<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to _________________
Commission File Number _____________
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0425553
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1560 Broadway
Denver, Colorado 80202
---------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 837-0886
-----------------
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether a registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock. As of December 31, 1996:
<TABLE>
<S> <C>
Class B Common Stock: 173,576
Class D Common Stock: 664,450
Class G Common Stock: 1,476,090
Class N Common Stock: 230
</TABLE>
<PAGE> 2
INDEX TO AFFILIATED NEWSPAPERS INVESTMENTS, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Item No. Page
- -------- ----
<S> <C> <C>
PART I - FINANCIAL INFORMATION
------------------------------
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
PART II - OTHER INFORMATION
---------------------------
1 Legal Proceedings 3
2 Changes in Securities 3
3 Defaults Upon Senior Securities 3
4 Submissions of Matters to a Vote of Security Holders 3
5 Other Information 4
6 Exhibits and Reports on Form 8-K 4
</TABLE>
2
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
The information required by this item is filed as part of this Form 10-Q. See
Index to Financial Information at page 5 of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-Q. See
Index to Financial Information at page 5 of this Form 10-Q.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the ordinary course of
business, none of which is expected to result in material loss.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the rights of security holders during the quarter for
which this report is filed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter for which this
report is filed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter for which this report is filed.
3
<PAGE> 4
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
9.1 - Singleton Family Voting Trust Agreement For Affiliated Newspapers
Investments, Inc.
9.2 - Scudder Family Voting Trust Agreement For Affiliated
Newspapers Investments, Inc.
4.3 - Shareholders' Agreement
27 - Financial Data Schedule
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31, 1996.
SIGNATURES
- --------------------------------------------------------------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
Dated: February 13, 1997 By: /s/Joseph J. Lodovic, IV
------------------- -----------------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer of Registrant
4
<PAGE> 5
AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
Index to Financial Information
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Item 1. Financial Statements:
-------
Condensed Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . 6
Unaudited Condensed Consolidated Statements of Operations . . . . . . . . . . . . 8
Unaudited Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . 9
Notes to Unaudited Condensed Consolidated Financial Statements . . . . . . . . . . 10
Item 2. Management's Discussion and Analysis of Financial
-------
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
5
<PAGE> 6
AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
ASSETS 1996 1996
---------------- -----------------
(In thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . $ 2,254 $ 4,615
Accounts receivable, less allowance for doubtful accounts
of $3,694 and $2,426 at December 31, 1996 and
June 30, 1996, respectively . . . . . . . . . . . . . . . 37,061 27,492
Inventories of newsprint and supplies . . . . . . . . . . . 6,168 3,966
Prepaid expenses and other assets . . . . . . . . . . . . . 4,390 2,780
---------------- -----------------
Total Current Assets . . . . . . . . . . . . . . . . . . 49,873 38,853
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,567 5,168
Buildings and improvements . . . . . . . . . . . . . . . . 37,956 32,687
Machinery and equipment . . . . . . . . . . . . . . . . . . 114,278 87,522
---------------- -----------------
Total Property, Plant and Equipment . . . . . . . . . . 159,801 125,377
Less accumulated depreciation and amortization . . . . . . 54,837 50,027
---------------- -----------------
Net Property, Plant and Equipment . . . . . . . . . . . 104,964 75,350
OTHER ASSETS
Investment in Denver Newspapers, Inc. (Note 2) . . . . . . 8,788 4,826
Investment in partnership . . . . . . . . . . . . . . . . . 6,614 6,369
Subscriber accounts, less accumulated amortization of
$51,945 and $48,594 at December 31, 1996 and
June 30, 1996, respectively . . . . . . . . . . . . . . . 57,069 44,220
Excess of cost over fair value of net assets acquired,
less accumulated amortization of $14,595 and $13,267
at December 31, 1996 and June 30, 1996, respectively . . 148,731 65,715
Covenants not to compete and other identifiable intangible
assets, less accumulated amortization of $20,547 and
$19,673 at December 31, 1996 and June 30, 1996,
respectively . . . . . . . . . . . . . . . . . . . . . . 7,588 8,461
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,862 1,871
---------------- -----------------
Total Other Assets . . . . . . . . . . . . . . . . . . . 230,652 131,462
---------------- -----------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . $ 385,489 $ 245,665
================ =================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
6
<PAGE> 7
AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
December 31, June 30,
LIABILITIES AND SHAREHOLDERS' DEFICIT 1996 1996
------------------ ----------------
(In thousands, except share data)
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable . . . . . . . . . . . . . . . . . . $ 3,576 $ 5,884
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 21,818 18,174
Unearned income . . . . . . . . . . . . . . . . . . . . . . 9,494 7,048
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 750 373
Current portion of long-term debt and capital lease
obligation . . . . . . . . . . . . . . . . . . . . . . . 12,162 11,190
---------------- -----------------
Total Current Liabilities . . . . . . . . . . . . . . . 47,800 42,669
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . 464,136 314,510
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 5,796 7,728
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . 12,137 12,275
SHAREHOLDERS' DEFICIT
Common stock, par value $1.00 per share; authorized
4,628,692 shares; 2,314,346 shares issued
and outstanding . . . . . . . . . . . . . . . . . . . . . 23 23
Additional paid-in capital . . . . . . . . . . . . . . . . 3,611 3,611
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . (148,014) (135,151)
---------------- -----------------
Total Shareholders' Deficit . . . . . . . . . . . . . . (144,380) (131,517)
---------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT . . . . . . . . . $ 385,489 $ 245,665
================ =================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
7
<PAGE> 8
AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
-------------------------- ---------------------------
1996 1995 1996 1995
-------------------------- ---------------------------
(In thousands except share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . . $ 78,885 $ 66,720 $ 139,965 $ 123,026
COST AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . . . . 26,722 25,843 50,289 48,717
Selling, general, and administrative . . . . . . . . . 31,693 25,760 58,222 50,103
Depreciation and amortization . . . . . . . . . . . . . 5,829 5,113 10,967 9,954
Interest expense . . . . . . . . . . . . . . . . . . . 12,043 10,542 22,364 20,654
Other, (net) . . . . . . . . . . . . . . . . . . . . . 14,067 383 14,265 1,804
----------- ----------- --------- ------------
TOTAL COST AND EXPENSES . . . . . . . . . . . . . . . 90,354 67,641 156,107 131,232
INCOME IN UNCONSOLIDATED SUBSIDIARY
(Note 2) . . . . . . . . . . . . . . . . . . . . . . . 3,482 1,389 3,962 1,594
----------- ----------- ---------- -------------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . . (7,987) 468 (12,180) (6,612)
INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . . . . . (629) (99) (683) 39
----------- ----------- ---------- -------------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . . . . $ (8,616) $ 369 $ (12,863) $ (6,573)
=========== =========== ========== =============
EARNINGS PER COMMON SHARE:
Net Income (loss) . . . . . . . . . . . . . . . . . . . $ (3.72) $ 0.16 $ (5.56) $ (2.84)
=========== =========== ========== =============
Weighted average number of shares outstanding . . . . . . 2,314,346 2,314,346 2,314,346 2,314,346
=========== =========== ========== =============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
8
<PAGE> 9
AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended December 31,
-------------------------------------
1996 1995
---------------- ----------------
(In thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (12,863) $ (6,573)
Adjustments to reconcile loss to net
cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 10,363 9,522
(Gain) on sale of newspaper property and other assets . . . . . . . -- (36)
Provision for losses on accounts receivable . . . . . . . . . . . . 1,559 1,358
Amortization of debt discount . . . . . . . . . . . . . . . . . . . 8,895 7,767
Debt issuance cost and prepayment premiums . . . . . . . . . . . . . 13,475 1,089
Undistributed earnings in equity investments . . . . . . . . . . . . (4,188) (2,137)
Deferred income tax benefit . . . . . . . . . . . . . . . . . . . . (138) (361)
Change in operating assets and liabilities, net of current
assets and liabilities acquired or sold . . . . . . . . . . . . . (9,077) (8,339)
---------------- ----------------
NET CASH FLOWS FROM OPERATING ACTIVITIES . . . . . . . . . . . 8,026 2,290
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of newspaper property assets . . . . . . . . . . . . . . . . . -- 36
Purchase of newspaper properties . . . . . . . . . . . . . . . . . . (131,811) (21,678)
Purchase of machinery and equipment . . . . . . . . . . . . . . . . (4,948) (2,428)
---------------- ----------------
NET CASH FLOWS FROM INVESTING ACTIVITIES . . . . . . . . . . . (136,759) (24,070)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . 243,800 21,000
Debt issuance cost and repurchase premiums . . . . . . . . . . . . . (13,475) (1,089)
Reduction of long-term debt . . . . . . . . . . . . . . . . . . . . (101,990) (4,384)
Reduction of non-operating liabilities . . . . . . . . . . . . . . . (1,963) (2,697)
---------------- ----------------
NET CASH FLOWS FROM FINANCING ACTIVITIES . . . . . . . . . . . 126,372 (12,830)
---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . (2,361) (8,950)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,615 17,283
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . $ 2,254 $ 8,333
================ ================
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,870 $ 13,731
================ ================
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . $ 507 $ 322
================ ================
</TABLE>
See notes to unaudited condensed consolidated financial statements.
9
<PAGE> 10
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulations S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete consolidated financial statements and should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Affiliated Newspapers Investments, Inc. ("ANI") Annual Report
on Form 10-K for the year ended June 30, 1996. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
three-month period ended December 31, 1996, are not necessarily indicative of
the results that may be expected for the year ended June 30, 1997.
The unaudited condensed consolidated financial statements include the
accounts of Affiliated Newspapers Investments, Inc. and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated upon
consolidation. ANI accounts for its investment in Denver Newspapers, Inc.
("Denver Newspapers") using the equity method of accounting (See Note 2).
Income Taxes
The effective income tax rate varies from the federal statutory rate
primarily because of the nondeductibility of certain expenses.
Business Acquisitions
On October 31, 1996, Garden State acquired substantially all the assets used
in the publication of the Star-News, San Gabriel Valley Tribune, Whittier Daily
News, Times-Standard and The Evening Sun, daily newspapers distributed
primarily in Pasadena, West Covina, Whittier and Eureka, California, and
Hanover, Pennsylvania, respectively, and seven weekly newspapers distributed in
and around these same cities, for a total of $130.0 million in cash. The daily
newspapers combined had daily and Sunday circulation of approximately 161,000
and 163,000, respectively, at March 31, 1996.
The acquisition was accounted for as a purchase; accordingly, the
consolidated financial statements include the operations of the acquired
newspapers from November 1, 1996. The assets acquired and the liabilities
assumed have been recorded at their estimated fair market values as of the date
of acquisition. These fair market values are based on management's estimates
and are subject to change upon the final allocation of the purchase price.
Seasonality
Newspaper companies tend to follow a distinct and recurring seasonal
pattern, with higher advertising revenues in months containing significant
events or holidays. Accordingly, the fourth calendar quarter, or the Company's
second fiscal quarter, is the Company's strongest revenue quarter of the year.
Due to generally poor weather and a lack of holidays, the first calendar
quarter, or the Company's third fiscal quarter, is the Company's weakest
revenue quarter of the year.
10
<PAGE> 11
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: LONG-TERM DEBT
In conjunction with the acquisitions described above, Garden State entered
into a $240.0 million amended and restated bank credit facility (the "Bank
Credit Facility") which was subsequently increased to $285.0 million on January
22, 1997. The Bank Credit Facility is comprised of the following components:
I. A $167.0 million Senior Secured Revolving Credit Facility ("Revolver
A") which matures on June 30, 2003. The commitment under Revolver A
is reduced annually, with a $13.0 million reduction on June 30, 1997,
a $26.0 million reduction on June 30, 1998 and 1999, a $27.0 million
reduction on June 30, 2000 and 2001, a $26.0 million reduction on June
30, 2002, and a final maturity of June 30, 2003. A portion of the
proceeds from Revolver A were used to purchase the newspaper assets
described above. As of the date hereof, $47.0 million is available
under Revolver A for business acquisitions.
II. A $27.0 million Senior Secured Revolving Credit Facility ("Revolver
B") with sublimits of $7.0 million available for standby Letters of
Credit and $5.0 million available for same day borrowings under a
Swingline Facility. No principal payments are required under Revolver
B until March 31, 2004, at which time the commitment is terminated and
all then outstanding balances are due and payable.
III. A $15.0 million Senior Secured Term Loan ("Term Loan A") with a final
maturity of March 31, 2004. Term Loan A requires quarterly
installments beginning June 30, 2002, with total annual payments of
$3.75 million, $7.5 million and $3.75 million in fiscal years ending
June 30, 2002, 2003 and 2004, respectively. Proceeds from Term Loan A
were used in conjunction with Revolver A to fund the aforementioned
acquisitions and to prepay a previously outstanding term loan which
had a balance of $7.5 million.
IV. A $76.0 million Senior Secured Term Loan ("Term Loan B") with a final
maturity of March 31, 2004. Term Loan B requires quarterly principal
payments commencing on September 30, 1997, with annual reductions of
$4.0 million in fiscal year 1998, $7.5 million in fiscal years 1999
and 2000, $12.0 million in fiscal years 2001 and 2002, $14.0 million
in 2003 and $19.0 million in 2004. Proceeds from Term Loan B were
used to prepay Garden State's 10.89% Senior Secured Notes on October
31, 1996, as further described below.
All borrowings under the Bank Credit Facility, except loans under the
Swingline Facility, bear interest at rates based upon, at Garden State's
option, Eurodollars or prime, plus a spread based on Garden State's leverage.
Borrowings under the Swingline Facility bear interest at prime plus a spread
based on Garden State's leverage. Interest on prime borrowings under the Bank
Credit Facility is payable quarterly. Interest on Eurodollar borrowings is due
at the end of the applicable interest rate contract or quarterly if the
interest rate contract exceeds three months. In addition, Garden State pays an
annual commitment fee of 0.50% on the unused commitment under Revolvers A and
B. If the ratio of total debt to operating cash flow is less than 4.00 to
1.00, the commitment fee is reduced to 0.375%.
The Garden State Bank Credit Facility contains certain restrictive covenants
which relate to, among other things, the incurrence of additional debt, capital
expenditures and distributions. Additionally, the agreement requires the
maintenance of certain financial ratios based on leverage, debt service
coverage, interest coverage and fixed charges coverage. Borrowings under the
Garden State Bank Credit Facility are secured by substantially all of Garden
State's tangible and intangible assets and stock of Garden State and its
subsidiaries.
In addition to proceeds from Term Loan B, Garden State received a
distribution of $17.4 million from borrowings under an existing bank credit
facility of a subsidiary. These funds were used to prepay in full Garden
State's 10.89% Senior Secured Notes in the amount of $77,577,686, including
interest of $697,686, and $1.8 million was used to reduce the outstanding
balance of Revolver B to zero. The remaining funds were used to pay a
make-whole payment of $9.5 million and bank fees and other transactional
expenses of approximately $4.5 million. The majority of these costs, which
related to the refinancings, were expensed in the quarter ended December 31,
1996.
11
<PAGE> 12
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: LONG-TERM DEBT--CONTINUED
Maturities of the Company's long-term debt for the remaining six months of
fiscal year 1997 and for the next four fiscal years ending June 30, 2001, are
as follows (in thousands):
<TABLE>
<S> <C>
1997. . . . . . . . . . . . . . . . . . . $ 1,415
1998. . . . . . . . . . . . . . . . . . . 6,409
1999. . . . . . . . . . . . . . . . . . . 45,465
2000. . . . . . . . . . . . . . . . . . . 37,055
2001. . . . . . . . . . . . . . . . . . . 41,383
Thereafter . . . . . . . . . . . . . . 337,075
--------
$468,803
========
</TABLE>
NOTE 3: INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
Basis of Accounting
The Company owns 60 percent of the outstanding common stock of Denver
Newspapers. However, because the Denver Newspaper Shareholder Agreement
provides Media General, the owner of the remaining 40 percent interest in
Denver Newspapers, with a 50 percent representation on the board of directors,
the Company accounts for its investment in Denver Newspapers under the equity
method of accounting.
The following are summarized statements of operations of Denver Newspapers
for the three and six-month periods ended December 31, 1996 and 1995 (in
thousands):
Summarized Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------------- -------------------------
1996 1995 1996 1995
---------- --------- -------- --------
<S> <C> <C> <C> <C>
Total Revenues . . . . . . . . . . . . . . . $ 53,941 $ 47,435 $ 98,407 $ 88,245
======== ======== ======== ========
Cost of Sales . . . . . . . . . . . . . . . . $ 26,567 $ 27,137 $ 52,258 $ 51,040
======== ======== ======== ========
Net income . . . . . . . . . . . . . . . . . $ 6,479 $ 2,990 $ 7,954 $ 4,007
======== ======== ======== ========
Net income applicable to common stock . . . . $ 5,804 $ 2,315 $ 6,604 $ 2,657
======== ======== ======== ========
</TABLE>
12
<PAGE> 13
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4: COMBINED SUMMARIZED FINANCIAL INFORMATION OF AFFILIATED NEWSPAPERS
INVESTMENTS, INC. AND DENVER NEWSPAPERS, INC.
The combined summarized statements of operations include the accounts of ANI
and Denver Newspapers. The companies have common ownership, management and
each have the same fiscal year end. All significant intercompany balances and
transactions have been eliminated. The summarized combined financial
information has been presented to supplement the presentation contained in the
consolidated financial statements of ANI. ANI has a significant economic
interest in Denver Newspapers and may, in the future, be at least partially
dependent upon dividends from Denver Newspapers to service its debt
obligations.
Summarized Combined Statements of Operations (in thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
-------------------------- --------------------------
1996 1995 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . $ 132,826 $ 114,155 $ 238,372 $211,271
========= ========= ========= ========
Cost of Sales . . . . . . . . . . . . . $ 53,289 $ 52,980 $ 110,480 $ 99,757
========= ========= ========= ========
Minority Interest . . . . . . . . . . $ (2,322) $ (926) $ (2,642) $ (1,063)
========= ========= ========= ========
Net Income (loss) . . . . . . . . . . . $ (7,806) $ 1,044 $ (11,513) $ (5,223)
========= ========= ========= ========
Net income (loss) applicable to
common stock . . . . . . . . . . . . . $ (8,481) $ 369 $ (12,863) $ (6,573)
========= ========= ========= ========
</TABLE>
NOTE 5: SUBSEQUENT EVENTS
Disposition
Effective February 14, 1997, the Company has agreed to sell substantially
all the assets used in the publication of the Potomac News and two weekly
publications to Community Newspapers Holdings, Inc. for $48.0 million in cash
plus an adjustment for working capital. The Company estimates it will recognize
a pre-tax gain on the sale of approximately $31.0 million, net of selling
expense, in its third fiscal quarter.
Acquisitions
Effective March 1, 1997, the Company has agreed to acquire substantially all
the assets used in the publication of the Sentinel & Enterprise, The Daily News
and The Daily Nonpareil, daily newspapers located in Fitchburg, Massachusetts;
Lebanon, Pennsylvania; and Council Bluffs, Iowa, respectively, and five weekly
newspapers distributed in and around these same cities, for a total of
approximately $51.5 million in cash. These daily newspapers had daily and
Sunday circulation of approximately 58,000 and 60,000, respectively, at
September 30, 1996. Proceeds from the sale of the Potomac News discussed above
and borrowings will be used to fund the acquisition.
The acquisition will be accounted for as a purchase; accordingly, the
consolidated financial statements will include the operations of the acquired
newspapers from March 1, 1997.
13
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
Three Months Ended December 31, 1996 and 1995
Revenues
Revenues increased $12.2 million or 18.2% in the second quarter of fiscal
year 1997 as compared to the same quarter of fiscal year 1996. The increase in
revenue was attributable to the March, 1996, acquisition of the San Mateo
Times, the April 30, 1996, acquisition of The Transcript and The Evening News,
and the October 31, 1996, acquisition of the Star-News, San Gabriel Valley
Tribune, Whittier Daily News, Times-Standard and The Evening Sun. Combined, the
acquisitions discussed above increased revenues approximately $17.3 million in
the second quarter of fiscal year 1997. These revenue increases were partially
offset by a $4.9 million decline in revenue resulting from the sale of the
Johnstown Tribune Publishing Company on April 30, 1996. Excluding the
newspaper operations described above, the Company's remaining newspaper
operations combined posted a $0.2 million decline in operating revenues for the
second quarter of fiscal year 1997. While operating revenues on a same
newspaper basis were down, all the Company's newspapers except Alameda
Newspaper Group (excluding San Mateo) and North Jersey Newspaper Company posted
an increase in operating revenue. The increase in operating revenue at these
newspapers was approximately $1.0 million and was primarily attributable to a
combined 8.5% and 6.1% gain in classified and retail revenue, respectively.
Alameda Newspaper Group and North Jersey Newspaper Company continue to be
negatively affected by a significant number of out-of-business accounts (either
from store mergers or bankruptcies) which have not yet been cycled through. In
addition, Alameda circulation revenue has been reduced by increased use of
discounts. The Company currently expects that Alameda Newspaper Group and
North Jersey Newspaper Company will begin showing year-over-year quarterly
improvements in operating revenues in the third fiscal quarter.
Cost of Sales
Cost of sales increased $0.9 million or 3.4% in the second quarter of fiscal
1997 compared to the same quarter of fiscal year 1996. The aforementioned
acquisitions caused cost of sales to increase approximately $6.0 million for
the quarter ended December 31, 1996. However, this increase was offset in part
by a $1.6 million decrease in cost of sales resulting from the sale of the
Johnstown Tribune Publishing Company. Excluding acquisition and disposition
transactions, cost of sales decreased approximately $3.5 million or 14.5%. The
decrease in cost of sales at existing newspapers was entirely the result of
declines in the average cost of newsprint of approximately 28.2% combined with
a 1.1% decrease in consumption, primarily associated with efforts to conserve
newsprint, including the conversion to the 50-inch web width which began in
October of 1995 and was completed at the majority of newspapers during fiscal
year 1996. Excluding newsprint, cost of sales on a same newspaper basis
decreased $0.5 million in the second quarter of fiscal 1997.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses increased $5.9 million
or 23.0% in the second quarter of fiscal 1997 compared to the same quarter of
fiscal 1996. The aforementioned acquisitions resulted in SG&A expense increase
of $6.1 million; however, this was in part offset by a $1.4 million reduction
in SG&A expense associated with the sale of the Johnstown Tribune Publishing
Company. Excluding the acquisition and disposition transactions, SG&A expense
increased $1.2 million or 4.7%. The majority of the increase in SG&A is
associated with increases in advertising and circulation expenditures at
Alameda Newspaper Group, which were primarily related to ongoing efforts to
increase advertising lineage and circulation.
14
<PAGE> 15
Other Expense
Other expense, net, increased $13.7 million. The majority of the increase is
attributable to a second quarter fiscal year 1997 charge to write off
approximately $13.5 million of fees and other costs associated with the
Company's term loan and revolving credit facility entered into on October 31,
1996, and prepayment premiums associated with the October 31, 1996, prepayment
of the Company's then outstanding Senior Secured Notes. Proceeds from the term
loan and revolving credit facility were used in part to fund the aforementioned
acquisition and refinancing the Company's Senior Secured Notes.
Denver Newspapers - Unconsolidated Subsidiary
Net income applicable to common stock of Denver Newspapers increased $2.1
million in the second quarter of fiscal year 1997 compared to the same quarter
of fiscal year 1996. The current quarter increase in net income applicable to
common stock at Denver Newspapers was primarily the result of a 13.7% increase
in operating revenues and a 105.6% increase in operating profit, as compared to
the same quarter of the prior year. The increase in revenue and operating
profit is primarily attributable to 10.6% growth in advertising lineage at The
Denver Post, which is a result of an increase in the market size as well as
market share growth. A 25.7% decrease in the average cost of newsprint,
partially offset by a 17.0% increase in consumption, also contributed to the
improvement in Denver Newspapers' operating profit. Denver Newspapers'
acquisition of three daily and three paid weekly newspapers in Eastern Colorado
on May 1, 1996, accounted for approximately 4.0% of the increase in net income
applicable to common stock.
Net Income
ANI recorded adjusted net income of approximately $4.9 million in the second
quarter of fiscal 1997 after excluding the effect of the $13.5 million charge
described above compared to a second quarter of fiscal 1996 net income of $0.4
million. The increase in the adjusted net income was primarily attributable to
a $2.1 million increase in income from Denver Newspapers and a $4.7 million
increase in operating profit at Garden State, which were offset in part by a
$1.5 million increase in interest expense and a $0.5 million increase in income
taxes resulting from improved operating results at Garden State.
OPERATING RESULTS
Six Months Ended December 31, 1996 and 1995
Revenues
Revenues increased $16.9 million or 13.8% in the first six months of fiscal
year 1997 compared to the same six-month period of fiscal year 1996. The
increase in revenue was attributable to the August 31, 1995, acquisition of The
Berkshire Eagle, Brattleboro Reformer and Bennington Banner ("New England
Newspapers"); the March, 1996, acquisition of the San Mateo Times; the April
30, 1996, acquisition of The Transcript and The Evening News; and the October
31, 1996, acquisition of the Pasadena Star-News, San Gabriel Valley Tribune,
Whittier Daily News, Times-Standard and The Evening Sun. Combined, the
acquisitions discussed above increased revenues approximately $26.8 million in
the first six months of fiscal year 1997. These revenue increases were
partially offset by a $9.3 million decline in revenue resulting from the sale
of the Johnstown Tribune Publishing Company on April 30, 1996. Excluding the
newspaper operations described above, the Company's remaining newspaper
operations combined posted a $0.6 million decline in operating revenues for the
first six months of fiscal year 1997. While operating revenues on a same
newspaper basis were down, all the Company's newspapers except Alameda
Newspaper Group (excluding San Mateo) and North Jersey Newspaper Company posted
an increase in operating revenue. The increase in operating revenue at these
newspapers was approximately $1.5 million and was primarily attributable to a
combined 10.4% and 6.5% gain in classified and retail revenue, respectively.
Alameda Newspaper Group and North Jersey Newspaper Company continue to be
negatively affected by a significant number of out-of-business accounts
(either from store mergers or bankruptcies) which have not yet been cycled
through. The Company currently expects that Alameda Newspaper Group and North
Jersey Newspaper Company will begin showing year-over-year quarterly
improvements in operating revenues in the fiscal third quarter.
15
<PAGE> 16
Cost of Sales
Cost of sales increased $1.6 million or 3.2% in the first six months of
fiscal year 1997 compared to the same six-month period of fiscal 1996. The
aforementioned acquisitions caused cost of sales to increase approximately $9.2
million for the period ended December 31, 1996. However, this increase was
offset in part by a $3.1 million decrease in cost of sales resulting from the
sale of the Johnstown Tribune Publishing Company. Excluding acquisition and
disposition transactions, cost of sales decreased approximately $4.5 million or
10.7%. The decrease in cost of sales at existing newspapers was entirely the
result of declines in the average cost of newsprint of approximately 16.6%
combined with a 3.1% decrease in consumption, primarily associated with efforts
to conserve newsprint, including the conversion to the 50-inch web width which
began in October of 1995 and was completed at a majority of newspapers during
fiscal 1996. Excluding newsprint, cost of sales on a same newspaper basis
decreased $0.9 million in the first six months of 1997.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses increased $8.1 million
or 16.2% in the first six months of fiscal year 1997 as compared to the same
six-month period of fiscal year 1996. The aforementioned acquisitions resulted
in SG&A expense increases of $9.7 million; however, this was in part offset by
a $2.7 million reduction in SG&A expense associated with the sale of the
Johnstown Tribune Publishing Company. Excluding the acquisition and disposition
transactions, SG&A expense increased $1.1 million or 2.5%. The increase in SG&A
expense is associated with increases in advertising and circulation
expenditures which were primarily related to ongoing efforts to increase
advertising lineage and circulation.
Other Expense
Other expense, net, increased $12.5 million. The majority of the increase
is attributable to a second quarter fiscal year 1997 charge to write off
approximately $13.5 million of fees and other costs associated with Garden
State's term loan and revolving credit facility entered into on October 31,
1996, and prepayment premiums associated with the October 31, 1996, prepayment
of Garden State's then outstanding Senior Secured Notes. The increase was
partially offset by $1.1 million of financing costs recorded in the same period
of fiscal year 1996 associated with the August, 1995, acquisition. Proceeds
from the term loan and revolving credit facility were used to fund the
aforementioned October 31, 1996, acquisition.
Denver Newspapers - unconsolidated subsidiary
Net income applicable to common stock of Denver Newspapers increased $2.4
million in the first six months of fiscal year 1997 compared to the same period
of fiscal year 1996. The current period increase in net income applicable to
common stock at Denver Newspapers was primarily the result of a 11.5% increase
in operating revenues and a 86.3% increase in operating profit, as compared to
the same period of the prior year. The increase in revenue and operating profit
is primarily attributable to 9.3% growth in advertising lineage at The Denver
Post, which is the result of an increase in the market size as well as market
share growth. A 16.6% decrease in the average cost of newsprint, which was
offset in part by a 14.4% increase in consumption, also contributed to the
improvement in Denver Newspapers' operating profit. Denver Newspapers'
acquisition of three daily and three paid weekly newspapers in Eastern Colorado
on May 1, 1996, accounted for approximately 4.6% of the increase in net income
applicable to common stock.
Net Income
ANI recorded adjusted net income of approximately $0.6 million in the first
six months of fiscal year 1997 after adjusting the loss to exclude the $13.5
million charge for debt issuance cost and prepayment premiums previously
discussed as compared to an adjusted loss of $5.5 million in the first six
months of fiscal year 1996, after excluding the write off of fees and other
costs associated with the term loan and revolving credit facility entered into
on August 31, 1995. The decrease in the loss is primarily attributable to a
$6.2 million increase in operating profit and a $2.4 million increase in income
from Denver Newspapers which is offset in part by an increase in interest
expense of $1.7 million and an increase in tax expense of $0.7 million from the
Company's improved operating results.
16
<PAGE> 17
FINANCIAL CONDITION AND LIQUIDITY
Net cash flows from operating activities were approximately $8.0 million and
$2.3 million for the six months ended December 31, 1996 and 1995, respectively.
The $5.7 million increase in cash flow from operating activities was primarily
the result of a $7.2 million increase in adjusted operating profit, after
excluding depreciation and amortization expense, for the six months ended
December 31, 1996, compared to the same period ended December 31, 1995. The
increase in adjusted operating profit was offset in part by a $0.6 million
increase in cash interest expense.
Net cash flows from investing activities were ($136.8) million and ($24.0)
million for the six months ended December 31, 1996 and 1995, respectively. The
change of approximately $112.8 million was primarily the result of the Company
spending approximately $130.0 million acquiring the Star-News, Whittier Daily
News, San Gabriel Valley Tribune, Times-Standard and The Evening Sun in fiscal
year 1997 compared to $21.7 million related to the acquisitions of The
Berkshire Eagle, Brattleboro Reformer and Bennington Banner in the first six
months of fiscal year 1996. Capital expenditures increased primarily as a
result of the previously announced press upgrade in Easton and new front-end
systems in Potomac and Las Cruces.
Net cash flows from financing activities were $126.4 million and $12.8
million for the six months ended December 31, 1996 and 1995, respectively. The
change of approximately $113.6 million was attributable to the Company
borrowing a net $128.4 million in the first six months of fiscal 1996,
primarily associated with the previously discussed October 31, 1995,
acquisitions and prepayment of the Company's Senior Secured Notes.
Liquidity
Giving effect to the January 22, 1997, Bank Credit Facility, Garden State
and subsidiaries had a combined $74.9 million available for future borrowings,
net of approximately $5.0 million in outstanding letters of credit at January
31, 1997. Approximately $47.0 million of the availability under the bank credit
facility is available exclusively for future business acquisitions.
The Company currently generates sufficient cash flow to meet its capital
expenditure and debt service requirements. Such debt service requirements
increase substantially in fiscal year 2000 as a result of interest on its
Senior Discount Debentures becoming current and payable on a semi-annual basis.
While there can be no assurance, the Company currently expects to have
sufficient internally generated funds to service interest when due; however, a
portion of the face amount may be required to be refinanced at maturity. There
can be no assurance that the Company will be able to refinance its debt when
due. However, based on current and projected cash flows and debt levels, the
Company believes there is minimal refinance risk.
The purchase of Garden State's Class A common stock and the Series A and C
preferred stock by ANI in May, 1994, was financed with debt issued by ANI. The
repayment of ANI's debt, which does not have scheduled interest payments until
January 1, 2000, is in part dependent upon Garden State's and/or Denver
Newspapers' ability to pay dividends to ANI. Garden State's and Denver
Newspapers' debt agreements prohibit the payment of dividends to ANI prior to
June 30, 1999. The Senior Discount Debentures restrict the Company's ability
to incur additional debt and pay dividends.
Denver Newspapers - unconsolidated subsidiary
Denver Newspapers is well capitalized and currently produces cash flows
significantly in excess of its capital expenditure and debt service
requirements; accordingly, management does not anticipate making any additional
capital contributions to Denver Newspapers. At December 31, 1996, Denver
Newspapers had $16.5 million available under its revolving credit facility, net
of $1.6 million in outstanding letters of credit. In addition, at December 31,
1995, Denver Newspapers had working capital of approximately $1.9 million.
17
<PAGE> 18
Denver Newspapers' revolving credit facility and shareholder agreement
prohibit the payment of common stock dividends to ANI until the revolving
credit facility and the 9% preferred stock have been prepaid in full. Denver
Newspapers' revolving credit facility expires July 1, 1999. Denver Newspapers'
preferred stock is mandatorily redeemable on the earlier of (a) June 30, 1999,
(b) the date on which such redemption is permissible under Denver Newspapers'
credit agreement, (c) the date on which Denver Newspapers ceases to own
directly at least 51% of all the outstanding capital stock of the Denver Post
Company, or (d) the date on which Denver Newspapers, directly or indirectly,
causes or permits the Denver Post Company to dispose of substantially all of
the assets of the Denver Post Company. Denver Newspapers declared and paid a
preferred stock dividend of $2.7 million in January, 1997.
NEAR TERM OUTLOOK
The steady increase in newsprint prices came to a halt in the second quarter
of calendar 1996 and, beginning in May, 1996, newsprint suppliers began
lowering prices. From May, 1996 to December, 1996, the discounts offered by
newsprint suppliers continued to accelerate as newsprint supply outpaced
demand. Believing that newsprint demand was beginning to strengthen, several
newsprint suppliers announced in December, 1996, a $75 per metric ton increase
in newsprint, effective February 1, 1997, but the announced increased failed to
take hold. While the February 1, 1997, price increase was unsuccessful, the
Company believes future modest price increases may occur in the near future. If
a price increase does occur, it is not expected to have a significant impact on
the Company's cash flows from operations. As a result of the recent decline in
newsprint prices, the Company is experiencing substantial year-over-year
favorable comparisons in the average cost of newsprint consumed.
Additionally, the Company's operating margins should also continue to
improve as the Company begins to realize the full annualized effect of reduced
consumption resulting from the conversion to 50-inch web widths.
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
9.1 Singleton Family Voting Trust Agreement For Affiliated Newspapers Investments, Inc.
9.2 Scudder Family Voting Trust Agreement For Affiliated Newspapers Investments, Inc.
4.3 Shareholders' Agreement
27 Financial Data Schedule
</TABLE>
<PAGE> 1
SHAREHOLDERS' AGREEMENT
THE SINGLETON FAMILY VOTING TRUST AGREEMENT,
FOR AFFILIATED NEWSPAPERS INVESTMENTS, INC.,
THE SINGLETON SHAREHOLDERS,
THE SCUDDER FAMILY VOTING TRUST AGREEMENT,
FOR AFFILIATED NEWSPAPERS INVESTMENTS, INC.,
THE SCUDDER SHAREHOLDERS,
AND
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
MAY 20, 1994
<PAGE> 2
SHAREHOLDERS' AGREEMENT
May 20, 1994
Table of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. PROPOSED ACTIVITIES OF ANI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.01 Newspaper Publishing Business. . . . . . . . . . . . . . . . . . . . . . . 3
2. RESTRICTIONS UPON SALE OR TRANSFER OF STOCK . . . . . . . . . . . . . . . . . . . 3
2.01 Generally. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.02 Additional Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.03 Tag-Along Restrictions/Rights. . . . . . . . . . . . . . . . . . . . . . . 3
3. PERMITTED TRANSFERS AMONG RELATED PARTIES . . . . . . . . . . . . . . . . . . . . 5
3.01 Permitted Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.02 Agreement of the Trustees. . . . . . . . . . . . . . . . . . . . . . . . . 6
4. TRANSFER OF STOCK BY CONSENT OF PARTIES . . . . . . . . . . . . . . . . . . . . . 6
4.01 Transfer By Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. COMPANY'S AND SHAREHOLDERS' OPTIONS TO PURCHASE STOCK . . . . . . . . . . . . . . 6
5.01 Option to Purchase. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.02 Required Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.03 Scope and Priority of Company's and Remaining Shareholders' Options. . . . 7
5.04 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.05 Failure To Exercise. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.06 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . 10
6. RESTRICTIVE LEGEND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.01 Form of Legend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. GENERAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.01 Applicability of Covenants. . . . . . . . . . . . . . . . . . . . . . . . 13
7.02 Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
8. NO RIGHTS FOR CLASS B COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . 14
8.01 No Rights for Class B Common Stock. . . . . . . . . . . . . . . . . . . . 14
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.01 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.02 Equitable Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
9.03 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.04 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.05 Brokerage and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.06 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.07 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
9.08 Announcement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.09 Captions and Pronouns. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.10 Choice of Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
9.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
i
<PAGE> 3
EXHIBITS
<TABLE>
<S> <C>
The Scudder Family Voting Trust Agreement
for Affiliated Newspapers Investments, Inc. . . . . . . . . . Exhibit A
The Singleton Family Voting Trust Agreement
for Affiliated Newspapers Investments, Inc. . . . . . . . . . Exhibit B
The Amended and Restated Certificate of
Incorporation of Affiliated Newspapers
Investments, Inc. . . . . . . . . . . . . . . . . . . . . . . Exhibit C
The Restated By-Laws of Affiliated Newspapers
Investments, Inc. . . . . . . . . . . . . . . . . . . . . . . Exhibit D
</TABLE>
ii
<PAGE> 4
SHAREHOLDERS' AGREEMENT
AGREEMENT, made as of this 20th day of May 1994, by and among The
Singleton Family Voting Trust Agreement for Affiliated Newspapers Investments,
Inc. (the "Singleton ANI Trust"), by Howell E. Begle Jr., Trustee (the
"Singleton ANI Trust Trustee"), The Singleton Family Irrevocable Trust by
Howell E. Begle, Jr. and Patricia Robinson, Trustees, The Singleton Family
Revocable Trust by William Dean Singleton and Howell E. Begle, Jr., Trustees
(The Singleton Family Irrevocable Trust and the Singleton Family Revocable
Trust are sometimes collectively referred to herein as the "Singleton
Shareholders"), The Scudder Family Voting Trust Agreement for Affiliated
Newspapers Investments, Inc. (the "Scudder ANI Trust") by Jean L. Scudder,
Trustee (the "Scudder ANI Trust Trustee"), Charles Scudder individually, Jean
L. Scudder individually, Carolyn Miller as custodian for her children,
Elizabeth H. Difani as custodian for her children, Elizabeth H. Difani
individually and Jean L. Scudder as Trustee (the "Scudder Family Trustee") for
the Scudder Family 1987 Trust (Charles Scudder individually, Jean Scudder
individually, Carolyn Miller as custodian for her children, Elizabeth H. Difani
individually and as custodian for her children and Jean L. Scudder as the
Scudder Family Trustee are sometimes collectively referred to herein as the
"Scudder Shareholders"), and Affiliated Newspapers Investments, Inc., a
Delaware corporation ("ANI" or the "Company"). The Singleton ANI Trust and the
Singleton Shareholders are sometimes collectively referred to herein as
"Singleton," Messrs. Singleton and Begle, in their capacities as trustees of
the Singleton ANI Trust are sometimes collectively referred to herein as the
"Singleton Trustee," and the Scudder ANI Trust and the Scudder Shareholders are
sometimes collectively referred to herein as "Scudder".
WHEREAS, the current equitable ownership of the Class D Common Stock,
Class G Common Stock and Class N Common Stock of ANI is as follows:
COMMON STOCK OWNERSHIP
<TABLE>
<S> <C>
Singleton Family 738,045 shares of Class G Common Stock
Revocable Trust
Singleton Family 332,225 shares of Class D Common Stock
Irrevocable Trust 115 shares of Class N Common Stock
Jean Scudder, 83,056.25 shares of Class D Common Stock
individually 184,511.25 shares of Class G Common Stock
28.75 shares of Class N Common Stock
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Charles Scudder, 83,056.25 shares of Class D Common Stock
individually 184,511.25 shares of Class G Common Stock
28.75 shares of Class N Common Stock
Jean Scudder, as 166,112.5 shares of Class D Common Stock
Trustee for the
Scudder Family
1987 Trust
Elizabeth H. Difani, 61,503.75 shares of Class G Common Stock
individually 9.58 shares of Class N Common Stock
Elizabeth H. Difani, 123,007.5 shares of Class G Common Stock
as custodian for 19.17 shares of Class N Common Stock
her children
Carolyn Miller, 184,511.25 shares of Class G Common Stock
as custodian for 28.75 shares of Class N Common Stock
her children
</TABLE>
As of the date hereof, there are no shares of Class A Common Stock and 173,576
shares of Class B Common Stock outstanding.
WHEREAS, the Scudder Shareholders and the Singleton Shareholders now
own, legally and beneficially, all of the issued and outstanding shares of the
Class D, Class G and Class N Common Stock of ANI consisting of 664,450 shares of
its Class D Common Stock, no par value, 1,476,090 shares of its Class G Common
Stock, no par value, and 230 shares of its Class N Common Stock, no par value
(the Class A, Class D, Class G and Class N Common Stock are sometimes
collectively referred to herein as the "Stock"); and,
WHEREAS, concurrent with the execution of this Agreement (i) the
Scudder Shareholders are entering into the Scudder ANI Trust and (ii) the
Singleton Shareholders are entering into the Singleton ANI Trust; and
WHEREAS, ANI now owns all of the outstanding common stock of Garden
State Newspapers, Inc. and 60% (on a fully diluted basis) of the common stock
of Denver Newspapers, Inc.; and
WHEREAS, the Singleton ANI Trustee, the Singleton Shareholders, the
Scudder ANI Trustee, the Scudder Shareholders and ANI desire to enter into this
Shareholders' Agreement in order to provide a continuing framework for their
relationship as the legal
2
<PAGE> 6
and beneficial owners of all of the outstanding capital stock of ANI and to
further define their mutual obligations.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto mutually agree as follows:
1. PROPOSED ACTIVITIES OF ANI
1.01 Newspaper Publishing Business. ANI will engage only in the
business of owning and holding the securities of companies that are in the
business of publishing and distributing newspapers.
2. RESTRICTIONS UPON SALE OR TRANSFER OF STOCK
2.01 Generally.
At any time during the term of this Agreement none of the
Singleton ANI Trust, any of the Singleton Shareholders, the Scudder ANI Trust
nor any of the Scudder Shareholders shall sell, transfer, assign, pledge, give
away or otherwise dispose of, alienate, or encumber in any manner any interest
in any shares of, or interest in any voting trust certificates relating to, any
class, now or hereafter authorized, of the Common Stock of ANI (any Common
Stock of ANI or interest in any voting trust certificate relating thereto being
hereinafter referred to as the "Stock") beneficially owned by any of them,
other than as hereinafter expressly provided in Sections 3, 4 or 5 of this
Agreement, and any attempt to sell, transfer, assign, pledge, give away or
otherwise dispose of or alienate or encumber any interest in 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 ANI.
2.02 Additional Restrictions.. Until the earlier of (i) the date
on which all of the then outstanding shares of Class B Common Stock, Class D
Common Stock, Class G Common Stock and Class N Common Stock are automatically
converted into shares of Class A Common Stock pursuant to the terms of the
Amended and Restated Certificate of Incorporation of the Company, or (ii) the
date on which the Leverage Ratio of ANI (as such term is defined in the
Indenture dated May 15, 1994 between ANI and the Bank of New York as Trustee)
is less than 3:1, and except as otherwise provided in Section 3 or 4 hereof,
none of the Singleton ANI Trust, the Singleton Shareholders, the Scudder ANI
Trust or the Scudder Shareholders shall sell, transfer, assign, pledge, give
away or otherwise dispose of, alienate, or encumber in any manner whatsoever
(each, as "Transfer") any shares or interest in any shares of any class, now or
hereafter authorized, of the Stock beneficially owned by any of them unless all
shares of Stock then
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outstanding are Transferred by the holders thereof in a single transaction or
series of related transactions on substantially the same terms.
2.03 Tag-Along Restrictions/Rights.
(a) No shareholder (a "Selling Shareholder") shall,
individually or collectively, in any one transaction or series of transactions,
directly or indirectly, Transfer rights to all or any part of the Selling
Shareholder's Stock in a transaction not otherwise permitted under Section 3 or
Section 4 hereof, to any person (other than a Permitted Transferee) (a "Third
Party") unless the terms and conditions of such Transfer to such Third Party
shall include an offer to each other shareholder (each, for purposes of the
Section 2.03, a "Tag Along Offeree") to include at the option of each Tag Along
Offeree, in the sale or other disposition to the Third Party such number of
shares owned by each such Tag Along Offeree at the time of such Transfer
determined in accordance with this Section 2.03. The Selling Shareholder
proposing to effect such Transfer (the "Transferor") shall send a written
notice (the "Tag-Along Notice") to each of the Tag Along Offerees setting forth
the maximum number of shares of 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 Stock owned by such Tag- Along Offeree determined in
accordance with the provisions of Section (b) of this Section 2.03 by
furnishing written notice of such exercise (the "Exercise Notice") to the
Transferor, which Exercise Notice shall set forth the maximum and minimum
number of shares of Stock that such Tag-Along Offeree wishes to Transfer 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 Stock then owned by such Tag-Along
Offeree as the percentage of the total number of shares of Stock then owned by
the Selling Shareholder to be Transferred to the Third Party; provided,
however, that, in the event that the total number of shares of Stock proposed
to be Transferred of by the Transferor and all Tag- Along Offerees as set forth
in their respective Exercise Notices exceeds the maximum number of shares of
Stock that the Third Party is willing to purchase or otherwise acquire, then
the number of shares of Stock to be Transferred by the Transferor and the
Tag-Along Offerees who have given 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 Stock that each of them
originally proposed to Transfer of to the Third Party; provided that if such
allocation would result in any such Tag-Along Offeree Transferring less than
the minimum number of shares of Stock set forth in such Tag-Along Offeree's
Exercise Notice, such Exercise Notice shall be deemed revoked and the shares of
Stock which such Tag-Along Offeree would otherwise have been entitled to
Transfer to the
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Third Party shall be allocated among the Transferor and the other Tag-Along
Offerees who gave Exercise Notices in accordance with the foregoing provisions
of this sentence. All calculations pursuant to this paragraph Section 2.03
shall exclude and ignore any unissued shares of Stock issuable pursuant to
stock options, warrants and other rights to acquire shares of Stock.
(c) 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 Transfer giving rise to the tag along right granted by this Section
2.03, to abandon, rescind, annul, withdraw or otherwise terminate such Transfer
whereupon all tag along rights in respect of such sale or other disposition
pursuant to this Section 2.03 shall become null and void, and neither the
Transferor nor the Third Party shall have any liability or obligation to any
Tag-Along Offeree with respect thereto by virtue of such abandonment,
rescission, annulment, withdrawal or termination.
(d) The purchase from the Tag-Along Offerees pursuant to
this Section 2.03 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 an Exercise Notice, such
Tag-Along Offeree will be deemed to have waived any and all of its rights with
respect to the Transfer described in the Tag-Along Notice and the Transferor
shall have 90 days after the expiration of such 45 day period in which to
Transfer not more than the number of shares of Stock described in the Tag-Along
Notice (minus the number of shares of Stock Transferred 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 Transfer of Stock
of the Transferor in accordance with the terms described in the Tag-Along
Notice, all the restrictions on Transfer contained in this Agreement with
respect to Stock owned by the Transferor shall again be in effect.
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3. PERMITTED TRANSFERS AMONG RELATED PARTIES
3.01 Permitted Transfers. At any time during the term of this
Agreement the Singleton ANI Trust, the Singleton Shareholders, the Scudder ANI
Trust or any member of the Scudder Shareholders may at any time sell, transfer,
or assign by inter vivos gift, testamentary bequest, or otherwise, for such
consideration, if any, as such person or entity shall, in its or his sole
discretion, determine appropriate (and without the prior consent of any other
shareholder or party to this Agreement), all or a portion of his interest in
shares of the Stock to members of his family (spouse, parents, siblings,
children, any descendants of the foregoing or any spouses of any of the
foregoing) or to a trust for the benefit of such family member(s) or in the
case of a trust, to its grantor or to its beneficiaries, (all such permitted
transferees sometimes being hereafter referred to as "Permitted Transferees"),
provided that the person or trustee of any trust to whom such shares are
transferred shall, together with his successors, assigns, distributees,
legatees, personal representatives, any receiver or trustee in bankruptcy or
trust beneficiaries, shall take such Stock subject to and bound by all of the
terms and conditions of this Agreement, including, without limitation, the
provisions of this Section 3 and of Sections 2, 4, 5, 6 and 7 hereof, and
further provided that the transferee shall execute and deliver to ANI a written
acknowledgment of the foregoing, whereupon a new certificate shall be issued to
it or him, representing the shares of Stock transferred to him bearing the
restrictive legend set forth in Paragraph 6.01 hereof.
3.02 Agreement of the Trustees. Each of the Singleton ANI Trustee
and the Scudder ANI Trust Trustee acknowledges that he has only bare legal
title to the Stock beneficially owned by the Singleton Shareholders and the
Scudder Shareholders, respectively, and he agrees with all parties hereto that
he shall promptly take all action necessary and appropriate to effect the
transfer of title to any Stock that is permitted or required to be transferred
by the Singleton Shareholders or the Scudder Shareholders, as the case may be,
pursuant to the provisions of this Section 3 or under Sections 4 or 5. Each
such Trustee further agrees that he shall not have the power to transfer title
to any of the Stock owned of record by him except pursuant to a transfer
permitted or required to be made by the Singleton Shareholders or Scudder
Shareholders under this Section 3 or under Sections 4 or 5. All of the
provisions of this Section 3.02 shall be binding upon all successors and
assigns of each such Trustee.
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4. TRANSFER OF STOCK BY CONSENT OF PARTIES
4.01 Transfer By Consent. At any time during the term of this
Agreement any shareholder may Transfer, with or without consideration, all or
any part of its Stock free and clear of any restrictions or limitations in this
Agreement, but only with the express prior written consent of all of the other
parties to this Agreement, which consent may be granted or withheld in the sole
and absolute discretion of each of such parties. In the event such prior
written consent is obtained, this Agreement shall not apply to the Stock to
which the consent relates, so long as the Transfer is made in accordance with
all the terms and conditions of such consent.
5. COMPANY'S AND SHAREHOLDERS' OPTIONS TO PURCHASE STOCK
5.01 Option to Purchase. Subject to the restrictions set forth in
Sections 2.02 and 2.03 hereof, should any shareholder (for purposes of this
Section 5, a "Selling Shareholder") desire to Transfer rights in all or any
part of the Selling Shareholder's Stock in a transaction not otherwise
permitted under Section 3 or 4 hereof, whether the Selling Shareholder desires
to initiate a Transfer or is responding affirmatively to an offer to Transfer,
before doing so the Selling Shareholder shall first permit (i) the Company and
thereafter (ii) the other Shareholders (the "Remaining Shareholders") to
exercise an option to purchase the shares of Stock which the Selling
Shareholder desires to Transfer in accordance with the provisions of this
Section.
(a) Subject to the restrictions set forth in Section 2.01(b),
a Shareholder may solicit third parties to purchase its Stock prior to offering
the same to the Company and the Remaining Shareholders, but no Transfer to a
third party may be consummated until such Stock has been offered to (i) the
Company and thereafter, (ii) the Remaining Shareholders 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 Transfer, or is responding affirmatively to an offer to purchase,
except for Transfers expressly authorized pursuant to Sections 3 and 4 of this
Agreement, the Selling Shareholder shall simultaneously notify the Company and
the Remaining Shareholders of the intended Transfer. Such notice (the "Transfer
Notice") shall contain a complete description of the proposed transaction,
including the identity of any proposed transferee, the "Purchase Price" (as such
term is defined in Section 5.04 hereof) offered by the Selling Shareholder or
proposed by a bona fide third party transferee and all other
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material terms of such disposition. The Transfer Notice shall also specify
whether the Selling Shareholder is only willing to Transfer all of his Stock,
or is willing to Transfer only a portion thereof, and such specifications shall
control the scope of any option to purchase thereunder.
5.03 Scope and Priority of Company's and Remaining Shareholders'
Options.
(a) Upon receipt of a Transfer Notice from a Selling
Shareholder pursuant to Section 5.02, the Company shall thereupon have the
first option to purchase all (but not less than all) of such shares of Stock
tendered at the Purchase Price. Such option to purchase must be exercised by
the Company within thirty (30) days after receipt of the Transfer Notice. Any
exercise of such option to purchase Stock by the Company shall be made by
notice in writing to the Selling Shareholder, with copy to all other
Shareholders, mailed within such thirty-day period. If the Company elects not
to exercise such option to purchase it shall so notify in writing the Selling
Shareholder, with copy to all other Shareholders, (the "Non-Exercise Notice")
mailed within such thirty-day period.
(b) If the Company fails to exercise its option to
purchase all of the Selling Shareholder's Stock in accordance with Section
5.03(a) above, then upon receipt of a notice (the "Second Transfer Notice")
from a Selling Shareholder that the Company has failed to exercise its option
to purchase pursuant to Section 5.03(a) above, or that the Company has notified
the Selling Shareholder that it has elected not to exercise such option to
purchase, the Remaining Shareholder(s) shall thereupon have an option to
purchase all of such shares tendered at the Purchase Price. This option to
purchase must be exercised by the Remaining Shareholder(s) within ten (10) days
after receipt by the Remaining Shareholders of the Second Transfer Notice. If
any Remaining Shareholder fails to exercise his option to purchase shares, or
exercises such option to purchase less than all the shares available to him,
then the other Remaining Shareholders shall have a period of ten (10) days
following the initial thirty day period to acquire all or any part of such
offered shares which are left. Any exercise of such option to purchase Stock
by the Remaining Shareholder(s) shall be made by notice in writing to the
Selling Shareholder, with copy to all other Shareholders, mailed within such
ten (10) day period (or, if not all shares of the Selling Shareholder are
acquired during such first period, then by notice mailed within the ten-day
period following).
(c) Any notice given pursuant to this Section 4 shall be given
as provided in Section 8.01 of this Agreement.
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5.04 Purchase Price.
(a) If the purchase price (the "Purchase Price") set
forth in the Transfer Notice is a bona fide all cash offer, then the Purchase
Price shall be such all cash offer.
(b) If all or any part of the Purchase Price set forth in
the Transfer Notice is non-cash consideration, then the Fair Market Value (as
such term is defined herein) of such non-cash consideration shall be determined
pursuant to the provisions of Section 5.05 hereof. The time periods for
exercise of options to purchase set forth in Section 5.03(a) and (b) hereof
shall be tolled until such time as the Fair Market Value of a non-cash offer
has been determined in accordance with the provisions of Section 5.05 hereof.
(c) As used in this Agreement, "Fair Market Value" shall
mean the amount that would be paid for all of the outstanding shares of capital
stock of the Company as a going concern, on a consolidated basis with its
subsidiaries, by a willing buyer to a willing seller, both knowledgeable in the
newspaper publishing industry.
5.05 Determination of Fair Market Value.
(a) If all or any part of the Purchase Price specified in
the Transfer Notice is a non-cash offer, then the Selling Shareholder and the
Company may mutually agree as to the Fair Market Value of the non-cash offer.
If the Selling Shareholder and the Company are unable to agree on such value
within ten (10) days after the Company and the Remaining Shareholders receive
the Transfer Notice, then in such event, Fair Market Value shall be established
as hereinafter provided by two independent qualified appraisers knowledgeable
in the newspaper publishing industry, one to be appointed by the Selling
Shareholder and the other to be appointed by majority vote of the Remaining
Shareholders (irrespective of whether the Company shall exercise the option
granted to it under Section 5.03 of this Agreement).
(b) The two independent appraisers shall be appointed
within twenty (20) business days after receipt by the Company and the Remaining
Shareholders of the Transfer Notice; if either the Selling Shareholder or the
Remaining Shareholders 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 the Fair Market Value.
If two appraisals are made, and if the higher appraisal does not exceed 110% of
the lower, Fair Market Value will be the average of the two. If the two
appraisals are further apart, a third appraiser
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will be selected within ten (10) days by the first two appraisers, and the Fair
Market Value 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 thirty (30) days of appointment of an appraiser and
written notice of the results of such appraisal shall be given to the parties
within such time. The Fair Market Value of ANI will be determined in its
entirety as a going concern, with the Selling Shareholder to receive a
proportionate part of the total value based on the number of shares being sold
by it. In making any appraisal hereunder all debts and liabilities shall be
taken into account and there shall be no discount made on account of the
Selling Shareholder's interest being a minority interest, and no premium
imposed on account of the Selling Shareholder's interest being a majority
interest. The Selling Shareholder shall pay the fee of the appraiser selected
by it, and the Remaining Shareholders (irrespective of whether the Company
shall exercise the option granted to it under Section 5.03 of this Agreement)
shall pay the fee of the appraiser selected by them (in proportion to their
respective ownership interests in the Company), with the fee of any third
appraiser to be divided equally among the Selling Shareholder and the Remaining
Shareholders.
5.05 Failure To Exercise. If the Remaining Shareholder(s) fails to
exercise its/their option to purchase the Selling Shareholder's Stock, the
Selling Shareholder shall be free to dispose of such Stock within a ninety day
period after the expiration of the Remaining Shareholder(s) option, but not
below the Purchase Price offered to the Remaining Shareholders, and not to a
different transferee than specified in the Transfer Notice (if any transferee
was so specified), or in a materially different manner or on materially
different terms. If the Stock is not disposed of within such ninety-day period
then this right shall lapse and the Selling Shareholder must thereafter
recommence the offering process to the Company and the Remaining Shareholder(s)
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 (or if no transfer agent has been appointed, the Secretary of
ANI) has been requested to record the transfer of Stock in the stock transfer
records of ANI. Any person to whom the shares of the Selling Shareholder are
transferred, following the Remaining Shareholder(s)' failure to exercise
its/their option to purchase, shall take such shares subject to all the terms
and conditions and restrictions imposed by this Agreement.
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5.06 Payment of Purchase Price.
(a) The purchaser of any Stock under this Section 5 shall
have the option to pay the Purchase Price in one of two methods. The first
method, called Option 1, shall consist of full payment of the Purchase Price by
a wire transfer of immediately available federal funds to a bank account
designated by the Selling Shareholder upon a date mutually selected by the
Selling Shareholder and the purchaser which is not more than ninety (90) days
after the determination of the Purchase Price as hereinbefore provided (such
date being herein referred to as the "Closing Date").
Upon receipt of the Purchase Price on 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 on that date by the Selling
Shareholder.
(b) The second method of payment for Stock called Option 2
shall consist of paying not less than ten percent (10%) of the total Purchase
Price in cash on the Closing Date, and by giving the Selling Stockholder the
purchaser's promissory note for the balance of the Purchase Price in not more
than 120 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 Bankers Trust Company, 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
ten (10) years from the date of the first installment.
The purchaser's promissory note shall provide that such note
shall be payable in full (i) upon the sale of all or substantially all of the
assets used by ANI or its direct or indirect subsidiaries in the operation of
their business, (ii) upon the sale of 50% or more of the then outstanding Stock
of ANI within
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any 180-day period, or (iii) upon the offering of any equity securities by ANI
or any subsidiary of ANI for sale to the public after the date hereof. As used
in this paragraph, the term "sale" includes an exchange of assets or 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 ANI become owned by
any parties to this Agreement or any transferee permitted under Section 3
hereof or any corporation or other entity that is wholly owned by one or more
of the parties to this Agreement.
If the purchaser elects Option 2, 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 Verner,
Liipfert, Bernhard, McPherson & Hand, 901 15th Street, N.W., Suite 700,
Washington, D.C. 20005-2301, 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 thirty (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 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. 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
liquidating dividend) with respect to the pledged Stock shall be vested in the
purchaser while such 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.
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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 any time,
without penalty. Any prepayment shall be 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.
6. RESTRICTIVE LEGEND
6.01 Form of Legend. All certificates for the shares of the Stock
shall bear the legend set forth below.
"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 Shareholders' Agreement
dated as of May 20, 1994, among certain Shareholders and the Company,
which may be examined at the 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
other transfer is in compliance with the Act and any applicable state
securities laws."
6.02 Stock Not Registered; Purchase for Investment. The parties
hereto expressly acknowledge and agree that the Stock is restricted as
described in the above legends; and that ANI is under absolutely no obligation
to, and has no plans to, register any of the Stock under the Securities Act of
1933, as amended.
7. GENERAL COVENANTS
7.01 Applicability of Covenants. The covenants set forth in this
Section 7 are made for the benefit of each of the Singleton ANI Trust, the
Singleton Shareholders, the Scudder ANI Trust and the Scudder Shareholders.
Such covenants shall also run in favor
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of any transferee permitted hereunder of the Stock of ANI but do not run in
favor of any of the holders of Class B Common Stock, their successors or
assigns.
7.02 Negative Covenants.
(a) From and after the date hereof, no equity securities of
ANI shall be issued, or class of securities convertible into equity securities
of ANI created, or obligations of ANI to issue additional equity securities
incurred.
(b) ANI covenants that it shall not do, take or permit any of
the following actions, unless the same shall have first been approved by the
approval of all directors then serving on ANI's Board of Directors, or by
unanimous approval of the full Executive Committee of ANI's Board of Directors,
or by the holders of not less than 75% of the shares of Stock then outstanding,
voting as a single class, and each of the Singleton ANI Trust, the Singleton
Shareholders, the Scudder ANI Trust and the Scudder Shareholders, covenant that
they shall cause ANI 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;
(2) Purchase or redeem any of its capital stock or make
investments in any other person or entity except as
otherwise expressly permitted herein;
(3) Adopt annual capital or annual operating budgets, or
made any single capital expenditure in excess of
$1,000,000 in any fiscal year;
(4) Except as otherwise provided in the Certificate of
Incorporation, 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, except as otherwise
provided in the Certificate of Incorporation, issue
any capital stock not specifically permitted herein,
or permit any subsidiary to issue capital stock to
any person other than ANI or elect any directors of
any subsidiary, or permit any subsidiary to appoint
any
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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) Appoint any committee of the Board of Directors of
ANI;
(9) Appoint an appraiser or appraisers for evaluation of
any assets purchased directly or indirectly by ANI or
any subsidiary;
(10) Enter into or acquiesce in any agreement which limits
or restricts the rights of ANI, the Singleton ANI
Trust, the Singleton Shareholders, the Scudder ANI
Trust or the Scudder Shareholders, to comply with the
provisions of this Agreement;
(11) Make any material change in its management of ANI or
its subsidiaries, including, but not limited to,
hiring, replacing or discharging of the chief
executive officer of ANI; or
(12) Refinance or refund, or amend, supplement, otherwise
modify or waive any material term of, any existing
loan agreement for borrowed money.
The Singleton ANI Trust, the Singleton Shareholders, the Scudder ANI
Trust and the Scudder Shareholders acknowledge that, under the Amended and
Restated Certificate of Incorporation set forth at Exhibit A hereto, the
holders of Class B Common Stock have certain voting rights on matters affecting
the dividend, liquidation and conversion rights of the Class B Common Stock.
8. NO RIGHTS FOR CLASS B COMMON STOCK
8.01 No Rights for Class B Common Stock. This Agreement shall not
convey or create any rights to or for the benefit of the holders of Class B
Common Stock, their successors or assigns, and the violation or waiver of any
of the provisions of this Agreement
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by the parties hereto shall not convey or create any rights, nor give rise to
any claim or cause of action, on the part of the holders of Class B Common
Stock, their successors or assigns.
9. MISCELLANEOUS
9.01 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 ANI: Mr. W. Dean Singleton,
Vice Chairman
Suite 525
4888 Loop Central Drive
Houston, Texas 77081
With Copy To: Howell E. Begle, Jr., Esquire
Verner, Liipfert, Bernhard,
McPherson & Hand
Suite 700
901 15th Street, N.W.
Washington D.C. 20005
(b) To the Scudder Care of:
ANI Trust or Jean L. Scudder
or to any Scudder RR #1 Box 75
Shareholders: Readfield, Maine 04335
With Copy To: Frederick W. Rose, Esq.
Cooper, Rose & English
20 Bingham Avenue
Rumson, New Jersey 07760
(c) To the Singleton Mr. W. Dean Singleton
ANI Trust or any Suite 525
Singleton 4888 Loop Central Drive
Shareholder Houston, Texas 77081
With Copy To: Howell E. Begle, Jr., Esquire
Verner, Liipfert, Bernhard,
McPherson & Hand
Suite 700
901 15th Street, N.W.
Washington D.C. 20005
or to such subsequent persons and addresses as may be specified by notice.
16
<PAGE> 20
9.02 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 part 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 ANI) against whom such action or proceeding is
brought hereby waives the claim or defense therein that such 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.
9.03 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement 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.
9.04 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.
9.05 Brokerage 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 other 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.
9.06 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. 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.
17
<PAGE> 21
9.07 Amendment. This Agreement may be amended only by a written
instrument executed by all of the parties hereto.
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 ANI. No other 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 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 State of Delaware
without regard to the conflict of laws provisions thereof.
9.11 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile signatures, each of which shall be deemed to be
an original, and all of which taken together shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first shown above.
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
By:
------------------------------------
WILLIAM D. SINGLETON
Its Vice Chairman
---------------------------------------
JEAN L. SCUDDER
As Trustee for the Scudder
Family Voting Trust Agreement
for Affiliated Newspapers
Investments, Inc.
18
<PAGE> 22
---------------------------------------
CHARLES SCUDDER
---------------------------------------
CAROLYN MILLER, as
Custodian for her Children
---------------------------------------
ELIZABETH H. DIFANI, as
Custodian for her Children
---------------------------------------
ELIZABETH H. DIFANI
---------------------------------------
JEAN L. SCUDDER
Individually and as the Trustee
for the Scudder Family 1987 Trust
---------------------------------------
HOWELL E. BEGLE, JR.
As Trustee of the Singleton Family
Voting Trust Agreement
for Affiliated Newspapers
Investments, Inc.
---------------------------------------
HOWELL E. BEGLE, JR.
As Trustee of the Singleton Family
Revocable Trust
---------------------------------------
HOWELL E. BEGLE, JR.
As Trustee of the Singleton Family
Irrevocable Trust
19
<PAGE> 1
SINGLETON FAMILY
VOTING TRUST AGREEMENT
FOR AFFILIATED NEWSPAPERS INVESTMENTS, INC.
This Agreement is made this 20th day of May, 1994 by and between (i)
The Singleton Family Irrevocable Trust by Howell E. Begle, Jr. and Patricia
Robinson, Trustees (the "Irrevocable Trust"), and The Singleton Family
Revocable Trust by William Dean Singleton and Howell E. Begle, Jr., Trustees
(the "Revocable Trust") (the Irrevocable Trust and the Revocable Trust are
collectively referred to herein as the "Shareholders") and (ii) Howell E.
Begle, Jr. as voting trustee hereunder (hereinafter referred to as the "Voting
Trustee").
W I T N E S S E T H:
WHEREAS, the Shareholders are the respective owners of (i) three
hundred thirty two thousand two hundred twenty five (332,225) shares of Class D
Common Stock, no par value per share (the "ANI Class D Common Stock") of
Affiliated Newspapers Investments, Inc. ("ANI" or the "Company"), (ii) seven
hundred thirty eight thousand forty five (738,045) shares of Class G Common
Stock, no par value per share of ANI (the "ANI Class G Common Stock") and (iii)
one hundred fifteen (115) shares of Class N Common Stock, no par value per
share of ANI (the "ANI Class N Common Stock") (the ANI Class D Common Stock,
ANI Class G Common stock and ANI Class N Common Stock is sometimes collectively
referred to herein as the "Stock").
WHEREAS, the Shareholders believe it to be in their best interests to
unite the voting powers held by them as shareholders of the Company and to
assign, transfer and vest the same in the hands of the Voting Trustee; and
WHEREAS, Howell E. Begle, Jr. has agreed to serve as Voting Trustee
with respect to the Shareholders' Stock;
NOW, THEREFORE, it is agreed between the parties as follows:
1. Voting Trust Agreement. Copies of this Voting Trust Agreement
shall be filed in the principal office of the Company and in the registered
office of the Company in the State of Delaware and shall be open to the
inspection of any stockholder of the Company, as well as any beneficiary of the
trust under this Agreement, daily during business hours. All Voting Trust
Certificates issued as hereinafter provided shall be issued, received, and held
subject to all of the terms of this Agreement.
<PAGE> 2
Each of the Shareholders shall be entitled to receive a Voting Trust
Certificate representing the Stock held by each Shareholder, and all
transferees and assigns of each of the Shareholders, upon accepting Voting
Trust Certificates issued hereunder, shall be bound by the provisions of this
Agreement.
2. Transfer of Stock Shares to Trustee.
(a) Upon the execution of this Agreement, the Irrevocable
Trust shall deposit with the Voting Trustee Certificates No. D5 and N7 of the
Company (the "Irrevocable Trust Certificates"), representing shares of Class D
Common Stock and Class N Common Stock held by the Irrevocable Trust.
(b) Upon the death or incapacity of William Dean
Singleton, the Revocable Trust will deposit with the Voting Trustee
certificates (the "Revocable Trust Certificates") representing the shares of
Stock then held by the Revocable Trust.
(c) The Certificates shall be endorsed, or accompanied by
an appropriate instrument of transfer, so as to enable the Voting Trustee to
cause the Company to issue a stock certificate for each Class of Common Stock
in the name of the Voting Trustee, as hereinafter provided. Upon receipt by
the Voting Trustee of stock certificates from the Company (in exchange for the
Certificates), the Voting Trustee shall hold the same subject to the terms of
this Agreement, and shall thereupon forthwith issue and deliver to each of the
Shareholders a Voting Trust Certificate for the shares of the Company so
deposited by them.
3. Voting Trust Certificate. The Voting Trust Certificate shall
be in the form attached as Exhibit A to this Agreement.
4. Transfer of Certificates. The Voting Trust Certificates shall
be transferable at the office of the Voting Trust, c/o Affiliated Newspapers
Investments, Inc., Suite 525, 4888 Loop Central Drive, Houston, Texas 77081-
2211, by the registered owner thereof. The Voting Trustee may treat the
registered holder of the Voting Trust Certificate as the owner thereof for all
purposes whatsoever, but he shall not be required to deliver stock certificates
hereunder without the surrender of such Voting Trust Certificates.
5. Dividends.
(a) Prior to the Termination of this Agreement, the
holder of each Voting Trust Certificate shall be entitled to receive payments
equal to the cash dividends, if any, received by the Voting Trustee upon a like
number and class of shares of capital stock of the Company as is called for by
each such Voting Trust Certificate. If any dividend in respect of the stock
deposited with the Voting Trustee is paid, in whole or in part, in
2
<PAGE> 3
stock of the Company having general voting powers, the Voting Trustee shall
likewise hold, subject to the terms of this Agreement, the certificates for
stock which are received by it on account of such dividend, and the holder of
each Voting Trust Certificate representing Stock on which such stock dividend
has been paid shall be entitled to receive a Voting Trust Certificate issued
under this Agreement for the number of shares and class of stock received as
such dividend with respect to the shares represented by such Voting Trust
Certificate.
(b) In lieu of receiving cash dividends upon the capital
stock of the Company and paying the same to the holders of Voting Trust
Certificates pursuant to the provisions of this Agreement, the Voting Trustee
may instruct the Company to pay such dividends directly to the holders of the
Voting Trust Certificates. Upon such instructions being given by the Voting
Trustee to the Company, and until revoked by the Voting Trustee, all liability
of the Voting Trustee with respect to such dividends shall cease.
6. Rights of Voting Trustee.
(a) The Voting Trustee shall have the right with respect
to the Shareholders' Stock to exercise in person or by nominee or proxy, all
stockholders' voting rights and powers in respect of the Shareholders' Stock
and to take part in, or consent to any corporate or stockholders' action of any
kind whatsoever. The right to vote shall include, without limitation, the
right to vote for the election of directors, in favor of or against any
resolution or proposed action which may be presented at any meeting or require
the consent of stockholders of the Company, including those pertaining to
mortgaging, creating a security interest in, or pledging all or any part of the
property of the Company, the dissolution of the Company, or the consolidation,
merger, reorganization or recapitalization of the Company.
(b) The Voting Trustee, in voting the shares of capital
stock of the Company, shall vote such stock in accordance with his best
judgment, subject in each instance to the terms of any applicable shareholders'
and/or related agreement which may from time to time be in effect.
7. Appointment of Voting Trustee.
(a) The Voting Trustee hereunder shall be Howell E.
Begle, Jr. and the Company's stock certificates to be issued as provided
aforesaid shall be issued to and held by the Voting Trustee in the name of
"Howell E. Begle, Jr. as Voting Trustee."
(b) The Voting Trustee (and any successor trustee) may at
any time resign by mailing to the registered holders of Voting Trust
Certificates a written resignation, to take effect ten days thereafter, or upon
the prior acceptance thereof. Upon the death,
3
<PAGE> 4
incapacity or unwillingness to act of Howell E. Begle, Jr. or upon his
resignation as Voting Trustee, such person as is unanimously selected by the
Trustees of the Irrevocable Trust shall become successor Voting Trustee for
Howell E. Begle, Jr.
8. Term.
(a) The Voting Trust created by this Agreement shall
continue in effect until May 20, 2004 (subject to extension as hereinafter set
forth).
(b) At any time within two years prior to May 20, 2004,
or at any time within two years prior to the time of expiration of this
Agreement as extended, one or more holders of Voting Trust Certificates
hereunder may, by agreement in writing and with the written consent of the
Voting Trustee, extend the duration of this Agreement for an additional period
not exceeding ten years from the then expiration date. In the event of such
extension, the Voting Trustee shall, prior to the time of expiration, as
hereinabove provided, as originally fixed or as theretofore extended, as the
case may be, file in the principal office of the Company and in the registered
office of the Company in the State of Delaware, a copy of such extension
agreement and of the consent thereto, and thereupon the duration of this
Agreement shall be extended for the period fixed by such extension agreement,
provided, however, that no such extension agreement shall extend the term of
this Agreement beyond the maximum period then permitted by applicable law or
affect the rights or obligations of persons not parties thereto.
(c) Upon the termination of this Agreement and upon the
delivery of the Voting Trust Certificates to the Voting Trustee, the
Shareholders shall receive the number of shares of Stock of the Company which
are represented by their Voting Trust Certificates and said transaction shall
be recorded on the books of the Company.
9. Compensation and Reimbursement of Voting Trustee. The Voting
Trustee shall serve without compensation. The Voting Trustee shall have the
right to incur and pay such reasonable expenses and charges, to employ and pay
such agents, attorneys,and counsel as they may deem necessary and proper for
carrying this Agreement into effect. Any such expenses or charges incurred by
and due to the Voting Trustee may be deducted from the dividends or other
moneys or property received by the Voting Trustee on the stock deposited
hereunder. Nothing herein contained shall disqualify the Voting Trustee or
successor trustees, or incapacitate them from serving the Company or any of its
subsidiaries as officer or director or in any other capacity, and in any such
capacity receiving compensation.
4
<PAGE> 5
10. Notice.
(a) Unless otherwise in this Agreement specifically
provided, any notice to or communication with the holders of the Voting Trust
Certificates hereunder shall be deemed to be sufficiently given or made if
mailed, first-class, postage prepaid, if addressed as follows:
To the Singleton Family W. Dean Singleton, Trustee
Revocable Trust: 4888 Loop Central Drive
Suite 525
Houston, Texas 77081-2211
and
Howell E. Begle, Jr., Trustee
Verner, Liipfert, Bernhard
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, DC 20005
To the Singleton Family Howell E. Begle, Jr., Trustee
Irrevocable Trust: Verner, Liipfert, Bernhard
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, DC 20005
and
Patricia Robinson
c/o Media News Group, Inc.
4888 Loop Central Drive
Suite 525
Houston, TX 77081-2211
To the Voting Trustee Howell E. Begle, Jr.
Verner, Liipfert, Bernhard
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, DC 20005
Every notice so given shall be effective, whether or not received, and the date
of mailing shall be the date such notice is deemed given for all purposes.
(b) Any notice to the Voting Trustee hereunder may be
mailed, first-class, postage prepaid, and sent by registered mail to the Voting
Trustee, addressed to her at such address as may from time to time be furnished
in writing to the Company by the voting Trustee, and if no such address has
been furnished by the Voting Trustee, then to the Voting Trustee in care of the
Company.
(c) All distributions of cash, securities, or other
property hereunder by the Voting Trustee to the holders of Voting Trust
Certificates may be made, in the discretion of the Voting
5
<PAGE> 6
Trustee, by mail (regular or registered mail, as the Trustee may deem
available), in the same manner as hereinabove provided for the giving of
notices to the holders of Voting Trust Certificates.
IN WITNESS WHEREOF, the parties have signed and sealed this
Agreement, effective May ___, 1994.
THE SINGLETON FAMILY IRREVOCABLE TRUST
By:
------------------------------------
Howell E. Begle, Jr., Trustee
THE SINGLETON FAMILY REVOCABLE TRUST
By:
------------------------------------
Howell E. Begle, Jr., Trustee
VOTING TRUSTEE
---------------------------------------
Howell E. Begle, Jr.
6
<PAGE> 7
EXHIBIT A
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
A DELAWARE CORPORATION
VOTING TRUST CERTIFICATE
Certificate No. ______ for ______________ (_____) shares.
This certifies that ________________________ is the beneficial owner
of _____ shares of the Class __ Common Stock of Affiliated Newspapers
Investments, Inc., a Delaware corporation (the "Company"), which have been
deposited with the Voting Trustee hereinafter named, under the Singleton Family
Voting Trust for Affiliated Newspapers Investments, Inc. dated as of _______
___, 1994, between Howell E. Begle, Jr as Voting Trustee and certain
shareholders of the Company. The original of said Voting Trust Agreement is on
file with the Voting Trustee. A copy of said Voting Trust Agreement is on file
in the registered office of the Company in the State of Delaware, and
additional copies thereof may be obtained upon request from the Voting Trustee.
This certificate has been issued pursuant to and subject to said Voting Trust
Agreement and represents said shareholder-depositor's beneficial interest in
said Voting Trust. This Certificate is transferable only on the books of the
Voting Trustee by the registered holder either in person or by attorney duly
authorized on surrender hereof, and until so transferred, the Voting Trustee
shall treat the registered holder as the owner thereof for all purposes.
The holder of this Voting Trust Certificate takes the same subject to
all the terms and conditions of the aforesaid Voting Trust Agreement, and
becomes a party to said Voting Trust Agreement and is entitled to the benefits
thereof.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed this ____ day of __________, 1994.
----------------------------
Howell E. Begle, Jr.
Voting Trustee
(Form of Assignment):
For value received _______________________________ hereby assigns the
within certificate, and all rights and interests represented thereby, to
___________________________ and appoints
<PAGE> 8
___________________ attorney to transfer this certificate on the books of the
Trustee mentioned therein, with full power to substitution.
DATED:
-----------------------
------------------------------
In presence of:
- ------------------------------
- ------------------------------
<PAGE> 1
SUDDER FAMILY
VOTING TRUST AGREEMENT
FOR AFFILIATED NEWSPAPERS INVESTMENTS, INC.
This Agreement is made this 20th day of May, 1994 by and between (i)
Charles A. Scudder, individually, Carolyn S. Miller, as custodian for her
children, Jean L. Scudder, individually and as Trustee for the Scudder Family
1987 Trust, (collectively referred to as the "Shareholders") and (ii) Jean L.
Scudder as voting trustee hereunder (hereinafter referred to as the "Voting
Trustee").
W I T N E S S E T H:
WHEREAS, the Shareholders are the respective owners of (i) three
hundred thirty two thousand two hundred twenty five (332,225) shares of Class D
Common Stock, no par value per share (the "ANI Class D Common Stock") of
Affiliated Newspapers Investments, Inc. ("ANI" or the "Company"), (ii) seven
hundred thirty eight thousand forty five (738,045) shares of Class G Common
Stock, no par value per share of ANI (the "ANI Class G Common Stock") and (iii)
one hundred fifteen (115) shares of Class N Common Stock, no par value per
share of ANI (the "ANI Class N Common Stock") (the ANI Class D Common Stock,
ANI Class G Common stock and ANI Class N Common Stock is sometimes collectively
referred to herein as the "Stock").
WHEREAS, the Shareholders believe it to be in their best interests to
unite the voting powers held by them as shareholders of the Company and to
assign, transfer and vest the same in the hands of the Voting Trustee; and
WHEREAS, Jean L. Scudder has agreed to serve as Voting Trustee
with respect to the Shareholders' Stock;
NOW, THEREFORE, it is agreed between the parties as follows:
1. Voting Trust Agreement. Copies of this Voting Trust Agreement
shall be filed in the principal office of the Company and in the registered
office of the Company in the State of Delaware and shall be open to the
inspection of any stockholder of the Company, as well as any beneficiary of the
trust under this Agreement, daily during business hours. All Voting Trust
Certificates issued as hereinafter provided shall be issued, received, and held
subject to all of the terms of this Agreement. Each of the Shareholders shall
be entitled to receive a Voting Trust Certificate representing the Stock held
by each Shareholder, and all transferees and assigns of each of the
Shareholders, upon accepting Voting Trust Certificates issued hereunder, shall
be bound by the provisions of this Agreement.
<PAGE> 2
2. Transfer of Stock Shares to Trustee.
(a) Upon the execution of this Agreement, the
Shareholders shall deposit with the Voting Trustee Certificates No. D2, D3, D4,
D5, G1, G2, G3, G4, G5, N2, N3, N4, N5 and N6 of the Company (the
"Certificates"), representing the Shareholders' Stock. The Certificates shall
be endorsed, or accompanied by an appropriate instrument of transfer, so as to
enable the Voting Trustee to cause the Company to issue a stock certificate for
each Class of Common Stock in the name of the Voting Trustee, as hereinafter
provided. Upon receipt by the Voting Trustee of stock certificates from the
Company (in exchange for the Certificates), the Voting Trustee shall hold the
same subject to the terms of this Agreement, and shall thereupon forthwith
issue and deliver to each of the Shareholders a Voting Trust Certificate for
the shares of Stock so deposited by them.
(b) The Voting Trustee hereunder shall be Jean L. Scudder
and the Company's stock certificates to be issued as provided aforesaid shall
be issued to and held by the Voting Trustee in the name of "Jean L. Scudder as
Voting Trustee."
3. Voting Trust Certificate. The Voting Trust Certificate shall
be in the form attached as Exhibit A to this Agreement.
4. Transfer of Certificates. The Voting Trust Certificates shall
be transferable at the office of the Voting Trust, c/o Affiliated Newspapers
Investments, Inc., Suite 525, 4888 Loop Central Drive, Houston, Texas 77081-
2211, by the registered owner thereof. The Trustee may treat the registered
holder of the Voting Trust Certificate as the owner thereof for all purposes
whatsoever, but she shall not be required to deliver stock certificates
hereunder without the surrender of such Voting Trust Certificates.
5. Dividends.
(a) Prior to the Termination of this Agreement, the
holder of each Voting Trust Certificate shall be entitled to receive payments
equal to the cash dividends, if any, received by the Voting Trustee upon a like
number and class of shares of capital stock of the Company as is called for by
each such Voting Trust Certificate. If any dividend in respect of the stock
deposited with the Voting Trustee is paid, in whole or in part, in
stock of the Company having general voting powers, the Voting Trustee shall
likewise hold, subject to the terms of this Agreement, the certificates for
stock which are received by it on account of such dividend, and the holder of
each Voting Trust Certificate representing stock on which such stock dividend
has been paid shall be entitled to receive a Voting Trust Certificate issued
under this Agreement for the number of shares and class of stock received as
such dividend with respect to the shares represented by such Voting Trust
Certificate.
2
<PAGE> 3
(b) In lieu of receiving cash dividends upon the capital
stock of the Company and paying the same to the holders of Voting Trust
Certificates pursuant to the provisions of this Agreement, the Voting Trustee
may instruct the Company to pay such dividends directly to the holders of the
Voting Trust Certificates. Upon such instructions being given by the Voting
Trustee to the Company, and until revoked by the Voting Trustee, all liability
of the Voting Trustee with respect to such dividends shall cease.
6. Rights of Voting Trustee.
(a) The Voting Trustee shall have the right with respect
to the Shareholders' Stock to exercise in person or by their nominees or
proxies,all stockholders' voting rights and powers in respect of the
Shareholders' Stock and to take part in, or consent to any corporate or
stockholders' action of any kind whatsoever. The right to vote shall include,
without limitation, the right to vote for the election of directors, in favor
of or against any resolution or proposed action which may be presented at any
meeting or require the consent of stockholders of the Company, including those
pertaining to mortgaging, creating a security interest in, or pledging all or
any part of the property of the Company, the dissolution of the Company, or
the consolidation, merger, reorganization or recapitalization of the Company.
(b) The Voting Trustee, in voting the shares of capital
stock of the Company, shall vote such stock in accordance with her best
judgment, subject in each instance to the terms of any applicable shareholders'
and/or related agreement which may from time to time be in effect.
(c) Notwithstanding the provisions of subsection (a) of
this Section, the Voting Trustee shall not exercise any rights she possesses to
vote any Stock concerning (i) the acquisition or divestiture by the Company of
any newspaper or any other business venture, (ii) the dissolution,
consolidation, merger, reorganization or recapitalization of the Company,
(iii) the sale, exchange, pledge or encumbrance of all or substantially all of
the Company's assets, (iv) amendment of the Company's Certificate of
Incorporation or bylaws or (v) the election of directors, without first
conferring with and obtaining the prior consent of the beneficial owners of at
least one-half of the shares of the Stock owned at the time of such shareholder
vote by the Shareholders.
The parties intend by the foregoing, in their
capacity as shareholders, to provide a mechanism for the Voting Trustee to
authorize routine actions that customarily are presented to a corporation's
shareholders for approval, while reserving to each Shareholder the right to
fully participate in certain major decisions concerning the Company. All
Shareholders and the Voting Trustee shall act in good faith in carrying out
this intention.
3
<PAGE> 4
7. Successornt Voting Trustee. The Trustee (and any
trustee may at any time resign by mailing to the registered holders of Voting
Trust Certificates a written resignation, to take effect ten days thereafter,
or upon the prior acceptance thereof. Upon the death, incapacity or
unwillingness to act of Jean L. Scudder, or upon her resignation as Voting
Trustee, Carolyn S. Miller shall become successor Voting Trustee for Jean L.
Scudder. Upon the death, incapacity or unwillingness to act of Carolyn
S. Miller, or upon her resignation as Voting Trustee, Charles A. Scudder shall
become successor Voting Trustee for Carolyn S. Miller.
8. Term.
(a) The Voting Trust created by this Agreement shall
continue in effect until May 20, 2004 (subject to extension as hereinafter set
forth).
(b) At any time within two years prior to May 20, 2004,
or at any time within two years prior to the time of expiration of this
Agreement as extended, one or more holders of Voting Trust Certificates
hereunder may, by agreement in writing and with the written consent of the
Voting Trustee, extend the duration of this Agreement for an additional period
not exceeding ten years from the then expiration date. In the event of such
extension, the Voting Trustee shall, prior to the time of expiration, as
hereinabove provided, as originally fixed or as theretofore extended, as the
case may be, file in the principal office of the Company and in the registered
office of the Company in the State of Delaware, a copy of such extension
agreement and of the consent thereto, and thereupon the duration of this
Agreement shall be extended for the period fixed by such extension agreement,
provided, however, that no such extension agreement shall extend the term of
this Agreement beyond the maximum period then permitted by applicable law or
affect the rights or obligations of persons not parties thereto.
(c) Upon the termination of this Agreement and upon the
delivery of the Voting Trust Certificates to the Voting Trustee, the
Shareholders shall receive the number of shares of Stock of the Company which
are represented by their Voting Trust Certificates and said transaction shall
be recorded on the books of the Company.
9. Compensation and Reimbursement of Voting Trustee. The Voting
Trustee shall serve without compensation. The Voting Trustee shall have the
right to incur and pay such reasonable expenses and charges, to employ and pay
such agents, attorneys,and counsel as they may deem necessary and proper for
carrying this Agreement into effect. Any such expenses or charges incurred by
and due to the Voting Trustee may be deducted from the dividends or other
moneys or property received by the Voting Trustee on the stock deposited
hereunder. Nothing herein contained shall disqualify the Voting Trustee or
successor trustees, or incapacitate them from serving the Company or any of its
4
<PAGE> 5
subsidiaries as officer or director or in any other capacity, and in any such
capacity receiving compensation.
10. Notice.
(a) Unless otherwise in this Agreement specifically
provided, any notice to or communication with the holders of the Voting Trust
Certificates hereunder shall be deemed to be sufficiently given or made if
mailed, first-class, postage prepaid, if addressed as follows:
To Charles A. Scudder 4 Ellsworth Place
Pittsburgh, Pennsylvania 15232
To Carolyn S. Miller 926 So. Waterloo Road
Devon, Pennsylvania 19333
To Elizabeth H. Difani 6000 Apple Road
Rt. 1, Box 138
Polson, Montana 59860
To Jean L. Scudder RR #1, Box 75
Readfield, Maine 04355
Every notice so given shall be effective, whether or not received, and the date
of mailing shall be the date such notice is deemed given for all purposes.
(b) Any notice to the Voting Trustee hereunder may be
mailed, first-class, postage prepaid, and sent by registered mail to the Voting
Trustee, addressed to her at such address as may from time to time be furnished
in writing to the Company by the voting Trustee, and if no such address has
been furnished by the Voting Trustee, then to the Voting Trustee in care of the
Company.
(c) All distributions of cash, securities, or other
property hereunder by the Voting Trustee to the holders of Voting Trust
Certificates may be made, in the discretion of the Voting Trustee, by mail
(regular or registered mail, as the Trustee may deem available), in the same
manner as hereinabove provided for the giving of notices to the holders of
Voting Trust Certificates.
11. Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile signatures, each of which shall be deemed to be
an original, and all of which taken together shall be deemed to be one and the
same instrument.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties have signed and sealed this
Agreement, effective May 20, 1994.
/s/ CHARLES A. SCUDDER
------------------------------------
Charles A. Scudder
------------------------------------
Carolyn S. Miller, as custodian
for Jeffrey, Katherine and
Jennifer Miller
---------------------------------------
Elizabeth H. Difani, individually
and as custodian for Miguel, Katya
and Chipeta Difani
---------------------------------------
Jean L. Scudder, individually, as
Trustee for the Scudder Family 1987
Trust and as Voting Trustee under
This Agreement
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
12/31/96 AFFILIATED NEWSPAPERS INVESTMENTS, INC. FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 2,254
<SECURITIES> 0
<RECEIVABLES> 37,061
<ALLOWANCES> 3,694
<INVENTORY> 6,168
<CURRENT-ASSETS> 49,873
<PP&E> 159,801
<DEPRECIATION> 54,837
<TOTAL-ASSETS> 385,489
<CURRENT-LIABILITIES> 47,800
<BONDS> 464,136
0
0
<COMMON> 23
<OTHER-SE> (144,403)
<TOTAL-LIABILITY-AND-EQUITY> 385,489
<SALES> 139,965
<TOTAL-REVENUES> 139,965
<CGS> 50,289
<TOTAL-COSTS> 119,478
<OTHER-EXPENSES> 14,265
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,364
<INCOME-PRETAX> (12,180)
<INCOME-TAX> 683
<INCOME-CONTINUING> (12,863)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,863)
<EPS-PRIMARY> (5.56)
<EPS-DILUTED> 0
</TABLE>
