STOCK AND ASSET PURCHASE AGREEMENT

Exhibit 2.1

Execution Copy

 

S TOCK AND A SSET P URCHASE A GREEMENT

B Y AND B ETWEEN

GATEHOUSE MEDIA ILLINOIS HOLDINGS, INC.

AND

THE COPLEY PRESS, INC.

 

Dated as of March 13, 2007

 

TABLE OF CONTENTS

 

 

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Strictly Confidential

EXHIBIT AND SCHEDULE INDEX

 

 

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Strictly Confidential

STOCK AND ASSET PURCHASE AGREEMENT

This STOCK AND ASSET PURCHASE AGREEMENT (this “ Agreement ”) is entered into as of March 13, 2007 (the “ Effective Date ”), by and between GATEHOUSE MEDIA ILLINOIS HOLDINGS, INC., a Delaware corporation (“ Buyer ”), and THE COPLEY PRESS, INC., an Illinois corporation (“ Seller ”).

RECITALS

WHEREAS, Seller currently owns all of the issued and outstanding shares of common stock, no par value per share, of Copley Ohio Newspapers, Inc., an Illinois corporation (“ Copley Ohio ” and each such share of Copley Ohio, a “ Copley Ohio Common Share ”), and all of the issued and outstanding shares of common stock, par value $0.33-1/3 per share, of The Peoria Journal Star, Inc., an Illinois corporation (“ Copley Peoria ” and each such share of Copley Peoria, a “ Copley Peoria Common Share ”);

WHEREAS, Seller currently owns the Copley Springfield Acquired Assets (as hereinafter defined), which it uses to conduct the Copley Springfield Business (as hereinafter defined); and

WHEREAS, upon the terms and subject to the conditions set forth herein, Seller desires to sell to Buyer, and Buyer desires to purchase from Seller, all of the Copley Ohio Common Shares, all of the Copley Peoria Common Shares and all of the Copley Springfield Acquired Assets, in consideration for payment by Buyer to Seller of the Purchase Price (as hereinafter defined) and the assumption by Buyer from Seller of all of the Copley Springfield Assumed Liabilities (as hereinafter defined).

NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements and conditions contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS

1.1 Defined Terms . For the purposes of this Agreement, the following capitalized terms shall have the meanings ascribed to them below:

“ Affiliate ” means, with respect to a specified person, a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.

 

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“ Agreement ” has the meaning ascribed to it in the Preamble hereto.

“ Allocation ” has the meaning ascribed to it in Section 2.8 .

“ Alternative Transaction ” means a transaction other than the Copley Midwest Share Purchase, the Copley Springfield Asset Purchase and the other transactions contemplated by this Agreement involving the sale by Seller of (i) any of the equity interests in, or all or a substantial portion of the assets of, the Copley Midwest Subsidiaries, or (ii) all or a substantial portion of the assets of the Copley Springfield Business.

“ Assignment and Assumption Agreement ” has the meaning ascribed to it in Section 2.7(a)(iv) .

“ Auction ” means the process undertaken by Seller involving the potential disposition to one or more competing bidders of all or substantially all of the equity interests in or assets of the Copley Midwest Subsidiaries and the Copley Springfield Business.

“ Balance Sheet Date ” has the meaning ascribed to it in Section 3.6 .

“ Bill of Sale ” has the meaning ascribed to it in Section 2.7(a)(iii) .

“ Business Day ” means any day other than a Saturday or a Sunday or a day on which banks located in Los Angeles, California generally are authorized or required by Law or regulation to close.

“ Buyer ” has the meaning ascribed to it in the Preamble hereto.

“ Buyer Executive ” has the meaning ascribed to it in Section 2.7(b)(vi) .

“ Buyer Indemnified Parties ” has the meaning ascribed to it in Section 10.2(a) .

“ Buyer Parent ” means GateHouse Media, Inc., a Delaware corporation.

“ Cash ” means cash, cash equivalents, marketable securities, short-term investments and deposits in banks or other financial institution accounts of any kind.

“ Closing ” has the meaning ascribed to it in Section 2.6 .

“ Closing Date ” has the meaning ascribed to it in Section 2.6 .

“ Closing Working Capital ” means (i) the aggregate amount of the current assets of the Copley Midwest Business, adjusted to exclude the Copley Excluded Assets, minus (ii) the aggregate amount of the current liabilities of the Copley Midwest Business, adjusted to exclude the Copley Excluded Liabilities, in each case determined as of the Closing on a basis consistent with the accounting principles and policies used in the preparation of the Copley Midwest

 

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Financial Statements.

“ COBRA ” has the meaning ascribed to it in Section 6.10 .

“ Code ” means the Internal Revenue Code of 1986, as amended.

“ Commercially Reasonable Efforts ” means the reasonable efforts that a reasonably prudent person would, at the time of executing this Agreement, contemplate using in similar circumstances in an effort to achieve a desired result set forth in this Agreement in a reasonably expeditious manner; provided , that , “Commercially Reasonable Efforts” shall not require the provision of any consideration to any third party of any amounts, except for the costs of making filings, copies, mailings, communications and transmissions in the ordinary course of business, the reasonable fees and expenses of counsel and accountants, any nominal consent fees provided for in the existing provisions of any Copley Midwest Major Contract, and the customary fees and charges of Governmental Authorities.

“ Confidential Information Memorandum ” means the Confidential Information Memorandum for the Copley Midwest Business, dated December 2006 and distributed by Evercore Partners Inc. in connection with the Auction, including all supplements thereto and amendments thereof.

“ Confidentiality Agreement ” means the confidentiality agreement, dated as of December 1, 2006, by and between Buyer Parent and Seller.

“ Consent ” means any consent or approval of any third-party person that is not a Governmental Authority.

“ Contract ” means any agreement, contract, purchase order, instrument or legally binding commitment or understanding.

“ Copley Excluded Assets ” means all rights of Seller under this Agreement, including to the Purchase Price, and under any agreement, certificate, instrument or other document executed and delivered in connection herewith, and all of Seller’s and the Copley Midwest Subsidiaries’ right, title and interest in and to the following assets: (i) articles of incorporation and bylaws, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other identification numbers, seals, minute books, stock transfer books, blank stock certificates, shares of capital stock of Seller held in treasury and other documents, in each case relating to the organization, maintenance and existence of Seller as a corporation, (ii) Cash, (iii) intercompany receivables (including receivables arising from intercompany debt or other intercompany obligations), (iv) intercompany Contracts, (v) Contracts or other arrangements of Seller or its Affiliates relating to the purchase of newsprint, (vi) assets of Employee Benefit Plans, other than such assets being transferred from Seller to Buyer as expressly set forth in ARTICLE VI , (vii) refunds of Taxes relating to Pre-Closing Tax Periods, (viii) Tax records and Tax Returns of Seller, except to the extent related solely to the Copley Midwest Business, (ix) Governmental

 

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Approvals (to the extent not transferable to Buyer), (x) Copley Intellectual Property, (xi) rights to receive corporate services provided to the Copley Midwest Business by Seller and its Affiliates, including those related to administration, treasury, legal, tax, human resources, facilities management, information technology, risk management, finance, accounting, payroll and group purchasing plans (including newsprint purchasing), or any services set forth in Section 3.20 of the Seller Disclosures Schedules, (xii) assets of any kind whatsoever used by or pertaining to Copley Information Services and Copley News Service, including any arrangements between Seller and Copley News Service but excluding the Copley News Service Midwest Employees who become New Buyer Employees pursuant to Section 6.1 , (xiii) historical memorabilia relating to the Copley Midwest Business, (xiv) insurance policies, and rights, refunds and claims relating thereto, (xv) personnel records and any other records that Seller is required by applicable Law to retain in its possession, (xvi) internal correspondence and memoranda, valuations, investment banking presentations and bids received from other persons in connection with the Auction, the Copley Midwest Share Purchase, the Copley Springfield Asset Purchase and the other transactions contemplated by this Agreement, (xvii) capital stock of, or other equity interests in, any person, other than the Copley Midwest Subsidiaries, owned (of record or beneficially) by Seller and its Affiliates, and (xviii) assets set forth on Section 1.1(K) of the Seller Disclosure Schedules.

“ Copley Excluded Liabilities ” means the Liabilities of Seller under this Agreement and under any agreement, certificate, instrument or other document executed and delivered in connection herewith, and the following Liabilities of Seller or any Copley Midwest Subsidiary: (i) intercompany payables (including payables arising from intercompany debt or other intercompany obligations), (ii) indebtedness for borrowed money, (iii) Liabilities for guarantees issued by any Copley Midwest Subsidiary in support of any indebtedness for borrowed money of Seller, (iv) Liabilities arising under intercompany Contracts, (v) Liabilities arising under Contracts or other arrangements of Seller or its Affiliates relating to the purchase of newsprint, (vi) Liabilities that Seller has expressly agreed to retain pursuant to ARTICLE VI , (vii) Liabilities for Taxes that are the responsibility of Seller pursuant to Section 5.10 , (viii) Liabilities relating to the Proceedings set forth on Section 1.1(A) of the Seller Disclosure Schedules, and (ix) Liabilities under the Employee Benefit Plans of Seller, except as otherwise set forth in ARTICLE VI .

“ Copley Intellectual Property ” means the corporate trademarks, trade names and other intellectual property rights of Seller and its Affiliates not primarily related to the Copley Midwest Business, including the corporate trademarks or trade names “The Copley Press”, “Copley News Service”, “Copley Information Services” and “Copley Newspapers” and derivations thereof, including all domain names, websites and URLs associated with the foregoing.

“ Copley Midwest Business ” means the business of operating the Copley Ohio Publications, the Copley Peoria Publications, and the Copley Springfield Publications, in each case as currently conducted.

 

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“ Copley Midwest Employees ” means the Copley Ohio Employees, the Copley Peoria Employees, the Copley Springfield Employees and the Copley News Service Midwest Employees, with any changes in such employees as allowed by this Agreement.

“ Copley Midwest Financial Statements ” has the meaning ascribed to it in Section 3.6 .

“ Copley Midwest Intellectual Property ” means (i) the corporate trademarks or trade names set forth on Section 1.1(B) of the Seller Disclosure Schedules and derivations thereof, the domain names set forth on Section 1.1(C) of the Seller Disclosure Schedules (including the websites and URLs associated therewith), all patents, copyrights, product names (including all assumed or fictitious names) and logos associated with the foregoing, all applications for the foregoing, and all licenses and other contractual or intangible rights with respect to the foregoing, and (ii) the Copley Springfield Intellectual Property.

“ Copley Midwest Leased Real Property ” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, fixtures, fittings and improvements held by Seller and used primarily for the Copley Springfield Business, or held by a Copley Midwest Subsidiary.

“ Copley Midwest Major Contracts ” has the meaning ascribed to it in Section 3.10(a) .

“ Copley Midwest Owned Real Property ” means (i) the Real Property, as more specifically described in Section 1.1(F) of the Seller Disclosure Schedules, owned by any of the Copley Midwest Subsidiaries, and (ii) the Copley Springfield Owned Real Property.

“ Copley Midwest Share Purchase ” has the meaning ascribed to it in Section 2.1 .

“ Copley Midwest Subsidiaries ” means Copley Ohio, Copley Peoria and Copley Peoria Sub.

“ Copley News Service Midwest Employees ” means the current employees of Copley News Service based in Ohio or Illinois, with any changes in such employees as allowed by this Agreement.

“ Copley Ohio ” has the meaning ascribed to it in the Recitals hereto.

“ Copley Ohio Common Share ” has the meaning ascribed to it in the Recitals hereto.

“ Copley Ohio Employees ” means the current employees of Copley Ohio, with any changes in such employees as allowed by this Agreement.

 

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“ Copley Ohio Publications ” means the publications published by Copley Ohio as set forth on Section 1.1(H) of the Seller Disclosure Schedules.

“ Copley Ohio Share Purchase ” has the meaning ascribed to it in Section 2.1 .

“ Copley Peoria ” has the meaning ascribed to it in the Recitals hereto.

“ Copley Peoria Common Share ” has the meaning ascribed to it in the Recitals hereto.

“ Copley Peoria Employees ” means the current employees of Copley Peoria and Copley Peoria Sub, with any changes in such employees as allowed by this Agreement.

“ Copley Peoria Publications ” means the publications published by Copley Peoria as set forth on Section 1.1(I) of the Seller Disclosure Schedules.

“ Copley Peoria Sub ” means The Galesburg Printing and Publishing Company, an Illinois corporation and wholly owned subsidiary of Copley Peoria.

“ Copley Peoria Sub Common Share ” has the meaning ascribed to it in Section 3.5(c) .

“ Copley Springfield Acquired Assets ” means all of Seller’s right, title and interest in and to the Copley Springfield Owned Real Property and the Copley Springfield Intellectual Property, and in and to any other assets to the extent they relate primarily to the Copley Springfield Business, including all of the Copley Springfield Business’s (i) tangible personal property, such as machinery, equipment, furniture, vehicles and tools, (ii) inventory, including inventories of raw materials and supplies, work in progress and finished products, (iii) Contracts, including all Copley Springfield Major Contracts and all collective bargaining agreements and other labor union Contracts relating to Copley Springfield Employees but excluding all Contracts relating to the purchase of newsprint and excluding any employment agreement or retention agreement between Seller and any individual Copley Midwest Employee who does not become a New Buyer Employee, (iv) accounts, notes and other receivables, other than intercompany receivables, (v) assets of Employee Benefit Plans being transferred from Seller to Buyer as expressly set forth in ARTICLE VI (but to no other assets relating to the Employee Benefit Plans of Seller), (vi) claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (including any such items relating to the payment of taxes), (vii) Governmental Approvals (but, in each case, only to the extent transferable to Buyer), (viii) sales support and promotional materials, advertising materials, catalogs, and production, sales and marketing records, including customer lists, subscription lists, bulk sales lists, advertiser lists, dealer and sub-dealer lists, supplier lists, purchase and sale records, circulation records, production records and credit records, and (ix) books, records, ledgers, business development plans, correspondence, accounting records, employee records, photographs and archives of Copley Springfield Publications; provided , that , notwithstanding the foregoing, “Copley Springfield Acquired Assets” shall not include any Copley Excluded Asset.

 

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“ Copley Springfield Asset Purchase ” has the meaning ascribed to it in Section 2.2 .

“ Copley Springfield Assumed Liabilities ” means all Liabilities of Seller to the extent they relate primarily to the Copley Springfield Business or the Copley Springfield Acquired Assets, including all Liabilities of Seller (i) under all Contracts (including all Copley Springfield Major Contracts and all collective bargaining agreements and other labor union Contracts relating to Copley Springfield Employees but excluding all Contracts relating to the purchase of newsprint and excluding any employment agreement or retention agreement between Seller and any individual Copley Midwest Employee who does not become a New Buyer Employee) included in the Copley Springfield Acquired Assets, (ii) as reflected in the Copley Springfield Financial Statements (less amounts paid or otherwise satisfied after the Balance Sheet Date) in connection with the operation of the Copley Springfield Business and similar Liabilities incurred after the Balance Sheet Date in connection with the operation of the Copley Springfield Business in accordance with the terms and conditions of this Agreement, (iii) that Buyer has expressly agreed to assume pursuant to ARTICLE VI , (iv) for Taxes that are the responsibility of Buyer pursuant to Section 5.10 , (v) arising from, relating to or in connection with any Proceedings to the extent primarily related to the Copley Springfield Business or the Copley Springfield Acquired Assets (including any such Proceedings identified as primarily related to the Copley Springfield Business or the Copley Springfield Acquired Assets on Section 3.11 of the Seller Disclosure Schedules but excluding the Proceedings set forth on Section 1.1(A) of the Seller Disclosure Schedules), and (vi) constituting Environmental Liabilities of the Copley Springfield Business or arising from, relating to or in connection with the Copley Springfield Acquired Assets; provided , that , notwithstanding the foregoing, “Copley Springfield Assumed Liabilities” shall not include any Copley Excluded Liabilities.

“ Copley Springfield Business ” means the business of operating the Copley Springfield Publications as currently conducted.

“ Copley Springfield Employees ” means the current employees of Seller who provide services primarily with respect to the Copley Springfield Business, with any changes in such employees as allowed by this Agreement.

“ Copley Springfield Financial Statements ” has the meaning ascribed to it in Section 3.6 .

“ Copley Springfield Intellectual Property ” means the corporate trademarks or trade names set forth on Section 1.1(D) of the Seller Disclosure Schedules, the domain names set forth on Section 1.1(E) of the Seller Disclosure Schedules (including the websites and URLs associated therewith), all patents, copyrights, product names (including all assumed or fictitious names) and logos associated with the foregoing, all applications for the foregoing, and all licenses and other contractual or intangible rights with respect to the foregoing.

“ Copley Springfield Major Contract ” means any Copley Midwest Major Contract entered into by Seller and primarily relating to the Copley Springfield Business or the Copley

 

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Springfield Acquired Assets.

“ Copley Springfield Owned Real Property ” means the Real Property, as more specifically described in Section 1.1(G) of the Seller Disclosure Schedules, owned by Seller and used primarily for the Copley Springfield Business.

“ Copley Springfield Publications ” means the publications published by Seller as set forth on Section 1.1(J) of the Seller Disclosure Schedules.

“ Damages ” has the meaning ascribed to it in Section 10.2(d) .

“ Effective Date ” has the meaning ascribed to it in the Preamble hereto.

“ Employee Benefit Plan ” means any written compensation or employee benefit plan, program, policy, agreement or other arrangement (but excluding any collective bargaining agreement and other labor union Contract, any employment agreement and any retention agreement), whether or not an “employee benefit plan” within the meaning of Section 3(3) of ERISA and whether or not subject to ERISA, providing compensation, bonuses, or cash or equity-based incentives, or health, medical, dental, pharmaceutical, vision, sickness, long-term care, workers compensation, disability, employee assistance, vacation, termination, severance, retirement, pension, savings, deferred compensation, retention, stay bonus, unemployment, matching gift, tuition reimbursement, or accident or life insurance benefits.

“ Employee Pension Benefit Plan ” means any “employee pension benefit plan” as such term is defined in Section 3(2) of ERISA.

“ Employee Welfare Benefit Plan ” means any “employee welfare benefit plan” as such term is defined in Section 3(1) of ERISA.

“ Environmental Law ” means all Laws in effect relating to public health and safety, worker health and safety, or pollution, protection, preservation or restoration of the environment (including air, surface water, groundwater, drinking water supply, surface land and subsurface land) or natural resources.

“ Environmental Liabilities ” means any and all Liabilities arising from, relating to or in connection with any Environmental Law, including such Liabilities arising from, relating to or in connection with (i) any presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, emission, spillage, control or cleanup by any person of any Hazardous Substance, (ii) any pollution or contamination by any person of air, soil, groundwater, surface water, buildings, structures, improvements and machinery and equipment by or with any Hazardous Substance, (iii) the presence of underground storage tanks, (iv) any off-site storage, transportation, release, discharge, emission, spillage or disposal of any Hazardous Substance by any person, or (v) any violation or non-compliance by any person with any Environmental Law.

 

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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” has the meaning ascribed to it in Section 3.17(a) .

“ Estimated Closing Statement ” has the meaning ascribed to it in Section 2.5(a) .

“ Estimated Purchase Price ” has the meaning ascribed to it in Section 2.5(b) .

“ Final Closing Statement ” has the meaning ascribed to it in Section 2.5(c) .

“ GAAP ” means United States generally accepted accounting principles as in effect from time to time, consistently applied.

“ Governmental Approval ” means any authorization, consent, approval, certification, permit, license or order of, or any filing, registration or qualification with, any Governmental Authority.

“ Governmental Authority ” means any foreign, international, multinational, national, federal, state, provincial, regional, local or municipal court or other governmental, administrative or regulatory authority, agency or body exercising executive, legislative, judicial, regulatory or administrative functions.

“ Governmental Prohibition ” has the meaning ascribed to it in Section 7.3 .

“ Hazardous Substance ” means any substance or material that is described as a toxic or hazardous substance, waste or material, a pollutant, a contaminant or infectious waste, or words of similar import, under the Environmental Laws, or chemicals or compounds that are otherwise subject to regulation, control or remediation under the Environmental Laws, and includes asbestos and asbestos-containing material, solvents, petroleum (including crude oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel, or any mixture thereof), foam insulation, polychlorinated biphenyls, urea formaldehyde, radon gas and radioactive matter.

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ HSR Fees ” means the filing fees in connection with any filings required under the HSR Act.

“ HSR Notifications ” means the notification and report forms required to be filed under the HSR Act.

“ Indemnified Party ” has the meaning ascribed to it in Section 10.2(c) .

 

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“ Indemnifying Party ” has the meaning ascribed to it in Section 10.2(c) .

“ IntraLinks ” means the information contained in the virtual data room made available to bidders in the Auction, as of 5:00 p.m. (New York time) on the Business Day prior to the Effective Date, including the documents, questions and answers, and other data posted thereon as of such time and date, as well as the Confidential Information Memorandum and any other documents otherwise made available to bidders in the Auction to the extent included on any index included in such virtual data room as of such time and date.

“ IP Assignment ” has the meaning ascribed to it in Section 2.7(a)(v) .

“ Knowledge ” means the extent, if any, of actual awareness of a particular fact or matter, after reasonable inquiry (which inquiry shall in no case require efforts other than Commercially Reasonable Efforts nor discussions with any former employees), of (i) with respect to Seller and the Copley Midwest Subsidiaries, David Greenfield, Ken Mauser or Sue Schmitt, (ii) with respect to Buyer, Michael E. Reed, Mark Thompson or Polly Grunfeld Sack, (iii) with respect to any other entities, the executive officers of such entity, and (iv) with respect to any individuals, such individual.

“ Laws ” means any and all foreign, international, multinational, national, federal, state, provincial, regional, local, municipal and other administrative laws (including common law), statutes, codes, orders, ordinances, rules and regulations, constitutions and treaties enacted, promulgated or issued and put into effect by a Governmental Authority.

“ Liabilities ” means liabilities, obligations, guarantees, assurances and commitments of every kind, nature, character and description whatsoever, whenever arising, whether known or unknown, whether asserted or unasserted, whether fixed, absolute or contingent, whether accrued or unaccrued, whether matured or unmatured, whether liquidated or unliquidated, whether due or to become due, and whether or not recorded or reflected or required to be recorded or reflected on books and records or financial statements, including fees, costs, expenses and losses relating thereto.

“ Liens ” means any liens, pledges, mortgages, deeds of trust, security interests, claims, leases, charges, options, rights of first refusal, easements, servitudes, conditional sales contracts, encumbrances or transfer restrictions under any shareholder or similar agreement.

“ Material Adverse Effect ” means any effect that would be materially adverse to (a) the validity or enforceability of this Agreement or the transactions contemplated hereby or the ability of a party hereto to consummate the transactions contemplated by this Agreement, or (b) the business, financial condition or results of operations of the Copley Midwest Business, taken as a whole, other than in the case of (a) or (b) any effect arising from or related to (i) general business, economic, political, social, legal or regulatory conditions, (ii) the industries in which the Copley Midwest Business operates in general and not specifically arising from, related to or disproportionately affecting the Copley Midwest Business, (iii) financial, banking or securities

 

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markets (including any disruption thereof), (iv) changes in applicable Law or GAAP, (v) outbreak of hostilities, terrorist attack (whether against a nation or otherwise) or war, (vi) the announcement or pendency of the Auction, this Agreement or any of the transactions contemplated hereby, or (vii) the performance or consummation of any of the transactions contemplated hereby in accordance with the terms and conditions hereof.

“ New 401(k) Plan ” has the meaning ascribed to it in Section 6.7 .

“ New Buyer Employees ” has the meaning ascribed to it in Section 6.1(b) .

“ New Plans ” has the meaning ascribed to it in Section 6.2(a) .

“ Non-Compete Agreement ” has the meaning ascribed to it in Section 2.7(a)(ix) .

“ Old 401(k) Plan ” has the meaning ascribed to it in Section 6.7 .

“ Old Plans ” has the meaning ascribed to it in Section 6.2(a) .

“ Order ” means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award.

“ Ordinary Course of Business ” means the conduct of the Copley Midwest Business in a manner substantially consistent with the customary conduct of such business, including any activities related to the conduct of the Auction or authorized or contemplated by this Agreement or the transactions contemplated hereby.

“ Parent Guaranty ” means the parent guaranty in the form attached hereto as Exhibit F , executed by Buyer Parent concurrently with the execution of this Agreement.

“ Permitted Exceptions ” means (i) any Liens for Taxes that are not yet due and payable, that are not yet subject to penalties for delinquent nonpayment, or that are being contested in good faith by appropriate Proceedings, (ii) any Liens in favor of vendors, carriers, warehousemen, repairmen, mechanics, workmen, materialmen, construction or similar Liens arising by operation of law or in the Ordinary Course of Business in respect of obligations that are not yet due and payable, that are not yet subject to penalties for delinquent nonpayment, or that are being contested in good faith by appropriate Proceedings, (iii) any zoning, building code, land use, planning, entitlement, or similar Laws or regulations imposed by any Governmental Authority, (iv) the interests of lessors in equipment or leasehold fixtures and improvements leased or loaned to Seller (with respect to the Copley Springfield Business) or any Copley Midwest Subsidiary, (v) any Liens that will be discharged or released either prior to, or substantially simultaneous with, the Closing, and (vi) any Liens created by Buyer or any of its Affiliates.

“ Pre-Closing Tax Period ” has the meaning ascribed to it in Section 5.10(a)(i) .

 

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“ Proceeding ” means any action, inquiry, proceeding, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal), commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.

“ Purchase Price ” has the meaning ascribed to it in Section 2.4 .

“ Real Property ” means land, together with all buildings, structures, fixtures, fittings and improvements located thereon, and all privileges, rights, easements and appurtenances belonging thereto or for the benefit thereof.

“ Section 338(h)(10) Election ” has the meaning ascribed to it in Section 5.10(c) .

“ Securities Act ” has the meaning ascribed to it in Section 4.9(a) .

“ Selected Accountants ” has the meaning ascribed to it in Section 2.5(d) .

“ Seller ” has the meaning ascribed to it in the Preamble hereto.

“ Seller Disclosure Schedules ” means the disclosure schedules to this Agreement delivered by Seller to Buyer as of the Effective Date.

“ Seller Executive ” has the meaning ascribed to it in Section 2.7(a)(x) .

“ Seller Indemnified Parties ” has the meaning ascribed to it in Section 10.2(b) .

“ Straddle Period ” has the meaning ascribed to it in Section 5.10(b) .

“ Survival End Date ” has the meaning ascribed to it in Section 10.1 .

“ Tax Authority ” means any Governmental Authority or any subdivision, agency, commission or authority thereof having jurisdiction over the assessment, determination, collection or imposition of any Tax.

“ Tax Claim ” has the meaning ascribed to it in Section 10.3(c) .

“ Taxes ” means any taxes, duties, charges or other levies separately or jointly due or payable to, or levied or imposed by, any national, federal, state, provincial, municipal, local or foreign Tax Authority, including income, gross receipts, license, wages, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duty, capital, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, transaction, registration, value-added, alternative or add-on minimum, estimated or other taxes, duties, charges or other levies of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not.

 

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“ Tax Period ” means any period prescribed by any Tax Authority for which a Tax Return is required to be filed or a Tax is required to be paid.

“ Tax Returns ” means any returns, declarations, reports, claims for refund, or information returns or statements relating to Taxes, including any schedule or attachment thereto and any amendment thereof.

“ Third Party Claims ” has the meaning ascribed to it in Section 10.2(c) .

“ Transfer Taxes ” has the meaning ascribed to it in Section 5.10(g) .

“ Transition Services Agreement ” has the meaning ascribed to it in Section 6.3 .

“ WARN Act ” means Worker Adjustment and Retraining Act of 1998, as amended.

1.2 Interpretation . Unless the context clearly indicates otherwise: (a) each definition herein includes the singular and the plural, (b) each reference herein to any gender includes the masculine, feminine and neuter where appropriate, (c) the words “include” and “including” and variations thereof shall not be deemed terms of limitation, but rather shall be deemed to be followed by the words “without limitation,” (d) the words “hereof,” “herein,” “hereto,” “hereby,” “hereunder” and derivative or similar words refer to this Agreement as an entirety and not solely to any particular provision of this Agreement, (e) each reference in this Agreement to a particular Article, Section, Exhibit or Schedule means an Article or Section of, or an Exhibit or Schedule to, this Agreement, unless another agreement is specified, and (f) all references to “$” or “Dollars” shall mean United States Dollars.

ARTICLE II

THE TRANSACTIONS

2.1 Purchase and Sale of Shares . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to (a) the Copley Ohio Common Shares, which shall constitute one hundred percent (100%) of the issued and outstanding capital stock of Copley Ohio (the “ Copley Ohio Share Purchase ”), and (b) the Copley Peoria Common Shares, which shall constitute one hundred percent (100%) of the issued and outstanding capital stock of Copley Peoria (collectively with the Copley Ohio Share Purchase, the “ Copley Midwest Share Purchase ”).

2.2 Purchase and Sale of Assets . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to the Copley Springfield Acquired Assets (the “ Copley Springfield Asset Purchase ”).

 

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2.3 Assumption of Liabilities . Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Buyer shall assume from Seller (and therefore agrees to pay, perform, discharge and become responsible for), and Seller shall convey and transfer to Buyer, all of the Copley Springfield Assumed Liabilities.

2.4 Consideration . The aggregate consideration for the Copley Ohio Common Shares, the Copley Peoria Common Shares and the Copley Springfield Acquired Assets is (i) Three Hundred Eighty-Two Million Five Hundred Thousand Dollars ($382,500,000) in cash, reduced or increased, as the case may be, on a dollar-for-dollar basis by the amount, if any, by which Closing Working Capital (as finally determined pursuant to Section 2.5 ) is less than or more than, respectively, Two Million Five Hundred Thousand Dollars ($2,500,000) (as adjusted, the “ Purchase Price” ), and (ii) the assumption by Buyer of the Copley Springfield Assumed Liabilities pursuant to Section 2.3 .

2.5 Purchase Price Adjustment .

(a) No later than three (3) Business Days prior to the Closing Date, Seller shall deliver to Buyer a statement (the “ Estimated Closing Statement ”), setting forth its good faith written estimate of Closing Working Capital, determined on a basis consistent with the accounting principles and policies used in the preparation of the Copley Midwest Financial Statements. The Estimated Closing Statement shall be accompanied by a certificate executed by a senior financial officer of Seller to the effect that the Estimated Closing Statement has been prepared in good faith in accordance with this Section 2.5(a) .

(b) The Purchase Price payable at the Closing shall be preliminarily calculated in accordance with Section 2.4 as if Seller’s estimate of Closing Working Capital set forth in the Estimated Closing Statement were the actual amount of Closing Working Capital. The Purchase Price as so estimated is referred to as the “ Estimated Purchase Price .”

(c) No later than sixty (60) days following the Closing Date, Buyer shall deliver to Seller a statement (the “ Final Closing Statement “), setting forth its good faith calculation of (i) Closing Working Capital, determined on a basis consistent with the accounting principles and policies used in the preparation of the Copley Midwest Financial Statements, and (ii) the Purchase Price calculated as if Buyer’s calculation of Closing Working Capital set forth in the Final Closing Statement were the actual amount of Closing Working Capital. The Final Closing Statement shall be accompanied by a certificate executed by a senior financial officer of Buyer to the effect that the Final Closing Statement has been prepared in good faith in accordance with this Section 2.5(c) . Seller shall, and shall cause its Affiliates to, cooperate with Buyer and provide to Buyer such information as Buyer may reasonably request, in each case in connection with Buyer’s preparation of the Final Closing Statement.

(d) Buyer shall, upon Seller’s written request, promptly make available to Seller (i) a copy of all workpapers, financial information and any other books and records utilized by Buyer in the preparation of the Final Closing Statement, and (ii) all personnel,

 

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including accounting personnel, of Buyer and its Affiliates involved in the preparation of the Final Closing Statement. Seller shall notify Buyer in writing no later than thirty (30) days following Seller’s receipt of the Final Closing Statement from Buyer that it accepts the Final Closing Statement or that there is a dispute as to an item or items reflected thereon. Such notice shall set forth Seller’s objections, if any, to the Final Closing Statement in reasonable detail. The failure by Seller to give Buyer such notice within such period shall be deemed to constitute Seller’s acceptance of the Final Closing Statement. The parties shall use all Commercially Reasonable Efforts to resolve any such dispute, but if such dispute cannot be resolved by the parties within thirty (30) days after Seller gives notice of such dispute, it shall be referred to Deloitte & Touche LLP, or another nationally recognized independent public accounting firm reasonably satisfactory to both Buyer and Seller (the “ Selected Accountants “). The determination of the Selected Accountants regarding such dispute shall be conclusive and binding on each party. One-half of the fees of the Selected Accountants shall be borne by Buyer and one-half shall be borne by Seller.

(e) If the Purchase Price as finally determined pursuant to this Section 2.5 (i) is less than the Estimated Purchase Price, Seller shall pay to Buyer an amount equal to the shortfall, or (ii) is more than the Estimated Purchase Price, Buyer shall pay to Seller an amount equal to the excess. Any such payment pursuant to the preceding sentence shall be made by wire transfer of immediately available U.S. funds, to an account designated by Buyer or Seller, as the case may be, on the later of (x) the second (2nd) Business Day after acceptance by Seller of the Final Closing Statement or (y) the second (2nd) Business Day following resolution (as contemplated by Section 2.5(d) ) of any dispute concerning the Final Closing Statement. All payments made pursuant to this Section 2.5(e) shall be accompanied by interest at a rate per annum equal to the prime rate as quoted in the “Money Rates” section of the Wall Street Journal on the Closing Date for the period from the Closing Date through (but excluding) the date such payment is made.

2.6 Closing . The closing of the Copley Midwest Share Purchase, the Copley Springfield Asset Purchase and the other transactions contemplated by this Agreement upon the terms and subject to the conditions set forth herein (the “ Closing ”) shall take place at the offices of Munger, Tolles & Olson LLP, Los Angeles, California at 10:00 a.m. local time as soon as practicable, but no later than two (2) Business Days after the first date on which all the conditions to Closing set forth in ARTICLE VII and ARTICLE VIII (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver of those conditions) shall have been satisfied or waived, but in no event later than June 30, 2007, or at such other time, place and date as Buyer and Seller may mutually agree. The date on which the Closing occurs is referred to as the “ Closing Date .”

 

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2.7 Closing Obligations . At the Closing:

(a) Seller shall deliver to Buyer the following documents:

(i) stock certificate(s) evidencing all of the issued and outstanding Copley Ohio Common Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank, in proper form for transfer;

(ii) stock certificate(s) evidencing all of the issued and outstanding Copley Peoria Common Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank, in proper form for transfer;

(iii) a duly executed bill of sale for the Copley Springfield Acquired Assets, substantially in the form attached hereto as Exhibit A (the “ Bill of Sale ”);

(iv) a duly executed instrument of assignment and assumption relating to the transfer of the Copley Springfield Business, substantially in the form attached hereto as Exhibit B (the “ Assignment and Assumption Agreement ”);

(v) a duly executed general assignment of intellectual property rights relating to the transfer of the Copley Springfield Intellectual Property, substantially in form attached hereto as Exhibit C (the “ IP Assignment ”);

(vi) one or more duly executed special warranty deeds for the transfer of the Copley Springfield Owned Real Property, substantially in the form set forth herein as Exhibit D and in form sufficient to permit the applicable title company, if any, to issue title policies to Buyer with respect to such Copley Springfield Owned Real Property;

(vii) a duly executed certificate certifying that Seller is not a foreign person that is subject to withholding under Section 1445 of the Code;

(viii) a duly executed copy of the Transition Services Agreement, if Buyer and Seller mutually agree upon the form of such agreement prior to Closing pursuant to Section 6.3 ;

(ix) a duly executed copy of a non-competition and non-solicitation agreement in the form attached hereto as Exhibit E (the “ Non-Compete Agreement “);

(x) a certificate duly executed by an executive officer of Seller reasonably satisfactory to Buyer (the “ Seller Executive ”), certifying that the conditions with respect to Seller’s obligations under this Agreement set forth in Sections 7.1 and 7.2 have been satisfied;

(xi) a certificate duly executed by the Secretary of Seller certifying as to (A) the articles of incorporation and bylaws of Seller and each Copley Midwest

 

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Subsidiary being in full force and effect as of the Closing, with a certified copy of the corresponding articles of incorporation and bylaws attached thereto, (B) resolutions having been duly and properly adopted by the Board of Directors of Seller authorizing the execution, delivery and performance of this Agreement by Seller and being in full force and effect as of the Closing, with a certified copy of such resolutions attached thereto, and (C) the incumbency and signatures of the officers of Seller executing this Agreement and any other documents delivered by Seller at the Closing;

(xii) instruments evidencing the resignation of each director of the Copley Midwest Subsidiaries;

(xiii) certificates of good standing for Seller and each of the Copley Midwest Subsidiaries issued by the Illinois Secretary of State, dated no earlier than ten (10) Business Days prior to the Closing Date; and

(xiv) a receipt duly executed by Seller Executive certifying the receipt from Buyer of the wire transfer of the Estimated Purchase Price in accordance with Section 2.7(b)(i) .

(b) Buyer’s Closing Deliveries . Buyer shall deliver to Seller:

(i) the Estimated Purchase Price, by wire transfer in immediately available U.S. funds, to the following account:

 

(ii) a duly executed copy of the Assignment and Assumption Agreement;

(iii) a duly executed copy of the IP Assignment;

(iv) a duly executed copy of the Transition Services Agreement, if Buyer and Seller mutually agree upon the form of such agreement prior to Closing pursuant to Section 6.3 ;

(v) a duly executed copy of the Non-Compete Agreement;

(vi) a certificate duly executed by an executive officer of Buyer Parent reasonably satisfactory to Seller (the “ Buyer Executive ”), certifying that the conditions with respect to Seller’s obligations under this Agreement set forth in Sections 8.1 and 8.2 have been satisfied;

 

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(vii) a certificate duly executed by the Secretary of Buyer Parent certifying as to (A) the certificate of incorporation and bylaws of each of Buyer and Buyer Parent being in full force and effect as of the Closing, with a certified copy of each such certificate of incorporation and bylaws attached thereto, (B) resolutions having been duly and properly adopted by the Board of Directors of Buyer Parent authorizing the execution, delivery and performance of this Agreement by Buyer and the Parent Guaranty by Buyer Parent and each being in full force and effect as of the Closing, with a certified copy of such resolutions attached thereto, and (C) the incumbency and signatures of the officers of Buyer and Buyer Parent executing this Agreement, the Parent Guaranty and any other documents delivered by Buyer or Buyer Parent at the Closing;

(viii) certificate of good standing for each of Buyer and Buyer Parent issued by the Delaware Secretary of State, dated no earlier than ten (10) Business Days prior to the Closing Date; and

(ix) a receipt duly executed by the Buyer Executive certifying the receipt by Buyer from Seller of the Copley Ohio Common Shares and the Copley Peoria Common Shares.

2.8 Allocation . Buyer and Seller agree that the Purchase Price (which for purposes of this Section 2.8 shall include any Liabilities required to be treated as part of the Purchase Price for U.S. federal income tax purposes), as may be adjusted pursuant to Section 2.5 , shall be allocated to the Copley Ohio Common Shares, the assets of Copley Ohio, the Copley Peoria Common Shares and the Copley Springfield Acquired Assets for all purposes (including Tax and financial accounting purposes) in a manner to be agreed by the parties through their good faith efforts following the Effective Date (the “ Allocation ”); provided , however , that if Buyer and Seller are unable to reach a good faith agreement on the Allocation by the forty-fifth (45 ^th ) day following the Closing Date, the determination of the matter or matters with respect to which there is disagreement shall be made by Deloitte & Touche LLP, or another nationally recognized independent public accounting firm reasonably satisfactory to both Buyer and Seller. Following the Closing, Buyer and Seller shall (a) be bound by the Allocation for all purposes, including for determining any income Taxes for all periods ending on or after the Closing Date, (b) prepare and file, and cause their Affiliates to prepare and file, all income Tax Returns on a basis consistent with the Allocation for all periods ending on or after the Closing Date, and (c) take no position, and cause their Affiliates to take no position, inconsistent with the Allocation on any such income Tax Return or in any Proceedings before any Tax Authority relating to any such income Tax Return. In the event the Allocation is audited or disputed by any Tax Authority, or otherwise, the party receiving notice thereof shall promptly notify the other party.

2.9 Nontransferability of Assumed Contracts . Notwithstanding Sections 2.2 and 2.3 , to the extent that the transfer or assignment of any Contract in connection with the Copley Springfield Asset Purchase is not permitted without the Consent of a third party, this Agreement shall not be deemed to constitute an undertaking to transfer or assign the same if such Consent is not obtained as of the Closing or if such an undertaking otherwise would constitute a

 

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breach thereof or cause a loss of benefits thereunder. Following the Closing, the parties hereto shall use, and shall cause their Affiliates to use, all Commercially Reasonable Efforts to (a) obtain any such Consent (provided that neither party shall be required to pay or incur any cost or expense to obtain any such Consent) and, promptly following the obtaining of any such Consent, transfer and assign such Contract to Buyer and cause Buyer to assume the Copley Springfield Assumed Liabilities relating thereto, and (b) until such transfer, assignment and assumption has occurred, cooperate in any reasonable and lawful arrangement designed to provide Buyer with the benefits of such Contract and to relieve Seller from any obligation of such Contract.

2.10 Further Assurances . At and after the Closing, and without further consideration therefor, (a) Seller shall, and shall cause its Affiliates to, execute and deliver to Buyer such further instruments and certificates of conveyance and transfer as Buyer may reasonably request in order to more effectively convey and transfer the Copley Ohio Common Shares, the Copley Peoria Common Shares and the Copley Springfield Acquired Assets to Buyer, and (b) Buyer shall, and shall cause its Affiliates to, execute and deliver to Seller such further instruments and certificates of assumption, novation and release as Seller may reasonably request in order to more effectively make Buyer responsible for all Copley Springfield Assumed Liabilities and release Seller therefrom to the fullest extent permitted under applicable Law.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Each representation and warranty contained in this Article III is qualified by disclosures made with respect to the Seller Disclosure Schedules. Except with respect to matters set forth in the Seller Disclosure Schedules, Seller hereby represents and warrants to Buyer, as of the Effective Date, as follows:

3.1 Organization and Good Standing . Each of Seller and each of the Copley Midwest Subsidiaries is a corporation (a) duly incorporated, validly existing and in good standing under the Laws of its jurisdiction of incorporation, (b) has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now conducted, and (c) is duly qualified and in good standing to transact business in each U.S. jurisdiction in which the ownership or leasing of its properties or the conduct of its business makes such qualification necessary, except where failures to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

3.2 Authority and Enforceability . Seller has all requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Seller, its performance hereunder, and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller and, assuming due execution and delivery by Buyer, constitutes a valid and binding obligation of Seller,

 

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enforceable against Seller in accordance with its terms and conditions, except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, preference, moratorium or other similar Laws now or hereafter in effect relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a Proceeding in equity or at law) and except that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any Proceeding may be brought.

3.3 Non-Contravention . Subject to the provisions of Section 3.4 regarding Consents, the execution and delivery of this Agreement by Seller do not, and Seller’s performance hereunder and the consummation of the transactions contemplated hereby shall not (a) violate any provision of the articles of incorporation or bylaws of Seller or any Copley Midwest Subsidiary, (b) violate or constitute a breach of or default under (with notice or lapse of time, or both), or permit termination, modification or acceleration under, any Copley Midwest Major Contract, except where such violations, breaches, defaults, terminations, modifications and accelerations would not, individually or in the aggregate, have a Material Adverse Effect, (c) violate any Law or Order of any Governmental Authority applicable to Seller or any Copley Midwest Subsidiary, except where such violations would not, individually or in the aggregate, have a Material Adverse Effect, (d) result in the cancellation, modification, revocation or suspension of any Governmental Approval granted to Seller or any Copley Midwest Subsidiary, except where such cancellations, modifications, revocations and suspensions would not, individually or in the aggregate, have a Material Adverse Effect, or (e) result in the imposition or creation of any Lien, except for Permitted Exceptions, upon or with respect to any of the properties or assets of Seller or any Copley Midwest Subsidiary.

3.4 Consents . The execution and delivery by Seller of this Agreement, Seller’s performance hereunder, and the consummation of the transactions contemplated hereby do not require (a) any Consent or trigger any termination right under any Copley Midwest Major Contract, except where failures to obtain such Consents or the triggering of such termination rights would not, individually or in the aggregate, have a Material Adverse Effect, or (b) any Governmental Approval, except (i) for HSR Notifications and (ii) where failures to obtain such Governmental Approval would not, individually or in the aggregate, have a Material Adverse Effect.

3.5 Capitalization; Subsidiaries .

(a) Copley Ohio has an authorized capitalization consisting of 1,000 Copley Ohio Common Shares, all of which are issued and outstanding and held of record by Seller and none of which is held in treasury. All of the issued and outstanding Copley Ohio Common Shares have been duly and validly authorized and are duly and validly issued, fully paid and non-assessable, and none of them have been issued in violation of preemptive or similar rights. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other agreements or rights to purchase or otherwise acquire any shares of capital stock of Copley Ohio, and no outstanding or authorized stock

 

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appreciation, phantom stock, profit participation, or similar rights for which Copley Ohio has any liability. Copley Ohio has no subsidiaries.

(b) Copley Peoria has an authorized capitalization consisting of 1,692,000 Copley Peoria Common Shares, of which 1,000 Copley Peoria Common Shares are issued and outstanding and held of record by Seller and none of which is held in treasury. All of the issued and outstanding Copley Peoria Common Shares have been duly and validly authorized and are duly and validly issued, fully paid and non-assessable, and none of them have been issued in violation of preemptive or similar rights. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other agreements or rights to purchase or otherwise acquire any shares of capital stock of Copley Peoria, and no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights for which Copley Peoria has any liability.

(c) Copley Peoria Sub is the only subsidiary of Copley Peoria. Copley Peoria Sub has an authorized capitalization consisting of 1,000,000 shares of common stock, no par value (each, a “ Copley Peoria Sub Common Share ”), of which 472,900 Copley Peoria Sub Common Shares are issued and outstanding and held of record by Copley Peoria and none of which is held in treasury. All of the issued and outstanding shares of common stock of Copley Peoria Sub have been duly and validly authorized and are duly and validly issued, fully paid and non-assessable, and none of them have been issued in violation of preemptive or similar rights. There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other agreements or rights to purchase or otherwise acquire any shares of capital stock of Copley Peoria Sub, and no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights for which Copley Peoria Sub has any liability.

(d) At the Closing and upon payment by Buyer of the Purchase Price as contemplated by this Agreement, Buyer will acquire from Seller good title to the Copley Ohio Common Shares and the Copley Peoria Common Shares, free and clear of all Liens, except for Liens in favor of Buyer arising out of, under or in connection with this Agreement and restrictions on transfer under applicable federal or state securities Laws.

3.6 Financial Statements . Attached to Section 3.6 of the Seller Disclosure Schedules are true and complete copies of the following financial statements (together, the “ Copley Midwest Financial Statements ”): (a) the unaudited statement of assets and liabilities of Copley Ohio as of December 31, 2006 (the “ Balance Sheet Date ”), and the related unaudited statements of revenues and expenses for the twelve (12) month period then ended, (b) the unaudited statement of assets and liabilities of Copley Peoria as of the Balance Sheet Date, and the related unaudited statements of revenues and expenses for the twelve (12) month period then ended, and (c) the unaudited statement of assets and liabilities of the Copley Springfield Business as of the Balance Sheet Date, and the related unaudited statements of revenues and expenses for the twelve (12) month period then ended (the financial statements set forth in this clause (c), the “ Copley Springfield Financial Statements ”). Other than as set forth on Section 3.6

 

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of the Seller Disclosure Schedules, the Copley Midwest Financial Statements (x) were derived from and in accordance with the books and records (which are accurate and complete in all material respects) of Seller and the Copley Midwest Subsidiaries, consistent with past practice, (y) were prepared in accordance with GAAP, and (z) fairly present, in all material respects, the financial position and results of operations of the applicable entity or business as of the dates and for the applicable periods indicated.

3.7 Absence of Certain Changes or Events . Except as otherwise contemplated, required or permitted by this Agreement, from the Balance Sheet Date to the Effective Date, neither Seller (with respect to the Copley Springfield Business) nor any Copley Midwest Subsidiary has taken any action of the type prohibited by Section 5.3(b) or 5.3(c) and there has not occurred any change, event or circumstance that has resulted in or that is reasonably likely to result in a Material Adverse Effect.

3.8 Undisclosed Liabilities . Neither Seller (with respect to the Copley Springfield Business) nor any Copley Midwest Subsidiary has any liabilities or obligations, whether or not accrued, contingent or otherwise, arising out of or relating to the Copley Springfield Acquired Assets or the operation of the Copley Midwest Business and required to be reflected or reserved against on a balance sheet prepared in accordance with GAAP, except for (a) liabilities reflected or reserved against in the Copley Midwest Financial Statements, (b) liabilities that have arisen after the Balance Sheet Date in the Ordinary Course of Business, none of which, individually or in the aggregate, has had or would be reasonably likely to have, a Material Adverse Effect, (c) liabilities disclosed in this Agreement or in the Seller Disclosure Schedules, including Section 3.6 of the Seller Disclosure Schedules, (d) liabilities contemplated or permitted by, or incurred pursuant to, this Agreement, (e) insurance reserves in connection with workers compensation and general liability insurance, and (f) income Taxes relating to the Copley Midwest Business payable by Seller.

3.9 Title .

(a) Seller has good and valid title to the tangible Copley Springfield Acquired Assets reflected as owned on the Copley Springfield Financial Statements as of the Balance Sheet Date, and good leasehold title to the tangible Copley Springfield Acquired Assets reflected as leased on the Copley Springfield Financial Statements as of the Balance Sheet Date, in each case (i) free and clear of any Liens, except for Permitted Exceptions, and (ii) except for assets sold or otherwise disposed of since the Balance Sheet Date in the Ordinary Course of Business.

(b) The tangible personal property included in the Copley Springfield Acquired Assets and the tangible personal property owned, leased or held by the Copley Midwest Subsidiaries (excluding the Copley Excluded Assets), are in good and serviceable condition and repair (ordinary wear and tear excepted) for property of comparable type, age and usage, and all inventory is of good and usable quality, in each case except for tangible personal property and inventory that is obsolete and no longer used in the Copley Midwest Business or

 

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items of below-standard quality, all of which have been written off or written down to, or are reflected at, net realizable value in the Copley Midwest Financial Statements.

(c) All accounts receivable that are reflected on the Copley Midwest Financial Statements have arisen from bona fide transactions in the Ordinary Course of Business and constitute only valid claims which are not subject to any known counterclaims or set-offs, except as reflected in allowances or reserves set forth in the Copley Midwest Financial Statements.

3.10 Major Contracts .

(a) Section 3.10(a) of the Seller Disclosure Schedules sets forth each written contract and written agreement (collectively, the “ Copley Midwest Major Contracts ”) to which Seller (with respect to the Copley Springfield Business) or a Copley Midwest Subsidiary is a party as of the Effective Date, and (i) the performance of which by its express terms, without taking into consideration options or similar renewals (whether automatic or elective), will involve annual expenditures or receipts by Seller and the Copley Midwest Subsidiaries in excess of $250,000, (ii) which provides for the employment or compensation of any Copley Midwest Employee, involves aggregate annual salary and cash bonus in excess of $100,000, and is not terminable without material penalty, or (iii) which contains any covenant materially limiting the right of Seller to engage in the Copley Springfield Business or the Copley Midwest Subsidiaries to engage in the Copley Midwest Business.

(b) Seller has made available to Buyer by posting to IntraLinks, or otherwise has made available to Buyer, copies of all Copley Midwest Major Contracts that are true and complete in all material respects, in each case subject to Seller’s and the Copley Midwest Subsidiaries’ confidentiality obligations to third parties and any restrictions on disclosure required by such third parties.

(c) Except for any Copley Midwest Major Contracts that have expired in accordance with their terms or terminated for any reason other than a default by Seller or the Copley Midwest Subsidiary that is party thereto, all of the Copley Midwest Major Contracts are in full force and effect in all material respects (except as the same may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, preference, moratorium or other similar Laws now or hereafter in effect relating to or affecting creditors generally or by general equity principles (regardless of whether such enforceability is considered in a Proceeding in equity or at law) and except that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any Proceeding may be brought) and such company is not in breach thereof or default thereunder, which breach or default has not been excused or waived, except where such breaches and defaults would not, or would not be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect.

 

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3.11 Litigation . There is no Proceeding, at law or in equity, pending against or, to the Knowledge of Seller and the Copley Midwest Subsidiaries, threatened against or affecting Seller (with respect to the Copley Springfield Business) or any Copley Midwest Subsidiary, nor is there any Order of any Governmental Authority or arbitrator outstanding against Seller (with respect to the Copley Springfield Business) or any Copley Midwest Subsidiary, in each case the adverse outcome or effect of which would, or would be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect, except for matters that are the subject of Sections 3.15 , 3.16 , 3.17 , 3.18 and 3.19 , which are controlled by such Sections without duplication with this Section.

3.12 Compliance with Laws . Seller (with respect to the Copley Springfield Business) and each Copley Midwest Subsidiary is, and at all times during the applicable statute of limitations (or, if there is no applicable statute of limitations, then five (5) years) prior to the Effective Date, has been, in compliance in all respects with all applicable Laws, Orders of Governmental Authorities and Governmental Approvals, except (a) for matters that are the subject of Sections 3.11 , 3.13 , 3.15 , 3.16 , 3.17 , 3.18 and 3.19 , which are controlled by such Sections without duplication with this Section, and (b) where failures to so comply would not, or would not be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect.

3.13 Licenses . Seller (with respect to the Copley Springfield Business) and each Copley Midwest Subsidiary possesses all Governmental Approvals necessary to carry on its business in the manner presently conducted, except where failures to possess such Governmental Approvals would not, or would not be reasonably likely to, individually or in the aggregate, have a Material Adverse Effect.

3.14 Real Property .

(a) Section 3.14(a) of the Seller Disclosure Schedules sets forth the address and description of each parcel of Copley Midwest Owned Real Property. Except for Permitted Exceptions and for matters that would not, or would not be reasonably likely to, have a Material Adverse Effect:

(i) Seller and the Copley Midwest Subsidiaries have good and marketable fee simple title to each parcel of Copley Midwest Owned Real Property, free and clear of any Liens, except for Permitted Exceptions;

(ii) neither Seller nor any Copley Midwest Subsidiary has leased or otherwise granted to any person the right to use or occupy Copley Midwest Owned Real Property or any portion thereof; and

(iii) there are no outstanding options, rights of first offer or rights of first refusal to purchase any Copley Midwest Owned Real Property or any portion thereof.

 

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(b) Section 3.14(b) of the Seller Disclosure Schedules sets forth the address of each parcel of Copley Midwest Leased Real Property, and a true and complete list of all leases and subleases for each such parcel of Copley Midwest Leased Real Property. Seller has made available to Buyer by posting to IntraLinks, or otherwise has made available to Buyer, copies of al