and intentional breach by such party.
10.4 Expenses. Except
as otherwise provided herein, all costs and expenses incurred in connection
with
this Agreement and the transactions contemplated hereby will be paid by the
party incurring such costs and expenses. Any sales or use Taxes or
recording or transfer Taxes or fees directly related to transferring the
Acquired Assets to Buyer (“Transfer Taxes”) shall be paid by
Buyer. The cost of title insurance for the Real Property purchased by
Buyer hereunder shall be paid by Buyer.
10.5 Employees
and Employee Benefits.
(a) Buyer
hereby agrees to offer employment, effective the day after the Closing Date,
to
all individuals who are, on the Closing Date, active, full or part-time
Publication Employees (including employees on short-term leave). With
respect to each such Publication Employee to whom Buyer offers employment,
Buyer
shall offer to employ such person at a rate of total
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compensation
substantially similar as that which was paid to such Publication Employee
immediately prior to Closing. Each Publication Employee of Sellers
who accepts employment with Buyer on the Closing Date is hereinafter referred
to
as a “New Employee”.
(b) Except
as set forth in subsection (a) above, Buyer, in its sole discretion, shall
determine what employee benefits will be made available to New Employees;
provided, however, that Buyer (i) will offer medical coverage to New Employees
immediately after the Closing Date; (ii) shall waive for New Employees, to
the
extent permitted by Buyer’s health plans, any pre-existing condition limitations
and waiting periods that may apply under such health plans; and (iii) shall
recognize New Employees’ service with Sellers or any of their respective
Affiliates as if it were service with Buyer for purposes of satisfying any
vesting requirements under any benefit plans offered by Buyer (but not for
purposes of benefit accrual or for determining the amount of benefits payable
under any benefit plan other than a vacation plan). Notwithstanding
the foregoing, nothing contained herein shall (i) be treated as an amendment
to
any particular employee benefit plan, (ii) obligate Buyer or any of its
Affiliates to (A) maintain any particular benefit plan or (B) retain the
employment of any particular employee (in general or at a particular rate of
compensation), or (iii) give any third party the right to enforce any of the
provisions of this Agreement. Buyer retains all rights to amend or
terminate any of its benefit programs in its sole discretion.
(c) Buyer
shall be responsible for any obligations under federal, state or local plant
closing statutes, including the Worker Adjustment and Retraining Notification
Act of 1988, as amended (“WARN Act”), with respect to events occurring after the
Closing Date other than any such obligations arising from the consummation
of
the transactions contemplated by this Agreement.
(d) Sellers
and Xxxxxx Communications shall be responsible for and timely pay all
compensation owed to New Employees and shall be responsible for and timely
provide New Employees with all benefits owed under the Employee Benefit Programs
through the Closing Date. Sellers and Xxxxxx Communications will
retain all of the Employee Benefit Programs, including all employee benefit
plans and pension plans, and Buyer will not assume obligations under any such
programs. Sellers shall take all necessary and appropriate action to
ensure that New Employees will not continue to be active participants in the
Employee Benefit Programs after the Closing Date. Sellers and Xxxxxx
Communications shall be fully and solely responsible for any costs, expenses,
obligations and liabilities arising out of the pension, retirement or
other
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benefit
obligations attributable to the Employee Benefit Programs and Sellers’ current
or former employees related to the period on or prior to the Closing
Date.
10.6 Further
Assurances and Consents.
(a) To
the extent Buyer and GateHouse Media have proceeded with Closing notwithstanding
the failure of Sellers or Xxxxxx Communications to effect the deliveries
contemplated by Sections 8.1(b) or 8.4, from time to time after the Closing
Date, without further consideration, Sellers and Xxxxxx Communications will,
at
their expense, (i) execute and deliver, or cause to be executed and delivered,
such documents to Buyer and GateHouse Media as Buyer and GateHouse Media may
reasonably request in order to effectively vest in Buyer good and valid (and,
in
the case of Real Property, good and marketable) title to the Acquired Assets,
and (ii) subject to Section 5.6(b), use reasonable efforts to obtain any
third-party consents to the assignment to Buyer of the Material Contracts which
require the consent of any third party by reason of the transactions provided
for in this Agreement and which were not obtained by Sellers or Xxxxxx
Communications on or before the Closing Date.
(b) From
time to time after the Closing Date, Buyer will provide Sellers with access,
with reasonable prior notice and during normal business hours, to the financial
records of the Publications related to the period on or prior to the Closing
Date for use by Sellers in connection with Tax and/or legal proceedings related
to the operation of the Publications on or prior to the Closing
Date. Buyer agrees to maintain all Tax records related to the
Publications for all Tax years that remain open as of the Closing Date unless
and until (i) Sellers notify Buyer in writing that any such Tax year(s) has
(have) been closed or (ii) Buyer has given Sellers prior written notice of
its
intent to destroy such records and Sellers have not reasonably and promptly
requested that such records not be destroyed.
(c) If,
in order to properly prepare its financial statements or documents to be filed
with any Governmental Authority, it is necessary that any party hereto be
furnished with additional information relating to the Acquired Assets or the
Publications and such information is in the possession of any of the other
parties hereto, such party or parties agree to use its/their best efforts to
furnish such information to the requesting party without cost or expense to
the
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requesting
party, unless it is necessary for such party or parties to incur third party
expenses (e.g. legal or accounting fees) in connection with such request in
which case the requesting party shall reimburse the furnishing party for such
third party expenses. After the Closing Date, except to the extent
otherwise noted, each of the parties hereto, shall, to the extent reasonably
requested by any other party hereto: (i) assist in the preparation of Tax
Returns relating to the Acquired Assets and/or the Publications, (ii) cooperate
in preparing any audits by or disputes with any Governmental Authority,
including but not limited to, regarding any Tax Returns, (iii) at any time
after
the execution of this Agreement, assist in the preparation of audited financial
statements to the extent they relate to, incorporate or rely upon any
information regarding the Acquired Assets and/or the Publications, including
but
not limited to providing relevant work papers and any certification or
representation reasonably requested, (iv) make available information, records
and documents relating to Taxes relating to the Acquired Assets and/or the
Publications (provided that each party shall have the right to reasonably limit
contact and communications to specific individuals within their respective
companies), and (v) furnish copies of correspondence received from any
Governmental Authority in connection with any Tax audit or information request
relating to the Acquired Assets and/or the Publications.
(d) Each
of Buyer and GateHouse Media, on the one hand, and Sellers and Xxxxxx
Communications on the other hand, shall use its reasonable commercial efforts,
and shall cause its respective Affiliates to use their reasonable commercial
efforts, to consummate the transactions contemplated by this Agreement as soon
as practicable following the date hereof. Each of Buyer and GateHouse
Media, on the one hand, and Sellers and Xxxxxx Communications on the other
hand,
shall cooperate with the other party, and use all reasonable commercial efforts,
to (a) procure all necessary and appropriate applications, notifications,
filings and certifications, and satisfy all requirements prescribed by
applicable law, rule on regulation for, and all conditions set forth in this
Agreement to, the consummation of the Transactions contemplated hereby or
thereby, and (b) effect the transactions contemplated by this Agreement at
the
earliest practicable date consistent with the terms hereof. Without
limiting the generality of the foregoing, each of Buyer and GateHouse Media,
on
the one hand, and Sellers and Xxxxxx Communications on the other hand, shall
(i)
cooperate in good faith and take all actions necessary, appropriate or advisable
to file expeditiously and diligently with the Federal Trade Commission and
the
Department of Justice the materials required pursuant to the
Xxxx-Xxxxx
-61-
Xxxxxx
Act, (ii) use its reasonable commercial efforts to prosecute such
filings and respond to inquiries related to a favorable conclusion, (iii) not
extend any waiting period under the Xxxx-Xxxxx-Xxxxxx Act or enter into any
agreement not to consummate the transactions contemplated by this Agreement,
except with the prior written consent of the other party, and (iv) use its
reasonable commercial efforts to avoid entry of (or to have vacated or
terminated) any decree, order or judgment that would restrain, prevent or delay
the Closing. In addition, subject to Sections 5.7 and 10.18 and
except as prohibited by applicable law, rule or regulation, each
of Buyer and GateHouse Media, on the one hand, and Sellers and Xxxxxx
Communications on the other hand, shall (x) promptly notify the other party
of
any written communication to such party from any Governmental Authority
regarding antitrust matters and permit such other party to review in advance
any
proposed written communication to any such Governmental Authority, and (y)
not
participate in any meetings or substantive discussions with any Governmental
Authority with respect to antitrust matters without offering the other party
a
meaningful opportunity to participate in such meetings or
discussions.
(e) If
the parties are not able to agree upon the Transition Services Agreements prior
to the Closing, Xxxxxx Communications and Sellers shall provide to Buyer
transition services as and to the extent reasonably requested by Buyer, at
Buyer’s cost (which shall be equal to Sellers’ cost), pending the execution of
the Transition Services Agreements, if any.
10.7 Waiver
of Compliance. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any
obligation, representation, warranty, covenant, agreement or condition herein
may be waived only by a written instrument signed by the party granting the
waiver. Any such waiver or failure to insist upon strict compliance
with a term of this Agreement shall not operate as a waiver of, or estoppel
with
respect to, any subsequent or other failure to comply.
10.8 Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given when delivered by hand or by facsimile transmission or mailed
by
registered or certified mail (return receipt requested), postage prepaid, to
the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
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(a) If
to Sellers, to:
Xxxxxx
Publishing Group,
LLC
000
Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Fax
No.
with
a
copy to:
Hull,
Xxxxxx, Xxxxxx, Xxxxxxx & Xxxxxx, P.C.
000
Xxxxx
Xxxxxx, 0xx
Xxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn: Xxxxxx
Xxxxxx, Esq.
Facsimile:
000-000-0000
(b) If
to Buyer:
GateHouse
Media Operating,
Inc.
000
XxxxxxXxxxx Xxxxxx
Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxx
Xxxx
Fax
No. 000-000-0000
with
a
copy to:
GateHouse
Media, Inc.
000
XxxxxxXxxxx Xxxxxx Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxx
Xxxxxxxx Sack
General
Counsel
Fax
No.
(000) 000-0000
-63-
(c) If
to GateHouse Media:
|
|
GateHouse
Media, Inc.
|
000
XxxxxxXxxxx Xxxxxx Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxxxx
X. Xxxx
Chief
Executive Officer
|
|
Fax
No. (000) 000-0000
|
with
a
copy to:
GateHouse
Media, Inc.
000
XxxxxxXxxxx Xxxxxx Xxxx
Xxxxxxxx,
Xxx Xxxx 00000
Attn: Xxxxx
Xxxxxxxx Sack
General
Counsel
Fax
No.
(000) 000-0000
(d) If
to Xxxxxx Communications:
Xxxxxx
Communications Company,
LLC
000
Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Fax
No.
with
a
copy to:
Hull,
Xxxxxx, Xxxxxx, Xxxxxxx & Xxxxxx, P.C.
000
Xxxxx
Xxxxxx, 0xx
Xxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn: Xxxxxx
Xxxxxx, Esq.
Facsimile:
000-000-0000
10.9 Assignment. This
Agreement and all of its terms shall be binding upon and inure to the benefit
of
the parties and their respective successors and permitted
assigns. Prior to the Closing, this Agreement shall not be assigned
by any party hereto without the prior written consent of the other parties;
provided, however, that Sellers may assign its rights under this Agreement
with
respect to the portion of the Purchase Price allocated to the Real Property
in
accordance with Section 1.7 to a qualified intermediary for the purpose of
facilitating a tax-free like-kind exchange of real estate. Any such
assignment to a qualified intermediary shall not relieve Sellers of any
obligation hereunder, and shall not require Buyer to incur any additional
expense or
-64-
liabilities. Furthermore,
Sellers shall reimburse GateHouse Media and Buyer for all costs and expenses
(including reasonable attorney’s fees) in connection therewith.
10.10 Governing
Law. This Agreement shall be governed
by, construed and enforced in accordance with the laws of the State of New
York
without reference to the choice of law principles thereof. This
Agreement sets forth the entire understanding of the parties, and supersedes
any
and all prior agreements, arrangements and understandings, written or oral,
relating to the subject matter hereof and shall be governed and construed under
the laws of the State of New York. Any action or proceeding involving
this Agreement shall be adjudicated in a court with jurisdiction in Monroe
County, New York and the parties irrevocably consent to the personal
jurisdiction and venue of such court.
10.11 Public
Announcements. Prior to the Closing,
except as required by applicable law, rule or regulation, no public announcement
(including an announcement to employees), press release or other disclosure
to
third parties concerning this Agreement or the transactions provided for herein
shall be made by any party without the prior written approval of the other
parties, which shall not be unreasonably withheld, conditioned or
delayed. With respect to any disclosures required by applicable law,
rule or regulation, including disclosure requirements under applicable
securities laws and Current Reports on Form 8-K under the Exchange Act, each
party will consult with the other party and allow the other party to review
the
proposed disclosure prior to making any such disclosures.
10.12 No
Third Party Rights. Nothing in this
Agreement shall be deemed to create any right on the part of any person or
entity not a party to this Agreement.
10.13 Waiver
of Jury Trial. The parties hereto
specifically waive any right to trial by jury in any court with respect to
any
contractual, tortious or statutory claim, counterclaim or crossclaim against
the
other arising out of or connected in any way to this Agreement because the
parties hereto, each of whom are represented by counsel, believe that the
complex commercial aspects of their dealing with one another make a jury
determination neither desirable nor appropriate.
-65-
10.14 Counterparts. This
Agreement may be executed via e-mail or facsimile and/or in identical
counterparts and each counterpart hereof shall be deemed to be an original
instrument, but all counterparts hereof taken together shall constitute a single
document.
10.15 Headings. The
article and section headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
of
this Agreement.
10.16 Specific
Performance. Except as provided in
Section 10.3, without limiting or waiving in any respect any rights or remedies
of any of the parties hereto given under this Agreement, or now or hereafter
existing at law or in equity or by statute, each of the parties hereto shall
be
entitled to seek specific performance of the obligations to be performed by
any
other party hereto, as the case may be, in accordance with the provisions of
this Agreement.
10.17 Severability. If
any provision of this Agreement or the application of any such provision to
any
person or circumstance shall be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
10.18 Entire
Agreement; Amendments. This Agreement,
including the Exhibits and the Schedules delivered pursuant hereto and the
documents delivered hereunder, embodies the entire agreement and understanding
of the parties in respect of the subject matter hereof, and supersedes all
prior
agreements and understandings between the parties. This Agreement may
not be amended except in a writing signed by both parties; provided, however,
that the terms of that certain Confidentiality Agreement dated July 19, 2007
between Sellers and GateHouse Media shall continue to be in force and effect
in
accordance with its terms. The parties have caused this Agreement to
be signed by their respective duly authorized officers as of the date first
above written.
-66-
10.19 Guaranties.
(a) Xxxxxx
Communications hereby guarantees to Buyer and GateHouse Media, as a primary
obligor, payment and performance by Sellers of their obligations under this
Agreement and under each of the other agreements contemplated hereunder to
which
Sellers are a party (including without limitation, all amendments hereof and
thereof), in each case, subject to the terms, conditions and limitations hereof
and thereof. Xxxxxx Communications hereby waives suretyship defenses,
demand, payment, protest and notice of dishonor or nonperformance of any such
obligations (other than any copies of notices required to be delivered under
this Agreement to Xxxxxx Communications), and no consent of Xxxxxx
Communications shall be required with respect to any amendment or waiver of
this
Agreement (other than this Section 10.19) that is effected in accordance with
this Agreement. The liability of Xxxxxx Communications under this
Agreement by reason of this Section 10.19 is primary, and neither Buyer nor
GateHouse Media shall be required to make any demand on Sellers for performance
of any of its obligations under this Agreement, nor to exhaust any legal,
contractual or equitable remedies against Sellers, prior to proceeding against
Xxxxxx Communications.
(b) GateHouse
Media hereby guarantees to Sellers, as a primary obligor, payment and
performance by Buyer of its obligations under this Agreement and under each
of
the other agreements contemplated hereunder to which Buyer is a party (including
without limitation, all amendments hereof and thereof), in each case, subject
to
the terms, conditions and limitations hereof and thereof. GateHouse
Media hereby waives suretyship defenses, demand, payment, protest and notice
of
dishonor or nonperformance of any such obligations (other than any copies of
notices required to be delivered under this Agreement to GateHouse Media),
and
no consent of GateHouse Media shall be required with respect to any amendment
or
waiver of this Agreement (other than this Section 10.19) that is effected in
accordance with this Agreement. The liability of GateHouse Media
under this Agreement by reason of this Section 10.19 is primary, and neither
Sellers nor Xxxxxx Communications shall be required to make any demand on Buyer
for performance of any of its obligations under this Agreement, nor to exhaust
any legal, contractual or equitable remedies against Buyer, prior to proceeding
against GateHouse Media.
10.20 Knowledge. For
all purposes hereunder, “to the knowledge of Xxxxxx Communications or Sellers”
(or words of like import) shall mean to the actual knowledge of each of Xxxxxxx
X. Xxxxxx III, Xxxxxxx X. Xxxxxx XX, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxx, Xxxxx
X.
Xxxxxx, Xxxxxxx Xxxxxxx and Xxxx Xxxxxx, in each case after due inquiry; and
“to
the knowledge of GateHouse Media or Buyer” (or words of like import) shall mean
to the actual knowledge of each of Xxxxxxx Xxxx, Xxxx Xxxxxxxx or Xxxxx Xxxxxxxx
Sack, in each case after due inquiry.
{Signature
page follows}
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, which is
effective as of the date first written above.
SELLERS:
XXXXXX
PUBLISHING GROUP, LLC
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
MPG
ALLEGAN PROPERTY, LLC
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
BROADCASTER
PRESS, INC.
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
MPG
HOLLAND PROPERTY, LLC
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
-00-
XXX
XXX XXXXXX, LLC
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
YANKTON
PRINTING COMPANY
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
XXXXXX
COMMUNICATIONS COMPANY, LLC
By: /s/
Name: Xxxxxxx
X. Xxxxxx
XX
Title: President
BUYER:
____________________________________
GATEHOUSE
MEDIA OPERATING, INC.
By: /s/
Name: Xxxx
Thompson_
Title: Chief
Financial Officer
GATEHOUSE
MEDIA, INC.
By: /s/
Name:
Xxxx
Xxxxxxxx
Title: Chief
Financial
Officer
-68-
Exhibit
A
Publications
The
Daily
Ardmoreite (Ardmore, Oklahoma)
Spotlight
(Ardmore, Oklahoma)
Dodge
City Daily Globe (Dodge City, Kansas)
Shoppers
Weekly (Dodge City, Kansas)
Xxxxxx
Press (Xxxxxx, Kansas)
The
Grand
Island Independent (Grand Island, Nebraska)
Heartland
Shoppers (Grand Island, Nebraska)
Hannibal
Courier-Post (Hannibal, Missouri)
Salt
River Journal (Hannibal, Missouri)
Hillsdale
Daily News (Hillsdale, Michigan)
Sampler
(Hillsdale, Michigan)
The
Holland Sentinel (Holland, Michigan)
Zeeland
Sentinel (Holland, Michigan)
Xxxxxxxx
Herald (Holland, Michigan)
The
Shawnee News-Star (Shawnee, Oklahoma)
Shopper’s
Advantage (Shawnee, Oklahoma)
York
News-Times (York, Nebraska)
The
Morning Sun (Pittsburg, Kansas)
The
Sunland Shopper (Pittsburg, Kansas)
Xxxxxxxxxx
Plain Talk (Vermillion, South Dakota)
XxXxxxxxxx
xx Xxxxx Xxxx (Xxxxx Xxxx, Xxxxxx)
Tip-Off
Shopping Guide (Jonesville, Michigan)
Trade
& Transactions Advantage (York, Nebraska)
Trade
West (Grand Island, Nebraska)
Flashes
Publishers (Allegan, Michigan) (Commercial Printing)
Flashes
Shopping Guide (Allegan/North Holland/South Holland/Kalamazoo/Lakeshore/Zeeland,
Michigan)
West
Michigan Senior Times (West Michigan)
The
Xxxxxx Kansan (Newton, Kansas)
Prairie
Shopper (Newton, Kansas)
Prairie
Shopper Plus (Newton, Kansas)
The
Examiner (Blue Springs, Missouri)
The
Examiner (Independence, Missouri)
The
Extra
(Independence, Missouri)
Winter
Haven News Chief (Winter Haven, Florida)
Winter
Haven Shopping Guide (Winter Haven, Florida)
The
Polk
Shopper (Winter Haven, Florida)
The
Oak
Ridger (Oak Ridge, Tennessee)
Missouri Valley
Shopper (Yankton, South Dakota)
The
Broadcaster (Vermillion, South Dakota)
Yankton
Daily Press & Dakotan (Yankton, South Dakota)
Town
and
Country (Yankton, South Dakota)
-69-
