<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report September 28, 1994
----------------------------------------------------------
Media General, Inc.
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(Exact name of registrant as specified in its charter)
Virginia 1-6383 54-0850433
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
333 E. Grace St., Richmond, Virginia 23219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 649-6000
---------------------
N/A
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(Former name or former address, if changed since last report.)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets
On September 28, 1994, Media General, Inc. (Company), acquired
40% of the common stock of Denver Newspapers, Inc. (DNI), the parent
company of The Denver Post, through the exercise for $40,000 of a warrant
held since 1987. The balance of DNI's common stock is owned by Affiliated
Newspapers Investments, Inc., which is controlled by William D. Singleton
and Richard B. Scudder. Messrs. Singleton and Scudder also control Garden
State Newspapers, Inc., in which the Company held 40% of the common equity
from 1985 through May 20, 1994. The Company already owns the preferred
stock of DNI and elects half of its board of directors. The following
officers and directors of the Company have been elected and are currently
serving on the board of directors of DNI: J. Stewart Bryan III, Chairman,
President and Chief Executive Officer; Marshall N. Morton, Senior Vice
President and Chief Financial Officer; George L. Mahoney, General Counsel
and Secretary; and James S. Evans, Vice-Chairman. The Company will
account for its investment in DNI under the equity method of accounting.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Denver Newspapers, Inc., for the year ended
June 30, 1994.
Report of independent auditors
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
Notes to consolidated financial statements
(b) Pro Forma Condensed Consolidated Financial Statements of Media
General, Inc.
Pro forma condensed consolidated balance sheet as of June 26, 1994
Pro forma condensed consolidated statement of operations for the year
ended December 26, 1993
Pro forma condensed consolidated statement of operations for the six
months ended June 26, 1994
Notes to pro forma condensed consolidated financial statements
(c) Exhibits
2. Second Amended and Restated Stock and Warrant Purchase and
Shareholders' Agreement dated May 20, 1994
23. Consent of Ernst & Young LLP
<PAGE> 3
Ernst & Young LLP 4300 Republic Plaza Phone: 303 534 4300
Denver, Colorado 80202
Report of Independent Auditors
The Board of Directors
Denver Newspapers, Inc.
We have audited the accompanying consolidated balance sheets of Denver
Newspapers, Inc. ("the Company") and subsidiary as of June 30, 1994 and
1993, and the related consolidated statements of operations, changes in
shareholders' equity (deficit), and cash flows for each of the three years
in the period ended June 30, 1994. Our audits also included the financial
statement schedules V, VI, VIII, and X. These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Denver
Newspapers, Inc. and subsidiary at June 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended June 30, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in relation to the
basic financial statements taken as a whole, present fairly in all material
respects the information set forth therein.
Denver, Colorado
August 26, 1994
Ernst & Young LLP
<PAGE> 4
Denver Newspapers, Inc.
Consolidated Balance Sheets
June 30
1994 1993
----------------
(In Thousands,
except per share data)
Assets (Note 2)
Current assets:
Cash and cash equivalents $ 8,443 $ 11,834
Short-term investments 1,327 -
Trade accounts receivable, less
allowance for doubtful accounts
(1994 -- $1,998; 1993 -- $1,971) 13,320 11,283
Due (to)/from affiliates (475) 931
Inventories of newsprint and supplies 4,693 3,676
Prepaid expenses and other assets 697 1,034
Federal income taxes receivable 521 -
Deferred federal income taxes 1,661 1,653
---------------------
Total current assets 30,187 30,411
Property, plant and equipment:
Land 6,859 6,859
Buildings and improvements 16,750 16,750
Machinery and equipment 65,152 62,889
--------------------
88,761 86,498
Accumulated depreciation (33,201) (27,741)
---------------------
Net property, plant and equipment 55,560 58,757
Other assets:
Deferred pension costs (Note 4) 18,128 17,060
Other 241 226
--------------------
18,369 17,286
--------------------
Total assets $104,116 $106,454
====================
<PAGE> 5
Denver Newspapers, Inc.
Consolidated Balance Sheets
June 30
1994 1993
----------------
(In Thousands,
except per share data)
Liabilities and shareholders' equity (deficit)
Current liabilities:
Trade accounts payable $ 10,087 $ 8,088
Accrued employee compensation 4,214 3,552
Accrued liabilities 2,067 1,665
Unearned income 7,182 5,833
Current portion of long-term debt and
obligations under capital leases 639 4,528
--------------------
Total current liabilities 24,189 23,666
Obligations under capital leases 1,611 4,569
Long-term debt 7,000 14,300
Other liabilities 1,019 8,327
Deferred income taxes 20,124 20,379
Mandatorily redeemable preferred stock:
9% cumulative preferred stock of Denver
Newspapers, Inc., par value $25,000
per share; 1,200 shares authorized,
issued and outstanding 47,775 45,075
8% cumulative preferred stock, par value
$.01 per share; stated value $100 per
share; 38,355 shares authorized,
issued and outstanding - 4,004
Shareholders' equity (deficit):
Common stock, par value $1 per share;
Class A, authorized 120 shares; none
issued; Class B, authorized 120 shares;
issued and outstanding 60 shares - -
Additional paid-in capital 9,704 -
Deficit (7,306) (13,866)
---------------------
Total shareholders' equity (deficit) 2,398 (13,866)
---------------------
Total liabilities and shareholders'
equity (deficit) $104,116 $106,454
====================
See accompanying notes.
<PAGE> 6
Denver Newspapers, Inc.
Consolidated Statements of Operations
Years ended June 30
1994 1993 1992
-----------------------------
(In Thousands)
Revenues $142,067 $126,053 $118,455
Costs and expenses:
Cost of sales 68,933 63,882 60,991
Selling, general and administrative 50,570 48,416 47,930
Management fees 501 321 161
Depreciation and amortization 5,626 5,573 6,198
Interest expense 1,406 8,428 14,926
Special charge - 14,791 -
Other expense (income) 1,529 (63) (328)
-------------------------------
Total costs and expenses 128,565 141,348 129,878
-------------------------------
Income (loss) before income taxes
and extraordinary item 13,502 (15,295) (11,423)
Income tax (provision) benefit (4,282) 412 (296)
-------------------------------
Income (loss) before extraordinary item 9,220 (14,883) (11,719)
Extraordinary item -- gain on debt
restructuring, net of taxes of $18,151 - 70,487 -
-------------------------------
Net income (loss) 9,220 55,604 (11,719)
Accretion of dividends on preferred stock (2,956) (2,868) (2,700)
Net income (loss) applicable to common
stock $ 6,264 $ 52,736 $(14,419)
===============================
See accompanying notes.
<PAGE> 7
Denver Newspapers, Inc.
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
Additional
Paid-in
Deficit Capital
--------------------
(In Thousands)
Balance at June 30, 1991 $(52,183) $ -
Net loss (11,719) -
Accretion of dividends on preferred
stock (2,700) -
---------------------
Balance at June 30, 1992 (66,602) -
Net income 55,604 -
Accretion of dividends on preferred
stock (2,868) -
---------------------
Balance at June 30, 1993 (13,866) -
Net income 9,220 -
Capital contributions - 10,000
Accreted and paid dividends on
preferred stock (2,660) (296)
---------------------
Balance at June 30, 1994 $ (7,306) $ 9,704
=====================
See accompanying notes.
<PAGE> 8
Denver Newspapers, Inc.
Consolidated Statements of Cash Flows
Years ended June 30
1994 1993 1992
-----------------------------
(In Thousands)
Operating activities
Net income (loss) $ 9,220 $ 55,604 $(11,719)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Gain on debt restructuring, net
of deferred taxes of $17,499 - (71,139) -
Depreciation and amortization 5,626 5,573 6,198
Deferred federal income tax
(benefit) provision (263) (412) 296
Deferred interest on long-
term debt - 7,184 14,388
Special charge - 14,791 -
Change in operating assets and
liabilities:
(Increase) decrease in
accounts receivable, net (2,037) (1,553) 156
(Increase) decrease in
inventories (1,017) (1,088) 2,179
(Increase) in income taxes
receivable (521) - -
Decrease in prepaid expenses
and other current assets 337 569 99
(Increase) in deferred
pension costs (1,068) (913) (361)
Increase in accounts payable
and current liabilities 4,412 2,158 828
Other 1,444 (456) (291)
-------------------------------
Net cash provided by operating activities 16,133 10,318 11,773
Investing activities
Purchases of property, plant and equipment,
net of capital leases (1,477) (1,181) (1,376)
(Increase) in short-term investments (1,327) - -
-------------------------------
Net cash used in investing activities (2,804) (1,181) (1,376)
Financing activities
Issuance of long-term debt 17,000 20,000 -
Debt restructuring costs - (1,745) -
Principal payments on long-term debt (27,500) (30,500) (1,049)
Principal payments on capital lease
obligations (4,600) (1,509) (1,333)
Repurchase of other obligation and 8%
preferred stock (11,620) - -
Capital contributions 10,000 - -
-------------------------------
Net cash used in financing activities (16,720) (13,754) (2,382)
-------------------------------
<PAGE> 9
Denver Newspapers, Inc.
Consolidated Statements of Cash Flows (continued)
Years ended June 30
1994 1993 1992
-----------------------------
(In Thousands)
Net (decrease) increase in cash
and cash equivalents (3,391) (4,617) 8,015
Cash and cash equivalents at beginning
of year 11,834 16,451 8,436
-------------------------------
Cash and cash equivalents at end of year $ 8,443 $ 11,834 $ 16,451
===============================
Supplemental cash flow information:
Interest paid $ 1,332 $ 1,191 $ 820
Income taxes paid 4,955 652 -
Supplemental noncash financing and
investing activities:
Extinguishment of debt $129,579
Debt assumed by DMHI (7,360)
Debt assumed by DNI (3,836)
Deferred income tax provision (17,499)
---------
Total of noncash items 100,884
Cash payment (partially financed
by a $20,000 note payable
to Bankers Trust) (28,000)
Restructuring expenses (1,745)
Current income taxes on
restructuring (652)
---------
Net gain $ 70,487
=========
See accompanying notes.
<PAGE> 10
Denver Newspapers, Inc.
Notes to Consolidated Financial Statements
June 30, 1994
1. Significant Accounting Policies and Other Matters
Principles of Consolidation
The consolidated financial statements include the accounts of Denver
Newspapers, Inc. and its wholly owned subsidiary, The Denver Post
Corporation (collectively referred to as "the Company"). Prior to May 20,
1994, the consolidated financial statements also included the accounts of
the Company's wholly owned subsidiary, Denver Media Holdings, Inc.
("DMHI"), which prior to the Equity Repurchase transaction described in
Note 2, held all the outstanding common stock of The Denver Post
Corporation. At June 30, 1994, the Company is a wholly owned subsidiary of
Affiliated Newspapers Investments, Inc. All intercompany accounts have
been eliminated upon consolidation.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Short-Term Investments
Short-term investments primarily include U.S. Treasury notes which are
valued at cost.
Inventories
Inventories, which largely consist of newsprint, are valued at the lower of
cost or market. Cost is generally determined using the last-in, first-out
("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Buildings and
machinery and equipment are depreciated using the straight-line method over
the expected useful lives of the individual assets.
Income Taxes
The Company accounts for income taxes using the asset and liability method
of accounting. Deferred taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory rates to differences
between the financial statement carrying amount and the tax basis of
existing assets and liabilities. The effect on deferred taxes of a change
in tax rates is recognized in income in the period that includes the
enactment date.
Financial Instruments
The carrying value of long-term debt at June 30, 1994 approximates the
total fair value of such financial instruments. Management cannot
practicably estimate the fair value of its mandatorily redeemable preferred
stock because of the lack of quoted market prices for this type of security
and its inability to estimate its fair value without incurring the
excessive costs of obtaining an appraisal. The carrying amount represents
<PAGE> 11
its original issue price plus accumulated and unpaid dividends.
Reclassifications
Certain amounts in the financial statements for 1993 have been reclassified
to conform to the 1994 presentation.
2. Long-Term Debt and Equity Repurchase
Long-Term Debt
The Company acquired the stock of The Denver Post Corporation on December
1, 1987 from the Times Mirror Company ("Times Mirror") for $25 million in
cash and indebtedness of $70 million payable to Times Mirror. The
acquisition was accounted for as a purchase and the excess of cost over
fair market value of net assets acquired was recorded as goodwill.
Effective December 10, 1992, the Company repurchased the $70 million note
held by Times Mirror plus accrued interest thereon of approximately $59.6
million in exchange for $28 million in cash, warrants to purchase 16.5% of
the common stock of DMHI for approximately $1.5 million and preferred stock
of the Company with a par value of approximately $3.8 million. In
connection with this repurchase, the Company executed a bank credit
agreement that provided a $20 million term loan which was used to partially
fund the cash payment. As a result of the repurchase, goodwill was deemed
to have no ongoing value. Accordingly, the Company recorded an unusual
charge of $14.8 million to write off the unamortized goodwill balance. The
debt repurchase resulted in a net gain of $70.5 million, and is reflected
in the statement of operations for the year ended June 30, 1993 as an
extraordinary item.
During the year ended June 30, 1994, the Company secured an $18.5 million
revolving bank credit facility (the "Agreement") which includes a $17
million revolving loan commitment and $1.5 million in support of letters of
credit. The Company used the $17 million revolving bank credit facility
and existing cash to pay down the remaining principal of a term loan dated
December 10, 1992 and the unpaid balance of the press line capital lease
obligation, at which time title to the press was conveyed to the Company.
The $1.5 million letter of credit commitment was issued in support of
workers' compensation.
The Agreement contains restrictions and limitations with respect to
additional debt, capital expenditures and lease arrangements. In addition,
the Agreement requires the maintenance of certain financial ratios,
operating statistics and cash flow levels. All of The Denver Post
Corporation's assets, and its common stock, are pledged as collateral under
the Agreement.
<PAGE> 12
Under the terms of the Agreement, the annual commitment under the revolving
bank credit facility shall be permanently reduced on each date set forth
below by the corresponding amount shown for such date. Reductions shall be
mandatory and cumulative (in thousands):
June 30, 1995 $ 3,000
June 30, 1996 4,000
December 31, 1996 2,500
June 30, 1997 1,500
June 30, 1998 4,000
June 30, 1999 2,000
On June 30, 1999, all letter of credit liabilities and any outstanding
balance under the revolving loan commitment are due and payable.
Equity Repurchase
On May 20, 1994, the Company repurchased its 8% Preferred Stock and
warrants to purchase 16.5% of DMHI from Times Mirror for a total of $11.6
million. The repurchase was funded with proceeds from an equity
contribution from Affiliated Newspapers Investments, Inc. and Media
General, Inc. (see Note 8) for a combined total of $10 million and a $1.6
million dividend from The Denver Post Corporation. Upon the repurchase,
DMHI was merged into Denver Newspapers, Inc.
3. Leases
The Company leases certain equipment, vehicles and office space under
various operating and capital leases.
Property, plant and equipment includes the following amounts for leases
that have been capitalized:
June 30
1994 1993
----------------
(In Thousands)
Machinery and equipment $ 3,131 $ 8,887
Accumulated amortization (1,274) (1,804)
---------------------
Machinery and equipment
under capital leases, net $ 1,857 $ 7,083
=====================
Lease amortization is included in depreciation for financial reporting
purposes.
Interest paid under capital leases during the years ended June 30, 1994,
1993 and 1992 was approximately $564,000, $717,000 and $820,000,
respectively.
Future minimum lease payments, by year and in the aggregate, for
noncancelable operating and capital leases with initial or remaining terms
of one year or more consisted of the following at June 30, 1994:
<PAGE> 13
Capital Operating
Leases Leases
---------------------
(In Thousands)
1995 $ 813 $ 2,272
1996 741 2,056
1997 333 1,836
1998 278 1,694
1999 408 1,631
Thereafter 142 9,732
---------------------
Total minimum obligations 2,715 $ 19,221
=========
Less amount representing interest 465
---------
Present value of net minimum obligations 2,250
Less current portion 639
---------
Long-term obligations $ 1,611
=========
Rental expense was approximately $2,330,000, $2,245,000 and $2,075,000 for
the years ended June 30, 1994, 1993 and 1992, respectively.
4. Employee Benefits
The Company sponsors two noncontributory defined benefit pension plans
which cover substantially all employees other than certain union employees
covered by multiemployer pension plans under collective bargaining
agreements. The plan covering salaried and management employees provides
benefits based on employees' years of service and compensation during the
years immediately preceding retirement. The plan covering employees
covered by a certain union agreement provides benefits of stated amounts
based on length of service. The Company's funding policy for both plans is
to make the minimum annual contributions required by the Employee
Retirement Income Security Act of 1974.
The components of net periodic pension costs for the Company's two
qualified defined benefit plans for the years ended June 30, 1994, 1993 and
1992 are as follows:
1994 1993 1992
-----------------------------
(In Thousands)
Service cost - benefits earned during
the period $ 1,202 $ 976 $ 802
Interest cost on projected benefit
obligation 2,075 2,024 1,833
Actual return on plan assets (667) (5,046) (5,135)
Net amortization and deferral (3,678) 1,134 2,139
-------------------------------
Net pension income $ (1,068) $ (912) $ (361)
===============================
The following table sets forth the funded status and amounts recognized in
the Company's balance sheets at June 30, 1994, 1993 and 1992 relating to
the qualified defined benefit plans:
<PAGE> 14
1994 1993 1992
-----------------------------
(In Thousands)
Actuarial present value of benefit
obligations:
Accumulated benefit obligation,
including vested benefits of
$24,517, $26,745 and $25,217
for 1994, 1993 and 1992,
respectively $ 25,042 $ 27,237 $ 25,827
===============================
Plan assets at fair value composed of
cash and money market funds $ 43,741 $ 45,077 $ 41,780
Projected benefit obligation 26,779 29,450 27,827
-------------------------------
Excess of plan assets over projected
benefit obligations 16,962 15,627 13,953
Unrecognized net loss (gain) from past
experience different from that assumed (879) 875 1,557
Unamortized balance of prior service
liability 2,045 558 638
-------------------------------
Net pension asset recognized in the
balance sheet $ 18,128 $ 17,060 $ 16,148
===============================
The weighted-average discount rate used in determining the actuarial
present value of the projected benefit obligations was 7.25% at June 30,
1994 and 1993, and 7.5% at June 30, 1992. The rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations was 6.25% and the expected long-term rate of
return on plan assets was 10% for all periods.
Certain union employees are covered under multiemployer defined benefit
plans administered by unions. The amounts contributed and charged to
pension cost for these plans totaled approximately $0.6 million, $0.6
million and $0.5 million for the years ended June 30, 1994, 1993 and 1992,
respectively.
5. Postretirement Benefits Other Than Pensions
In December 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 106 (SFAS 106), which requires the
Company to recognize as an expense the future projected cost of providing
postretirement health care and life insurance benefits as the employee
provides services instead of when the benefits are paid. The Company has
four plans that will require the adoption of SFAS 106 no later than July 1,
1995. The Company plans to adopt SFAS 106 in the first quarter of fiscal
1995, and expects to record an estimated $4.5 million (pre-tax) cumulative
effect of an accounting change, as a charge to its fiscal 1995 earnings.
The Company intends to fund this obligation from continuing operations.
The Company has accrued $0.8 million for early retirement incentives which
consist of supplemental retirement benefits for certain employees who
retire between the age of sixty-two and sixty-seven. These supplemental
retirement benefits consist of cash payments to supplement the retiree's
pension.
<PAGE> 15
6. Income Taxes
The income tax provision (benefit) for each of the three years ended June
30, 1994, 1993 and 1992 consists of deferred federal income taxes of $(.2)
million, $(.4) million and $.3 million, respectively.
A reconciliation between the actual income tax expense for financial
statement purposes and income taxes computed by applying the statutory
federal income tax rate to financial statement earnings before taxes is as
follows:
1994 1993 1992
-----------------------------
Statutory federal income tax rate 35% (34)% (34)%
Effect of:
Operating losses, net of NOLs
utilized and credit carryforwards (6) (3) 35
Nondeductible write-down and
amortization of goodwill - 33 1
Other, net 2 1 -
-------------------------------
31% (3)% 2%
===============================
Components of the net deferred tax liability are as follows:
June 30, 1994 Current Long Term Total
-----------------------------
(In Thousands)
Deferred tax asset:
Allowance for bad debts $ 699 $ - $ 699
Workers' compensation 281 - 281
Capital lease liability - 787 787
Contract rebates 345 - 345
Other 406 426 832
-------------------------------
Total deferred tax asset 1,731 1,213 2,944
Deferred tax liability:
Fixed assets and capital lease assets - (14,794) (14,794)
Pension asset - (6,345) (6,345)
Other (70) (199) (269)
-------------------------------
Total deferred tax liability (70) (21,338) (21,408)
-------------------------------
Net deferred tax asset (liability) $ 1,661 $(20,125) $(18,464)
===============================
June 30, 1993 Current Long Term Total
-----------------------------
(In Thousands)
Deferred tax asset:
Allowance for bad debts $ 690 $ - $ 690
Workers' compensation 281 - 281
Capital lease liability 154 517 671
Other 528 337 865
-------------------------------
Total deferred tax asset 1,653 854 2,507
<PAGE> 16
June 30, 1993 (continued) Current Long Term Total
-----------------------------
(In Thousands)
Deferred tax liability:
Fixed assets and capital lease assets - (15,054) (15,054)
Pension asset - (5,971) (5,971)
Other - (208) (208)
-------------------------------
Total deferred tax liability - (21,233) (21,233)
-------------------------------
Net deferred tax asset (liability) $ 1,653 $(20,379) $(18,726)
===============================
As described in Note 2, during fiscal year 1993 the Company restructured
its debt, which resulted in relief of indebtedness income of $90.4 million.
For state and federal income tax purposes, the gain was reduced to the
extent the Company was insolvent, as defined by the Internal Revenue Code
("IRC"), immediately prior to the restructuring. The Company's insolvency
for tax purposes reduced the relief of indebtedness income by $56.3
million, leaving taxable income of $34.1 million which was completely
offset by available net operating loss carryforwards. The tax effect of
the relief of indebtedness income was approximately $18.2 million, which
includes $0.7 million of then current alternative minimum tax and $17.5
million of deferred tax expense, and has been netted against the
extraordinary credit in the consolidated statements of operations for the
year ended June 30, 1993.
As a result of not recognizing taxable income under the insolvency section
of the IRC, the Company reduced certain of its state and federal income tax
attributes by the tax insolvency amount effective July 1, 1993. The
attributes were reduced as follows (in thousands):
Net operating loss carryforwards $ 42,756
Tax basis reduction of fixed assets for
income tax purposes 13,544
----------
Total reduction in tax attributes $ 56,300
==========
At June 30, 1994, the Company has remaining state operating loss
carryforwards of $37.6 million for income tax purposes and $31.0 million
for financial reporting purposes expiring in 2004 through 2007. The
Company has no remaining federal operating loss carryforwards as a result
of the attribute reductions discussed above.
7. Mandatorily Redeemable Preferred Stock
In conjunction with the fiscal 1993 debt repurchase (see Note 2), the
Company authorized and issued 38,355 shares of 8% cumulative preferred
stock with a stated value of $3.8 million (the "8% Preferred Stock"). On
May 20, 1994, the Company repurchased the 8% preferred stock, as described
in Note 2, for $4.3 million, which included accumulated and unpaid
dividends of approximately $0.4 million.
The Company previously authorized and issued 1,200 shares of 9% non-voting
cumulative preferred stock with a stated value of $30.0 million (the "9%
Preferred Stock") which is currently held by Media General, Inc. The
holder of the 9% Preferred Stock is entitled to receive, when and as
declared, yearly dividends at the rate of 9% per year. The carrying value
<PAGE> 17
of the 9% Preferred Stock includes the accretion of accumulated and unpaid
dividends as of June 30, 1994, in the amount of $17.7 million.
No dividend payments may be made on the 9% Preferred Stock until all
outstanding indebtedness under the Company's revolving bank credit facility
has been repaid in full.
8. Common Stock Warrant
Media General, Inc. currently holds a warrant to purchase a 40 percent
interest (on a fully diluted basis) in the Company for $0.04 million. The
Company has been informed that Media General, Inc. intends to exercise its
warrant in fiscal 1995.
9. Commitment and Contingencies
During fiscal year 1995, the Company intends to begin construction of a
fourth printing press at its current press facility. The Company estimates
the construction costs will approximate $15 million.
The Company is involved in litigation related to various libel cases. The
Company has indemnity coverage for libel cases, which management believes
to be adequate to ensure the outcome will not have a material adverse
impact on the Company. The Company is not a party to any material legal
proceedings, other than routine litigation incidental to the business of
the Company, nor is any of its property the subject of any such
proceedings.
10. Related Party Transactions
MediaNews Group, Inc., an affiliate of the Company's shareholder, provides
management services to the Company.
<PAGE> 18
Denver Newspapers, Inc.
Schedule V -- Property, Plant and Equipment
Fiscal Years ended June 30, 1994, 1993 and 1992
(In Thousands)
Balance at Balance at
Beginning Additions End of
of Period at Cost Retirements Period
----------------------------------------------
Year ended June 30, 1994
Land $ 6,859 $ - $ - $ 6,859
Buildings and improvements 16,750 - - 16,750
Machinery and equipment 62,889 2,461 (198) 65,152
---------------------------------------------
Totals $ 86,498 $ 2,461 $ (198) $ 88,761
=============================================
Year ended June 30, 1993
Land $ 6,859 $ - $ - $ 6,859
Buildings and improvements 16,750 - - 16,750
Machinery and equipment 61,533 1,666 (310) 62,889
---------------------------------------------
Totals $ 85,142 $ 1,666 $ (310) $ 86,498
=============================================
Year ended June 30, 1992
Land $ 6,859 $ - $ - $ 6,859
Buildings and improvements 16,750 - - 16,750
Machinery and equipment 60,566 3,059 (2,092) 61,533
---------------------------------------------
Totals $ 84,175 $ 3,059 $(2,092) $ 85,142
=============================================
<PAGE> 19
Denver Newspapers, Inc.
Schedule VI -- Accumulated Depreciation of Property, Plant and Equipment
Fiscal Years ended June 30, 1994, 1993 and 1992
(In Thousands)
Additions
Balance at Charged to Balance at
Beginning Costs and End of
of Period Expenses Retirements Period
----------------------------------------------
Year ended June 30, 1994
Buildings and improvements $ 2,357 $ 453 $ - $ 2,810
Machinery and equipment 25,384 5,173 (166) 30,391
---------------------------------------------
Totals $ 27,741 $ 5,626 $ (166) $ 33,201
=============================================
Year ended June 30, 1993
Buildings and improvements $ 1,904 $ 453 $ - $ 2,357
Machinery and equipment 20,698 4,943 (257) 25,384
---------------------------------------------
Totals $ 22,602 $ 5,396 $ (257) $ 27,741
=============================================
Year ended June 30, 1992
Buildings and improvements $ 1,451 $ 453 $ - $ 1,904
Machinery and equipment 16,953 5,320 (1,575) 20,698
---------------------------------------------
Totals $ 18,404 $ 5,773 $(1,575) $ 22,602
=============================================
<PAGE> 20
Denver Newspapers, Inc.
Schedule VIII - Valuation and Qualifying Accounts and Reserves
Fiscal Years ended June 30, 1994, 1993 and 1992
(In Thousands)
Additions
Balance Charged
at to Balance at
Beginning Expense- Net- Dispo- End of
of Period Net Deductions sitions Period
---------------------------------------------------
Year ended June 30, 1994
Reserves and allowances
deducted from asset
accounts:
Allowance for uncol-
lectible accounts $ 1,971 $ 1,864 $ (1,837) $ - $ 1,998
-----------------------------------------------------
Totals $ 1,971 $ 1,864 $ (1,837) $ - $ 1,998
=====================================================
Year ended June 30, 1993
Reserves and allowances
deducted from asset
accounts:
Allowance for uncol-
lectible accounts $ 1,872 $ 1,971 $ (1,872) $ - $ 1,971
Deferred tax asset
valuation
allowance 13,095 - (13,095) - -
-----------------------------------------------------
Totals $ 14,967 $ 1,971 $(14,967) $ - $ 1,971
=====================================================
Year ended June 30, 1992
Reserves and allowances
deducted from asset
accounts:
Allowance for uncol-
lectible accounts $ 1,327 $ 2,233 $ (1,688) $ - $ 1,872
Deferred tax asset
valuation
allowance 9,175 3,920 - - 13,095
-----------------------------------------------------
Totals $ 10,502 $ 6,153 $ (1,688) $ - $14,967
=====================================================
<PAGE> 21
Denver Newspapers, Inc.
Schedule X -- Supplementary Income Statement Information
Fiscal Years ended June 30, 1994, 1993 and 1992
(In Thousands)
Charged to Costs and
Expenses
-----------------------------
1994 1993 1992
-----------------------------
Advertising costs $ 3,446 $ 4,115 $ 3,917
==============================
Note: Items and amounts not presented are less than 1% of consolidated
revenues.
<PAGE> 22
MEDIA GENERAL, INC.
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma condensed consolidated balance sheet
(balance sheet) as of June 26, 1994, and the pro forma condensed
consolidated statements of operations for the year ended December 26, 1993,
and for the six months ended June 26, 1994 (statements of operations), give
effect to the acquisition by Media General, Inc. (Company), of a 40% equity
interest in Denver Newspapers, Inc. (DNI), using the equity method of
accounting. The equity interest in DNI was acquired for $40,000 on
September 28, 1994, when the Company exercised a warrant it had held since
1987.
The balance sheet and statements of operations reflect adjustments to show
the results of the acquisition as if it had occurred, for purposes of the
balance sheet, on June 26, 1994 and, for purposes of the statements of
operations, on December 28, 1992 (the first day of the Company's 1993
fiscal year), respectively.
The pro forma condensed consolidated financial statements are provided for
informational purposes only, and are not necessarily indicative of the past
or future results of operations or financial position of the Company that
would have occurred had the acquisition of the 40% equity interest in DNI
been consummated on the respective dates assumed.
This information should be read in conjunction with the previously filed
historical consolidated financial statements and accompanying notes of
Media General, Inc., contained in its Annual Report on Form 10-K for the
fiscal year ended December 26, 1993, and in its Quarterly Report on Form
10-Q for the quarter ended June 26, 1994, and in conjuction with the
historical financial statements and accompanying notes of Denver
Newspapers, Inc., for the year ended June 30, 1994, included elsewhere in
this Form 8-K.
<PAGE> 23
Media General, Inc.
Pro Forma Condensed Consolidated Balance Sheet
As of June 26, 1994
(In thousands)
(Unaudited)
As Pro Forma Pro Forma
Reported Adjustments Balance
--------- --------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 16,483 $ (40) (1) $ 16,443
Accounts receivable - net 61,837 --- 61,837
Inventories 9,647 --- 9,647
Other 27,578 --- 27,578
--------- --------- ---------
Total current assets 115,545 (40) 115,505
--------- --------- ---------
Investments in unconsolidated
affiliates 78,973 40 (1) 79,013
Other assets 31,616 --- 31,616
Property, plant and equipment-
net 518,203 --- 518,203
Excess of cost of businesses
acquired over equity in
net assets - net 44,182 --- 44,182
--------- --------- ---------
$788,519 $ --- $788,519
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 25,714 $ --- $ 25,714
Accrued expenses and other
liabilities 68,360 --- 68,360
Income taxes payable 6,968 --- 6,968
Current portion of long-
term debt 13,989 --- 13,989
--------- --------- ---------
Total current liabilities 115,031 --- 115,031
--------- --------- ---------
Long-term debt 177,767 --- 177,767
Deferred income taxes 92,660 --- 92,660
Other liabilities and deferred
credits 86,257 --- 86,257
Stockholders' equity 316,804 --- 316,804
--------- --------- ---------
$788,519 $ --- $788,519
========= ========= =========
See notes to the pro forma
condensed consolidated financial statements.
<PAGE> 24
Media General, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 26, 1993
(In thousands except per share amounts)
(Unaudited)
As Pro Forma Pro Forma
Reported Adjustments Balance
--------- --------- ---------
Revenues $600,824 $ --- $600,824
--------- --------- ---------
Operating costs:
Production costs 321,422 --- 321,422
Selling, distribution and
administrative 162,252 --- 162,252
Depreciation and amortization 56,847 --- 56,847
--------- --------- ---------
Total operating costs 540,521 --- 540,521
--------- --------- ---------
Operating income 60,303 --- 60,303
--------- --------- ---------
Other income (expense):
Interest expense (21,274) --- (21,274)
Equity in net income (loss)
of unconsolidated affiliates (990) 1,293 (3) 303
Other, net 835 --- 835
--------- --------- ---------
Total other income (expense) (21,429) 1,293 (20,136)
--------- --------- ---------
Income before income taxes 38,874 1,293 40,167
--------- --------- ---------
Income taxes 13,166 98 (5) 13,264
--------- --------- ---------
Net income $ 25,708 $ 1,195 $ 26,903
--------- --------- ---------
Earnings per common share
and equivalent $ 0.98 $ --- $ 1.03
========= ========= =========
Weighted average common shares
and equivalents 26,152 26,152
See notes to the pro forma
condensed consolidated financial statements.
<PAGE> 25
Media General, Inc.
Pro Forma Condensed Consolidated Statement of Operations
For the six months ended June 26, 1994
(In thousands except per share amounts)
(Unaudited)
As Pro Forma Pro Forma
Reported Adjustments Balance
--------- --------- ---------
Revenues $303,998 $ --- $303,998
--------- --------- ---------
Operating costs:
Production costs 161,838 --- 161,838
Selling, distribution and
administrative 83,316 --- 83,316
Depreciation and amortization 27,953 --- 27,953
--------- --------- ---------
Total operating costs 273,107 --- 273,107
--------- --------- ---------
Operating income 30,891 --- 30,891
--------- --------- ---------
Other income (expense):
Interest expense (9,201) --- (9,201)
Equity in net income (loss)
of unconsolidated affiliates (1,641) 1,745 (2) 104
Gain on sale of Garden State
Newspapers investment 91,520 --- 91,520
Other, net 474 --- 474
--------- --------- ---------
Total other income (expense) 81,152 1,745 82,897
--------- --------- ---------
Income before income taxes 112,043 1,745 113,788
--------- --------- ---------
Income taxes 15,205 132 (4) 15,337
--------- --------- ---------
Net income $ 96,838 $ 1,613 $ 98,451
--------- --------- ---------
Earnings per common share
and equivalent $ 3.69 $ --- $ 3.75
========= ========= =========
Weighted average common shares
and equivalents 26,244 26,244
See notes to the pro forma
condensed consolidated financial statements.
<PAGE> 26
Notes to Media General, Inc.
Pro Forma Condensed Consolidated Financial Statements
(In thousands)
BALANCE SHEET
(1) To record Media General's exercise of a warrant for
40% of DNI's common stock $ 40
STATEMENTS OF OPERATIONS
Equity in net income (loss) of unconsolidated affiliates
(2) To record Media General's equity in the net income
applicable to common stock of DNI for the six months
ended 6/26/94 1,745
(3) To record Media General's equity in the net income
applicable to common stock of DNI for the year ended
12/26/93 1,293
Income Taxes
(4) To record income tax expense (based on dividend exclusion
rate) on equity in the net income applicable to common
stock of DNI for the six months ended 6/26/94 132
(5) To record income tax expense (based on dividend exclusion
rate) on equity in the net income applicable to common
stock of DNI for the year ended 12/26/93 98
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIA GENERAL, INC.
DATE: October 12, 1994 /s/ Marshall N. Morton
---------------- ----------------------------------------
Marshall N. Morton, Senior
Vice-President and Chief Financial
Officer
<PAGE> 1
Exhibit 2
SECOND AMENDED AND RESTATED
STOCK AND WARRANT PURCHASE AND SHAREHOLDERS' AGREEMENT
Media General, Inc.
Affiliated Newspapers Investments, Inc.
Denver Newspapers, Inc.
May 20, 1994
<PAGE> 2
TABLE OF CONTENTS
Table of Contents i
LISTS OF EXHIBITS iii
1. Termination OF ORIGINAL AGREEMENT AS TO CERTAIN
PARTIES; AMENDMENTS TO CERTIFICATE OF lNCORPORATION...........3
1.01 Termination of Original Agreement as to Certain
Parties..................................................3
1.02 Amendment of Certificate of Incorporation................3
1.03 Additional Securities....................................3
2. CONDITIONS TO PARTIES' OBLIGATIONS PURSUANT TO SECTION 1
OF THIS AGREEMENT..................................................4
2.01 Conditions to Media General's Obligations.....................4
2.02 Conditions to ANI's Obligation................................5
3. SALE OR TRANSFER OF STOCK..........................................5
3.01 Restrictions..................................................5
3.02 Permitted Transfers...........................................6
4. ANI'S AND DNI'S RIGHT OF FIRST PURCHASE IN CONNECTION
WITH PROPOSED PUBLIC OFFERINGS AND RULE 144
SALES BY MEDIA GENERAL........................................7
4.01 Proposed Public Offerings by Media General....................7
4.02 Proposed Rule 144 Sales by Media General......................8
5. SHAREHOLDERS' OPTION TO PURCHASE STOCK.............................9
5.01 Option to Purchase............................................9
5.02 Required Notice...............................................9
5.03 Scope of Remaining Shareholder's Options......................10
5.04 Exercise......................................................ll
i
5.05 Bona Fide Non-Cash Third Party Offers.........................11
5.06 Failure To Exercise...........................................12
5.07 Payment of Purchase Price.....................................12
6. RESTRICTIVE LEGEND.................................................16
<PAGE> 3
6.01 Form of Legend................................................16
6.02 Removal of Legends............................................17
6.03 Exercise of Warrant...........................................18
7. REPRESENTATION AND WARRANTIES......................................18
7.01 By the ANI Parties............................................18
7.02 By Media General..............................................22
8. GENERAL COVENANTS..................................................22
8.01 Applicability of Covenants....................................22
8.02 Affirmative Covenants.........................................23
8.03 Negative Covenants............................................27
8.04 Additional Negative Covenants for Media General's Benefit.....29
9. MISCELLANEOUS......................................................30
9.01 Indemnification...............................................30
9.02 Notices.......................................................30
9.03 Equitable Relief..............................................31
9.04 The Original Agreement........................................31
9.05 Successors and Assigns........................................31
9.06 Brokers and Expenses..........................................32
9.07 Waivers.......................................................32
9.08 Announcement..................................................32
ii
9.09 Captions and Pronouns.........................................33
9.10 Choice of Law.................................................33
9.11 Preemptive Rights Waiver......................................33
9.12 Additional Provisions Re Sale of Class A and Class
B Common Stock Tag - Along Rights.............................33
9.13 Registration Rights...........................................37
9.14 Facsimile Signatures; Counterparts............................37
iii
<PAGE> 4
SECOND AMENDED AND RESTATED
STOCK AND WARRANT PURCHASE AND SHAREHOLDERS' AGREEMENT
This Agreement is made as of this 20th of May, 1994, by and among
Media General, Inc., a Virginia corporation ("Media General"), Affiliated
Newspapers Investments, Inc., a Delaware corporation ("ANI"), and Denver
Newspapers, Inc., a Delaware corporation ("DNI" or the "Company"), amending
and restating the Agreement among Media General, DNI and The Singleton
Family Irrevocable Trust by Howell E. Begle, Jr. and Patricia Robinson,
Trustees (the "Singleton Trust"), The Scudder Family 1987 Trust by Jean L.
Scudder, Trustee (the "Scudder Trust"), Charles Scudder, Jean L. Scudder,
individually and as voting trustee under The Scudder Family Voting Trust
Agreement For Denver Newspapers (collectively, the "Scudder Shareholders"),
and Garden State Newspapers, Inc., a Delaware corporation ("Garden State"),
originally made as of December 1, 1987 and as amended and restated by such
parties on December 10, 1992 (the "Original Agreement") (Media General, ANI
and the Company are sometimes collectively referred to herein as the
"Parties" and ANI and Media General are sometimes individually referred to
as a "Shareholder" and collectively as the "Shareholders").
WHEREAS, pursuant to a Stock Contribution Agreement dated as of the
date hereof among the Singleton Trust, the Scudder Shareholders, various
other parties and ANI, the Singleton Trust and the Scudder Shareholders
have contributed to ANI all of the outstanding Class B common stock, par
value $1.00 per share (the "Class B Common Stock"), of the Company and
received in exchange therefore common stock of ANI (the "ANI Common
Stock"); and
WHEREAS, pursuant to an Exchange Agreement dated as of the date hereof
between Garden State, an affiliate of the Company, and Media General (the
"Exchange Agreement"), Media General has acquired 1,200 shares of the
Company's 9%
1
cumulative preferred stock, par value $.01 per share and stated value
$25,000 per share (the "9% Preferred Stock"); and
WHEREAS, ANI now owns all of the issued and outstanding common stock
of the Company, consisting of 60 shares of Class B Common Stock, and Media
General owns (i) a warrant (the "Warrant") to purchase, for $40,000, that
number of shares of Class A common stock, par value $ 1.00 per share of the
Company (the "Class A Common Stock" and, together with the Class B Common
Stock, the "Common Stock"), which will, upon exercise of the Warrant, equal
40% of all issued and outstanding shares of common stock of the Company and
(ii) all of the issued and outstanding shares of 9% Preferred Stock, such
Class B Common Stock and 9% Preferred Stock constituting all of the
outstanding capital stock of the Company; and
WHEREAS, concurrent with the execution of this Agreement, the Note
Repurchase and Master Agreement dated as of December 10, 1992 by and among
the Company, The Times Mirror Company and various other parties (the "Times
Mirror Agreement") has been terminated; and
WHEREAS, simultaneously with the execution of this Agreement, the
Company will cause Denver Media Holdings, Inc. ("DMHI"), its wholly-owned
subsidiary, to merge with and into the Company (the "DNI Merger"), with the
Company being the surviving corporation; and
WHEREAS, simultaneously with the execution of this Agreement, the
Denver Post Stockholders' Agreement dated as of December 10, 1992 among
DMHI, The Times Mirror Company, the Company, the Singleton Trust and the
Scudder Shareholders shall have been terminated as of the date hereof; and
<PAGE> 5
WHEREAS, simultaneously with the execution of this Agreement, the
Credit Agreement dated as of January 12, 1990 as amended and restated as of
December 12, 1992 among North Jersey Newspapers Company, NJN Holdings,
L.P., Affiliated Newspapers Investment Company, the bank parties thereto
and Bankers Trust
2
Company as Agent (the "NJN Credit Agreement") has been terminated as of the
date hereof; and
WHEREAS, in consideration of the consummation of the transactions
contemplated by the Stock Contribution Agreement and the Exchange
Agreement, (i) the Parties, the Singleton Trust, the Scudder Shareholders
and Garden State wish to terminate the Original Agreement as to the
Singleton Trust, the Scudder Shareholders and Garden State and (ii) ANI,
Media General and the Company wish to amend and restate the Original
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto mutually agree as follows:
1. TERMINATION OF ORIGINAL AGREEMENT AS TO CERTAIN PARTIES;
AMENDMENTS TO CERTIFICATE OF INCORPORATION
1.01 Termination of Original Agreement as to Certain Parties. The
Parties to this Agreement, and the Singleton Trust, the Scudder
Shareholders and Garden State, hereby agree that, as of the date hereof,
the Original Agreement is terminated as to the Singleton Trust, the Scudder
Shareholders and Garden State, except for the representations and
warranties of such Parties in Section 7 hereof.
1.02 Amendment of Certificate of Incorporation. The Parties hereby
agree that, concurrent with execution of this Agreement, they will cause
the current Certificate of Incorporation of DNI to be restated and amended
in the form appended as Exhibit A to this Agreement.
1.03 Additional Securities. The Parties hereby agree that, except as
provided in Section 3(g) of the Registration Rights Agreement attached as
Exhibit B hereto (the "Registration Rights Agreement") and except for the
shares of Class A Common Stock which Media General has the right to acquire
by exercise of the Warrant, and other than the issuance of (i) shares of
Class A Common Stock solely in exchange for
3
shares of Class B Common Stock, on a share for share basis, and (ii) shares
of Class B Common Stock solely in exchange for Class A Common Stock on a
share for share basis, each as authorized by the Corporation's Second
Amended and Restated Certificate of Incorporation, no other equity
securities of DNI shall hereafter be issued, or class of securities
convertible into equity securities of DNI created, or obligations of DNI to
issue additional equity securities incurred.
2. CONDITIONS TO PARTIES' OBLIGATIONS PURSUANT TO SECTION 1 OF THIS
AGREEMENT
2.01 Conditions to Media General's Obligations. Media General's
obligations pursuant to Section 1.01 of this Agreement shall be subject to
the satisfaction of the following conditions (which may only be waived by a
separate written instrument by Media General with respect thereto):
(a) ANI shall have purchased all of the Class A Common Stock and
Series A and Series C Preferred Stock of Garden State and the Warrant in
accordance with the terms of the Stock and Warrant Purchase Agreement dated
as of the date hereof by and between Media General and ANI (the "Media
General Stock and Warrant Purchase Agreement");
<PAGE> 6
(b) each of the conditions set forth in Section 3 of the letter
agreement dated March 16, 1994 among ANI, Garden State and Media General
(the "Letter Agreement") shall have been satisfied or waived by a separate
written instrument by Media General;
(c) each of the parties (other than Media General) to the
Operative Documents (as defined below) shall have complied in all material
respects with all agreements and satisfied in all material respects all
conditions on its part to be performed or satisfied at or prior to the
Closing Time under the Operative Documents. As used herein, "Operative
Documents" means this Agreement (including the Registration
4
Rights Agreement attached hereto as Exhibit B), the Letter Agreement and
the Stock and Warrant Purchase Agreement;
(d) all of the representations and warranties of DNI, the
Scudder Shareholders, the Scudder Family Voting Trustees, the Singleton
Trust and ANI (the "ANI Parties"), set forth in Section 7 hereof shall be
true and correct; and
(e) Media General shall have received (1) an opinion addressed
to it and dated as of the Closing Time from Verner, Liipfert, Bernhard,
McPherson and Hand to the effect set forth in Exhibit C and (2) such other
closing certificates and documents, in form and substance reasonably
acceptable to Media General, as it may reasonably request.
2.02 Conditions to ANI's Obligation. ANI's obligations pursuant to
Section 1.01 of this Agreement shall be subject to the satisfaction of the
following conditions (which may only be waived by a separate written
instrument by ANI with respect thereto):
(a) ANI shall have purchased all of the Class A Common Stock and
Series A and Series C Preferred Stock of Garden State and the Warrant in
accordance with the terms of the Stock and Warrant Purchase Agreement; and
(b) all of the representations and warranties of Media General
set forth in Section 7 hereof shall be true and correct; and none of the
covenants of Media General set forth in Section 8 hereof shall have been
breached.
3. SALE OR TRANSFER OF STOCK
3.01 Restrictions. Neither ANI nor Media General shall sell, transfer,
assign, pledge, give away or otherwise dispose of, alienate, or encumber in
any manner (each, a "Transfer") any interest in any shares of any class,
now or hereafter authorized of the Common Stock or Preferred Stock of DNI
(any such interest in Common Stock or Preferred Stock of DNI, including the
Warrant and the shares of Class A Common Stock
5
issued or issuable on exercise of the Warrant, being hereinafter referred
to as the "Stock") owned by any of them, other than as hereinafter
expressly provided in this Agreement, except (i) with the prior written
consent of the other Parties, which may be granted or withheld in the sole
and absolute discretion of such other Parties, or (ii) pursuant to Section
3.02, 4 or 5 hereof. Any attempt to Transfer any of the Stock in violation
of this Agreement shall be void and of no effect and shall not be
recognized or recorded in the stock transfer books of DNI.
3.02 Permitted Transfers. The following transfers of shares of the
Stock are permitted:
(a) ANI may Transfer shares of the Stock to any business entity
controlled (directly or indirectly) by ANI, but any shares so Transferred
shall continue to be subject to this Agreement.
<PAGE> 7
(b) Media General may Transfer shares of the Stock to any
business entity controlled (directly or indirectly) by Media General or the
D. Tennant Bryan Media General Trust or any beneficiaries thereof, but any
shares so transferred shall continue to be subject to this Agreement.
(c) ANI may Transfer Stock to Media General as provided in
Section 5 hereof and Media General may Transfer Stock to ANI as provided in
Sections 4 and 5 hereof.
(d) Subject to its having complied with the provisions of
Sections 4 and 5 hereof, as applicable, any Shareholder may Transfer shares
of the Stock to third parties but any such purchaser shall (except as
provided in Section 3.02(e)) take the shares of the Stock subject to all of
the terms and conditions and restrictions of this Agreement.
(e) Subject to its having complied with Section 4 hereof, Media
General may Transfer shares of Common Stock to third parties in a public
offering registered under the Securities Act of 1933, as amended (the
"Securities Act"), or
6
pursuant to Rule 144 under the Securities Act, and any transferee of such
shares (including any subsequent transferee) shall take such shares free of
the restrictions of this Agreement.
4. ANI's AND DNI'S RIGHT OF FIRST PURCHASE IN CONNECTION WITH
PROPOSED PUBLIC OFFERINGS AND RULE 144 SALES BY MEDIA GENERAL
4.01 Proposed Public Offerings by Media General. If Media General
desires to sell any of its Common Stock in a public offering to be
registered under the Securities Act, Media General shall deliver to ANI and
DNI written notice of such desire (a "Notice of Proposed Public Offering"),
describing the Common Stock proposed to be sold in such offering (the
"Offered Shares"), the proposed effective date, and the proposed price per
share of such public offering (The "Proposed Offering Price"). The Notice
of Proposed Public Offering shall constitute an option for first ANI, and
then DNI, to purchase all, but not less than all, of the Offered Shares at
the Proposed Offering Price, payable in cash. Exercise of the option shall
be made by giving written notice of such exercise (the "Exercise Notice")
to Media General not more than 30 days after receipt of the Notice of
Proposed Public Offering. Such Exercise Notice shall set forth a closing
date, which shall be not less than 10 nor more than 90 days after the date
of the Exercise Notice. If no Exercise Notice is timely given or is not
given with respect to all of the Offered Shares to which the Notice of
Proposed Public Offering relates, Media General may, at any time within six
months immediately following the later of (i) the date the registration
statement in respect of such public offering is declared effective by the
Securities and Exchange Commission (the "SEC") or (ii) the expiration of
the time in which the Exercise Notice could be given (or such prior time as
ANI or DNI, as the case may be, shall in writing advise Media General of
its election not to exercise the right of first purchase), sell the Offered
Shares in a public offering registered under the Securities Act, provided,
however, that (i) any such public offering shall be at a price per share or
7
other unit not lower than 90% of the Proposed Offering Price, and (ii) if
such price (for purposes of this subsection, the "Revised Price") shall be
lower than 90% of the Proposed Offering Price, first ANI, and then DNI,
shall have the option to purchase all, but not less than all, of the
Offered Shares subject to such Notice of Proposed Public Offering at a
price equal to 110% of the Revised Price, payable in cash, which option may
<PAGE> 8
be exercised only during the 10 days beginning on the day after receipt of
a written notice from Media General indicating the Revised Price.
4.02 Proposed Rule 144 Sales by Media General. If Media General
desires to sell any of its Common Stock pursuant to Rule 144 under the
Securities Act, Media General shall deliver to ANI and DNI written notice
of such desire (a "Notice of Proposed 144 Sale") describing the Common
Stock proposed to be sold in such offering (the "Offered 144 Shares") and
the proposed purchase price per share of the Offered 144 Shares (the
"Proposed Sale Price"). The Notice of Proposed 144 Sale shall constitute an
option for first ANI, and then DNI, to purchase all, but not less than all,
of the Offered 144 Shares at the Proposed Sale Price, payable in cash.
Exercise of the option shall be made by giving written notice of such
exercise (a " 144 Exercise Notice") to Media General not more than 30 days
after receipt of the Notice of Proposed 144 Sale. The 144 Exercise Notice
shall set forth a closing date, which shall be not less than 10 nor more
than 90 days after the date of the 144 Exercise Notice. If no 144 Exercise
Notice is timely given or is not given with respect to all of the Offered
144 Shares to which the 144 Exercise Notice relates, Media General may, at
any time within 30 days immediately following the expiration of the time in
which the 144 Exercise Notice could be given (or such prior time as ANI or
DNI, as the case may be, shall in writing advise Media General of its
election not to exercise the right of first purchase), sell the Offered 144
Shares pursuant to Rule 144, provided, however, that (i) any such sale
shall be for a price per share or other unit not less than 90% of the
Proposed Sale Price and (ii) if such price (for purposes of this
subsection, the "Revised Price") shall be lower than 90% of
8
the Proposed Sale Price first ANI, and then DNI, shall have the option to
purchase all, but not less than all, of the Offered 144 Shares subject to
such Notice of Proposed 144 Sale at a price equal to 110% of the Revised
Price, payable in cash, which option may be exercised only during the 10
days beginning on the day after receipt of a written notice from Media
General indicating the Revised Price.
5. SHAREHOLDERS' OPTION TO PURCHASE STOCK
5.01 Option to Purchase. Except as otherwise provided in Sections 3
and 4 of this Agreement, should ANI or Media General (ANI or Media General
being hereinafter referred to, for purposes of this Section 5, as a
"Selling Shareholder") desire to Transfer rights in all or any part of the
Selling Shareholder's Stock, whether the Selling Shareholder desires to
initiate a disposition or is responding affirmatively to an offer to
purchase, before doing so the Selling Shareholder first shall permit the
other Shareholder (the "Remaining Shareholder") to exercise a first option
to purchase the shares of Stock which the Selling Shareholder desires to
Transfer, in accordance with the provisions of this Section. Nothing in
this Agreement shall be deemed to restrict or prohibit a Shareholder from
soliciting third parties to purchase its Stock prior to offering the same
to the Remaining Shareholder, but no sale to a third party may be
consummated until such Stock has been offered to the Remaining Shareholder
in accordance with this Agreement.
5.02 Required Notice. Upon deciding to Transfer all or any rights in
all or any part of his Stock, whether the Selling Shareholder desires to
initiate a disposition, or is responding affirmatively to an offer to
purchase, except as otherwise expressly authorized pursuant to Sections 3
and 4 of this Agreement, the Selling Shareholder shall simultaneously
<PAGE> 9
notify DNI and the Remaining Shareholder of its intended disposition. Such
notices shall contain a complete description of the proposed transaction,
including the identity of any proposed transferee, the purchase price (the
"Purchase Price") offered by the Selling Shareholder or proposed by a bona
fide third party transferee (in the event
9
such offer is a non-cash offer (in whole or in part) it must first be given
a present cash value pursuant to Section 5.05 herein), and all other
material terms of such disposition. Such notices shall also specify whether
the Selling Shareholder is only willing to sell all of his Stock, or is
willing to sell only a portion thereof, and such specifications shall
control the scope of any option to purchase thereunder.
5.03 Scope of Remaining Shareholder's Options.
(a) If the Selling Shareholder is Media General, then ANI shall
have the first option to purchase the shares of Stock being sold by Media
General; provided, however, that Media General may require that any
purchases shall in the aggregate be not less than all (or any specified
portion) of its Stock being sold.
(b) If the Selling Shareholder is ANI, then Media General shall
have the first option to purchase the shares of Stock being sold by ANI;
provided, however, that ANI may require that any purchases shall in the
aggregate be for not less than all (or any specified portion) of its Stock
being sold.
(c) If the notices giving rise to the option have specified that
all (or a specified portion) of the interests offered must be purchased in
the aggregate, and the option exercised is for less than the minimum
interests specified in the notices, then the exercise of such option shall
be void and of no effect, and the Selling Shareholder may proceed with a
sale pursuant to Section 5.06 hereof in the same manner as if the option
had not been exercised. Any notice given pursuant to this Section 5 or
Section 4 shall be given as provided in Section 9.02 of this Agreement. Any
provision of any shareholder agreement or voting trust or voting agreement
with respect to DNI heretofore entered into among any of the parties hereto
or their predecessors in interest, creating rights of first refusal or
options to purchase with respect to DNI stock, are hereby superseded by
this Agreement and all such provisions of such prior agreements are null
and void and of no further force or effect.
10
5.04 Exercise. Upon receipt of a notice from a Selling Shareholder
pursuant to Section 5.02, the Remaining Shareholder shall thereupon have
the first option to purchase all, but not less than all, of such shares
tendered at the Purchase Price. This option to purchase must be exercised
by the Remaining Shareholder within 30 days after receipt of the notice
delivered pursuant to Section 5.02 herein. Any exercise of an option to
purchase Stock by the Remaining Shareholder shall be made by notice in
writing to the Selling Shareholder, with copy to DNI, given within such 30-
day period.
5.05 Bona Fide Non-Cash Third Party Offers. If a Selling Shareholder
has received a bona fide third party non-cash offer for the shares of Stock
it proposes to sell and the Selling Shareholder and the Remaining
Shareholder cannot agree on the cash value of such non-cash offer, then two
qualified independent appraisers, knowledgeable in the appropriate
industry, one to be appointed by the Selling Shareholder and the other to
be appointed by the Remaining Shareholder shall determine the present cash
value of the non-cash offer. Such appraisers shall be appointed within 30
<PAGE> 10
business days after receipt by the Remaining Shareholder of a written
notice from a Selling Shareholder that it wishes to sell and has received a
bona fide non-cash third party offer which must be valued for purposes of
calculating the Purchase Price to be included in the Notice required in
Section 5.02 herein; if either party fails to appoint an appraiser within
this time period, then its right to do so shall lapse, and the appraisal
made by the one independent appraiser who is timely appointed shall be
conclusive. If two appraisals are made, and if the higher appraisal does
not exceed 110% of the lower, the agreed value of the non-cash offer shall
be average of the two. If the two appraisals are further apart, a third
appraiser will be selected within 15 business days by the first two
appraisers, and the cash value of the non-cash offer will be deemed to be
the average of the third appraisal and the one of the first two appraisals
which is closer to the third. All appraisals shall be made within 30 days
of appointment of an appraiser and written notice of the results of such
appraisals shall be given to the parties within such time. Each of
11
the Parties hereto and the Company agrees that it will use its best efforts
to provide each appraiser with such information as such appraiser may
reasonably require in order to complete its appraisal within 30 days of its
appointment. The Selling Shareholder shall pay the fee of the appraiser
selected by it, and the Remaining Shareholder shall pay the fee of the
appraiser selected by it, with the fee of any third appraiser to be divided
equally among them.
5.06 Failure To Exercise. If the Remaining Shareholder fails to
exercise its option to purchase the Selling Shareholder's Stock, the
Selling Shareholder shall be free to dispose of such Stock within a 90-day
period after the expiration of the Remaining Shareholder's option but not
below the Purchase Price offered to the Remaining Shareholder, and not to a
different transferee than specified in the notice (if any transferee was so
specified), or in a different manner or on different terms. If the Stock is
not disposed of within such 90-day period then this right shall lapse and
the Selling Shareholder must thereafter recommence the offering process to
the Remaining Shareholder if he subsequently wishes to dispose of his
shares. For purposes of this Section, a sale shall be deemed made when
closing has occurred, and the transfer agent has been requested to record
the transfer of Stock in the stock transfer records of DNI. Any person to
whom the shares of Stock of the Selling Shareholder are transferred
pursuant to this Section 5, following the Remaining Shareholder's failure
to exercise its right of first refusal, shall take such shares subject to
all the terms and conditions and restrictions imposed by this Agreement.
5.07 Payment of Purchase Price.
(a) The purchaser of any Stock under Section 5 of this Agreement
shall have the option to pay the Purchase Price in one of three methods.
The first method, called Option 1, shall consist of matching the same price
or payment terms offered by a bona fide purchaser of the Selling
Shareholder (and acceptable to the Selling Shareholder) The second method,
called Option 2, shall consist of full payment of the
12
purchase price either by a wire transfer of immediately available federal
funds to a bank account designated by the Selling Shareholder or by
delivery of shares of the publicly traded Class A common stock of Media
General (valued at the average of its publicly traded price for the 30
calendar days preceding the date of delivery) or by a combination thereof,
upon a date mutually selected by the Selling Shareholder and the purchaser
<PAGE> 11
which is not less than ten (10) nor more than 120 days after the date the
Selling Shareholder gives notice of his intent to transfer his Stock under
Section 5.02 of this Agreement (such date being herein referred to as the
"Closing Date").
(b) The third method of payment for Stock pursuant to this
Section 5, called Option 3, shall consist of paying not less than twenty-
five percent (25%) of the total purchase price in cash on the Closing Date,
and by giving the Selling Shareholder the purchaser's promissory note for
the balance of the purchase price in not more than 60 equal monthly
installments of principal. Simple interest on the unpaid principal balance
of the purchase price shall accrue from the Closing Date and shall be
payable monthly at the base rate of interest established by Norwest Bank
Colorado, National Association, as such rate may change from time to time,
but in no event less than the minimum rate of interest that is required
under the Internal Revenue Code and the regulations thereunder to avoid the
imputation of a higher rate. The first installment of principal and
interest shall be due on the first day of the first calendar month
following the Closing Date, and such installments shall continue on the
first day of each month thereafter until the entire principal balance
together with interest thereon have been paid, but in any case for a period
of not more than five (5) years from the date of the first installment.
The purchaser's promissory note shall provide that such note shall be
payable in full upon the sale of all or substantially all of the assets
used by DNI, Denver Post or any of their direct or indirect subsidiaries in
the operation of its or their business, upon the sale of 50% or more of the
then outstanding shares of Common Stock of DNI
13
within any 180-day period or, if the maker of the promissory note is ANI,
upon the beneficial owners of ANI as of the date of this Agreement ceasing
to own beneficially, directly and indirectly, at least 50% of the common
equity of ANI or upon the offering of any securities of DNI or any
subsidiary of DNI for sale to the public. As used in this paragraph, the
term "sale" includes an exchange of assets, Stock for assets or stock,
whether or not gain or loss attributable to such transaction is recognized
for federal income tax purposes. However, the term "sale" shall not include
any transaction by which the Stock or assets of DNI become owned by any of
the Parties to this Agreement or any transferee permitted under Section
3.02(a), (b) or (c) hereof or any corporation or other entity that is
solely owned by one or more Parties to this Agreement.
If the purchaser elects Option 3 in order to secure the performance by
the purchaser of the obligations under his or its promissory note the
purchaser shall place the stock certificate or certificates representing
the Stock purchased in escrow with the law firm of Christian, Barton, Epps,
Brent & Chappell, 1200 Mutual Building, 909 East Main Street, Richmond,
Virginia 23219, or such other person or entity as shall be mutually
acceptable to the purchaser and seller, as escrow agent (the "Escrow
Agent"), with stock powers duly endorsed in blank, as security for the
payment of the unpaid principal balance and interest on the purchaser's
promissory note. The Escrow Agent may require the purchaser and seller to
execute and deliver an escrow agreement more fully outlining the
obligations of the Escrow Agent and otherwise containing terms and
conditions typically found in escrow agreements in commercial transactions
and not inconsistent with this Agreement. The promissory note given by each
purchaser shall provide that upon default in payment of any installment of
principal or interest, if such default shall continue for more than 30 days
after written notice of default has been given to the purchaser by the
holder of the note, the holder of the note at that time may inform the
<PAGE> 12
Escrow Agent in writing of the default, and thereupon, the Escrow Agent
shall deliver the stock certificates and accompanying stock powers to the
holder of the promissory note.
14
Upon such delivery (1) all obligations of the Escrow Agent to all of the
parties hereunder shall cease and (2) the holder of the promissory note
shall be entitled to pursue whatever remedies it may have in law or equity
against the purchaser.
Voting and dividend rights (other than the rights to any liquidated
dividend) with respect to the pledged Stock shall be vested in the
purchaser while such Stock or Preferred Stock is held in escrow and until
there has been a default in payment of interest or principal with respect
to the promissory note.
All Stock pledged hereunder and all the accompanying stock powers
shall be returned to the purchaser upon full satisfaction of the promissory
note.
In addition to the provisions for payment contained above in this
Section, the purchaser, at its sole option, may prepay any amount of
principal or interest due on the purchaser's promissory note at this time,
without penalty. Any prepayment shall by applied against the remaining
principal installments due under the note to the Selling Shareholder in the
inverse order in which such installments fall due. Any prepayment shall be
applied first to pay any interest that is in arrears, and then shall be
applied to reduce the entire principal balance before any prepayment is
applied to interest that is not in arrears.
(c) Upon receipt of the Purchase Price at the Closing Date, all
interest of the Selling Shareholder in the Stock being sold shall
terminate, and the Selling Shareholder shall cease to have any further
rights as a shareholder in the Stock being sold. At the closing on the
Closing Date, the Selling Shareholder shall deliver to the purchaser a
certificate or certificates duly endorsed for transfer representing all of
the Stock being sold at that date by the Selling Shareholder.
15
6. RESTRICTIVE LEGEND
6.01 Form of Legend. All certificates for the shares of the Common
Stock shall bear the legend set forth in Subsection (a) below, the Warrant
shall bear the legend set forth in Subsection (b) below, and the Preferred
Stock shall bear the legend set forth in Subsection (c) below, all as
follows:
(a) On certificates representing the Common Stock:
"Sale, transfer, assignment, pledge, gift or any other
disposition, alienation or encumbrance of the shares represented
by this certificate is restricted by the terms of a Second
Amended and Restated Stock and Warrant Purchase and Shareholders'
Agreement dated as of May 20, 1994 among Media General, Inc.,
Affiliated Newspapers Investments, Inc., and the Company, which
may be examined at the principal office of the Company, and such
shares may be sold, transferred, assigned, pledged, given or
otherwise disposed of, alienated or encumbered only upon
compliance with the terms of that Agreement, which is
incorporated herein by reference. "
"The shares represented by this certificate have not been
registered under the Securities Act of 1993 (the 'Act') and may
<PAGE> 13
not be offered, sold or otherwise transferred, unless and until
(i) a registration statement with respect thereto is effective
under the Act or (ii) in the opinion of counsel, which opinion is
reasonably satisfactory in form and in substance to counsel for
the Company, such offer, sale or other transfer is in compliance
with the Act and any applicable state securities laws."
(b) On the Warrant:
"Sale, transfer, assignment, pledge, gift or any other
disposition, alienation or encumbrance of this Warrant or the
shares that are acquired upon the exercise of this Warrant is
restricted by the terms of a Second Amended and Restated Stock
Warrant Purchase and Shareholders' Agreement dated as of May 20,
1994 among Media General, Inc., Affiliated Newspapers
Investments, Inc., and the Company, which may be examined at the
principal office of the Company, and this Warrant and all shares
acquired upon the exercise of this Warrant may be sold,
transferred, assigned, pledged, given or otherwise disposed of,
alienated or encumbered only upon
16
compliance with the terms of that Agreement which is incorporated
herein by reference."
"This Warrant has not been registered under the Securities Act of
1933 (the 'Act') and may not by offered, sold or otherwise
transferred, unless and until (i) a registration statement with
respect thereto is effective under the Act or (ii) in the opinion
of counsel, which opinion is reasonably satisfactory in form and
in substance to counsel for the Company, such offer, sale or
other transfer is in compliance with the Act and any applicable
state securities laws."
(c) On certificates representing the Preferred Stock:
"Sale, transfer, assignment, pledge, gift or any other
disposition, alienation or encumbrance of the shares represented
by this certificate is restricted by the terms of a Second
Amended and Restated Stock and Warrant Purchase and Shareholders'
Agreement dated as of May 20, 1994, among Media General, Inc.,
Affiliated Newspapers Investments, Inc. and the Company, which
may be examined at the principal office of the Company, and such
shares may be sold, transferred, assigned, pledged, given or
otherwise disposed of, alienated or encumbered only upon
compliance with the terms of that Agreement, which is
incorporated herein by reference."
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the 'Act') and may
not be offered, sold or otherwise transferred, unless and until
(i) a registration statement with respect thereto is effective
under the Act or (ii) in the opinion of counsel which opinion is
reasonably satisfactory in form and in substance to counsel for,
the company, such offer, sale or transfer is in compliance with
the Act and any applicable state securities laws."
<PAGE> 14
6.02 Removal of Legends. Those legends set forth in Section 6.01 that
are intended to ensure compliance with Sections 3, 4, and 5 of this
Agreement shall be removed by the Company, or by the transfer agent and
registrar of the Company upon the Company's instructions, from the
certificates evidencing any Offered Shares or Offered 144 Shares upon
Transfer of such Offered Shares or Offered 144 Shares in connection with a
public offering or Rule 144 sale by Media General in accordance with
Section 4.
17
Those legends set forth in Section 6.01 that are intended to ensure
compliance with the Securities Act shall be removed by the Company, or by
the transfer agent and registrar of the Company upon the Company's
instructions, from the certificates evidencing securities to which either
of clause (i) or (ii) apply when (i) a registration statement covering such
Stock (and in the case of the Warrant the Common Stock issuable upon
exercise thereof) becomes effective under the Securities Act or (ii) the
Company receives an opinion of counsel that such restrictions are no longer
required on the certificates evidencing such Stock in order to ensure
compliance with the Securities Act. When the holder of any Stock is
entitled to have one or more of the restrictive legends set forth in
Section 6.01 removed from the certificates evidencing such Stock, the
Company shall, or shall instruct its transfer agent and registrar to, issue
new certificates evidencing such Stock in the name of the holder not
bearing the legends required under Section 6.01 hereof that cease to apply.
6.03 Exercise of Warrant. Notwithstanding any other provision of this
Agreement, DNI, ANI and Media General hereby agree that the only condition
to issuance of the required number of shares of Class A Common Stock upon
exercise of the Warrant will be the payment to DNI of the sum of $40,000
and the tendering to DNI of the Warrant and the subscription notice
attached to the Warrant. Upon notice by the Holder thereof of its intention
to exercise the Warrant, the parties hereby agree to promptly take all
steps necessary to effect any filings required under Hart-Scott-Rodino
Antitrust Improvements Act of 1976 ("HSR") and to respond promptly to any
requests for additional information by the Federal Trade Commission or
Department of Justice. Furthermore, DNI hereby agrees to pay any filing
fees associated with the HSR filing.
7. REPRESENTATION AND WARRANTIES
7.01 By the ANI Parties. The ANI Parties jointly and severally
represent and warrant to Media General that:
18
(a) All the representations and warranties by DNI made in the Times
Mirror Agreement and any other agreements with The Times Mirror Company
(whether or not terminated) or any other loan agreements by which DNI and
its subsidiaries are presently bound were true and correct at the time
made, and such representations and warranties are incorporated by reference
herein and made to Media General as of the date hereof to the same extent
as if fully set forth herein.
(b) The Original Agreement was the legal, valid and binding
obligation of each of the ANI Parties (other than ANI), legally binding
upon them in accordance with its terms, and this Agreement is the legal,
valid and binding obligation of each of the ANI Parties, legally binding
upon them in accordance with its terms.
(c) ANI is the legal owner of 60 shares of Class B Common Stock. Such
shares of Class B Common Stock, together with the 9% Preferred Stock owned
by Media General, constitute all of the currently issued and outstanding
<PAGE> 15
capital stock of DNI. All such shares are validly issued, fully paid and
nonassessable and free and clear of all liens, claims, options, charges,
trusts, security interests and encumbrances, except for the options and
encumbrances created by this Agreement. Except as provided in Section 3(g)
of the Registration Rights Agreement and, in the Second Amended and
Restated Certificate of Incorporation of the Company, and, except for the
Warrant, there are no existing options, warrants, calls or covenants to
which DNI or ANI, or any affiliate of ANI, is a party requiring the
issuance by DNI of any additional shares of any equity security of any
class or character.
(d) None of the information contained in the representations and
warranties of the ANI Parties in this Agreement or any of the Operative
Documents, or in any of the information delivered or to be delivered to
Media General as contemplated by any provision of any of such Agreements
contains any untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or therein not
misleading.
19
(e) DNI has previously delivered to Media General true and correct
copies of each of the Operative Documents and all agreements related
thereto.
(f) Upon effectiveness of the DNI merger, DNI will be the owner of
all of the issued and outstanding capital stock of the Denver Post, free
and clear of all liens, charges, securities, interests and encumbrances
except those created in favor of the lenders pursuant to the General
Security Agreement and Pledge (Denver Post Stock), dated as of May 20,
1994, from DNI to Norwest Bank Colorado, National Association.
(g) DNI is duly qualified and in good standing as a foreign
corporation authorized to transact business in each jurisdiction where the
conduct of its business or the ownership of its property requires such
qualification.
(h) The termination of the rights of the Singleton Trust, the Scudder
Trust and the Scudder Family Voting Trust under the Original Agreement
pursuant to the provisions of Section 1.01 of this Agreement and the
representations and warranties of such Trusts in this Agreement are binding
upon such Trusts and each of their beneficiaries without the necessity for
any of such beneficiaries to execute this Agreement and the terms hereof
that purport to be enforceable against such beneficiaries are so
enforceable against each of them.
(i) The Warrant has been duly and validly authorized, and the Class A
Common Stock which will be issued upon exercise of the Warrant will be, at
the time of such exercise, validly issued and outstanding and fully paid
and nonassessable. Any and all preemptive rights or similar rights on the
part of the holder of shares of DNI's capital stock to subscribe to or
purchase the Class A Common Stock which may be acquired upon exercise of
the Warrant have been waived and such waivers are effective and
enforceable. No further approval or authorization by any shareholder of DNI
will be required for the issuance of the Class A Common Stock required to
be issued upon exercise of the Warrant.
20
(j) Each of ANI, DNI and Garden State is a corporation duly organized
and validly existing under the laws of the State of Delaware with full
corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
<PAGE> 16
(k) All consents, approvals, authorizations, qualifications,
designations, declarations or filings with any governmental authority on
the part of each of the ANI Parties required in connection with the conduct
of DNI's business or in connection with the execution, delivery and
performance of this Agreement or the issue and delivery to Media General of
the Class A Common Stock to be issued upon exercise of the Warrant, have
been obtained and are currently effective.
(1) Neither ANI, Garden State nor DNI is in violation of any
provision of its Certificate of Incorporation or By-laws and none of the
ANI Parties is in violation or breach of any loan agreement or other
material agreement to which any of them is a party, and all consents of any
person required to permit the consummation of the transactions contemplated
herein or in the Operative Documents have been received and are effective
to permit the consummation of all such transactions without the violation
of any agreement binding upon any ANI Party.
(m) There is no action, proceeding or investigation pending or
threatened (or any basis therefor known to any ANI Party), that questions
the validity of this Agreement, the 9% Preferred Stock, the Warrant (or the
Class A Common Stock to be issued upon the exercise thereof), or any action
taken or to be taken pursuant hereto or thereto or contemplated hereby or
thereby, or that might result, either in any case or in the aggregate, in
any material adverse change in the business, prospects, operations, affairs
or condition of DNI or in any of its properties or assets, or in any
material liability on the part of DNI.
(n) Each of the trustees of the Singleton Trust and the Scudder
Trust, by his or her execution of this Agreement on behalf of his
respective trust, represent that he (or he and his co-trustee acting
together) has the power under the terms
21
of his respective trust to terminate the rights of the beneficiaries under
the Original Agreement and to make the representations and warranties
herein contained. Each of the trustees of the Singleton Trust and the
Scudder Trust has provided Media with a copy of their respective trust
instruments, including all amendments thereto, and will hereafter provide
copies to Media of any further amendments to such trust instruments.
7.02 By Media General. Media General represents and warrants to ANI
and DNI that:
(a) It is a corporation duly organized and validly existing under the
laws of the Commonwealth of Virginia, with full corporate power and
authority to execute, deliver and perform its obligations under this
Agreement;
(b) This Agreement is the legal, valid and binding obligation of
Media General, legally binding upon it in accordance with its terms; and
(c) The execution, delivery and performance of this Agreement by
Media General will not violate its Articles of Incorporation, By-laws or
any agreement to which it is a party or by which it may be bound, and that
any necessary consent of any third party or authorization or any
governmental entity which is required for its execution of or delivery and
performance under this Agreement has been obtained.
8. GENERAL COVENANTS
8.01 Applicability of Covenants. The covenants set forth in this
Section are made for the benefit of Media General, as the holder of the 9%
Preferred Stock, the Warrant, the Class A Common Stock to be acquired upon
exercise of the Warrant and, in the case of Section 8.02(c) ( 1), (2) and
(3) and 8.03, for the benefit of ANI, as holder of the Class B Common
Stock. Such covenants shall also run in favor of any transferee permitted
hereunder of the Stock (other than (i) any third party transferee (or
<PAGE> 17
subsequent transferee) of Offered Shares or Offered 144 Shares sold by
Media General in connection with a public offering or Rule 144 sale
pursuant to Sections 4 and 3.02 (e)).
22
8.02 Affirmative Covenants.
(a) DNI covenants that it will comply, and will cause Denver Post and
its direct or indirect subsidiaries to comply, and ANI covenants that it
will cause DNI and Denver Post, and their direct or indirect subsidiaries,
to so comply, with the covenants set forth in the Times Mirror Agreement
and any other agreement with Times Mirror and any other loan agreements by
which it and its subsidiaries are presently or may hereafter be bound, and
that DNI shall obtain the prior written consent or waiver of Media General
to any variations or deviation from the covenants set forth therein
(unless, for so long as any amount remains outstanding under such loan
agreement, a written waiver or amendment or such other modification shall
have been granted or agreed upon by the lenders under such loan agreements
of any such variation or deviation), the Parties agreeing that such
covenants are incorporated herein by reference for the convenience of the
Parties to the same extent as if they were set forth in full herein, and
such covenants shall run directly to the benefit of Media General, and
shall not terminate upon termination of, or final payment of any
indebtedness described in, such agreements, but shall continue in full
force and effect, inuring to the benefit of Media General for so long as it
is a stockholder or creditor of DNI or any successor thereto; provided,
however, that no consent of Media General shall be required for DNI to
incur any debt, the purpose of which is to purchase any Stock held by Media
General. Notwithstanding the foregoing, during such time as Denver Post is
bound by the Loan Agreement of even date herewith between Denver Post and
Norwest Bank Colorado, National Association (the "Norwest Loan Agreement"),
DNI and Denver Post shall not be required to comply with Sections 8.02 and
8.05 of the Times Mirror Agreement; provided, in the case of Section 8.02,
DNI and Denver Post provide Media General with the information required by
the other provisions of this agreement and Section 8.2 of the Norwest Loan
Agreement.
23
(b) ANI and DNI further covenant that they shall immediately inform
Media General of any defaults occurring under any of its direct or indirect
subsidiaries' loan agreements, or under any other obligation of DNI, Denver
Post or any of their direct or indirect subsidiaries in excess of $100,000,
and shall continue to keep Media General informed as to the status of such
defaults. ANI and DNI shall furnish Media General with copies of all
notices and correspondence received or sent by any of them or by DNI's
direct or indirect subsidiaries related to any such defaults.
(c) Each of DNI, ANI and Media General, jointly and severally, hereby
covenants and agrees as follows:
(1) Until such time as the Warrant is exercised and Class A Stock has
been issued to Media General (or its permitted successors in ownership),
ANI (or its permitted successor in ownership), at any annual meeting of
stockholders of DNI or any special meeting at which directors are to be
elected (or in any written consent in lieu of any such meeting), will cast
or cause to be cast all its votes of Common Stock so as to cause the
election of the following persons as directors: (i) four (4) directors to
be selected by Media General (or its permitted successor in ownership of
the Warrant), and (ii) four (4) directors to be selected by the holders of
the Class B Common Stock, in the manner provided in DNI's Certificate of
<PAGE> 18
Incorporation and Bylaws, for a total of eight (8) directors (which shall
constitute the entire Board of Directors of DNI).
(2) If a vacancy with respect to a director originally selected by
the holders of the Class B Common Stock, on the one hand, or Media General,
on the other, pursuant to the preceding subparagraph, should be created on
the Board of Directors of DNI for any reason, including, but not limited
to, the death, disability, resignation or removal of such director, such
vacancy will promptly be filled by holders of the Class B Common Stock at a
special meeting called for that purpose (or by a written consent in lieu of
such meeting), and at such special meeting (or by such consent), the
holders of the Class B Common Stock (or their permitted successors in
ownership) shall cast or cause to be cast all of its or their votes in
favor of
24
the replacement director selected by the party who previously selected the
director whose death, resignation, etc. created the vacancy. No person who,
directly or indirectly, as an employee, director, consultant, or in any
other capacity, is engaged in any newspaper publishing business which is in
direct competition with any newspaper published by DNI or any of its
subsidiaries shall be a director.
(3) At any annual meeting of stockholders of Denver Post or any
special meeting at which directors of Denver Post are to be elected (or in
any written consent in lieu of such a meeting) DNI will cast all of its
votes of capital stock of Denver Post so that 1/2 of the total number of
directors to be elected by such votes shall be persons selected by Media
General (or its permitted successors in ownership of the Warrant or the
Class A Common Stock) and the other 1/2 shall be Persons submitted jointly
by the holders of the Class B Common Stock (or their permitted successors
in ownership). Notwithstanding the previous sentence; the number of
directors selected by Media General (or its permitted successors in
ownership of the Warrant or the Class A Common Stock) and the number of
directors selected by the holders of the Class B Common Stock shall always
be equal. If a vacancy with respect to a director originally selected by
Media General (or its permitted successors in ownership of the Warrant or
the Class A Common Stock), on the one hand, or the holders of the Class B
Common Stock, on the other, should be created on the Board of Directors of
Denver Post for any reason, including, but not limited to, the death,
disability, resignation or removal of such director, such vacancy will
promptly be filled by DNI at a special meeting called for that purpose (or
by a written consent in lieu of such meeting), DNI shall cause to be
elected a replacement director selected by the party who previously
selected the director whose death, resignation, etc. created the vacancy.
No person who, directly or indirectly, as an employee, director,
consultant, or in any other capacity, is engaged in any newspaper
publishing business which is in direct competition with any newspaper
published by Denver Post shall be a director.
25
(4) DNI shall cause Denver Post to pay to DNI a sum sufficient to
permit DNI to pay all amounts required in order to redeem the 9% Preferred
Stock on the Redemption Date (as defined in the Certificate of
Incorporation of DNI) and to pay all dividends on the 9% Preferred Stock
not prohibited by DNI's and Denver Post's agreements with their
institutional lenders.
(5) DNI shall at all times reserve and set apart and have, free from
preemptive rights, a number of shares of authorized but unissued Class A
<PAGE> 19
Common Stock, sufficient to enable it at any time and at all times to
fulfill all its obligations under the Warrant.
(6) DNI will deliver to Media General within 25 days after the end of
each month, consolidated balance sheets of DNI as of the end of such month
and related consolidated statements of earnings, changes in shareholder's
equity and cash flow for such month and for the fiscal year through the end
of such month and for the comparable month and period of the prior year,
certified by DNI's chief financial officer as presenting fairly the
consolidated financial position and results of operations of DNI and its
consolidated subsidiaries in accordance with generally accepted accounting
principles.
(7) ANI shall cause DNI to take all actions necessary and appropriate
to comply with the covenants contained in this Section 8.02.
(d) DNI and ANI covenant and agree that notwithstanding the fact that
Media General only holds the 9% Preferred Stock and the Warrant, DNI and
ANI shall owe to Media General the full scope of fiduciary duties,
including, but not limited to, good faith, fairness and fair dealing, which
DNI would owe to any of its common stockholders. DNI and ANI also
acknowledge that (while DNI is technically not a "close corporation" under
Delaware Law) DNI is a closely held corporation, and that as such, the
fiduciary duties owed by DNI to Media General and ANI are of the highest
degree and character, and ANI owes to Media General the same fiduciary
duties which DNI owes to it.
26
(e) ANI covenants that it shall cause directors nominated by ANI (i)
to vote for declaring and paying to DNI all dividends permitted to be paid
under the Norwest Loan Agreement, and (ii) to vote for declaring and paying
9% cumulative dividends on the 9% Preferred Stock on January 1, 1997 and on
each January 1 thereafter until the 9% Preferred Stock has been redeemed in
full.
8.03 Negative Covenants. DNI covenants that it shall not, nor shall it
permit Denver Post or any direct or indirect subsidiary to do, take or
permit any of the following actions, unless the same shall have first been
approved (i) by the unanimous approval of all directors then serving on
DNI's Board of Directors, or (ii) by unanimous approval of the full
Executive Committee of DNI's Board of Directors, or (iii) by Media General
(or any permitted successor in ownership to the Warrant) and by the holders
of 75% of the Class B Common Stock, and ANI covenants that it shall cause
DNI, Denver Post, and any direct or indirect subsidiary of either, to
refrain from such actions, unless they have been approved, in the manner
provided above:
(1) Declare and pay any dividends on its common stock unless and
until DNI has first or simultaneously declared and paid all unpaid and
accumulated dividends on the 9% Preferred Stock; provided, however, that
Media General covenants that directors nominated by Media General will not
unreasonably withhold their approval for any dividend on the Common Stock
proposed by any member of the Board of Directors of DNI following the
redemption in full of the 9% Preferred Stock, including the payment of all
accrued and unpaid dividends to the date of redemption.
(2) Purchase or redeem any of its capital stock (except for the 9%
Preferred Stock and, subject to compliance with applicable law, Common
Stock purchased pursuant to the rights granted to DNI under Sections 4.01
and 4.02 hereof) or make investments in any other person or entity except
as otherwise expressly permitted herein.
27
<PAGE> 20
(3) Adopt annual capital or annual operating budgets, or make any
single capital expenditure in excess of $1,000,000 in any fiscal year.
(4) Create, establish or acquire any subsidiary, or liquidate or
dissolve itself or any subsidiary, or merge or consolidate, or cause or
permit any subsidiary to be merged or consolidated, with any corporation,
or enter into any transaction under which any class of its stock would be
acquired or the stock of any subsidiary would be sold, or sell, lease,
encumber, convey, transfer or otherwise dispose of all or any substantial
part of its assets or those of any subsidiary, or amend its Certificate of
Incorporation or Bylaws, or issue any capital stock not specifically
permitted herein, or permit any subsidiary to issue capital stock to any
person other than DNI, or elect any directors of any subsidiary, or permit
any subsidiary to appoint any committee of its Board of Directors, or
acquire or sell any newspaper business.
(5) Incur any debt which aggregates $1,000,000 or more on a
cumulative basis in any fiscal year.
(6) Fix the level of total compensation for any employee which would
be over $175,000 per year.
(7) Enter into or acquiesce in any agreement which limits or
restricts the rights of any of the parties thereto to comply with the
provisions of this Agreement.
(8) Permit any breach of the representations and warranties set forth
in Section 7 hereof to occur.
(9) Appoint independent certified public accountants for DNI, Denver
Post, or any other direct or indirect subsidiary.
(10) Appoint any committee of the Board of Directors of DNI.
(11) Appoint an appraiser or appraisers for evaluation of any assets
purchased directly or indirectly by DNI or any subsidiary.
28
(12) Enter into or acquiesce in any agreement which limits or
restricts the rights of DNI or ANI to comply with the provisions of this
Agreement; or,
(13) Make any material change in the management of DNI or its
subsidiaries, including, but not limited to, hiring, replacing or
discharging of the chief executive officer of DNI or Denver Post; or
(14) Refinance or refund, or amend, supplement, otherwise modify or
waive any material term of, any existing loan agreement for borrowed money.
8.04 Additional Negative Covenants for Media General's Benefit. (a)
Without the prior written consent of Media General, DNI covenants and
agrees that it shall not, nor shall it permit the Denver Post or any direct
or indirect Subsidiary to, enter into or suffer to exist any loan
agreement, credit facility or other Debt having any (i) cross-default or
cross-acceleration provision that would be triggered by a default on or
acceleration of any Debt or other obligation of ANI or any Subsidiary of
ANI (other than DNI and its Subsidiaries) or (ii) event of default or
change of control provision that would require or permit the acceleration
of any obligation or Debt of DNI or any of its Subsidiaries as a result of
a change of control of ANI.
(b) ANI covenants and agrees with DNI and Media General that without
Media General's consent, ANI and its Subsidiaries (other than DNI and its
Subsidiaries) shall not, directly or indirectly, issue or suffer to exist
any Debt in respect of Capitalized Lease Obligations exceeding in the
aggregate $10 million at any one time outstanding.
(c) Capitalized terms in this Section 8.04 not otherwise defined
herein have the meaning set forth in the ANI registration statement in
<PAGE> 21
respect of ANI's Senior Discount Debentures due 2006, as filed with the SEC
on February 10, 1994.
29
9. MISCELLANEOUS
9.01 Indemnification. DNI and ANI hereby jointly and severally agree
to indemnify and hold Media General harmless from and against any damage to
Media General resulting from any material inaccuracies in any
representation or warranty or covenant or breach of any covenant made
herein by any of the ANI Parties, including all actions, suits, judgments,
costs and legal and accounting expenses incident to any of the foregoing.
9.02 Notices. All notices and other communications hereunder shall be
in
writing and deemed to have been duly given if delivered by hand or mailed,
postage prepaid by certified mail, return receipt requested to the
following persons and addresses:
(a) To DNI or ANI: Mr. W. Dean Singleton,
Vice Chairman
Denver Newspapers, Inc.
Suite 525
4888 Loop Central Drive
Houston, Texas 77081
With Copies to: Howell E. Begle, Jr., Esq.
Verner, Liipfert, Bernhard,
McPherson & Hand Chartered
Suite 700
901 15th Street, N.W.
Washington, D.C. 20005
(b) To Media General: Mr. J. Stewart Bryan, III
Chairman
Media General, Inc.
333 East Grace Street
Richmond, Virginia 23219
and
George L. Mahoney, Esq.
General Counsel & Secretary
Media General, Inc.
333 East Grace Street
Richmond, Virginia 23219
30
With Copies to: Stuart Katz, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
or to such subsequent persons and addresses as may be specified by notice.
9.03 Equitable Relief. The parties hereby acknowledge that monetary
damages are insufficient to adequately remedy the damages which will
accrue, or which have accrued, to a party hereto by reason of a failure to
perform any of the obligations required under this Agreement. Therefore, if
any party hereto shall institute any action or proceeding to enforce the
provisions hereof, any person (including DNI) against whom such action or
proceeding is brought hereby waives the claim or defense therein that such
<PAGE> 22
party or personal representative has or have an adequate remedy at law, and
such person shall not advance in any such action or proceeding the claim or
defense that such remedy at law exists.
9.04 The Original Agreement. The parties hereto agree that the
Original Agreement was in effect and binding on them (and on their
respective predecessors in title) from the date thereof to the date of this
Agreement. Except as otherwise expressly provided herein, this Agreement
now contains the entire agreement among the parties and it may not be
modified, changed, or amended unless the same be in writing and signed by
all of the parties hereto, or their successors or assigns.
9.05 Successors and Assigns. All of the terms and conditions herein
contained shall bind each of the parties hereto, their successors, assigns,
distributees, legatees, heirs, executors, administrators and personal
representatives and also any receiver or trustee in bankruptcy or
insolvency. Media General and ANI hereby acknowledge the Norwest Security
Agreement and the security interest created thereby, and agree that in the
event Norwest Bank Colorado, National Association, forecloses on the Denver
Post stock under the terms of the Norwest Security Agreement, neither
31
Norwest Bank Colorado nor any purchaser or subsequent owner of the Denver
Post stock in connection with or following such foreclosure shall be bound
by any term or condition of this Agreement.
9.06 Brokers and Expenses. The parties hereto agree to pay their
respective expenses incurred in connection with this Agreement. Each of the
parties represents that it has had no dealings in connection with this
transaction with any finder, broker or other third party who may have a
claim against any of the parties hereto arising out of or in connection
with any of the transactions contemplated by this Agreement; and each
agrees to indemnify the others against and hold the others harmless from
any and all liabilities (including without limitation, cost of counsel) to
any persons claiming brokerage commissions or finder's fees on account of
services purported to have been rendered on behalf of, or loss of
investment rights or opportunity caused by, the indemnifying party in
connection with this Agreement or the transactions contemplated hereby.
9.07 Waivers. The terms, covenants, representations, warranties or
conditions of this Agreement may be waived only by a written instrument
executed by the party waiving compliance. The failure of any party at any
time or times to require performance of any provision hereof shall in no
manner affect the right at a later time prior to any subsequent change in
capital structure to enforce the same. No waiver by any party of any breach
of any term, covenant, representation, condition or warranty contained in
this Agreement, whether by contract or otherwise, in any one or more
instances, shall be deemed to be or construed as a waiver of any other
breach of any other term, covenant, representation, condition or warranty
contained in this Agreement.
9.08 Announcement. Such public announcement or "release" describing
the transactions provided for herein as may be required by applicable law
or regulation shall be made by the Parties, the same to be approved in
advance by all Parties. No other
32
public announcement or release with respect to the transactions provided
for herein shall be made by any Party, unless the same shall be approved in
advance by the other Parties hereto.
9.09 Captions and Pronouns. The captions appearing in this Agreement
are included solely for the convenience of the parties and shall not be
<PAGE> 23
given any effect in construing this Agreement. Wherever singular pronouns
are used herein, the same shall include the plural, and vice versa and
wherever words of any gender are used herein, such words shall include
other genders.
9.10 Choice of Law. This Agreement shall be construed and interpreted
in accordance with the internal laws of the Commonwealth of Virginia,
without regard to the conflict of laws provisions thereof.
9.11 Preemptive Rights Waiver. Each of the Shareholders hereby
irrevocably waives any and all preemptive or similar rights that any of
them may have with respect to the issuance of the shares of Class A and
Class B Common Stock, the Preferred Stock and the Warrant, and with respect
to the shares of Class A Common Stock that will be issued upon the exercise
of the Warrant.
9.12 Additional Provisions Re Sale of Class A and Class B Common Stock
Tag-Along Rights.
(a) Except as provided in paragraph (g), no Selling Shareholder
shall, individually or collectively, in any one transaction or series of
transactions, directly or indirectly, sell or otherwise dispose of shares
of Class A Common Stock, Class B Common Stock or, in the case of Media
General, the Warrant, including the shares of Class A Common Stock issued
and issuable upon exercise of the Warrant (for purposes of this Section
9.12, collectively, "Common Stock") to any person (other than ANI or Media
General) (a "Third Party") unless the terms and conditions of such sale or
other disposition to such Third Party shall include an offer to each
Remaining Shareholder (each, a "Tag-Along Offeree") to include at the
option of each Tag-Along Offeree, in the
33
sale or other disposition to the Third Party such number of shares of
Common Stock owned by each such Tag-Along Offeree (including, in the case
of Media General, any shares issued or issuable upon exercise of the
Warrant) at the time of such sale or other disposition determined in
accordance with this Section. The Selling Shareholder proposing to effect
such sale or other disposition (the "Transferor") shall send a written
notice (the "Tag-Along Notice") to each of the Tag-Along Offerees setting
forth the number of shares of Common Stock the Third Party is willing to
purchase or otherwise acquire. At any time within 45 days after its receipt
of the Tag-Along Notice, each of the Tag-Along Offerees may exercise its
option to sell a number of shares of Common Stock (including, in the case
of Media General, any shares issuable upon exercise of the Warrant) owned
by such Tag-Along Offeree determined in accordance with the provisions of
paragraph (b) of this Section 9.12 by furnishing written notice of such
exercise (the "Tag-Along Exercise Notice") to the Transferor, which Tag-
Along Exercise Notice shall set forth the maximum and minimum number of
shares of Common Stock that such Tag-Along Offeree wishes to sell or
otherwise dispose of to the Third Party.
(b) If the proposed sale or other disposition to the Third Party by
the Transferor is consummated, each Tag-Along Offeree shall have the right
to sell to the Third Party as part of such proposed transfer the same
percentage of the total number of shares of Common Stock then owned by such
Tag-Along Offeree (including, in the case of Media General, any shares
issuable upon exercise of the Warrant) as the percentage of the total
number of shares of Common Stock then owned by the Selling Shareholder
(including, in the case of Media General, any shares issuable upon exercise
of the Warrant) to be sold to the Third Party; provided, however, that, in
the event that the total number of shares of Common Stock proposed to be
sold or otherwise disposed of by the Transferor and all Tag-Along Offerees
as set forth in their respective Exercise Notices exceeds the maximum
<PAGE> 24
number of shares of Common Stock that the Third Party is willing to
purchase or otherwise acquire, then the number of shares of Common Stock to
be sold
34
by the Transferor and the Tag-Along Offeree who have given Tag-Along
Exercise notices shall be allocated among the Transferor and such Tag-Along
Offerees (with rounding to avoid fractional shares) in proportion to the
number of shares of Common Stock that each of them originally proposed to
sell or otherwise dispose of to the Third Party; provided that if such
allocation would result in any such Tag-Along Offeree selling or disposing
of less than the minimum number of shares of Common Stock as set forth in
such Tag-Along Offeree's Tag-Along Exercise Notice, such Tag-Along Exercise
Notice shall be revoked and the shares of Common Stock which such Tag-Along
Offeree would otherwise have been entitled to sell or dispose of to the
Third Party shall be allocated among the Transferor and the other Tag-Along
Offerees who have given Tag-Along Exercise Notices in accordance with the
foregoing provisions of the sentence. All calculations pursuant to this
paragraph shall exclude and ignore any unissued shares of Common Stock
issuable pursuant to stock options, warrants (except the Warrant) and other
rights to acquire shares of Common Stock.
(c) Notwithstanding the provisions of this Section 9.12, if Media
General is entitled to sell all of the shares of Common Stock issuable upon
exercise of its Warrant pursuant to this Section 9.12, it shall, at its
election, be entitled to transfer the Warrant to the Third Party for the
same consideration it would have received for such shares of Common Stock
minus the exercise price of the Warrant. If, in the reasonable opinion of
Media General's counsel, in connection with a sale of any shares of Common
Stock (including shares issuable upon exercise of the Warrant) or the
Warrant which Media General proposed to make under or pursuant to this
Article, Media General is required to comply with the provisions of the
HSR, and it is making reasonable efforts to so comply, then the sale of
Common Stock to a Third Party shall be deferred until such time that Media
General has complied with HSR.
(d) Each of the Transferor and the Third Party shall have the right,
in its sole discretion, at all times prior to consummation of the proposed
sale or
35
other disposition giving rise to the tag-along right granted by this
Section 9.12, to abandon, rescind, annul, withdraw or otherwise terminate
such sale or other disposition whereupon all tag-along rights in respect of
such sale or other disposition pursuant to this Section 9.12 shall become
null and void, and neither the Transferor nor the Third Party shall have
any liability or obligations to any Tag-Along Offeree with respect thereto
by virtue of such abandonment, rescission, annulment, withdrawal or
termination.
(e) The purchase from the Tag-Along Offeree pursuant to this Section
9.12 shall be on the same terms and conditions, including but not limited
to the per share price and the date of sale or other disposition, as are
applicable to the Transferor which shall be as stated in the Tag-Along
Notice provided to the Tag-Along Offerees by the Transferor.
(f) If within 45 days after receipt of the Tag-Along Notice, any Tag-
Along Offeree has not delivered a Tag-Along Exercise Notice, such Tag-Along
Offeree will be deemed to have waived any and all of its rights with
respect to the sale or other disposition of Common Stock described in the
Tag-Along Notice and the Transferor shall have 90 days after the expiration
<PAGE> 25
of such 45 day period in which to sell or otherwise dispose of not more
than the number of shares of Common Stock described in the Tag-Along Notice
(minus the number of shares of Common Stock sold or otherwise disposed of
to the Third Party by Tag-Along Offerees) on terms not more favorable to
the Transferor than were set forth in the Tag-Along Notice. If, at the end
of 90 days following the receipt of the Tag-Along Notice, the Transferor
has not completed the sale or other disposition of Common Stock of the
Transferor in accordance with the terms described in the Tag-Along Notice,
all the restrictions on sale or other disposition contained in this
Agreement with respect to Common Stock owned by the Transferor shall again
be in effect.
36
(g) The provisions of this Section 9.12 shall not be applicable to
any transfer of Common Stock pursuant to Section 3.02(a), 3.02(b), 3.02(c),
3.02(e) or 4 of this Agreement.
9.13 Registration Rights. From and after the date hereof Media
General, as holder of the Warrant and the shares of Class A Common Stock
issued or issuable upon exercise of the Warrant, shall have registration
rights with respect to such shares of Class A Common Stock as set forth at
Exhibit B hereto, which is hereby incorporated in full herein, and with
respect to any other "Registrable Securities," as defined therein.
9.14 Facsimile Signatures: Counterparts. This Agreement may be
executed by facsimile signatures and in one or more counterparts, each of
which shall be deemed an original and all of which together will constitute
one and the same instrument.
37
IN WITNESS WHEREOF, the parties have signed this Agreement as of the date
and year first shown above.
DENVER NEWSPAPERS, lNC.
By: /s/ E.M. Fluker
Its: Senior Vice President/Administration
MEDIA GENERAL, INC.
By: /s/ J.S. Bryan III
Its: Chairman and President
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
By: /s/ E.M. Fluker
Its: Senior Vice President/Administration
THE SINGLETON FAMILY IRREVOCABLE TRUST
<PAGE> 26
By: /s/ Howell E. Begle, Jr.
Howell E. Begle, Jr.
(for purposes of Section 1.01 and Section 7 only)
By: /s/ Patricia Robinson
Patricia Robinson, Trustee
(for purposes of Section 1.01 and Section 7 only)
THE SCUDDER FAMILY 1987 TRUST
By: /s/ Jean L. Scudder
Jean L. Scudder, Trustee
(for purposes of Section 1.01 and Section 7 only)
38
THE SCUDDER FAMILY VOTING TRUST AGREEMENT FOR
DENVER NEWSPAPER, INC.
By: /s/ Jean L. Scudder
Jean L. Scudder, Trustee
(for purposes of Section 1.01 and Section 7 only)
/s/ Charles A. Scudder
Charles Scudder, Individually
(for purposes of Section 1.01 and Section 7 only)
/s/ Jean L. Scudder
Jean L. Scudder, Individually
(for purposes of Section 1.01 and Section 7 only)
GARDEN STATE NEWSPAPERS, INC.
By: /s/ W. Dean Singleton
William Dean Singleton
Its Vice Chairman
(for purposes of Section 1.01 and Section 7 only)
39
<PAGE> 27
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
for
DENVER NEWSPAPERS, INC.
Restated as of May 20, 1994
<PAGE> 28
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
Table of Contents
Article
I. (Name of Corporation) 1
II. (Registered Agent and Office) 1
III. (Nature of Business) 2
IV. (Capital Stock) 2
Common Stock 2
Voting Rights Generally 2
Voting For Election of Directors 2
Voting Regarding Other Matters 3
Dividends 4
Other Distributions 4
Conversion of Class A Shares 4
Conversion of Class B Shares 4
Termination of Separate Class Voting Rights 5
Action Without Meeting 5
9% Cumulative Preferred Stock 6
Dividends 6
Preferences 6
Protective Provisions 7
Redemption 8
Voting 9
V. (Perpetual Existence) 9
VI. (Management) 10
Board of Directors 10
By-Laws 10
Voting Rights 11
VII. (Indemnification) 11
Right to Indemnification 12
Right of Claimant to Bring Suit 13
Non-Exclusivity of Rights 14
Insurance 14
i
VIII. (Cumulative Voting) 15
IX. (Subject to Delaware Law) 15
ii
<PAGE> 29
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF DENVER NEWSPAPERS, INC.
Denver Newspapers, Inc., a Corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation), hereby certifies as follows:
1. The name of the Corporation is Denver Newspapers, Inc. The
Corporation was originally incorporated under the name Denver Newspapers,
Inc., and the Certificate of Incorporation was filed on September 11, 1987,
with the Secretary of State of the State of Delaware;
2. On December 1, 1987, a Certificate of Amendment of certificate
of Incorporation and a Certificate of Designation with respect to the
Corporation's 9% cumulative preferred stock were duly filed with the
Secretary of State of the State of Delaware;
3. On December 14, 1992, an Amended and Restated Certificate of
Incorporation was duly filed with the Secretary of State of the State of
Delaware; and
4. The Board of Directors of the Corporation, by a unanimous written
consent dated May 20, 1994, duly approved resolutions declaring this
Second Amended and Restated Certificate of Incorporation of the
Corporation to be advisable and submitting the same for approval by the
stockholders of the Corporation, such Amendment and Restatement to read in
its entirety as follows:
FIRST: The name of the Corporation (hereinafter called the
"Corporation") is: Denver Newspapers, Inc.
SECOND: The address, including street number, city and county,
of the registered Office of the Corporation in the State of Delaware is 32
Loockerman Square, Suite L-100, City of Dover, County of Kent; and the
name of the registered agent of the
1
Corporation in the state of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
THIRD: The nature of the business and of the purpose to be conducted
and promoted by the Corporation shall be to conduct any lawful business, to
promote any lawful purpose, and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is as follows:
1. One Hundred Twenty (120) shares of Class A Common Stock, with a
par value of One Dollar ($1.00) per share;
2. One Hundred Twenty (120) shares of Class B Common Stock, with a
par value of One Dollar ($1.00) per share: and
3. One Thousand Two Hundred (1,200) shares of preferred stock with
a par value of one cent ($0.01) per share and a stated value of Twenty-Five
Thousand Dollars ($25,000.00) per share, designated "9% Cumulative
Preferred Stock" (hereinafter, the "9% Cumulative Preferred Stock").
COMMON STOCK
Voting Rights Generally. Except as otherwise provided by law or by
the powers, preferences and other specific rights of the 9% Cumulative
Preferred Stock, as set forth below, the holders of the Corporation's Class
A and Class B Common Stock shall have the exclusive right to vote for the
election of Directors and for all other purposes.
<PAGE> 30
Voting For Election of Directors. With respect to the
2
election of Directors, the holders of Class A and Class B Common stock
shall vote separately, as separate classes, and each class shall be
entitled to elect one-half of the whole Board of Directors,
provided, however, that until the Corporation issues Class A Common Stock,
the holders of the Class B Common Stock shall be entitled to elect the
entire Board of Directors and to vote upon and take all other actions
requiring shareholder voting or approval. The filling of any vacancy
with respect to a Director shall be voted upon solely by the holders of the
class of Common stock which elected the Director with respect to whose term
the vacancy relates. In connection with all elections of Directors, the
number of votes to which each shareholder shall be entitled shall be as set
forth in the Eighth Article of this Certificate. No election of Directors
need be by written ballot.
Voting Regarding Other Matters. Whenever the holders of Class A or
Class B Common Stock shall vote upon any matter other than the election or
removal of Directors, they shall vote separately, as separate classes,
provided, however, that until the Corporation issues Class A Common Stock,
the holders of the Class B Common Stock shall be entitled to vote upon and
take all actions requiring shareholder approval. In each such
circumstance, unless otherwise expressly provided by law, or by this Second
Amended and Restated Certificate of Incorporation, the affirmative vote of
three-fourths of the shares voted by the holders of each class of Common
Stock shall be required for the approval of any matter voted upon. In
connection with all such matters upon which the holders of Class A and
Class B Common Stock are entitled to vote, each holder of the Class A or
Class B Common Stock shall be entitled to one vote for
3
each share held.
Dividends. Subject to all of the rights of the 9% Cumulative
Preferred Stock, the holders of the Class A and Class B Common Stock shall
be entitled to receive, when, as and if declared by the Board of Directors,
out of funds legally available therefor, dividends payable in cash, stock
or otherwise. In connection with all such dividends, each share of Class A
and Class B Common Stock shall have equal rights of participation, in all
respects.
Other Distributions. Upon any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, and after the holders
of the 9% Cumulative Preferred Stock of the Corporation shall each have
been paid in full the amounts to which they shall be entitled or a sum
sufficient for such payments in full shall have been set aside, the
remaining net assets of the Corporation shall be distributed pro rata to
the holders of the Class A and Class B Common Stock, to the exclusion of
the holders of the 9% Cumulative Preferred Stock. In connection with all
such distributions, each share of Class A and Class B Common Stock shall
have equal rights of participation, in all respects.
Conversion of Class A Shares. Effective upon any sale or transfer of
the legal or beneficial ownership of any shares of Class A Common Stock to
the then legal or beneficial owner of any shares of Class B Common Stock or
to the purchaser of any Class B Common Stock pursuant to any right of
participation, all shares of Class A Common Stock thus transferred
shall immediately be converted, on a share for share basis, to shares of
Class B Common Stock.
<PAGE> 31
Conversion of Class B Shares. Effective upon any sale or
4
transfer of the legal or beneficial ownership of any shares of Class B
Common Stock to the then legal or beneficial owner of any shares of Class A
Common Stock or to a purchaser of any Class A Common stock pursuant to any
right of participation, all shares of Class B Common Stock thus
transferred shall immediately be converted, on a share for share basis,
to shares of Class A Common Stock.
Termination of Separate Class Voting Rights. Once the
Corporation has issued Class A Common Stock, then all rights of holders of
the Class A and Class B Common Stock to vote separately upon matters, as
set forth above, and all rights of holders separately to elect one-half
of the whole Board of Directors of the Corporation, as set forth above,
shall thereafter immediately terminate whenever the number of shares
outstanding of either Class shall at any time be less than 20. Upon such
termination, the holders of each outstanding share of Class A and Class B
Common Stock shall thereafter be entitled to one vote for each share held
(except as otherwise expressly provided in the Eighth Article hereof), and
all matters to be voted upon shall be voted upon jointly by the holders of
the shares of both Classes of Common Stock.
Action Without Meeting. Whenever the vote of stockholders at a
meeting thereof is required or permitted to be taken for or in connection
with any corporate action, the meeting and vote of stockholders may be
dispensed with and such action may be taken With the written consent of
stockholders having not less than the minimum percentage of the vote
required by this Second Amended and Restated Certificate of Incorporation
for the proposed corporate
5
action, provided that prompt notice shall be given to all stockholders of
the taking of corporate action without a meeting and by less than unanimous
consent.
9% CUMULATIVE PREFERRED STOCK
Dividends. The holders of the 9% Cumulative Preferred Stock shall be
entitled to receive, when and as declared by the Board of Directors, yearly
dividends which shall accrue from day to day from the date of issuance at
the rate of 9% of its Stated Value per annum and no more, payable on the
first day of each January, with proper adjustment for any dividend period
which is less than a full year. Such dividends shall be payable before any
dividend shall be paid upon, or set apart for, the Class A or Class B
Common Stock of the Corporation and shall be cumulative, so that if in any
annual dividend period, dividends at the aforesaid rate shall not have been
paid upon or set apart for the 9% Cumulative Preferred Stock, the
deficiency shall be fully paid or declared and set apart for payment before
any dividend shall be paid upon, or set apart for, the Common Stock. No
dividends or Distributions shall be declared or paid on the Class A or
Class B Common Stock or any other Capital Stock, as defined below nor shall
any such stock be redeemed or repurchased in whole or in part, unless and
until the Stated Value of, and all dividends accrued on, the 9% Cumulative
Preferred Stock shall have been paid in full. The dividends on the 9%
Cumulative Preferred Stock shall be cumulative from the original date of
issuance of each certificate evidencing shares thereof as evidenced by the
date appearing on such certificates (December 1, 1987).
<PAGE> 32
Preferences. Upon any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, and whether
6
or not the Corporation shall have a surplus or earnings available for
dividends or upon any distribution of capital or in the event of its
insolvency, there shall be paid to the owners of the 9% Cumulative
Preferred Stock after the payment in full of all the Corporation's debts
and prior to any payment being made to the holders of the Common Stock of
the Corporation, a sum equal to (a) $25,000 per share plus (b) an amount
equal to all dividends accumulated and unpaid thereon, whether earned or
declared or not; but such owners shall not participate in any further
distribution of the surplus assets of the Corporation. If the assets
remaining after payment of the Corporation's debts are insufficient to pay
the full amount due with respect to the 9% Cumulative Preferred Stock as
hereinabove provided, such assets as remain shall be divided among the
holders of the 9% Cumulative Preferred Stock in proportion to the number of
shares of such 9% Cumulative Preferred Stock held.
Protective Provisions. So long as any shares of the 9% Cumulative
Preferred Stock remain outstanding, the unanimous consent of the
holders of such 9% Cumulative Preferred Stock given in writing or at a
special meeting called for that purpose, at which the holders of the 9%
Cumulative Preferred Stock shall vote separately as a class, shall be
necessary for effecting or validating any one or more of the following
transactions:
1. The amendment of the Corporation's Charter or By-Laws;
2. The issuance by the Corporation of any authorized but unissued
stock of any class (other than to effect the conversion of Class A and
Class B Common Stock under certain circumstances described above under the
headings "Conversion of Class A Shares"
7
and "Conversion of Class B Shares" or upon exercise of the warrant to
purchase Class A Common Stock dated December 10, 1992 issued to Media
General, Inc.);
3. The sale, lease, encumbrance, conveyance, transfer or other
disposition by the Corporation of all its property or business or any
material part thereof necessary to continued conduct of its business or the
parting with control thereof, or the voluntary dissolution, liquidation
or winding up of the Corporation; it being understood that any
such sale, lease encumbrance, conveyance, transfer or other disposition
the proceeds of which are used to repay obligations under the Denver Post
Credit Agreement, as defined below, shall not require such vote.
4. The merger of the Corporation into any other corporation, the
merger of any other corporation into the Corporation, or the consolidation
of the Corporation with any other corporation; or
5. Any of the actions set forth in Article I, Section 9 of the By-
Laws of the Corporation.
Redemption. On the 9% Cumulative Preferred Stock Redemption Date (as
hereinafter defined) the entire amount of the 9% Cumulative
Preferred Stock issued and outstanding shall be purchased and
redeemed, to the extent the Corporation may legally do so, and the holders
of the shares so purchased or redeemed shall be paid an amount (the
"Redemption Amount") in cash equal to (a) $25,000 per share, the Stated
Value thereof (the "Capital Portion of the Redemption Amount"), plus (b)
the unpaid cumulative preferred dividends thereon accrued from the date
<PAGE> 33
of issuance of each share of the 9% Cumulative Preferred Stock to the
Redemption Date whether or not earned or declared (the "Dividend Portion of
8
the Redemption Amount"). All payments made with respect to the 9%
Cumulative Preferred Stock shall be credited, first, to accrued and unpaid
dividends and, second, to the Capital Portion of the Redemption Amount.
The 9% Cumulative Preferred Stock Redemption Date shall be the earliest of:
(a) June 30, 1999, (b) the date on which such redemption shall be
permissible under the Denver Post Credit Agreement, (c) the date on which
the Corporation ceases to own directly at least 51% of all of the
outstanding capital stock of the Denver Post and (d) the date on which the
Corporation, directly or indirectly, causes or permits the Denver Post to
dispose of (by sale, merger, or any other transaction) or to cease to own,
voluntarily or involuntarily, all or substantially all of the assets of the
Denver Post. As used herein, "Denver Post Credit Agreement" means the
Credit Agreement dated as of December 10, 1992 among Bankers Trust Company,
Denver Post, Denver Media Holdings Inc., the Corporation and the other
banks parties thereto and all Loan Documents (as defined therein) as each
such agreement may be amended, or supplemented or otherwise modified or
waived from time to time, plus any agreement, instrument or
indenture which refinances or refunds in whole or in part any of the
obligations under any such agreement (including successive refinancings).
Voting. The holders of the 9% Cumulative Preferred Stock shall not
have any voice or vote in the management of the Corporation nor in any
proceedings requiring the affirmative vote or consent of stockholders,
except as elsewhere provided in this Second Amended and Restated
Certificate of Incorporation, or in the Corporation's By-laws, as amended
from time to time.
FIFTH: The Corporation is to have perpetual existence.
9
SIXTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs of
The Corporation shall be vested in its Board of Directors. The number
of Directors which shall constitute the whole Board of Directors shall be
such even number of Directors as shall be fixed from time to time by, or in
the manner provided in, the By-Laws. The phrase "whole board" and the
phrase "total number of directors" shall be deemed to have the same
meaning, to wit, the total number of Directors which the Corporation would
have if there were no vacancies.
2. The power to adopt, amend, or repeal the By-Laws and to adopt new
By-Laws shall be exercised by the unanimous vote of all Directors then
serving on the Board of Directors, or by the affirmative vote of the
holders of at least three-fourths of the shares of each of the
Corporation's Class A and Class B Common Stock, voting as separate classes,
in either case with the consent of the holders of the Corporation's 9%
Cumulative Preferred Stock, provided, however, that any provision for the
classification of directors of the Corporation for staggered terms pursuant
to the provisions of subsection (d) of Section 141 of the General
Corporation Law of the State of Delaware shall be set forth in a By-Law
adopted by the holders of a majority of each of the Corporation's Class A
<PAGE> 34
and Class B Common Shares, voting as separate classes, unless provision for
such classification shall be set
10
forth in this Second Amended and Restated Certificate of
Incorporation.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the Corporation shall be authorized to issue more than one class of stock,
no outstanding share of any class of stock which is denied voting power
under the provisions of this Second Amended and Restated Certificate of
Incorporation shall entitle the holder thereof to the right to vote at any
meeting of stockholders except as the provisions of paragraph (b)(2) of
Section 242 of the General Corporation Law of the State of Delaware shall
otherwise require; provided, that no share of any such class which is
otherwise denied voting power shall entitle the holder thereof to vote upon
the increase or decrease in the number of authorized shares of said class.
SEVENTH: A Director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except for liability:
a. For any breach of the Director's duty of loyalty to the
Corporation or its stockholders;
b. For acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
c. Under Section 174 of the General Corporation Law of the
State of Delaware; or
d. For any transaction from which the Director derived
11
an improper personal benefit.
1. Rights to indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he
or she, or a person of whom he or she is the legal representative, is or
was a director or officer, of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another Corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official
capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the
same exists or may thereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
<PAGE> 35
therewith and such indemnification shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators; provided,
however, that except as provided in the
12
following section hereof, "Right of Claimant to Bring Suit," the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification
conferred in this Article shall be a contract right and shall include the
right to be paid by the Corporation the expenses incurred in defending any
such proceeding in advance of its final disposition, which indemnification
or advancement of expenses shall not require an undertaking, by or on
behalf of the director or officer so indemnified, to repay all amounts
so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified, unless the General Corporation
Law of the State of Delaware shall be construed to so require. The
Corporation may, by action of its Board of Directors, provide
indemnification of Directors and officers.
2. Right of Claimant to Bring Suit. If a claim under the preceding
section, "Right to Indemnification," is not paid in full by the Corporation
within thirty days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suite against
the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be
paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the
13
standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct get forth in the General
Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable
standard of conduct.
3. Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, By-Law,
agreement, vote of stockholders or disinterested directors or otherwise.
4. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of
the Corporation or another corporation, partnership, joint venture, trust
<PAGE> 36
or other enterprise against any such expense, liability or loss whether or
not the Corporation would have the power to indemnify such person against
such expense, liability or
14
loss under the General Corporation Law of the State of Delaware.
EIGHTH: At all elections of directors of the Corporation, each holder
of stock entitled to vote in the election of directors shall be entitled to
as many votes as shall equal the number of votes which (except for this
provision as to cumulative voting) he would be entitled to cast for the
election of directors with respect to his shares of stock multiplied by
the number of directors to be elected by him, and he may cast all of such
votes for a single director or may distribute them among the number to be
voted for, or for any two or more of them as he may see fit.
NINTH: From time to time any of the provisions of this Second Amended
and Restated Certificate of Incorporation may be further amended, altered
or repealed, and other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted in the manner and at
the time prescribed by said laws and this Second Amended and Restated
Certificate of Incorporation, and all rights at any time conferred upon the
stockholders of the Corporation by this Second Amended and Restated
Certificate of Incorporation are granted subject to the provisions of this
Article NINTH.
5. The stockholder of the Corporation approved the aforesaid Second
Amended and Restated Certificate of Incorporation of Denver Newspapers,
Inc. by unanimous written consent dated May 20, 1994 in accordance with
Section 228 of the Delaware General Corporation law.
6. This Second Amended and Restated Certificate of
Incorporation is duly adopted in accordance with the provisions of Sections
242 and 245 of the Delaware General Corporation law.
15
IN WITNESS WHEREOF, Denver Newspapers, Inc. has caused this Second
Amended and Restated Certificate of Incorporation to be executed and
acknowledged in accordance with Section 103 of Title 8 of the Delaware Code
by E. Michael Fluker, its Senior Vice President/Administration and to be
attested by Howell E. Begle, Jr., its Assistant Secretary.
DENVER NEWSPAPERS, INC.
By: /s/ E.M. Fluker
E. Michael Fluker
Senior Vice President
Administration
ATTEST:
/s/ Howell E. Begle, Jr.
Howell E. Begle, Jr.
Assistant Secretary
16
<PAGE> 37
EXHIBIT B
REGISTRATION RIGHTS
1. Certain Definitions. As used in this Exhibit B, the following
phrases shall have the following respective meanings:
"Warrant Shares" shall mean the shares of Class A Common Stock,
with a par value of $1.00 per share (the "Class A Common Stock")
issued or issuable by Denver Newspapers, Inc., a Delaware
corporation ("DNI" or the "Company"), upon exercise of a Warrant
dated December 10, 1992 to purchase shares of Class A Common
Stock of the Company (the "Warrant"), and any other securities
that may be issued or issuable by the Company, or any successor
of the Company, as a dividend or distribution upon or in exchange
for or in replacement or conversion of the Warrant Shares
(including any Class B Common Stock, with a par value of $1.00
per share ("Class B Common Stock"), issued upon conversion of the
Class A Common Stock) or any such other securities.
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities
Act. "Common Stock" shall mean the Class A Common Stock and the
Class B Common Stock.
"Denver Shareholders' Agreement" shall mean the Second Amended
and Restated Stock and Warrant Purchase and Shareholders'
Agreement dated as of May 20, 1994 of which this Exhibit B is a
part.
1
"Exchange Act" shall mean the Securities Exchange Act of 1934 or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
""Holder" shall mean any person who is the owner of record of any
of the Registrable Securities.
"9% Preferred Stock" shall mean the 9% Cumulative Preferred
Stock, with a par value of one cent ($0.01) per share and a
stated value of twenty-five thousand dollars ($25,000.00) per
share, of the Company.
"Registrable Securities" shall mean any Warrant Shares. As to any
particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (a) a Registration
Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities
shall have been disposed of in accordance with such Registration
Statement, (b) they shall have been sold as permitted by, and in
compliance with, Rule 144 (or successor provision) promulgated
under the Securities Act, (c) they shall have been otherwise
transferred, new certificates for them not bearing a legend
restricting further transfer under the Securities Act or the
<PAGE> 38
Denver Stockholders Agreement shall have been delivered by the
Company and subsequent public distribution of them shall not
require registration of them under the Securities Act, or (d)
they shall have ceased to be outstanding.
"Registration Statement" shall mean a Registration Statement
filed or to be filed by the Company to register under the
Securities Act a sale of any of
2
the Registrable Securities by or for the account of any Holder.
Such term includes any prospectus included in the Registration
Statement.
"Securities Act" shall mean the Securities Act of 1933 or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.
"Selling Holders" shall mean the Holders of Registrable
Securities included in a registration under either Section 2 or
Section 3 of this Exhibit B.
"Transfer" shall mean any sale or other disposition of any
Registrable Securities which would constitute a sale thereof
under the Securities Act.
All other capitalized terms not otherwise defined herein shall
have the meaning assigned to such terms in the Denver
Shareholders' Agreement.
2. Piggyback Registration.
(a) If at any time the Company determines that it will file a
Registration Statement for any public offering of its securities, either
for its own account or the account of any security holder (a "Piggyback
Registration"), then the Company shall give written notice to each Holder,
at least 45 days in advance of filing such Registration Statement that such
filing is expected to be made (the "Piggyback Notice"). Such Notice shall
also be given by the Company to all other holders of the Company's
securities that are entitled to registration rights with respect to such
securities and all such holders shall be offered the opportunity to have
such securities included in the Piggyback Registration. Such Notice to each
Holder shall be deemed to be confidential information about the Company and
the Holder hereby agrees to maintain the confidentiality of such
3
information and shall not, directly or indirectly, take any action
(including, without limitation the purchase or sale of the Company's
securities), with respect to such information that is inconsistent with the
confidential nature of such information. Upon the written request of any
Holder received by the Company no later than 30 days following the
Piggyback Notice (the "Piggyback Request"), and subject to the conditions
set forth in this Section 2, the Company shall include in such Registration
Statement all, but not less than all, of the Registrable Securities held by
such Holder for the purpose of registering those Registrable Securities for
<PAGE> 39
sale by or for the account of such Holder. The Company shall have exclusive
control over the filing, amending, withdrawal and other actions regarding
such Registration Statement in accordance with the provisions of Section
2(c) hereof. The Company shall have no obligation to give notice to any
Holder with respect to the filing of, or to include any Registrable
Securities for any Holder in, any Registration Statement on Form S-4 or
Form S-8 (or successor forms thereto).
(b) If the securities to be sold by the Company pursuant to a
Registration Statement described in Section 2(a) hereof, or if none are to
be sold by the Company then if the majority of the securities to be sold by
others pursuant to any such Registration Statement, are to be sold in any
underwritten public offering and are of the same class as the Registrable
Securities, the right of any Holder to have the Registrable Securities
included in the same Registration Statement may be conditioned upon the
inclusion of such Holder's Registrable Securities in the same underwriting.
The Company, all Selling Holders and all other security holders proposing
to sell securities in such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters.
Notwithstanding any other provisions of this Section 2(b), if the managing
underwriter, which shall be a reputable and experienced firm selected by
the Company, determines that marketing factors require a limitation of the
number of securities to be included in the underwriting, the managing
underwriter, in its sole discretion, may either eliminate all Registrable
Securities from such underwriting, or ratably limit the number of
4
Registrable Securities to be included in the underwriting for all Selling
Holders. The Company shall advise all Holders who shall have requested
inclusion of their Registrable Securities in the same underwriting of the
aggregate number of Registrable Securities that may be included for all
Selling Holders. Such aggregate number shall be allocated among all such
Selling Holders in proportion, as nearly as practical, to the number of
Registrable Securities for which each Selling Holder requested
registration. No Registrable Securities excluded from an underwriting by
reason of such marketing limitation shall be included in the Registration
Statement. If any Holder disapproves of the terms of the underwriting, he
may elect to withdraw his Registrable Securities by giving written notice
to the Company and the managing underwriter. After receiving any such
Notice, the Company shall withdraw those Registrable Securities from the
Registration Statement. If a withdrawal of Registrable Securities or any
withdrawal of other securities (except a complete withdrawal of all
securities that were to be sold by the Company, in which case the Company
may withdraw the Registration Statement in its entirety) makes it possible,
within the marketing limitation set by the managing underwriter and the
Company, to include in the underwriting a greater number of Registrable
Securities held by other Selling Holders participating in such
underwriting, then to the extent practical, without delaying the
underwriting, the Company shall offer to all Selling Holders who then have
Registrable Securities included in the underwriting an opportunity to
include additional Registrable Securities in the proportion previously
described in this Section 2(b).
(c) After filing such Registration Statement, the Company shall
use its best efforts and shall take all appropriate actions to cause such
Registration Statement to become effective as soon as practical. After such
Registration Statement becomes effective, the Company shall use its best
efforts and shall take all appropriate actions to maintain the
effectiveness of such Registration Statement for such reasonable period,
not exceeding 15 months, as the Selling Holders participating in such
<PAGE> 40
registration may require to complete their contemplated sales in compliance
with the Securities Act. So long as
5
the Registration Statement remains in effect, the Company shall furnish to
the Selling Holders participating in such registration and their
underwriters such quantities of each prospectus included in the
Registration Statement as they may reasonably request.
3. Registration on Request.
(a) Request. Subject to Section 3(i) hereof, at any time and
from time to time, upon the written request of one or more holders (the
"Initiating Holders") of Registrable Securities representing not less than
25% of the Registrable Securities that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders'
Registrable Securities (a "Demand Notice"), the Company will promptly give
written notice of such requested registration to all registered Holders of
Registrable Securities, and thereupon the Company will use its best efforts
to effect the registration under the Securities Act of
(i) the Registrable Securities which the Company has been
so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the Company has
been requested to register by the Holders thereof by written request
given to the Company within 30 days after the giving of such written
notice by the Company (the "Requesting Holders"), all to the extent
requisite to permit the disposition of the Registrable Securities so
to be registered.
(b) Registration of Other Securities. Whenever the Company shall
effect a registration pursuant to this Section 3 in connection with an
underwritten offering by one or more Selling Holders of Registrable
Securities, no securities other than Registrable Securities shall be
included among the securities covered by such registration unless (a) the
managing underwriter of such offering shall have advised each Selling
Holder of Registrable Securities to be covered by such registration in
writing that the inclusion of such other securities would not adversely
affect such offering or (b) the
6
Selling Holders of not less than 66-2/3% of all Registrable Securities to
be covered by such registration shall have consented in writing to the
inclusion of such other securities.
(c) Registration Statement Form. Registrations under this
Section 3 shall be on such appropriate registration form of the Commission
as shall be selected by the Company and as shall be reasonably acceptable
to the Selling Holders of more than 50% of the Registrable Securities so to
be registered. The Company agrees to include in any such Registration
Statement all information which, in the opinion of counsel to the Selling
Holders of Registrable Securities so to be registered and counsel to the
Company, is required to be included.
(d) Effective Registration Statement. A registration requested
pursuant to this Section 3 shall not be deemed to have been effected (i)
unless a Registration Statement with respect thereto has become effective,
(ii) if after it has become effective, such registration is interfered with
by any stop order, injunction or other order or requirement of the
Commission or other governmental agency or court for any reason not
attributable to the Selling Holders and has not thereafter become
<PAGE> 41
effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure
on the part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or underwriters
of each underwritten offering of the Registrable Securities so to be
registered under this Section 3 shall be selected by the Initiating Holders
with the consent of the Selling Holders (including the Initiating Holders)
of more than 50% of the Registrable Securities so to be registered.
(f) Priority in Requested Registration. If the managing
underwriter of any underwritten offering shall advise the Company in
writing (with a copy to each Selling Holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number
7
which can be sold in such offering within a price range acceptable to the
Selling Holders of 66-2/3% of the Registrable Securities requested to be
included in such registration, the Company will include in such
registration, to the extent of the number which the Company is so advised
can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Selling Holders
requesting such registration on the basis of the percentage of the
Registrable Securities of such Selling Holders requested so to be
registered. No Registrable Securities excluded from an underwriting by
reason of proration under this Section 3(f) shall be included in the
Registration Statement. If the Selling Holders of more than 50% of the
Registrable Securities so to be registered elect to sell their Registrable
Securities in an underwritten public offering, the right of any other
Holder to have Registrable Securities included in the same Registration
Statement shall be conditioned upon the inclusion of such Holder's
Registrable Securities in the same underwriting. All Holders proposing to
sell their Registrable Securities in such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected in the manner set forth above. If any Holder
disapproves of the terms of the underwriting, he may elect to withdraw his
Registrable Securities by giving written notice to the Company and the
managing underwriter. After receiving any such notice the Company shall
withdraw those Registrable Securities from the Registration Statement.
(g) Stock Split. In connection with an initial public offering,
upon request from the Initiating Holders, or the managing underwriters
selected in accordance with Section 3(e), the Company and its shareholders
shall promptly effect a stock split of the Common Stock on a pro rata basis
to provide for such number of shares as the Initiating Holders or such
managing underwriter determines is appropriate.
(h) Limitations if Company Offering in Process. After the
initial public offering of Warrant Shares, notwithstanding the other
provisions of this Section 3, the Company shall not be obligated to file
any Registration Statement pursuant to Section 3
8
hereof during any period commencing with the date of filing of a
Registration Statement under the Securities Act pertaining to an
underwritten public offering of Common Stock to be sold by or for the
account of the Company and ending three months after the effective date of
such Registration Statement, provided that (i) the procedures of Section 2
are complied with in connection with such offering, (ii) the managing
<PAGE> 42
underwriter determined that marketing factors required the exclusion of all
Registrable Securities and (iii) during such period the Company and the
managing underwriter in good faith use reasonable efforts to cause such
Registration Statement to become effective and to complete the public
offering covered by such Registration Statement.
(i) Limitations on Registration on Request. Notwithstanding
anything in this Section 3 to the contrary, in no event will the Company be
required to effect, in the aggregate pursuant to this Section 3, without
regard to the holder of Registrable Securities making such request, more
than three registrations during the term of this Agreement.
4. Registration and Qualification Procedures. Whenever the Company
is required by the provisions of Section 3 to use its best efforts to
effect the registration of any Registrable Securities under the Securities
Act or the Company is required by the provisions of Section 2 to include
Registrable Securities in any registration of its securities, the Company
will:
(i) as expeditiously as possible and in any event within 60 days
of the Demand Notice in the case of a request for registration pursuant to
Section 3, prepare and file with the Commission a Registration Statement
with respect to such Registrable Securities in connection with which the
Company will give each Selling Holder, the underwriters, if any, their
respective counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each prospectus included
therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to
9
discuss the business of the Company with its officers and the independent
public accountants that have examined its financial statements as shall be
necessary, in the opinion of such Selling Holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act;
(ii) in the case of registration required by Section 3, use its
best efforts to cause such registration statement to become effective not
later than 120 days after the Demand Notice;
(iii) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and the prospectus current and to comply with the
provisions of the Securities Act with respect to the sale of the securities
covered by such registration statement whenever the Selling Holder of such
securities shall desire to sell the same; provided, however, the Company
shall have no obligation to file any amendment or supplement at its own
expense more than 15 months after the effective date of such Registration
Statement;
(iv) furnish to each Selling Holder such numbers of copies of
preliminary prospectuses and prospectuses and each supplement or amendment
thereto and such other documents as each such Selling Holder may reasonably
request in order to facilitate the sale or other disposition of the
Registrable Securities owned by such Selling Holder in conformity with (A)
the requirements of the Securities Act and (B) such Selling Holders'
proposed method of distribution;
(v) register or qualify the Registrable Securities covered by
such Registration Statement under the securities laws of such jurisdictions
within the United States as each Selling Holder shall reasonably request,
and do such other reasonable acts and things as may be required of it to
enable each Selling Holder to consummate the sale or other disposition in
<PAGE> 43
such jurisdictions of the securities owned by such Selling Holder;
provided, however, that the Company shall not be required to (A) qualify as
a foreign
10
corporation or consent to a general and unlimited service of process in any
such jurisdictions, or (B) qualify as a dealer in securities;
(vi) furnish, at the request of any Selling Holder on the date
such Registrable Securities are delivered to the underwriters for sale
pursuant to such registration or, if such securities are not being sold
through underwriters, on the date the Registration Statement with respect
to such Registrable Securities becomes effective, (i) an opinion, dated
such date, of counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to each Selling
Holder, covering such legal matters with respect to the registration in
respect of which such opinion is being given as the Selling Holder of such
Registrable Securities may reasonably request and are customarily included
in such opinions and (ii) letters, dated, respectively, (1) the effective
date of the Registration Statement and (2) the date such securities are
delivered to the underwriters, if any, for sale pursuant to such
registration, from a firm of independent public accountants of recognized
national standing selected by the Company, addressed to the underwriters,
if any, and to the Selling Holder making such request, covering such
financial, statistical and accounting matters with respect to the
registration in respect of which such letters are being given as the
Selling Holder of such Registrable Securities may reasonably request and
are customarily included in such letters;
(vii) enter into and perform an underwriting agreement with
the managing underwriter, if any, selected as provided herein, containing
customary (A) terms of offer and sale of the Registrable Securities,
payment provisions, underwriting discounts and commissions, and (B)
representations, warranties, covenants, indemnities, terms and conditions;
the Selling Holders may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of such Selling Holders and that any or all of the
conditions precedent to the obligations of
11
such underwriters under such underwriting agreement be conditions precedent
to the obligations of such Selling Holders; such Selling Holders shall not
be required to make any representations or warranties to or agreements with
the Company or the underwriters other than representations, warranties or
agreements regarding such Selling Holders and such Selling Holders'
intended method of distribution and any other representation required by
law and Section 7(c) hereof; and
(viii) notify each Selling Holder at any time when a
prospectus relating to the registration is required to be delivered under
the Securities Act, upon discovery that, or upon happening of any event as
a result of which, the prospectus included in such Registration Statement,
as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein not misleading in
the light of the circumstances under which they were made, and at the
request of any such Selling Holder promptly prepare and furnish to such
Selling Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that as thereafter
delivered to the purchasers of such securities, such prospectus shall not
<PAGE> 44
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they
were made.
5. Allocation of Expenses. If the Company is required by the
provisions hereof to use its best efforts to effect the registration or
qualification under the Securities Act or any state securities laws of any
Registrable Securities, the Company shall pay all expenses in connection
therewith (other than underwriting discounts and commissions attributable
to the Registrable Securities being registered or qualified), including,
without limitation, (i) all expenses incident to filing with the National
Association of Securities Dealers, (ii) registration fees, (iii) printing
expenses, (iv) accounting and legal fees and expenses, except to the extent
in a registration pursuant hereto the holders of Registrable Securities
elect to engage accountants or attorneys in addition to the accountants and
12
attorneys engaged by the Company and one firm of attorneys for the Selling
Holders, in which case such holders shall pay the fees and expenses of such
additional accountants and attorneys, (v) expenses of any special audits
incident to or required by any such registration or qualification, (vi)
premiums for insurance in such amount, if any, deemed appropriate by the
managing underwriter and (vii) expenses of complying with the securities
laws of any jurisdictions in connection with such registration or
qualification.
6. Indemnifications. In connection with any Registration Statement
filed pursuant to this Exhibit B, the Company shall indemnify and hold
harmless each Selling Holder whose Registrable Securities are included in
the Registration Statement, each underwriter who may purchase from or sell
any Registrable Securities for any such Selling Holder and each person who
controls any such Selling Holder or any such underwriter, within the
meaning of the Securities Act or the Exchange Act and against any and all
losses, claims, damages, and liabilities (joint or several) caused by any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any preliminary prospectus, prospectus or
offering material or any related state securities or "blue sky"
applications or other instruments or caused by any omission or alleged
omission to state in the Registration Statement or any preliminary
prospectus, prospectus or offering material or any related state securities
or "blue sky" applications or other instruments any material fact required
to be stated or necessary to make the statements which are made not
misleading, or any violation or alleged violation of the Exchange Act,
state securities laws, or the rules and regulation thereunder, together
with the costs of investigating and defending any such claim (including
reasonable attorneys' fees) except insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue
statement or omission or alleged omission based upon information furnished
in writing to the Company by such Selling Holder, underwriter or
controlling person expressly for use in the Registration Statement or any
related state securities or "blue sky" applications or other instruments.
Each Selling Holder whose
13
Registrable Securities are included in any Registration Statement filed
pursuant to this Exhibit D shall severally, and not jointly, indemnify the
Company, its directors, each officer signing the Registration Statement,
each other person (including each other Holder) whose securities are
<PAGE> 45
included in the Registration Statement, each underwriter who may purchase
from or sell any securities for the Company or any other person pursuant to
the Registration Statement and each person, if any, who controls the
Company, any such other person or any such underwriter, within the meaning
of the Securities Act, from and against any and all losses, claims, damages
and liabilities caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any related
state securities or "blue sky" applications or other instruments or caused
by any omission or alleged omission to state in the Registration Statement
or any related state securities or "blue sky" applications or other
instruments any material fact required to be stated or necessary to make
the statements which are made not misleading, insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or
alleged untrue statement or omission or alleged omission based upon
information furnished in writing signed by an officer of the Selling Holder
from whom indemnification is sought expressly for use in the Registration
Statement or any related state securities or "blue sky" applications or
other instruments. To the extent the provisions contained in this Exhibit B
are in conflict with any indemnification provisions that are included in
any underwriting agreement entered into by the Company and/or one or more
Selling Holders with one or more underwriters in connection with any
underwritten public offering registered under any Registration Statement
filed pursuant to this Exhibit B, the provision of the underwriting
agreement shall govern. The indemnities provided for in this Section 6
shall be independent of and in addition to any other indemnity provisions
of the Agreement.
14
7 Miscellaneous
(a) Each Selling Holder whose Registrable Securities are
included in any Registration Statement filed pursuant to this Exhibit B
shall furnish to the Company such information regarding such Selling Holder
and the sale proposed by such Selling Holder as may reasonably be required
for inclusion in the Registration Statement or any related state securities
or "blue sky" applications or other instruments, as may be necessary to
provide supplement information to the Commission, the National Association
of Securities Dealers, Inc. or any administrator of any state securities or
"blue sky" law, or as the Company or any underwriter may reasonably
request.
(b) The registration rights granted in this Exhibit B are not
assignable, in whole or in part, without the prior written consent of the
Company, except such rights shall transfer with the ownership of the
Warrant and Registrable Securities.
(c) As a condition to having Registrable Securities included in
any Registration Statement filed pursuant to this Exhibit B, such Holder
may be required to agree, in a manner acceptable to the Company, that in
selling the Registrable Securities the Holder will comply with all
applicable laws and regulations including, but not limited to, Rules 10b-2,
10b-6 and 10b-7, if applicable, promulgated under the Securities Exchange
Act of 1934, as amended.
15
<PAGE> 46
Exhibit C
Verner, Liipfert, Bernhard, McPherson And Hand
Chartered
901-15th Street, N.W.
Washington, D.C. 20005-2301
(202) 376-6000
Telecopier: (202) 371-6279
8280 Greensboro Drive
Suite 601
McLean, Virginia 22102
(703) 749-6000
Telecopier: (703) 749-6027
2600 Texas Commerce Tower
600 Travis
Houston, Texas 77002
(713) 237-9034
Telecopier (713) 237-1216
May 20, 1994
Media General, Inc.
333 Grace Street
Richmond, VA 23219
Ladies and Gentlemen:
We have acted as counsel to Affiliated Newspapers Investments, Inc., a
Delaware corporation, ("ANI"), Garden State Newspapers, Inc., a Delaware
corporation ("Garden State"), Affiliated Newspapers Investment Company, a
Delaware corporation ("ANIC"), Denver Newspapers, Inc., a Delaware
corporation ("DNI"), Denver Media Holdings, Inc., a Delaware corporation
("DNI"), Denver Media Holdings, Inc., a Delaware corporation, ("DMHI"),
North Jersey Newspapers, Inc., a Delaware corporation ("NJNI"), Montclair
Newspapers, Inc., a Delaware corporation ("Montclair"), NJN Holdings L.P.,
a Delaware limited partnership ("NJNLP"), North Jersey Newspapers Company,
a New Jersey general partnership ("NJN Co."), The Singleton Family
Irrevocable Trust, a trust created under an agreement dated October 31,
1991, under the laws of Utah (the "Revocable Trust"), and W. Dean Singleton
in connection with the transactions contemplated by the Letter Agreement
dated March 16, 1994, as amended on May 3, 1994, among Garden State, ANIC
and you (the "Media General Letter Agreement"). (ANI, Garden State, ANIC,
DNI, DMHI, DPC, NJNI, Montclair, NJNLP, NJN Co., the Revocable Trust, the
Irrevocable Trust and W. Dean Singleton are sometimes individually referred
to herein as a "Client" and sometimes collectively referred to herein as
"Our Clients.")
This opinion is being furnished to you at the request of Our Clients
and in satisfaction of the requirement set forth in Section 2.01(e) of the
Second Amended Denver Shareholders' Agreement (as defined below). Any
capitalized term used and not defined herein shall have the meaning
assigned to such term in the Agreements (as such term is defined below).
We have reviewed the following documents, each of which is dated as of
the date hereof, unless otherwise noted:
1. Media General Letter Agreement;
1
<PAGE> 47
2. Stock Purchase Agreement by and between Media General and ANI
(the "Media General Stock Purchase Agreement") relating to the purchase by
ANI from Media General of 400 shares of Class A Common Stock, 600 shares of
Series A Preferred Stock, and 738.663 shares of Series C Preferred Stock of
Garden State;
3. Warrant Purchase Agreement between Media General and ANI (the
"Media General Warrant Purchase Agreement") relating to the purchase by ANI
from Media General of a warrant to purchase shares of Class A Common Stock
of ANIC (the "ANIC Warrant");
4. Exchange Agreement between Media General and Garden State (the
"Media General Exchange Agreement") relating to the exchange (the
"Exchange") by Garden State and Media General of 1,200 shares of Garden
State's Series B Preferred Stock currently owned by Media General for 1,200
shares of DNI 9% Preferred Stock (the "DNI 9% Preferred Stock Shares")
currently owned by Garden State;
5. Second Amended and Restated Stock and Warrant Purchase and
Shareholders' Agreement among ANI, DNI and Media General (the "Second
Amended Denver Shareholders' Agreement") relating to the rights and
obligations of the parties thereto;
6. Capital Contribution Agreement (the "Capital Contribution
Agreement") among ANI, DNI and Media General relating to certain capital
contributions to DNI;
7. Termination Agreement among DPC, DMHI, DNI, The Times Mirror
Company ("Times Mirror"), ANIC, NJNI, NJNLP, NJN Co. and Montclair (the
"Termination Agreement") terminating a Master Agreement dated as of
December 10, 1992 among such parties;
8. Termination of Warrant Agreement among DNI, DMHI and Times Mirror
(the "Termination of Warrant Agreement");
9. Termination of NJN Holders' Agreement by and among NJNLP, ANIC,
NJNI, Montclair, Garden State, the Revocable Trust, the Scudder Family
Voting Trust Agreement for Garden State Newspapers, Inc. and TMACQ, Inc., a
Delaware corporation ("TMACQ") (the "Termination of NJN Holders'
Agreement");
10. Termination of Denver Post Stockholders' Agreement by and among
DMHI, DNI, The Irrevocable Trust, The Scudder Family 1987 Trust, The
Scudder Family Voting Trust for Denver Newspapers, Inc., Jean L. Scudder,
Charles Scudder and The Times Mirror Company (the "Termination of Denver
Post Stockholders' Agreement");
11. Stock and Warrant Purchase Agreement by and between Times Mirror
and DNI (the "Stock and Warrant Purchase Agreement");
2
12. Termination of Rights Agreement by and among NJNLP, DPC and ANIC
(the "Termination of Rights Agreement");
13. Termination of NJNLP Rights Agreement Assignment by and among
DPC, Times Mirror and TMACQ (the "Termination of NJNLP Rights Agreement
Assignment");
14. Waiver Agreement among W. Dean Singleton, Charles Scudder, Jean
L. Scudder, Carolyn S. Miller as custodian for her children, Elizabeth H.
Difani individually and as custodian for her children and Media General
(the "Waiver Agreement");
15. Termination Agreement among Media General, the Revocable Trust,
Charles Scudder, Jean L. Scudder, Carolyn Miller as custodian for her
children, Elizabeth H. Difani as custodian for her children, Jean L.
Scudder as voting trustee under the Scudder Family Voting Trust for Garden
State Newspapers and Garden State (the "Garden State Shareholders'
Termination Agreement"); and
<PAGE> 48
16. Termination Agreement among Media General, Jean L. Scudder as
trustee under the Scudder Family 1987 Trust, Charles Scudder, Jean L.
Scudder, Jean L. Scudder as trustee under the Scudder Family Voting Trust
for Denver Newspapers and ANIC (the "ANIC Shareholders' Termination
Agreement").
The Media General Letter Agreement, Media General Stock Purchase
Agreement, Media General Warrant Purchase Agreement, Media General Exchange
Agreement, Capital Contribution Agreement, Second Amended Denver
Shareholders' Agreement, Termination Agreement, Termination of Warrant
Agreement, Termination of NJN Holders' Agreement, Termination of Denver
Post Stockholders' Agreement, Stock and Warrant Purchase Agreement,
Termination of Rights Agreement, Termination of NJNLP Rights Agreement
Assignment, Waiver Agreement, Garden State Shareholders' Termination
Agreement and ANIC Shareholders' Termination Agreement are sometimes
individually referred to herein as an "Agreement" and sometimes
collectively referred to herein as the "Agreements."
In addition, in connection with the opinions set forth below, we have
examined originals, or copies certified or otherwise identified to our
satisfaction, of such documents, corporate records, certificates and other
instruments as we have deemed necessary or appropriate for the purposes of
this opinion. Furthermore, we have assumed the legal capacity to sign of
all individuals executing documents (other than those of the officers and
representatives of Our Clients), the genuineness and authenticity of all
signatures on original documents, instruments and certificates and the
accuracy of all records of Our Clients made available to us. We have also
assumed that you and all other parties to the Agreements other than Our
Clients (the "Other Parties") have the power and authority to execute,
deliver and
3
perform the Agreements; that you and each of the Other Parties have duly
and validly executed and delivered the Agreements; that the Agreements are
legally valid and binding on and enforceable against you and each of the
Other Parties; and that you and each of the Other Parties will seek to
enforce your or their rights under such Agreements in a commercially
reasonable manner.
With respect to various matters of material facts, we have relied on
representations by officers of Our Clients, and we have assumed the
accuracy of the representations and warranties of all parties thereto in
the Agreements. Where matters are stated to be "to the best of our
knowledge" or "to the best of our knowledge after due inquiry" or "known to
us", our investigations consisted of an inquiry of the officers of Our
Clients and attorneys at our firm who have worked on matters on behalf of
such Client, and a review of the documents contained in our files, and we
have not made any investigation as to, and have not independently verified,
the facts underlying such matters, nor have we undertaken a search of court
dockets in any jurisdiction. The term "threatened," when used herein in
reference to any action, proceeding or investigation, shall have the
meaning ascribed to the term "threatened litigation" as used in the
American Bar Association Statement of Policy on Lawyers Responses to
Auditors' Requests for Information dated January 15, 1976.
We have assumed that there are no additional or subsequent agreements
or modifications or amendments to the Agreements not known to us which
might alter or amend the provisions thereof.
1. Each Client (other than the Revocable Trust, the Irrevocable
Trust and Mr. Singleton) (individually a "Corporate Client" and
collectively the "Corporate Clients") is a corporation incorporated,
validly existing and in good standing under the laws of the State of
<PAGE> 49
Delaware, except DPC is a corporation incorporated, validly existing and in
good standing under the laws of the State of Colorado. Each Corporate
Client has all corporate power and authority, and each other Client has all
necessary power and authority, to enter into the respective Agreement to
which such Client is a party and to carry out the transactions contemplated
thereby.
2. The execution, delivery and performance of each of the Agreements
has been duly authorized by all necessary action by each of Our Clients
which is a party to such Agreement, and each Agreement constitutes a legal,
valid and binding obligation of each Client party thereto, enforceable
against such Client in accordance with its terms.
3. The Second Amended Denver Shareholders Agreement constitutes a
legal, valid and binding obligation of the
4
Irrevocable Trust, enforceable against such Trust and the Trustees and
beneficiaries thereunder.
4. Neither the execution and the delivery of the Agreements, nor the
consummation of the transactions contemplated thereby, will (A) violate any
statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government, governmental
agency, or court to which the Client party to such Agreement is subject (or
any provision of the charter or bylaws of such Client) or (B) to our actual
knowledge, conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest, or other arrangement to which such Client
is a party or by which it is bound or to which any of its assets is subject
where such event would have a material adverse effect on Media General's
rights and/or benefits under the Agreements.
5. Except for such as have been given, made or obtained, Our Clients
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency or other person or entity in order for the parties thereto to
consummate the transactions contemplated by each Agreement.
6. Delivery of a stock certificate evidencing the DNI 9% Preferred
Stock Shares by Garden State to Media General pursuant to the Media General
Exchange Agreement will transfer to Media General good and marketable title
to the DNI 9% Preferred Stock Shares, free and clear of all restrictions on
transfer (other than any restrictions under the Securities Act, state
securities laws, and the Second Amended Denver Shareholders' Agreement) and
any claims, taxes, demands, liens, liabilities, security interests and
encumbrances created by or arising through Garden State.
7. To our actual knowledge, there is no action, proceeding or
investigation brought by any third party pending against any of Our
Clients, and none of Our Clients has received any threat thereof, which
questions the validity of the Agreements or the right of Our Clients to
enter into the Agreements or consummate the transactions contemplated
thereby.
8. The DNI 9% Preferred Stock Shares have been duly and validly
issued, and such Shares are fully paid and nonassessable.
9. With respect to Garden State, the Exchange is a permissible
transaction under the provisions of Section 160 of the General Corporation
Law of Delaware.
5
<PAGE> 50
Our opinions contained herein are subject to the following
qualifications:
(i) Except as set forth in paragraph 9 above, statements in
this opinion as to the validity, binding effect and enforceability of
agreements, instruments and documents are subject (a) to limitations as to
enforceability imposed by bankruptcy, reorganization, moratorium,
insolvency and other laws of general application relating to or affecting
the enforceability of creditors' rights, (b) equitable principles limiting
the availability of equitable remedies, (c) as to rights to indemnify, to
limitations that may exist under federal or state laws and the public
policy underlying such laws, (d) to limitations as to enforceability that
may be imposed under the fraudulent conveyance statutes as currently in
effect, and (e) limitations as to the enforceability of clauses providing
that "time is of the essence" where the passage of time has not prejudiced
the party seeking enforcement of rights granted thereto. In addition, we
express no opinion regarding the availability of any equitable remedy or
relief available upon enforcement of any right under any agreement or
document.
(ii) We render no opinion as to the federal or state securities
laws, rules or regulations.
(iii) We express no opinion on the enforceability or any
provision of any document that provides that the provisions of any document
are severable in the event that a provision of such document is determined
by a court to be material and unenforceable.
(iv) We note that we do not purport to be experts on, or to give
any opinion concerning, the laws of any jurisdiction other than the federal
law of the United States, the General Corporation Law of the State of
Delaware and the laws of the Commonwealth of Virginia.
(v) We have made no independent investigation of any matter
except as herein specified.
(vi) The opinions are limited to the matters set forth in this
letter. No other opinion should be inferred beyond the matters expressly
stated.
(vii) The opinions herein expressed are rendered solely for your
benefit and may not be relied upon by any other person or entity for any
purpose.
(viii) To the extent that you have actual knowledge of any fact
which, at the date hereof, you know to be
6
inconsistent with our opinion as herein set forth, we will not be held
responsible for such inconsistency.
(ix) We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion.
(x) Howell E. Begle, Jr., Of Counsel to this form, is also
General Counsel to Our Clients.
Respectfully submitted,
VERNER, LIIPFERT, BERNHARD,
McPHERSON AND HAND CHARTERED
By: /s/ Michael D. Golden
------------------------
Michael D. Golden
Shareholder
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Media General, Inc.
We consent to the use of our report dated August 26, 1994, with
respect to the consolidated financial statements of Denver Newspapers,
Inc., for the year ended June 30, 1994, included in this Current Report on
Form 8-K dated October 12, 1994, of Media General, Inc., filed with the
Securities and Exchange Commission.
We also consent to the incorporation by reference in (a) the
Registration Statement (Form S-8 No. 2-56905) pertaining to the 1971
Unqualified Stock Option Plan and the 1976 Qualified and Non-Qualified
Stock Option Plans of Media General, Inc.; (b) the Registration Statement
(Form S-8 No. 33-29478) pertaining to the Media General, Inc., Employees
Thrift Plan; (c) the Registration Statement (Form S-8 No. 33-23698)
pertaining to the 1987 Non-Qualified Stock Option Plan of Media General,
Inc.; (d) the Registration Statement (Form S-3 No. 33-26853) pertaining to
the Media General, Inc., Automatic Dividend Reinvestment and Stock Purchase
Plan and (e) the Registration Statement (Form S-8 No. 33-52472) pertaining
to the 1987 Non-Qualified Stock Option Plan of Media General, Inc., amended
and restated May 17, 1991, and in the Prospectus related to each, of our
report dated August 26, 1994, with respect to the consolidated financial
statements of Denver Newspapers, Inc., for the year ended June 30, 1994,
included in this Current Report on Form 8-K dated October 12, 1994, of
Media General, Inc.
ERNST & YOUNG LLP
Denver, Colorado
October 10, 1994
