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EXHIBIT 2.1
ACQUISITION AGREEMENT
by and between
MEDIANEWS GROUP, INC.
and
AT&T BROADBAND, LLC
dated as of December 1, 2000
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TABLE OF CONTENTS
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ARTICLE I -- DEFINITIONS........................................................................................1
1.1 Definitions.....................................................................................1
ARTICLE II -- SALE OF INTERESTS; CLOSING........................................................................6
2.1 Purchase and Sale...............................................................................6
2.2 Allocation of Purchase Price....................................................................6
2.3 Wire Instructions...............................................................................6
2.4 Pension Plan and Trust..........................................................................6
2.5 Closing.........................................................................................7
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF AT&T BROADBAND.................................................7
3.1 Organization....................................................................................7
3.2 Authorization; No Conflicts.....................................................................7
3.3 LLC Interests...................................................................................8
3.4 Succession of Interest..........................................................................8
3.5 Financial Statements............................................................................8
3.6 No Material Adverse Effect......................................................................8
3.7 Employment Matters..............................................................................8
3.8 Brokers' Fees...................................................................................9
3.9 Litigation......................................................................................9
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF BUYER..........................................................10
4.1 Organization...................................................................................10
4.2 Authorization; No Conflicts....................................................................10
4.3 Purchase for Purpose of Investment.............................................................10
4.4 Brokers' Fees..................................................................................10
ARTICLE V -- COVENANTS.........................................................................................10
5.1 Conduct of the Business........................................................................10
5.2 Access to Information..........................................................................11
5.3 Public Announcements...........................................................................11
5.4 Taking of Necessary Action.....................................................................11
5.5 Other Agreements...............................................................................12
5.6 Employees......................................................................................12
5.7 Buyer Transfers................................................................................16
5.8 Waiver.........................................................................................16
5.9 Post-Closing Payments..........................................................................16
5.10 AT&T Broadband Affiliate Transfers.............................................................18
5.11 Schedules......................................................................................18
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ARTICLE VI -- CONDITIONS.......................................................................................19
6.1 Conditions of Purchase.........................................................................19
6.2 Conditions of Sale.............................................................................19
ARTICLE VII -- INDEMNIFICATION.................................................................................21
7.1 Indemnification of Buyer.......................................................................21
7.2 Indemnification of AT&T and AT&T Broadband.....................................................21
7.3 Indemnification Mechanics......................................................................22
7.4 Indemnification Sole Remedy....................................................................23
ARTICLE VIII -- TAX MATTERS....................................................................................23
8.1 Allocation and Forms...........................................................................23
8.2 Filing Responsibility..........................................................................23
8.3 Cooperation and Exchange of Information........................................................24
8.4 Refunds........................................................................................24
ARTICLE IX -- TERMINATION......................................................................................24
9.1 Termination....................................................................................24
9.2 Effect of Termination..........................................................................24
ARTICLE X -- MISCELLANEOUS.....................................................................................25
10.1 No Survival of Representations and Warranties..................................................25
10.2 Notices........................................................................................25
10.3 Entire Agreement; Amendment....................................................................26
10.4 Counterparts...................................................................................26
10.5 Governing Law..................................................................................26
10.6 Consent to Jurisdiction........................................................................26
10.7 Expenses.......................................................................................27
10.8 Third-Party Beneficiaries......................................................................27
10.9 Successors and Assigns.........................................................................27
10.10 Headings.......................................................................................27
10.11 Interpretation; Absence of Presumption.........................................................27
10.12 Severability...................................................................................27
10.13 Specific Performance...........................................................................27
10.14 No Consequential Damages.......................................................................28
SCHEDULES:
Schedule 3.1 - Limited Liability Company Agreement of the Company
Schedule 3.5 - Company Financial Statements
Schedule 3.7 - Employment Matters
Schedule 5.6 - Employees
Schedule 5.6(b) - Accrued and Unused Vacation and Sick Leave
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Schedule 5.6(g) - Severance Plan
EXHIBITS:
Exhibit A - Form of Consent and Release
Exhibit B - Form of Release
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ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT (this "Agreement"), dated as of December 1,
2000 by and between MediaNews Group, Inc., a Delaware corporation ("Buyer"), and
AT&T Broadband, LLC ("AT&T Broadband"), a Delaware limited liability company
(the successor by conversion to Tele-Communications, Inc., a Delaware
corporation ("TCI")) and a wholly owned subsidiary of AT&T Corp., a New York
corporation ("AT&T"), and which owns all of the outstanding limited liability
company interests of Kearns-Tribune, LLC, a Delaware limited liability company
(the "Company").
WITNESSETH:
WHEREAS, the Company is the successor by mergers to Kearns-Tribune
Corporation, a Utah corporation ("K-T Corp."), and, by virtue of such mergers,
has succeeded to the ownership of the Salt Lake Tribune (the "Tribune");
WHEREAS, AT&T Broadband owns all of the outstanding limited liability
company interests (the "LLC Interests") of the Company;
WHEREAS, AT&T Broadband wishes sell to Buyer and Buyer wishes to
purchase from AT&T Broadband all of the LLC Interests;
WHEREAS, AT&T Broadband and Buyer are entering into this Agreement to
provide for such purchase and sale and to establish various rights and
obligations in connection therewith;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or through one or more intermediaries, controls or is controlled
by or is under common control with such Person, and, if such a Person is an
individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any person who is
controlled by any such member or trust. As used in this definition, "control"
(including, with correlative meanings, "controlled" and "under common control
with") shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies of a Person (whether through
ownership of securities or partnership or other ownership interests, by contract
or otherwise).
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"Agreement" shall have the meaning set forth in the Preamble.
"AT&T" shall have the meaning set forth in the Preamble.
"AT&T Broadband" shall have the meaning set forth in the Preamble.
"AT&T Broadband Plans" shall have the meaning set forth in Section
3.7(b).
"AT&T Broadband Required Regulatory Approvals" shall mean any consent,
approval, order or authorization of, registration, declaration or filing with
any Governmental Entity by AT&T Broadband or by the Company, the failure of
which to make or obtain would reasonably be expected to have a Material Adverse
Effect.
"AT&T - K-T Mergers" shall have the meaning set forth in Section 3.4.
"Business" shall mean the ownership and operation of the Tribune.
"Business Employees" shall have the meaning set forth in Section 5.6.
"Buyer Required Regulatory Approvals" shall mean any consent, approval,
order or authorization of, registration, declaration or filing with any
Governmental Entity by Buyer, the failure of which to make or obtain would
reasonably be expected to have a Material Adverse Effect.
"Cap" shall have the meaning set forth in Section 5.9.
"Cash Flow" shall have the meaning set forth in Section 3.5.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. Sec. 906 et seq. -- ---
"Closing" shall mean the consummation of the purchase and sale of the
LLC Interests as contemplated by this Agreement.
"Closing Date" shall have the meaning set forth in Section 2.6(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning set forth in the Preamble.
"Company Financial Statements" shall have the meaning set forth in
Section 3.5.
"Containers" shall mean (a) underground storage tanks (as defined in
RCRA) and (b) above-ground storage tanks which have a capacity of 100 gallons or
more.
"Contract" shall mean any contract, agreement, indenture, note, bond,
loan, instrument, lease, conditional sale agreement, purchase order, mortgage,
deed of trust, license, permit, concession, grant, franchise, commitment,
guarantee, other evidence of indebtedness or other binding arrangement,
understanding or agreement, whether or not written.
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"Damages" shall mean costs, losses, liabilities, damages, lawsuits,
deficiencies, claims, taxes and expenses (whether or not arising out of
third-party actions or governmental examinations, inspections or audits)
actually suffered or sustained by the relevant party, including interest,
penalties, reasonable attorneys' fees and all amounts paid in investigation,
defense or settlement of any of the foregoing.
"Delaware LLC Act" shall mean the Delaware Limited Liability Company
Act, as amended.
"Determination" shall mean a "determination" as defined by Section
1313(a) of the Code or any similar state, local or foreign provision.
"DNPC" shall mean Deseret News Publishing Company, a Utah corporation.
"Environment" shall mean any surface water, groundwater, drinking water
supply, land surface or subsurface strata, or ambient air, including, without
limitation, any indoor location.
"Environmental Laws" shall mean all Federal, state and local statutes,
regulations, ordinances, rules, regulations and written government agency
policies, all court orders and decrees and arbitration awards, and the common
law, which pertain to environmental matters or contamination of any type
whatsoever. Environmental Laws include, without limitation, those relating to:
manufacture, processing, use, distribution, treatment, storage, disposal,
generation, transportation or cleanup of Hazardous Materials; air, surface or
ground water or noise pollution; Releases; protection of wildlife, endangered
species, wetlands, and natural resources; Containers; health and safety of
employees and other persons; and notification requirements relating to the
foregoing.
"Environmental Permits" shall mean governmental licenses, permits,
registrations, approvals, agreements and consents which are required under or
are issued pursuant to Environmental Laws.
"Environmental Violation" shall have the meaning set forth in Section
5.9(a).
"ERISA" shall have the meaning set forth in Section 3.7(b).
"ERISA Affiliate" shall have the meaning set forth in Section 3.7(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Facility" shall mean any facility as defined in CERCLA.
"FCC" shall mean the Federal Communications Commission.
"GAAP" shall mean United States generally accepted accounting
principles applied on a consistent basis.
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"Governmental Entity" shall mean any supranational, national, state,
municipal or local government or any agency, authority, bureau, commission,
department or similar body or instrumentality thereof, or any governmental court
or tribunal.
"Hazardous Materials" shall mean pollutants, contaminants, pesticides,
radioactive substances, solid wastes or hazardous or extremely hazardous,
special, dangerous or toxic wastes, substances, chemicals or materials
prohibited, limited or regulated by any Environmental Law, including without
limitation any (i) "hazardous substance" as defined in CERCLA, and (ii)
"hazardous waste" as defined in RCRA.
"HSR Act" shall mean the Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended.
"Income Tax" shall mean any Tax based upon or measured by net income.
"Indemnified Party" shall have the meaning set forth in Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section
7.3(a).
"IRS" shall mean the Internal Revenue Service.
"Joint Operating Agreement" shall mean the Agency Agreement, originally
entered into on August 12, 1952, by and between K-T Corp. and DNPC, as amended
effective January 1, 1983.
"K-T Corp." shall have the meaning set forth in the first "WHEREAS"
clause of this Agreement.
"K-T Merger Sub" shall have the meaning set forth in Section 3.4.
"Laws" shall mean common law or other laws, statutes, rules,
regulations, decrees, ordinances, orders and codes.
"Lien" shall mean any lien (statutory or otherwise), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or security agreement or preferential arrangement of any kind or nature
whatsoever (including the interest of a vendor or lessor under any conditional
sale, capitalized lease or other title retention agreement).
"Litigation" shall mean the meaning set forth in Section 3.9.
"LLC Agreement" shall mean the Limited Liability Company Agreement of
the Company, dated as of January 20, 1999, executed by AT&T Broadband as the
sole member of the Company, together with any and all amendments thereto.
"LLC Interests" shall have the meaning set forth in the second
"WHEREAS" clause of this Agreement.
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"Management Agreement" shall mean the Management Agreement, dated as of
July 31, 1997, by and between the Company and SLT Publishing.
"Material Adverse Effect" shall mean a material adverse effect on the
condition (financial or other), results of operations, assets, liabilities or
business of the Company, other than any such effect arising from general
industry or economic conditions.
"NAC" shall mean the Newspaper Agency Corporation, jointly owned by the
Company and DNPC.
"Option Agreement" shall mean the Option Agreement, dated as of July
31, 1997, by and between the Company and SLT Publishing.
"Option Exercise Period" shall have the meaning set forth in Section
5.7.
"Option Exercise Price" shall have the meaning set forth in Section
2.2.
"Original Merger" shall have the meaning set forth in Section 3.4.
"Pension Plan" shall have the meaning set forth in Section 2.5.
"Person" or "person" shall mean an individual, corporation,
association, partnership, limited liability company, group (as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), joint
venture, trust or unincorporated organization, other form of business or legal
entity or a Governmental Entity.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
Sec. 6902 et seq.
"Real Property" shall have the meaning set forth in Section 5.9(a).
"Release" shall mean any spill, discharge, leak, emission, escape,
injection, dumping, disposal or other release or threatened release of any
Hazardous Materials into the environment, whether or not notification or
reporting to any governmental agency was or is required, including, without
limitation, any Release which is subject to CERCLA.
"Section 1060 Forms" shall have the meaning set forth in Section
8.1(a).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"SLT Publishing" shall mean the Salt Lake Tribune Publishing Company,
LLC, a Utah limited liability company.
"Tax" shall mean any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, unmined minerals,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
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disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto.
"Tax Proceeding" shall have the meaning set forth in Section 8.3.
"Tax Return" shall mean 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.
"Taxing Authority" shall mean any Governmental Entity having
jurisdiction over the assessment, Determination, collection or other imposition
of Tax.
"TCI" shall have the meaning set forth in the Preamble.
"TCI KT Merger Sub" shall have the meaning set forth in Section 3.4.
"Transactions" shall have the meaning set forth in Section 3.2.
"Tribune" shall have the meaning set forth in the first "WHEREAS"
clause of this Agreement.
"Trust" shall have the meaning set forth in Section 2.5.
ARTICLE II
SALE OF INTERESTS; CLOSING
2.1 Purchase and Sale. At the Closing and subject to the terms and
conditions set forth herein, AT&T Broadband shall sell, convey, assign, transfer
and deliver to Buyer its ownership of the LLC Interests, in exchange for
$200,000,000 in cash (the "Purchase Price") paid by Buyer.
2.2 Allocation of Purchase Price. The Purchase Price shall be allocated
among the assets of the Company in accordance with Section 8.1.
2.3 Wire Instructions. At least two business days prior to the Closing
Date, AT&T Broadband shall deliver to Buyer written wire transfer instructions
designating the account or accounts to which the Purchase Price shall be paid by
Buyer.
2.4 Pension Plan and Trust. AT&T Broadband or its Affiliate shall
assume, prior to the Closing Date, sponsorship of the Kearns-Tribune Pension
Plan (the "Pension Plan") and its related Trust (the "Trust"), responsibility
for administration of the Plan and all liability for payment of all benefits
under the Pension Plan, and neither the Pension Plan nor the Trust nor any
assets or liabilities thereunder shall be transferred to Buyer.
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2.5 Closing.
(a) Payment and Delivery. On the terms and conditions of this
Agreement, and in reliance upon the representations and warranties hereinafter
set forth, at the closing of the Transactions (the "Closing"): (i) AT&T
Broadband shall cause the Company's books and records to reflect the transfer of
the LLC Interests to Buyer in accordance with the LLC Agreement and the Delaware
LLC Act, and shall make any necessary filings to reflect the transfer of such
interests, and (ii) Buyer will pay to AT&T Broadband the Purchase Price by wire
transfer to the account or accounts designated by AT&T Broadband.
(b) Location. Subject to the terms and conditions hereof, the Closing
will be held in New York, New York, at 10 a.m. New York time, on the fifth
business day after all of the conditions to Closing set forth in Article VI
which are capable of being satisfied prior to Closing have been satisfied, at
the offices of Wachtell, Lipton, Rosen & Katz, or at such other time and/or
place as the parties hereto may agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AT&T BROADBAND
AT&T Broadband represents and warrants to, and agrees with, Buyer as
follows:
3.1 Organization. AT&T Broadband and the Company are limited liability
companies, in each case duly organized, validly existing and in good standing
under the laws of Delaware, and both have all requisite corporate power and
authority to own, operate, lease and use its properties and to carry on its
business as it is being conducted on the date hereof. The Company is, or prior
to the Closing will be, duly licensed, authorized or qualified as a foreign
corporation or limited liability company for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, except where the failure to be so licensed, authorized or
qualified would not reasonably be expected to have a Material Adverse Effect.
The Company and AT&T Broadband have full corporate power and authority to
consummate all of the Transactions. Attached hereto as Schedule 3.1 is a true
and complete copy of the LLC Agreement. The LLC Interests have the rights, terms
and conditions set forth in the LLC Agreement and the Delaware LLC Act.
3.2 Authorization; No Conflicts. This Agreement has been duly
authorized, executed and delivered by the AT&T Broadband and constitutes a valid
and binding obligation of AT&T Broadband, enforceable against AT&T Broadband in
accordance with its terms. The execution and delivery of this Agreement by AT&T
Broadband, and the performance of this Agreement and the covenants contained in
this Agreement, and the consummation of the other transactions contemplated
hereby and thereby (all of the actions, events and transactions set forth in
this sentence and any of the agreements in connection with such actions, events
and transactions being referred to herein collectively as the "Transactions") by
AT&T Broadband and the Company will not (with or without the lapse of time or
the giving of notice or both) conflict with, breach, violate or result in a
breach or violation of, or constitute a default under, (i) any provision of the
limited liability company agreement of AT&T Broadband, or of the LLC Agreement,
or (ii) any judgment, order, decree, statute, rule, regulation, arbitration
award, or any
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other restriction of any kind or character, applicable AT&T Broadband or, to the
knowledge of AT&T Broadband, to the Company or their respective properties,
other than any conflicts, breaches, violations and defaults under this clause
(ii) which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect.
3.3 LLC Interests. All outstanding LLC Interests are duly authorized,
validly issued, and owned by AT&T Broadband free and clear of all Liens and,
except for the LLC Interests, there are no other equity or other membership
interests of the Company authorized, issued, reserved for issuance or
outstanding.
3.4 Succession of Interest. Pursuant to the Agreement and Plan of
Merger, dated April 18, 1997, by and between TCI, TCI KT Merger Sub, Inc., a
Utah corporation ("TCI KT Merger Sub"), and K-T Corp., on July 31, 1997 TCI KT
Merger Sub merged with and into K-T Corp., with K-T Corp. continuing as the
surviving corporation (the "Original Merger"). On January 31, 2000, K-T Corp.
merged with and into Kearns-Tribune Merger Corporation ("K-T Merger Sub"), and
on March 5, 1999 K-T Merger Sub merged with and into the Company (the mergers of
K-T Corp. into K-T Merger Sub and K-T Merger Sub into the Company are
collectively defined herein as the "AT&T - K-T Mergers"). As the result of the
AT&T - K-T Mergers, the Company became the legal successor in interest to K-T
Corp. and, thereby, to all newspaper assets relating to the Tribune previously
held by K-T Corp. Since that date, the Company has conducted the Business in the
ordinary course. All consents to the AT&T - K-T Mergers which, individually or
in the aggregate, would reasonably be expected to have a Material Adverse Effect
have been obtained as of the date hereof or will be obtained prior to the
Closing.
3.5 Financial Statements. Attached hereto as Schedule 3.5 are an
unaudited balance sheets of the Company as of October 31, 2000 and December 31,
1999, income statements of the Company as of October 31, 2000 and December 31,
1999 and for the one year and nine-month periods then ended, and a statement of
operating cash flow before depreciation and amortization as determined in
accordance with GAAP ("Cash Flow") as of October 31, 2000 (the "Company
Financial Statements").
3.6 No Material Adverse Effect. Except as disclosed to Buyer, since
September 30, 2000, there has not been and, to AT&T Broadband's knowledge, no
event has occurred that would have, a Material Adverse Effect.
3.7 Employment Matters.
(a) Except to the extent that any noncompliance would not reasonably be
expected to have a Material Adverse Effect, AT&T Broadband has complied in all
material respects with all applicable Laws relating to the employment of labor,
including WARN, continuation coverage requirements with respect to group health
plans and those relating to wages, hours, collective bargaining, unemployment
insurance, workers' compensation, equal employment opportunity, age, sex, race
and disability discrimination, immigration control and the payment and
withholding of Taxes.
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(b) For purposes of this Agreement, "AT&T Broadband Plans" means each
employee benefit plan (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) or any multiemployer plan (as
defined in Section 3(37) of ERISA) which is sponsored, maintained or contributed
to by AT&T Broadband for the benefit of Business Employees. AT&T Broadband Plans
in which a Business Employee of the Company participates are set forth in
Schedule 3.7. Except to the extent that any violation would not reasonably be
expected to have a Material Adverse Effect, with respect to the AT&T Broadband
Plans, none of AT&T Broadband, any of its ERISA Affiliates, any AT&T Broadband
Plan other than a multiemployer plan (as defined in Section 3(37) of ERISA), or
to the knowledge of AT&T Broadband or any of its ERISA Affiliates, any AT&T
Broadband Plan that is a multiemployer plan (as defined in Section 3(37) of
ERISA) is in violation of any provision of ERISA or the Code. No material
"reportable event" described in Sections 4043(c)(1), (2), (3), (5), (6), (7),
(10) and (13) of ERISA, non-exempt "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code), "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or "withdrawal liability" (as
determined under Section 4201 et seq. of ERISA) has occurred or exists and is
continuing with respect to any AT&T Broadband Plan other than a multiemployer
plan (as defined in Section 3(37) of ERISA), or to the knowledge of AT&T
Broadband or any of its ERISA Affiliates, any AT&T Broadband Plan that is a
multiemployer plan (as defined in Section 3(37) of ERISA). After the Closing,
neither Buyer nor any of Buyer's ERISA Affiliates will be required, under ERISA,
the Code or any collective bargaining agreement, to establish, maintain or
continue any AT&T Broadband Plan currently maintained by AT&T Broadband or any
of AT&T Broadband's ERISA Affiliates.
(c) Except as set forth on Schedule 3.7, there are no collective
bargaining agreements applicable to any Person employed by the Company and the
Company has no duty to bargain with any labor organization with respect to any
such Person. Except as set forth on Schedule 3.7, there are not pending any
unfair labor practice charges against the Company, any demand for recognition or
any other request or demand from a labor organization for representative status
with respect to any Person employed by it. Except as described on Schedule 3.7,
neither AT&T Broadband nor the Company has any employment agreements, either
written or oral, with any employee of the Company and none of the employment
agreements listed on Schedule 3.7 requires AT&T Broadband or the Company, or
will require Buyer or any Affiliate of Buyer, to employ any Person after the
Closing.
(d) After the Closing Date, neither the Company nor Buyer shall have
any liability or obligation of any kind whatsoever under or with respect to the
Pension Plan.
3.8 Brokers' Fees. Neither AT&T Broadband nor AT&T has dealt with any
broker, finder or consultant in connection with the Transactions, and no Person
acting on behalf of or at the direction of AT&T Broadband or AT&T is entitled to
any commission or finder's fee in connection with the sale of the LLC Interests
to Buyer.
3.9 Litigation. Except for claims made by DNPC and SLT Publishing, to
AT&T Broadband's knowledge, there are no judicial or administrative claims,
charges, actions, suits, proceedings or investigations ("Litigation") pending or
threatened against the Company, or which question the validity of this Agreement
or challenge any of the Transactions.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to, and agrees with, AT&T Broadband as
follows:
4.1 Organization. Buyer is a corporation duly organized and validly
existing and in good standing under the laws of Delaware. Buyer has all
requisite corporate power and authority to enter into this Agreement, to
purchase the LLC Interests, to consummate the Transactions and to own, operate
and manage the Company immediately following the Closing Date.
4.2 Authorization; No Conflicts. This Agreement has been duly
authorized, executed, and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms. The
Transactions will not (with or without the lapse of time or the giving of notice
or both) conflict with, breach, violate or result in a breach or violation of,
or constitute a default under, (i) any organizational document of Buyer or (ii)
any judgment, order, decree, statute, rule, regulation, arbitration award, or
any other restriction of any kind or character, applicable to Buyer or its
properties other than any conflicts, violations, breaches or defaults under this
clause (ii) which, individually or in the aggregate, would not reasonably be
likely to have a material adverse effect on the consummation of the
Transactions.
4.3 Purchase for Purpose of Investment. Buyer is acquiring the LLC
Interests for its own account solely for the purpose of investment and not with
a view to, or for sale in connection with, any distribution thereof.
4.4 Brokers' Fees. Buyer has not dealt with any broker, finder or
consultant in connection with the Transactions, and no Person acting on behalf
or at its direction is entitled to any commission or finder's fee in connection
with the sale of the LLC Interests to Buyer.
ARTICLE V
COVENANTS
5.1 Conduct of the Business. Except for the Transactions, and subject
to the provisions of the Management Agreement, during the period from the date
hereof to the earlier of the termination of this Agreement or the Closing Date,
AT&T Broadband will use its reasonable best efforts to cause the Company, except
as otherwise consented to or approved by Buyer in writing or as permitted or
required hereby, to conduct the Business in the ordinary course and in all
material respects in a manner such that the representations and warranties
contained in Article III shall continue to be true and correct in all material
respects on and as of the Closing Date (except for representations and
warranties made as of a specific date) as if made on and as of the Closing Date.
Notwithstanding the foregoing, without the consent of Buyer, any one or more of
AT&T, AT&T Broadband, and the Company may commence an action at any time during
the sixty (60) day period immediately following the execution of this Agreement
in any court of competent jurisdiction seeking a resolution of issues arising
under the Option Agreement, including seeking a declaration that consummation of
the Transactions would not breach the Option Agreement.
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5.2 Access to Information. From and after the date of this Agreement,
subject to the provisions of the Management Agreement, AT&T Broadband shall use
its reasonable best efforts to cause the Company, and the directors, officers,
employees, agents and representatives of the Company, to afford to Buyer and its
directors, officers, employees, accountants, counsel and other agents, advisors
and representatives full access, in such manner as will not unreasonably
interfere with the conduct of the Business, to their respective properties,
books, records (financial and otherwise), internal reports, financial and
operating data, and management.
5.3 Public Announcements. Subject to each party's disclosure
obligations imposed by law, AT&T, AT&T Broadband and Buyer will cooperate with
each other in the development and distribution of all news releases and other
public information disclosures with respect to this Agreement and any of the
Transactions. All notices to third parties, press releases and other publicity
concerning the Transactions shall be jointly planned and coordinated by AT&T,
AT&T Broadband and Buyer. The terms of this Agreement, including the Purchase
Price, shall remain confidential and shall not be disclosed by either party,
except as such disclosure may be required by law or by any Governmental Entity
(including pursuant to generally accepted accounting principles).
5.4 Taking of Necessary Action. Each of the parties hereto agrees to
use its respective reasonable best efforts promptly to take or cause to be taken
all action and promptly to do or cause to be done all things necessary, proper
or advisable under applicable Laws and regulations to consummate and make
effective the Transactions. Without limiting the foregoing, Buyer and AT&T
Broadband agree as follows:
(a) AT&T Broadband shall make or cause the Company to make all
necessary filings in connection with the AT&T Broadband Required Regulatory
Approvals promptly following the date of this Agreement, and shall use its
reasonable best efforts to furnish or cause to be furnished, as promptly as
practicable, all information and documents requested with respect to such AT&T
Broadband Required Regulatory Approvals and shall otherwise cooperate with the
applicable Governmental Entity in order to obtain any AT&T Broadband Required
Regulatory Approval. AT&T Broadband shall use its reasonable best efforts to
resolve, or cause the Company to resolve, such objections, if any, as any
Governmental Entity may assert with respect to this Agreement and the
Transactions in connection with the AT&T Broadband Required Regulatory Approvals
in as expeditious a manner as possible.
(b) Buyer shall make all necessary filings in connection with the Buyer
Required Regulatory Approvals promptly following the date of this Agreement, and
shall use its reasonable best efforts to furnish or cause to be furnished, as
promptly as practicable, all information and documents requested with respect to
such Buyer Required Regulatory Approvals and shall otherwise cooperate with the
applicable Governmental Entity in order to obtain any Buyer Required Regulatory
Approval. Buyer shall use its reasonable best efforts to resolve such
objections, if any, as any Governmental Entity may assert with respect to this
Agreement and the Transactions in connection with the Buyer Required Regulatory
Approvals in as expeditious a manner as possible.
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(c) Buyer shall undertake any required or desired notifications to or
filings with the FCC, if any, and shall coordinate the making of such
notifications or filings with counsel for AT&T and AT&T Broadband.
(d) AT&T Broadband and Buyer shall cooperate in making any filings
under the HSR Act promptly following the date of this Agreement and in seeking
early termination relating to such filings.
(e) AT&T Broadband and Buyer shall (to the extent permitted by law or
regulation or any applicable confidentiality agreement) deliver to each other
copies of any filings made with a Governmental Entity promptly after the same
are filed and, to the extent practicable, shall consult with the each other with
respect to the obtaining of any consents, approvals and authorizations of
Governmental Entities.
(f) AT&T Broadband and Buyer shall keep each other apprised of the
status of matters relating to completion of the Transactions.
(g) In the event that a suit is instituted by a Person or Governmental
Entity challenging this Agreement and the Transactions as violative of
applicable antitrust or competition law, each of AT&T Broadband and Buyer shall
use its respective reasonable best efforts to resist or resolve such dispute.
5.5 Other Agreements.
(a) Management Agreement. Buyer understands, acknowledges and agrees
that the Company is, and after the Closing Date will continue to be, a party to
the Management Agreement and is, and after the Closing Date will continue to be,
bound by the terms thereof. Without limiting the foregoing, Buyer will cause the
Company to honor the terms of the Management Agreement that ensure the
independence of the Tribune's reporting and editorial functions.
(b) Option Agreement. Buyer understands, acknowledges and agrees that
the Company is, and after the Closing Date will continue to be, a party to the
Option Agreement and is, and after the Closing Date will continue to be, bound
by the terms thereof.
(c) Joint Operating Agreement. Following the Closing, Buyer will cause
the Company to comply with its obligations under the Joint Operating Agreement,
subject to all rights of the Company pursuant to the terms of the Joint
Operating Agreement.
5.6 Employees.
(a) Schedule 5.6 hereto lists separately each position currently filled
by employees of the Company ("Business Employees") and each such Business
Employee's name, job title, current salary and any other compensation items
(e.g., bonus, allowances, etc.), years of service, rate type (hourly or salary),
accrued vacation and accrued sick leave, whether the employee is subject to an
employment agreement, a collective bargaining agreement or represented by a
labor organization and the current status of each employee filling such position
(e.g., whether the employee is active, on short-term disability, on leave of
absence, etc.). The
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Company and Buyer shall use commercially reasonable efforts to retain all
Business Employees, and to maintain in good standing all agreements with the
individuals or entities listed on Schedule 3.7 from the execution of this
Agreement through the Closing Date, but shall be under no obligation to offer
any compensation or other incentives in addition to the compensation and
benefits being provided in the ordinary course of the Company's business as of
the date of this Agreement.
(b) After the Closing Date and for the six-month period immediately
following thereafter, the Company and Buyer shall retain all Business Employees
and not terminate the employment of any such employee prior to the end of such
six-month period, other than for cause or on account of any net decline in the
business or programs of the Company. While employed by the Company and Buyer
during such six-month period, Business Employees shall be entitled to at least
the same base salary plus annual cash target bonus opportunity listed on
Schedule 5.6. Each Business Employee shall continue to be entitled, after the
Closing Date, to the amount of accrued and unused vacation and accrued and
unused sick leave as listed on Schedule 5.6.(b).
(c) If the Transactions do not result in a permissible distribution
event under Section 401(k) of the Code, and if the parties hereto mutually agree
to do so, the parties hereto shall cooperate in arranging transfers between AT&T
Broadband's 401(k) plan and Buyer's 401(k) plan with respect to the Business
Employees as of the effective date of such asset transfer. If there is no
plan-to-plan transfer, and if no permissible distribution is allowed, in order
to permit AT&T Broadband, or its appropriate Affiliate, to make distributions to
any Business Employee of the balance of such employee's 401(k) account in AT&T
Broadband's or its Affiliate's tax qualified plan, if any, as soon as legally
permitted, Buyer shall notify AT&T Broadband of the date of termination of such
employee's employment with Buyer for any reason.
(d) All claims, liabilities and obligations under, pursuant to or in
connection with any welfare, medical, insurance, disability or other employee
benefit plans of AT&T Broadband or any Affiliate of AT&T Broadband or arising
under any Laws affecting Business Employees incurred on or before the Closing
Date or resulting from or arising from events or occurrences occurring or
commencing on or before the Closing Date will remain the responsibility of AT&T
Broadband, or the appropriate Affiliate of AT&T Broadband, whether or not such
employees are hired by Buyer as of or after the Closing. Neither the Company nor
Buyer will have nor assume any obligation or liability under or in connection
with any such plan of AT&T Broadband or any Affiliate of AT&T Broadband. For
purposes of this Agreement, the following claims and liabilities shall be deemed
to be incurred as follows: (i) medical, dental and/or prescription drug benefits
upon the rendering of the medical, dental, pharmacy or other services giving
rise to the obligation to pay such benefits except with respect to such benefits
provided in connection with a continuous period of hospitalization, which shall
be deemed to be incurred at the time of admission to the hospital; (ii) life,
accidental death and dismemberment and business travel accident insurance
benefits and workers' compensation benefits, upon the death, disability, injury
or accident giving rise to such benefits; and (iii) salary continuation or other
short-term disability benefits, or long-term disability, upon commencement of
the disability giving rise to such benefit.
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(e) AT&T Broadband or its Affiliates, will remain solely responsible
for, and will indemnify and hold harmless Buyer from and against all losses
arising from or with respect to, all pension, severance, medical, continuation
coverage, disability and other benefits (other than accrued but unused vacation
and sick leave) to which Business Employees may be entitled, as a result of
their employment by the Company on or prior to the Closing Date, the
consummation of the Transactions or pursuant to any applicable Laws otherwise
relating to their employment prior to the Closing Date. Any liability under WARN
with regard to any employee terminated on or prior to the Closing Date, or not
hired by Buyer on or after the Closing Date, shall be the responsibility of AT&T
Broadband or its Affiliates by which the employee was employed prior to the
Closing Date.
(f) Notwithstanding anything to the contrary herein, after the Closing
Date, Buyer shall:
(i) give each Business Employee credit for such employee's past
service with the Company or AT&T Broadband and its Affiliates as of the
Closing Date (including past service with any prior owner or operator
of AT&T Broadband's business) for purposes of eligibility to
participate in Buyer's employee welfare benefit plans (e.g. group
health, disability, life, flexible spending accounts etc.), as well as
for the schedule of benefits under Buyer's vacation or paid time off
policies, sick leave policy and short-term disability plan to the same
extent as similarly situated employees of Buyer and their dependents
are permitted to participate;
(ii) give each Business Employee credit for such employee's past
service with the Company or AT&T Broadband and its Affiliates as of the
Closing Date (including past service with any prior owner or operator
of AT&T Broadband's business) for purposes of eligibility and vesting
under any Buyer defined benefit pension and defined contribution plan
to the same extent as other similarly situated employees of Buyer;
(iii) give each Business Employee credit for such employee's past
service with the Company, AT&T Broadband and its Affiliates as of the
Closing Date for purposes of satisfying any waiting periods under
Buyer's employee benefit plans, including any group health and
disability plans to the same extent as similarly situated employees of
Buyer, except to the extent such employees were subject to such
limitations under the employee benefit plans of AT&T Broadband or any
Affiliate of AT&T Broadband and not subject any Business Employees to
any limitations on benefits for any preexisting conditions; and
(iv) credit each Business Employee under any group health plan for
any deductible amount and out-of-pocket maximums previously met by such
Business Employee as of the Closing Date under any of the group health
plans of AT&T Broadband or any of its Affiliates for the plan year in
which the transfer of employment occurs; and
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(v) provide the Business Employees as of the Closing Date with
employee benefits and compensation no less favorable in the aggregate
than those employee benefits and compensation provided to similarly
situated employees of Buyer.
(g) As of the first moment of the Closing Date, Buyer shall provide, or
shall cause the Company to provide, medical, dental, vision care, life insurance
and disability insurance benefits to all Business Employees that are
substantially similar in the aggregate to those currently provided by the
Broadband at the Closing Date and as listed on Schedule 3.7, which shall contain
no restrictions or limitations with respect to pre-existing conditions, except
to the extent any such restrictions or limitations actually applied to such
Business Employees prior to the Closing Date, nor require proof of insurability.
(h) As soon as practicable after the Closing Date, Buyer shall
establish for the benefit of all Business Employees a defined contribution plan
providing benefits to Business Employees which are comparable on an overall
basis to the benefits currently provided to such employees by the AT&T Long Term
Savings Plan (other than investment in the employer securities).
(i) If the Company discharges any Business Employee without cause
within the twelve-month period after Closing, then Buyer or the Company shall
pay severance benefits to such Business Employee in accordance with AT&T
Broadband's current severance benefit plan, a summary or copy of which is
attached as Schedule 5.6(g). Following such twelve-month period, such Business
Employee shall be covered under Buyer's severance benefit plan, recognizing each
such employee's service with the Company or AT&T Broadband and its affiliates
prior to the Closing Date. For purposes of this Agreement, "cause" means:
(i) conviction (including a plea of guilty or nolo contendere) of a
crime involving theft, fraud, dishonesty or moral turpitude;
(ii) intentional or grossly negligent disclosure of confidential or
trade secret information of the Company (or any of its Affiliates) to
anyone who is not entitled to receive such information;
(iii) gross omission or gross dereliction of any statutory or
common law duty of loyalty to the Company or any of its Affiliates;
(iv) willful violation of the Company's Code of Conduct or other
written Company policies or procedures; or
(v) repeated failure to carry out the duties of the employee's
position despite specific instruction to do so.
(j) Nothing in this Section 5.6 or elsewhere in this Agreement shall be
deemed to make any employee of either Party a third party beneficiary of this
Agreement.
(k) Except as otherwise provided in this Agreement, as of the first
moment of the Closing Date, all Business Employees will cease to participate as
active employees in or accrue benefits under the AT&T Broadband Plans and the
Company shall cease to be a
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participating company in each of the AT&T Broadband Plans. Thereafter, neither
the Buyer nor any of its Affiliates nor any Business Employee shall assume or be
entitled to participate in any AT&T Broadband Plan, except to the extent such
plans provide by their terms for participation after the Closing Date or as
otherwise required by law or by the terms of this Agreement.
(l) AT&T Broadband, or its Affiliate which has assumed sponsorship of
the Pension Plan, shall take such actions as may be necessary to ensure that, as
soon as practicable after the Closing Date, all Business Employees with benefits
accrued under the Pension Plan shall be eligible to receive a distribution of
their entire accrued benefit in any form currently available under the Pension
Plan as well as in the form of a lump sum distribution.
5.7 Buyer Transfers. Until the expiration of the option exercised
period set forth in Section 3 of the Option Agreement (the "Option Exercise
Period"), Buyer shall not, and shall cause any subsequent purchasers to not,
directly or indirectly, sell, convey, assign, deliver or otherwise transfer to
DNPC or any of its Affiliates (a) any of the LLC Interests or any other interest
in the Company or any successor interest or (b) any of the assets of the
Company.
5.8 Waiver. Buyer waives any and all existing and future claims, known
and unknown, against AT&T and AT&T Broadband, and their respective members,
managers, directors, officers, employees, subsidiaries and Affiliates,
including, but not limited to, any and all existing and future claims, known and
unknown, made in connection with the Management Agreement, the Option Agreement,
the Joint Operating Agreement or the operation or management of the Company, K-T
Corp. or the NAC, except only such claims which Buyer may be entitled to file
for breach of any of AT&T Broadband's warranties pursuant to Article III of this
Agreement or AT&T Broadband's indemnification obligations pursuant to Article
VII of this Agreement.
5.9 Post-Closing Payments. Upon the occurrence of any of the events
hereinafter provided, Buyer shall be entitled to a payment or payments as
hereinafter provided; provided, however, that the sum of all payments made by
AT&T Broadband pursuant to this Section 5.9 shall not exceed $26,000,000 (the
"Cap"):
(a) Environmental Claims. If immediately prior to the Closing (i) the
Company, or any real property then owned or leased by the Company (the "Real
Property"), is in violation of any Environmental Law, (ii) the Company then
fails to possess any valid Environmental Permit required for the operations of
the Company as then operated, or the Company was not then in compliance with any
of such permits, (iii) there then or previously had been any storage, treatment,
generation, transportation or Release of any Hazardous Materials by the Company
or any agent thereof at any Real Property or other Facility of this Company in
violation of, or which immediately prior to the Closing would give rise to any
obligations or the incurrence of damages under, any Environmental Laws, or (iv)
any of the Real Property is listed or proposed for listing on the National
Priorities List or on the Comprehensive Environmental Response, Compensation and
Liability Information Systems List, both promulgated under CERCLA, or on any
state or local list of sites requiring removal, remedial response or corrective
actions pursuant to any Environmental Law (hereafter, individually or
collectively, an "Environmental Violation") and Buyer provides written notice of
such Environmental Violations on or prior to the date that is six (6) months
after the Closing Date, AT&T Broadband shall make
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a cash payment to Buyer equal to the amount necessary to cure such Environmental
Violations, and such payment shall be made by wire transfer of immediately
available funds within five (5) business days of Buyer's written notification to
AT&T Broadband; provided, however, that Buyer shall be entitled to provide only
one notification under this clause (a); provided, further, however, that any
payment to be made pursuant to this clause (a) shall not exceed the Cap less the
aggregate of any payments made pursuant to Section 5.9(b), 5.9(c), 5.9(d) or
5.9(e).
(b) Assets. If any material assets used or held for use in the Business
at any point between January 1, 2000 and the Closing Date were not owned by the
Company immediately prior to the Closing Date or to which the Company did not
have a lawful right to use such asset immediately prior to the Closing Date
pursuant to a valid lease or license under which the rental or other payments to
be made in connection with such lawful right were reflected in the Cash Flow set
forth on the Company Financial Statements, and Buyer provides written notice of
such on or prior to the date that is six (6) months after the Closing Date, AT&T
Broadband shall make a cash payment to Buyer equal to the fair market value of
such assets, and such payment shall be made by wire transfer of immediately
available funds within five (5) business days of Buyer's written notification to
AT&T Broadband; provided, however, that Buyer shall be entitled to provide only
one notification under this clause (b); provided, further, however, that any
payment to be made pursuant to this clause (b) shall not exceed the Cap less the
aggregate of any payments made pursuant to Section 5.9(a), 5.9(c), 5.9(d) or
5.9(e).
(c) Cash Flow. If the Cash Flow set forth on the Company Financial
Statements is less than the Cash Flow as of the date of such financial
statements as reflected in audited financial statements of the Company prepared
and audited by Arthur Andersen, LLC and Buyer provides written notice of such on
or prior to September 30, 2001, AT&T Broadband shall make a cash payment to
Buyer equal to such discrepancy, and such payment shall be made by wire transfer
of immediately available funds within five (5) business days of Buyer's written
notification to AT&T Broadband; provided, however, that Buyer shall be entitled
to provide only one notification under this clause (c); provided, further,
however, that any payment to be made pursuant to this clause (c) shall not
exceed the Cap less the aggregate of any payments made pursuant to Section
5.9(a), 5.9(b), 5.9(d) or 5.9(e).
(d) Litigation. If there is any pending or threatened Litigation
relating to the Company or its assets as of the Closing Date of which AT&T
Broadband then had knowledge and (except for Litigation brought by or on behalf
of DNPC or SLT Publishing) for which AT&T and/or AT&T Broadband shall not be
obligated to indemnify Buyer pursuant to Section 7.1 of this Agreement and,
subject to Buyer's compliance with Section 7.3 of this Agreement, Buyer shall
prior to the expiration of the Option Exercise Period incur any Damages with
respect thereto, AT&T Broadband shall make a cash payment to Buyer equal to such
Damages, and such payment shall be made by wire transfer of immediately
available funds within five (5) business days of Buyer's written notification to
AT&T Broadband; provided, however, that Buyer shall be entitled to provide only
one notification under this clause (d); provided, further, however, that any
payment to be made pursuant to this clause (d) shall not exceed the Cap less the
aggregate of any payments made pursuant to Section 5.9(a), 5.9(b), 5.9(c) or
5.9(e).
(e) Option. If, upon the exercise by SLT Publishing of its rights under
the Option Agreement, SLT Publishing shall acquire the Tribune Assets (as
defined in the Option
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Agreement) from Buyer or its Affiliates at an option exercise price equal to the
then Fair Market Value (as defined in the Option Agreement) of such assets (such
price, plus the fair market value of any assets acquired by Buyer pursuant to
this Agreement which (x) are retained by Buyer or the Company subsequent to such
exercise, or (b) were previously transferred or disposed of by Buyer or the
Company in advance of such exercise, in the event the Tribune Assets are
determined to be less than all of the assets of the Company, the "Option
Exercise Price"), and if the Option Exercise Price is different from the amount
of the Purchase Price, a payment shall be made as hereinafter provided:
(i) If the Option Exercise Price is greater than the Purchase
Price, a cash payment shall be made by Buyer to AT&T Broadband equal to
50% of the amount by which the Option Exercise Price exceeds the
Purchase Price, and such payment shall be made by wire transfer of
immediately available funds within five (5) business days of the
Company's receipt and acceptance of the Option Exercise Price.
(ii) Conversely, if the Option Exercise Price is less than the
Purchase Price, a cash payment shall be made by AT&T Broadband to Buyer
equal to the amount by which the Purchase Price exceeds the Option
Exercise Price, and such payment shall be made by wire transfer of
immediately available funds within five (5) business days of Buyer's
written notification to AT&T Broadband of its receipt and acceptance of
the Option Exercise Price; provided, however, that any payment to be
made pursuant to this clause (ii) shall not exceed the Cap less the
aggregate of any payments made pursuant to Section 5.9(a), 5.9(b),
5.9(c) or 5.9(d); provided, further, however, that no cash payment
shall be made pursuant to this clause (ii) if the Fair Market Value of
the Tribune Assets has declined due to the mismanagement of the Company
or the Tribune by Buyer.
5.10 AT&T Broadband Affiliate Transfers. If it should be reasonably
determined prior to or subsequent to the Closing Date that any interest in any
asset used or held for use in the Business is owned by an Affiliate of AT&T
Broadband, AT&T Broadband shall use reasonable efforts to cause such Affiliate
to transfer such interest to the Company, as soon as reasonably practicable, at
no cost to the Company. If AT&T Broadband is unable to transfer such interest to
the Company, AT&T Broadband shall provide, or cause such Affiliate to provide,
at no cost to the Company, access to the asset subject to such interest in a
manner consistent with the operation of the asset and to the extent such access
is reasonably required in order to operate the Business.
5.11 Schedules. Except for Schedule 5.6(b) (which shall be delivered at
Closing), the Schedules to this Agreement shall be delivered as soon as
reasonably practicable after the date hereof in such form as may be reasonably
satisfactory to Buyer and AT&T Broadband.
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ARTICLE VI
CONDITIONS
6.1 Conditions of Purchase. The obligation of Buyer to purchase and pay
for the LLC Interests at the Closing is subject to satisfaction or waiver of
each of the following conditions precedent:
(a) Representations and Warranties; Covenants. Each of the
representations and warranties of AT&T Broadband set forth in this Agreement
that is qualified as to materiality or Material Adverse Effect shall have been
true and correct when made and shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than representations and
warranties which address matters only as of a certain date which shall be true
and correct as of such certain date), and each of the representations and
warranties of AT&T Broadband that is not so qualified shall have been true and
correct in all material respects when made and shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of such
date (other than representations and warranties which address matters only as of
a certain date which shall be true and correct in all material respects as of
such certain date). AT&T Broadband shall have performed or caused the Company to
perform in all material respects all obligations and complied in all material
respects with all agreements, undertakings, covenants and conditions required
hereunder to be performed by AT&T Broadband or the Company at or prior to the
Closing. AT&T Broadband shall have delivered to Buyer at the Closing a
certificate in form and substance reasonably satisfactory to Buyer dated the
Closing Date and signed by an officer of AT&T Broadband to the effects set forth
above.
(b) No Injunction. No preliminary or permanent injunction or other
judgment, order, writ or decree by any Governmental Entity which prevents
consummation of any of the Transactions shall have been issued and remain in
effect.
(c) Compliance with Applicable Laws. The purchase of and payment for
the LLC Interests on the terms and conditions contained herein shall not violate
any applicable Law or governmental regulations.
(d) HSR Act. The waiting period (and any extension thereof) applicable
to the Transactions under the HSR Act shall have been terminated or shall have
expired.
(e) Termination of Inter-Company Loans. Any loans payable to an
Affiliate of the Company by the Company and any loans payable to the Company by
an affiliate of the Company shall have been repaid in full or otherwise
discharged, terminated or cancelled.
(f) Intellectual Property. The Company is the owner, free and clear of
any Liens, of the masthead of the Tribune.
6.2 Conditions of Sale. The obligation of AT&T Broadband to sell the
LLC Interests at the Closing is subject to satisfaction or waiver of each of the
following conditions precedent:
(a) Representations and Warranties; Covenants. Each of the
representations and warranties of Buyer set forth in this Agreement that is
qualified as to materiality or material
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adverse effect shall have been true and correct when made and shall be true and
correct on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct as of such certain date), and each of the
representations and warranties of Buyer that is not so qualified shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects on and as of the Closing Date as if made on and
as of such date (other than representations and warranties which address matters
only as of a certain date which shall be true and correct in all material
respects as of such certain date). Buyer shall have performed in all material
respects all obligations and complied in all material respects with all
agreements, undertakings, covenants and conditions required hereunder to be
performed by Buyer at or prior to the Closing. Buyer shall deliver to AT&T
Broadband at the Closing a certificate in form and substance satisfactory to
AT&T Broadband dated the Closing Date and signed by the president or a
vice-president of Buyer to the effects set forth above.
(b) No Injunction; Litigation. No preliminary or permanent injunction
or other judgment, order, writ or decree by any Governmental Entity which
prevents consummation of any of the Transactions shall have been issued and
remain in effect. No action or other proceeding shall have been commenced and be
pending by or before any Governmental Entity seeking to enjoin consummation of
the Transactions or alleging that consummation of such transactions would
violate the Option Agreement. If any one or more of AT&T, AT&T Broadband and the
Company shall have commenced an action at anytime during the sixty (60) day
period immediately following the execution of this Agreement in any court of
competent jurisdiction seeking a resolution of issues arising under the Option
Agreement, including seeking a declaration that consummation of the Transactions
would not breach the Option Agreement, such action shall have been resolved
favorably to AT&T, AT&T Broadband and/or the Company with respect to the issue
whether consummation of the Transactions would breach the Option Agreement.
(c) Compliance with Applicable Laws. The sale of the LLC Interests on
the terms and conditions contained herein shall not violate any applicable Law
or governmental regulations.
(d) HSR Act. The waiting period (and any extension thereof) applicable
to the Transactions under the HSR Act shall have been terminated or shall have
expired.
(e) Consent and Release. Buyer shall have caused DNPC to deliver a
consent to AT&T Broadband, in the form of Exhibit A, approving and consenting to
(i) the Original Merger, (ii) the AT&T - K-T Mergers and (iii) this Agreement
and releasing AT&T and AT&T Broadband and their respective members, managers,
directors, officers, employees, subsidiaries and Affiliates from any and all
existing and future claims, known and unknown, made by DNPC in connection with
(i) the Original Merger, (ii) the AT&T - K-T Mergers and (iii) this Agreement,
and such consent and release shall not have been revoked and shall be in full
force and effect.
(f) DNPC Release. Buyer shall have caused DNPC to deliver a release to
AT&T Broadband, in the form of Exhibit B, releasing AT&T and AT&T Broadband, and
their respective members, managers, directors, officers, employees, subsidiaries
and Affiliates, from
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any and all existing and future claims, known and unknown, made by DNPC,
including, but not limited to, any and all existing and future claims, known and
unknown, made by DNPC in connection with (i) the NAC, (ii) the Joint Operating
Agreement, (iii) this Agreement, (iv) the Option Agreement and (v) the
Management Agreement, and such release shall not have been revoked and shall be
in full force and effect.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Buyer. From and after the Closing Date, AT&T
Broadband hereby covenants and agrees, except as may otherwise be expressly
provided in this Agreement, to indemnify, defend and hold harmless, and hereby
releases, Buyer and its directors, officers, employees, agents, affiliates,
successors and assigns and related parties from and against any and all Damages
incurred in connection with or arising out of or resulting from (i) any breach,
non-compliance or nonfulfillment by AT&T Broadband of any covenant, agreement or
undertaking to be complied with or performed by it or the Company contained in
or pursuant to this Agreement (other than any breach, non-compliance or
nonfulfillment by AT&T Broadband of any covenant, agreement or undertaking to be
complied with or performed by it or the Company contained in or pursuant to
Section 5.9 the indemnification for which shall be governed solely by Section
5.9), (ii) the Original Merger (except as set forth in clause (iii) below) or
the AT&T - K-T Mergers, (iii) any Tax liability of the Company or otherwise
pertaining to the Company's assets which arises out of the ownership of its
assets or operations prior to the Closing Date or which arises out of any
transaction relating to the Company occurring prior to the Closing Date;
provided, however, that AT&T Broadband shall not be required to provide
indemnification for, release from or defense against, and does not indemnify
Buyer for, release Buyer from or defend Buyer against any Tax liability of the
Company arising out of or relating to, directly or indirectly, the Original
Merger that results directly or indirectly from a sale of the LLC Interests, any
other interest in the Company or any assets of the Company to SLT Publishing on
or before July 31, 2002.
7.2 Indemnification of AT&T and AT&T Broadband. From and after the
Closing Date, Buyer hereby covenants and agrees to indemnify, defend and hold
harmless, and hereby releases, AT&T and AT&T Broadband and their members,
managers, directors, officers, employees, agents, affiliates, successors and
assigns and related parties from and against any and all Damages incurred in
connection with or arising out of or resulting from (i) any breach,
non-compliance or nonfulfillment by Buyer of any covenant, agreement or
undertaking to be complied with or performed by it contained in or made pursuant
to this Agreement, (ii) any liability and any claim made by DNPC or any
Affiliate of DNPC relating to or arising from the conduct of the Business (other
than businesses disposed of prior to the date hereof) prior to, or from and
after, the Closing Date or by any other Person relating to or arising from the
conduct of the Business (other than businesses disposed of prior to the date
hereof) from and after the Closing Date, (iii) any liability and any claim made
by DNPC or any Affiliate of DNPC relating to or arising from the operation of
the NAC prior to, or from and after, the Closing Date or by any other Person
relating to or arising from the operation of the NAC from and after the Closing
Date, (iv) any breach, non-compliance or nonfulfillment by the Company or Buyer
of any covenant, agreement or undertaking to be complied with or performed by it
contained in or made pursuant to the Joint Operating Agreement which arises, in
the case of any claim by DNPC or
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any Affiliate of DNPC, from the operation of the NAC or the conduct of the
Company prior to, or from and after, the Closing Date, or in the case of any
claim made by any other Person, which arises from the operation of the NAC or
the conduct of the Company from and after the Closing Date, (v) any breach,
non-compliance or nonfulfillment by the Company or Buyer of any covenant,
agreement or undertaking to be complied with or performed by it contained in or
made pursuant to the Management Agreement, (vi) any breach, non-compliance or
nonfulfillment by the Company or Buyer of any covenant, agreement or undertaking
to be complied with or performed by it contained in or made pursuant to the
Option Agreement, (vii) any and all Taxes of the Company or any subsidiary of
the Company, including Tax liability of the Company arising out of or relating
to, directly or indirectly, the Original Merger that results directly or
indirectly from a sale of the LLC Interests, any other interest in the Company
or any assets of the Company to SLT Publishing on or before July 31, 2002;
provided, however, that Buyer shall not be required to provide indemnification
for, release from or defense against, and does not indemnify AT&T Broadband for,
release AT&T Broadband from or defend AT&T Broadband against (a) any Tax
liability for the AT&T - K-T Mergers and (b) any Tax liability of the Company or
otherwise pertaining to the Company's assets which arises out of the ownership
of its assets or operations prior to the Closing Date or which arises out of any
transaction relating to the Company occurring prior to the Closing Date, (viii)
any liability to and any claim made by DNPC or any Affiliate of DNPC in
connection with the sale of the LLC Interests, to Buyer, and (ix) all other
claims of DNPC or any Affiliate of DNPC, of whatever kind or nature, whether now
existing or whether arising at any future date. To the extent permitted under
the applicable insurance policies, Buyer shall be entitled to receive the
benefit of any insurance coverage in force and applicable to any claims as to
which Buyer assumes liability or responsibility for payment or indemnification
hereunder.
7.3 Indemnification Mechanics.
(a) If a claim for Damages is to be made by a party entitled to
indemnification hereunder (the "Indemnified Party") against the indemnifying
party (the "Indemnifying Party"), the Indemnified Party shall give written
notice to the Indemnifying Party as soon as reasonably practicable after the
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Damages for which indemnification may be sought under Section 7.1 or
7.2. If any lawsuit or enforcement action is filed against any Indemnified
Party, written notice thereof shall be given to the Indemnifying Party as soon
as reasonably practicable (and in any event within 20 business days after the
service of the citation or summons); provided, however, that the failure of any
Indemnified Party to give timely notice shall not affect rights to
indemnification hereunder except to the extent that the Indemnifying Party
demonstrates actual material damage caused by such failure. After such notice,
if the Indemnifying Party shall acknowledge in writing to the Indemnified Party
that the Indemnifying Party shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action, then the Indemnifying Party
shall be entitled, if it so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage attorneys of
its own choice, satisfactory to the Indemnified Party, to handle and defend the
same, at the Indemnifying Party's cost, risk and expense, provided, however,
that the Indemnifying Party and its counsel shall proceed with diligence and in
good faith with respect thereto. The Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and such attorneys in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom; provided, however, that the Indemnified Party may,
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subject to the Indemnifying Party's control of the defense and investigation of
such lawsuit or action, at its own cost, participate in the investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom. No
Indemnifying Party shall be permitted to settle any such lawsuit or action
without the prior written consent of the Indemnified Party, which consent shall
not be unreasonably withheld; provided, however, that no such consent shall be
required in the case of a settlement involving solely the payment of monetary
damages.
(b) The provisions of Section 7.3(a) shall not apply to any Tax
Proceedings.
7.4 Indemnification Sole Remedy. Except with respect to Damages arising
out of the fraud of Buyer or AT&T Broadband and except as otherwise expressly
provided herein, AT&T Broadband and Buyer hereby acknowledge and agree that
their sole and exclusive remedy with respect to any and all monetary claims
arising from any breach of any warranty, covenant or agreement set forth herein,
shall be pursuant to the indemnification provisions set forth in this Article.
ARTICLE VIII
TAX MATTERS
8.1 Allocation and Forms.
(a) AT&T Broadband and Buyer shall agree upon a reasonable allocation
of the Purchase Price (and any liabilities assumed or treated as assumed for Tax
purposes, which assumption is treated as consideration for the LLC Interests for
purposes of the Code), based on fair market values and consistent with Section
1060 of the Code. Except as otherwise required pursuant to a Determination, AT&T
Broadband and Buyer agree to report the Transactions for Tax purposes consistent
with such allocation and take no position (including for purposes of any Tax
Returns) inconsistent with such allocation. AT&T Broadband and Buyer shall
cooperate in the preparation of any forms or reports required to be filed for
Tax purposes pursuant to Section 1060 of the Code (including IRS Form
8594)("Section 1060 Forms").
(b) Buyer and AT&T Broadband agree that neither of them shall take any
action to modify the Section 1060 Forms following the execution thereof without
the written consent of Buyer and AT&T Broadband.
8.2 Filing Responsibility. AT&T Broadband shall prepare and file or
cause the Company to prepare and file, with respect to the Company, any Tax
Return for taxable periods ending on or prior to the Closing Date. Buyer shall
prepare and file or cause the Company to prepare and file all other Tax Returns
with respect to the Company. AT&T Broadband and Buyer agree that the Company's
existence is ignored for U.S. federal income tax purposes and that the purchase
and sale of the LLC Interests shall be treated for U.S. federal income tax
purposes as if Buyer acquired all of the assets of the Company and that AT&T
Broadband and Buyer shall file (and cause each of their Affiliates to file) all
tax returns (including filing an IRS Form 8594 and any comparable form for state
or local income tax purposes) consistent with this treatment.
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8.3 Cooperation and Exchange of Information. AT&T Broadband shall have
the right to control, at the expense of AT&T Broadband, any audit or examination
by, or contest or litigation against, any Taxing Authority (a "Tax Proceeding"),
in each case, with respect to Tax returns with respect to the Company for
taxable periods ended on or prior to the Closing Date. Buyer shall have the
right to control any other Tax Proceeding with respect to the Company. AT&T
Broadband shall furnish Buyer, and Buyer shall furnish AT&T Broadband, and Buyer
and AT&T Broadband shall furnish the Company, with their complete cooperation,
respectively, in connection with any Tax matter, including any Tax Proceeding.
8.4 Refunds. Buyer and the Company shall be entitled to any refunds
relating to Taxes of the Company for which Buyer or the Company is liable
hereunder, and AT&T Broadband shall be entitled to any refunds relating to Taxes
of the Company for which AT&T Broadband is liable hereunder.
ARTICLE IX
TERMINATION
9.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of the parties hereto;
(b) unilaterally by either Buyer or AT&T Broadband, if the Closing is
not consummated on or before the later of nine months from (i) the date of this
Agreement or (ii) the date AT&T, AT&T Broadband or the Company brings an action
seeking resolution of issues arising under the Option Agreement in accordance
with Section 5.1; provided, however, that the right to terminate this Agreement
under this Section 9.1(b) shall not be available to any party whose failure to
perform any material covenant or obligation under this Agreement has been the
cause of or resulted in the failure of the Transactions to occur on or before
such date;
(c) by AT&T Broadband or Buyer in the event any Governmental Entity of
competent jurisdiction shall have issued an order, decree, injunction, judgment
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Transactions and such order, decree, injunction, judgment or
ruling or other action shall have become final and nonappealable;
9.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become
void, and there shall be no liability or obligation on the part of the parties
hereto; provided, however, that the foregoing shall not relieve any party of any
liability for damages incurred as a result of any breach of this Agreement; and
provided, further, however, that, in the absence of actual fraud, neither party
shall be liable to the other for the inaccuracy of any representation made in
this Agreement in the event of a termination.
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ARTICLE X
MISCELLANEOUS
10.1 No Survival of Representations and Warranties. The representations
and warranties contained herein and in any document, instrument, certificate or
other writing delivered pursuant hereto shall not survive the Closing. Nothing
contained in this Section 10.1 shall affect any covenant, agreement or
undertaking contained in this Agreement or in any instrument delivered pursuant
to this Agreement or pursuant to any agreement or the Transactions which
covenant, agreement or understanding is to be performed from and after the
Closing Date.
10.2 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given, if delivered personally,
by telecopier or sent by certified mail, return receipt requested, postage
prepaid, or by a recognized air courier service, as follows:
If to the Company or AT&T Broadband, to:
AT&T Broadband, LLC
188 Inverness Drive West
Englewood, Colorado 80112
Attention: Michael P. Huseby
Fax Number: (303) 858-5823
With a copy to:
AT&T Corp.
295 North Maple Avenue
Basking Ridge, New Jersey 07920
Attention: Marilyn J. Wasser, Esq.
Fax Number: (908) 221-6618
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Steven A. Rosenblum, Esq.
Fax number: (212) 403-2000
If to Buyer, to:
MediaNews Group, Inc.
1560 Broadway, Suite 2100
Denver, CO 80202
Attention: Joseph J. Lodovic, IV
Executive Vice President and Chief Financial Officer
Fax number: (303) 894-9340
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With a copy to:
Verner, Lipfert, Bernhard, McPherson and Hand, Chartered
901 15th Street, N.W., Suite 700
Washington, DC 20005-2301
Attention: Howell E. Begle, Jr., Esq.
Fax number: (202) 371-6279
or to such other address or addresses as shall be designated in writing. All
notices shall be effective when received.
10.3 Entire Agreement; Amendment. This Agreement and the documents
described herein or attached or delivered pursuant hereto set forth the entire
agreement among the parties hereto with respect to the Transactions, and
supersede all prior agreements with respect thereto. Any provision of this
Agreement may be amended or modified in whole or in part at any time by an
agreement in writing among the parties hereto executed in the same manner as
this Agreement. No failure on the part of any party to exercise, and no delay in
exercising, any right shall operate as waiver thereof, nor shall any single or
partial exercise by either party of any right preclude any other or future
exercise thereof or the exercise of any other right.
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document. Facsimile copies
of executed signature pages shall have the same force and effect as original
executed signature pages.
10.5 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of New York applicable to
contracts made and to be performed in that State without regard to conflict of
laws provisions thereof.
10.6 Consent to Jurisdiction. Buyer and AT&T Broadband irrevocably
submit to the exclusive jurisdiction of (i) the Supreme Court of the State of
New York, New York County and (ii) the United States District Court for the
Southern District of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or the Transactions (and each agrees
that no such action, suit or proceeding relating to this Agreement or the
Transactions shall be brought by it or any of its Affiliates except in such
courts). Buyer and AT&T Broadband further agree that service of any process,
summons, notice or document by U.S. registered mail to such person's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Buyer and AT&T Broadband irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the Transactions in (i) the Supreme Court of the State of
New York, New York County or (ii) the United States District Court for th
Southern District of New York or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
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10.7 Expenses. Unless otherwise indicated herein and whether or not the
Transactions are consummated, each of the parties hereto shall bear its own
expenses in connection with the negotiation of this Agreement and consummation
of the Transactions, including but not limited to, legal and accounting fees.
Any transfer, sales, excise or similar Taxes arising from the Transactions shall
be borne and paid by Buyer.
10.8 Third-Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended or shall be construed to create any third-party
beneficiaries, other than the Indemnified Parties identified in Sections 7.1 and
7.2.
10.9 Successors and Assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties; provided, however, that Buyer may assign
to a newly formed subsidiary all of Buyer's rights hereunder, provided that
MediaNews Group, Inc. shall remain directly and fully liable for all obligations
pursuant to or contained in this Agreement. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
10.10 Headings. The Section, Article and other headings contained in
this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
10.11 Interpretation; Absence of Presumption.
(a) For the purposes hereof, (i) words in the singular shall be held to
include the plural and vice versa and words of one gender shall be held to
include the other gender as the context requires, (ii) the terms "hereof",
"herein", and "herewith" and words of similar import shall, unless otherwise
stated, be construed to refer to this Agreement as a whole (including the
Schedules and Exhibits hereto) and not to any particular provision of this
Agreement, and Article, Section, paragraph, Schedule and Exhibit references are
to the Articles, Sections, paragraphs, Schedules and Exhibits to this Agreement
unless otherwise specified, (iii) the word "including" and words of similar
import when used in this Agreement shall mean "including, without limitation,"
unless the context otherwise requires or unless otherwise specified, (iv) the
word "or" shall not be exclusive, and (v) the phrase "knowledge of AT&T
Broadband" or "AT&T Broadband's knowledge" shall mean the actual knowledge of
AT&T Broadband.
(b) This Agreement shall be construed without regard to any presumption
or rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted.
10.12 Severability. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
10.13 Specific Performance. The parties hereto each acknowledge that,
in view of the uniqueness of arrangements contemplated by this Agreement, the
parties hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not
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performed in accordance with its terms, and therefore agree that the parties
hereto shall be entitled to specific enforcement of the terms hereof in addition
to any other remedy to which the parties hereto may be entitled at law or in
equity.
10.14 No Consequential Damages. Except as prohibited by Law, or as may
otherwise be expressly herein provided, each party waives any right it may have
to claim or recover any special, exemplary, punitive or consequential damages,
or any damages other than, or in addition to, actual damages.
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IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties hereto by their respective duly authorized officers, all as of the date
first above written.
MEDIANEWS GROUP, INC.
By:
-----------------------------------------
Name: Joseph J. Lodovic, IV
Title: Executive Vice President and Chief
Financial Officer
AT&T BROADBAND, LLC
By:
-----------------------------------------
Name: Michael P. Huseby
Title: Executive Vice President and Chief
Financial Officer