EXHIBIT 10.18
INDEMNIFICATION AGREEMENT, dated as of February 20, 2002 (the
"Agreement"), between Ottaway Newspapers, Inc. ("Parent") and Newspaper
Holdings, Inc., a Delaware corporation (the "Buyer"). Capitalized terms
used but not defined herein shall have the meanings ascribed to them in the
Asset Agreements (as defined below). For the purposes of this Agreement, the
term "Sellers" means all of the Sellers, as defined in the respective Asset
Agreements; "Seller Assets" means all of the Seller Assets, as defined in the
respective Asset Agreements; the term "Businesses" means all of the
Businesses, as defined in the respective Asset Agreements; the term "MTI
Assets" means all of the MTI Assets, as defined in the respective Asset
Agreements; the term "Excluded Liabilities" means all of the Excluded
Liabilities, as defined in the respective Asset Agreements; the term
"Purchase Price" means the aggregate of the Purchase Prices, as defined in
the respective Asset Agreements; the term "Seller Schedules" means all of the
Seller Schedules to the Asset Agreements.
WHEREAS, the Parent, the Buyer, the Sellers and The Mail Tribune,
Inc. ("MTI") are entering into four Agreements of Purchase and Sale, each
dated as of the date hereof (together, the "Asset Agreements");
WHEREAS, pursuant to the Asset Agreements, the Sellers are selling
to the Buyer, and the Buyer is buying from the Sellers, the Seller Assets and
the Businesses, and MTI is selling to the Buyer, and the Buyer is buying from
MTI, the MTI Assets;
In consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, and intending to be legally
bound hereby, the parties hereto agree that, subject to the conditions herein
contained:
1. Indemnification by the Parent. The Parent hereby agrees to
indemnify the Buyer and its officers, directors, employees and stockholders
against, and agrees to defend and hold them harmless from, any claims,
losses, liabilities, damages, judgments, costs and expenses (including,
attorneys' fees and expenses) (collectively, "Losses") caused proximately by:
(a) any breach by any of the Sellers, the Parent or MTI of its
representations and warranties or covenants and agreements contained in the
Asset Agreements (other than any breach as to which the Buyer had knowledge
as of the Closing Date); or
(b) any Excluded Liabilities;
provided, however, that (i) the Parent shall not have any liability pursuant
to clause (a) above for any breach that results in a Loss of less than
$10,000.00; (ii) the Parent shall not have any liability pursuant to clause
(a) above unless the aggregate of all Losses, for which the Parent would, but
for this proviso, be liable, exceeds, on a cumulative basis, Nine Hundred
Thousand Dollars ($900,000), in which case the Parent shall be liable for the
amount of such Losses in excess of Five Hundred Thousand Dollars ($500,000);
and (iii) notwithstanding any other provision of this Agreement, the Parent's
liability for asbestos abatement at any site shall be limited to performing
or paying for commercially reasonable performance of the abatement described
in the abatement plans included in the Environmental Site Assessments
attached to the Seller Schedules (with a maximum expenditure of $50,000 for
abatement at the Ashland property); provided, however, that notwithstanding
anything contained in this Agreement to the contrary, excluding any liability
pursuant to clause (b) above for which the Parent shall be liable without
limit as to the amount thereof, the aggregate cumulative liability of the
Parent pursuant to this Section 1 shall not exceed Five Percent (5%) of the
Purchase Price. In the event that a Loss arises as a proximate result of an
event or circumstance constituting both a breach of a representation and
warranty of any of the Sellers, the Parent or MTI under the Asset Agreements
and a breach of a covenant of any such Seller, the Parent or MTI thereunder,
the Buyer's right to be indemnified against such Loss shall be subject to the
aggregate minimum threshold described above as if such event or circumstance
constituted solely a breach of the applicable representation and warranty.
The Buyer shall make the books and records of the Buyer relating to the
relevant Loss available to the Parent and shall make its employees available
for interviews and similar matters to assist the Parent prosecuting such
claims; provided, however, that the Buyer shall be reimbursed by the Parent
for all out-of-pocket costs incurred in connection with the Buyer's efforts
to so assist the Parent as provided herein.
2. Indemnification by the Buyer. The Buyer hereby agrees to
indemnify each Seller, MTI and the Parent and their respective officers,
directors, employees and stockholders against, and agrees to defend and hold
them harmless from, any Losses caused proximately by:
(a) any breach by the Buyer of its representations and warranties
or covenants and agreements contained in the Asset Agreements (other than any
breach as to which the Parent had knowledge as of the Closing Date); or
(b) any Assumed Liability;
provided, however, that (i) the Buyer shall not have any liability pursuant
to clause (a) above for any breach that results in a Loss of less than
$10,000.00; and (ii) the Buyer shall not have any liability pursuant to
clause (a) above unless the aggregate of all Losses for which the Buyer
would, but for this proviso, be liable, exceeds, on a cumulative basis, Nine
Hundred Thousand Dollars ($900,000), in which case the Buyer shall be liable
for the amount of all such Losses in excess of Five Hundred Thousand Dollars
($500,000); provided, however, that notwithstanding anything contained herein
to the contrary, excluding liability pursuant to clause (b) above for which
the Buyer shall be liable without limit as to the amount thereof, the Buyer's
aggregate liability pursuant to this Section 2 shall not exceed Five Percent
(5%) of the Purchase Price. In the event that a Loss arises as a proximate
result of an event or circumstance constituting both a breach of a
representation and warranty of the Buyer under the Asset Agreements and a
breach of a covenant of the Buyer thereunder, the Sellers', MTI's and the
Parent's right to be indemnified against such Loss shall be subject to the
aggregate minimum threshold described above as if such event or circumstance
constituted solely a breach of the applicable representation and warranty.
The Sellers, MTI and the Parent shall make the books and records of the
Sellers, MTI and the Parent relating to the relevant Loss available to the
Buyer and shall make its employees available for interviews and similar
matters to assist the Buyer prosecuting such claims; provided, however, that
the Sellers, MTI and the Parent shall be reimbursed by the Buyer for all out-
of-pocket costs incurred in connection with the Sellers', MTI's or the
Parent's efforts to so assist the Buyer as provided herein.
3. Procedure For Third Party Claims . With respect to any claim
for indemnification hereunder other than a Third Party Claim (as defined in
Section 8.4 below), the party or parties receiving such claim shall have
fifteen (15) business days from receipt of written notice of such claim
within which to respond. If the party receiving such claim does not respond
within such fifteen (15) business day period, the party receiving such claim
shall be deemed to have accepted responsibility to make payment and shall
have no further right to contest " \l 2 . (a) In order for a party (the
"indemnified party"), to be entitled to any indemnification provided for
under this Agreement in respect of, arising out of or involving a claim made
by any entity or person not a party hereto against the indemnified party (a
"Third Party Claim"), such indemnified party must notify the indemnifying
party promptly in writing of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification
provided hereunder except to the extent the indemnifying party actually shall
have been prejudiced as a result of such failure (except that the
indemnifying party shall not be liable for any expenses incurred during the
period in which the indemnified party failed to give such notice). The
indemnified party shall deliver to the indemnifying party, within five (5)
business days after the indemnified party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified
party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party,
the indemnifying party will be entitled to participate in the defense thereof
and, if it chooses, to assume the defense thereof at its own cost and
expense with counsel selected by the indemnifying party. Should the
indemnifying party elect to assume the defense of a Third Party Claim, the
indemnifying party will not be liable to the indemnified party for any legal
expenses subsequently incurred by the indemnified party in connection with
the defense thereof unless the indemnified party shall have reasonably
determined that there may be one or more defenses which are available to it
which are different from or in addition to those available to the
indemnifying party. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying party
shall control such defense unless the circumstances described in the
immediately preceding sentence are present. The indemnifying party shall be
liable for the reasonable fees and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has not
assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim
as provided above unless it is finally determined pursuant to the provisions
of Section 3 hereof that the indemnified party is not entitled to
indemnification under this Agreement). If the indemnifying party chooses to
defend a Third Party Claim, the indemnified party shall cooperate in the
defense thereof. Such cooperation shall include the retention and (upon the
indemnifying party's request) the provision to the indemnifying party of
records and information which are reasonably relevant to such Third Party
Claim, and making employees, consultants and independent contractors
available on a mutually convenient basis to provide additional information
and explanation of any material provided hereunder and to provide testimony.
If the indemnifying party chooses to defend any Third Party Claim, the
indemnifying party shall not agree to any settlement, compromise or discharge
of such Third Party Claim without the prior written consent of the
indemnified party (not to be unreasonably withheld or delayed), unless such
settlement, compromise or discharge provides solely for monetary relief and
does not impose an injunction or other equitable relief on the indemnified
party. Whether or not the indemnifying party shall have assumed the defense
of a Third Party Claim, the indemnified party shall not admit any liability
with respect to, or settle, compromise or discharge, such Third Party Claim
without the indemnifying party's prior written consent.
4. Limitations on Computation of Dollar Amount of Claims. The
indemnification obligations of the parties hereunder shall be limited to the
obligation to make the other party whole on a dollar for dollar basis for
assets lost or diminished, liabilities increased or expenses and costs
actually incurred, and under no circumstances shall the indemnifying party be
liable for claims by the party seeking indemnification that as a consequence
of the breach in question the party seeking indemnification has incurred
consequential, enhanced, punitive, special or exemplary damages.
5. Exclusivity of Remedies. The remedies of any party hereto for
breaches by another party of any representation, warranty, covenant or
agreement under the Asset Agreements, or otherwise arising out of any matter
pertaining thereto, shall be limited to the right of indemnification provided
in this Agreement, and such right of indemnification shall be exclusive of
any and all other rights or remedies which might be available to a party upon
the occurrence of any such breach or with respect to such other matter
whether such other right or remedy would otherwise be available at law or in
equity.
6. Net Recovery. The amount which a party hereto is or may be
required to pay to any other party pursuant to this Agreement shall be
reduced by any actual or reasonably anticipated insurance proceeds, tax
benefits or other amounts recoverable by or on behalf of the party claiming a
right to indemnification, in reduction of the related Losses.
7. Asset Agreement Purchase Price. All indemnification payments
under this Agreement shall be deemed adjustments to the Purchase Price.
IN WITNESS WHEREOF, each of the parties hereto has signed
this Agreement or has caused this Agreement to be signed by its duly
authorized officers as of the date first above written.
OTTAWAY NEWSPAPERS, INC.
By:/s/Joseph Richter
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Name:Joseph Richter
Title:President
NEWSPAPER HOLDINGS, INC.
By:/s/Michael Reed
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Name:Michael Reed