<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 1996
----------------------
Garden State Newspapers, Inc.
-----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2675173
-----------------------------------------------------------------------------
(State or other jurisdiction (Commission (Employer
of incorporation) File Number) Identification No.)
1560 Broadway, Suite 1450, Denver, CO 80202
-----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 837-0886
--------------------------
No Change
-----------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE> 2
Item 2. Acquisitions or Dispositions of Assets
On May 1, 1996, Garden State Investments, Inc., a wholly owned subsidiary of
Garden State Newspapers, Inc. (the "Registrant"), sold the common stock of The
Johnstown Tribune Publishing Company, publisher of the Johnstown
Tribune-Democrat, to American Publishing (1991), Inc. ("American Publishing")
in exchange for $32.6 million in cash and substantially all the assets used in
the publication of the following daily and weekly newspapers:
<TABLE>
<CAPTION>
===========================================================================================================
Newspaper Location Daily Publication Weekly Publication
===========================================================================================================
<S> <C> <C> <C>
Bridgeton, New Jersey Bridgeton Evening News None
-----------------------------------------------------------------------------------------------------------
Fort Morgan, Colorado Fort Morgan Times Morgan Times Review(a)
-----------------------------------------------------------------------------------------------------------
Sterling, Colorado Journal-Advocate J. A. Shopper(a)
-----------------------------------------------------------------------------------------------------------
Lamar, Colorado Lamar Daily News Tri-State Trader(a)
-----------------------------------------------------------------------------------------------------------
Millville, New Jersey Millville News Millville Shopper News(a)
-----------------------------------------------------------------------------------------------------------
Sidney, Nebraska Sidney Telegraph High Plains Shopping Guide(a)
-----------------------------------------------------------------------------------------------------------
North Adams, Massachusetts The Transcript The Transcript Spotlight(a)
-----------------------------------------------------------------------------------------------------------
Akron, Colorado None Akron News Reporter(b)
-----------------------------------------------------------------------------------------------------------
Brush, Colorado None Brush News-Tribune(b)
-----------------------------------------------------------------------------------------------------------
Julesburg, Colorado None Julesburg Advocate(b)
===========================================================================================================
</TABLE>
(a) Free Weekly Distribution
(b) Paid Weekly Distribution
The Registrant also assumed non-compete and other long-term obligations with a
discounted value of approximately $1.0 million in association with the
acquisition of the newspapers listed above. All the assets and the liabilities
assumed have been recorded at their estimated fair market values at the date of
the acquisition.
Immediately after the above described acquisition, the Registrant contributed
all of the newly acquired assets and liabilities of the Sidney, Nebraska; and
the Akron, Brush, Fort Morgan, Julesburg, Lamar and Sterling, Colorado daily
and weekly newspapers to a newly formed corporation, Eastern Colorado
Publishing Company ("Eastern Colorado"). The common stock of Eastern Colorado
was then sold to The Denver Post Corporation, an affiliate of the Registrant,
for approximately $15.6 million, including the assumption of $0.2 million of
discounted non-compete covenants and other long-term obligations (The Denver
Post Corporation is a 60 percent owned subsidiary of Affiliated Newspapers
Investments, Inc., parent company of the Registrant). No gain or loss was
realized on the sale of the Eastern Colorado common stock. The sale price of
the Eastern Colorado common stock was deemed to be fair based on an independent
appraisal of the transaction.
1
<PAGE> 3
Proceeds from the sale of The Johnstown Tribune Publishing Company and Eastern
Colorado were used to prepay certain debt obligations of the Registrant and its
subsidiaries as follows: (1) $4.6 million was prepaid to holders of the
Registrant's Senior Secured Notes; (2) $21.3 million was prepaid against
borrowings under the NJN Investments, Inc., a subsidiary of the Registrant,
revolver, representing 100 percent of the amount outstanding; (3) $7.5 million
was prepaid against a bank term loan, representing amounts due through
September, 1996; and (4) the remaining amount of approximately $13.6 million
was prepaid against the Registrant's revolving credit agreement.
The description of the purchase and sale transactions set forth herein are
qualified in their entirety by the provisions of the purchase and sales
agreements which are attached hereto as exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Not Applicable Due to Size.
(b) Unaudited Pro Forma Financial Information
Unaudited pro forma financial information has been
presented for the disposition of The Johnstown
Tribune Publishing Company common stock beginning at
page 5 of this report. The acquisition of the
newspapers listed above did not require the
presentation of pro forma financial information as
required by Form 8-K. Accordingly, the acquisition
transaction has been omitted from the unaudited pro
forma financial information.
(c) Exhibits
2.1 Agreement dated April 29, 1996 by and among American
Publishing (1991) Inc., Berksire Newspapers, Inc.,
Evening News Company, Sidney Publication Company,
Sterling Publishing Company and Garden State
Investments, Inc.
2.2 Agreement dated April 30, 1996 by and among Garden
State Investments, Inc. and The Denver Post
Corporation for the sale/purchase of the capital
stock of Eastern Colorado Publishing Company.
2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GARDEN STATE NEWSPAPERS, INC.
Date: May 15, 1996 By: /s/ Joseph J. Lodovic, IV
--------------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
3
<PAGE> 5
GARDEN STATE NEWSPAPERS, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma balance sheet as of March 31, 1996, gives
effect to the sale of the common stock of The Johnstown Tribune Publishing
Company, publisher of the Johnstown Tribune-Democrat, as if this transaction
had occurred on July 1, 1995.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended March 31, 1996 and the year ended June 30, 1995, give
effect to the sale of the common stock of The Johnstown Tribune Publishing
Company, publisher of the Johnstown Tribune-Democrat, herein referred to as the
"Johnstown Sale," as if the Johnstown Sale had occurred on July 1, 1995 and
July 1, 1994, respectively.
These pro forma statements are not necessarily indicative of the future
operations or of the consolidated results of operations had the Johnstown Sale
actually taken place on July 1, 1995 or July 1, 1994. The unaudited pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto appearing in the Company's
Form 10-K and 10-Q for the periods ending June 30, 1995 and March 31, 1996,
respectively.
4
<PAGE> 6
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(Amounts in Thousands)
<TABLE>
<CAPTION>
ASSETS As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . $ 1,485 $ 1,672 (a),(c) $ 3,105
Accounts receivable, less allowance
for doubtful accounts . . . . . . . . . . . . . . 27,183 (1,321) (a) 25,862
Inventories of newsprint and supplies . . . . . . . 6,641 (401) (a) 6,240
Prepaid expenses and other assets . . . . . . . . . 6,239 (1,793) (a) 4,446
-------- -------- --------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . 41,548 (1,843) 39,705
PROPERTY, PLANT AND EQUIPMENT
Land . . . . . . . . . . . . . . . . . . . . . . . 5,296 (128) (a),(d) 5,168
Buildings and improvements . . . . . . . . . . . . 34,189 (1,593) (a),(d) 32,596
Machinery and equipment . . . . . . . . . . . . . . 90,634 (5,793) (a),(d) 84,841
-------- -------- --------
Total Property, Plant and Equipment . . . . . . 130,119 (7,514) 122,605
Less accumulated depreciation and amortization . . (52,238) 5,181 (a) (47,057)
-------- -------- --------
Net Property, Plant and Equipment . . . . . . . 77,881 (2,333) 75,548
OTHER ASSETS
Investment in partnership . . . . . . . . . . . . 6,122 -- 6,122
Subscriber accounts, net of accumulated
amortization . . . . . . . . . . . . . . . . . . . 47,143 (1,646) (a) 45,497
Excess of cost over fair value of net assets
acquired, 101,613 (31,597) (a) 70,016
net of accumulated amortization . . . . . . . . .
Covenants net of compete and other identifiable 4,703 -- 4,703
intangible assets, not to accumulated amortization 3,244 (1,805) (a) 1,439
-------- -------- --------
Other . . . . . . . . . . . . . . . . . . . . . . . 162,825 (35,048) 127,777
------- -------- -------
TOTAL OTHER ASSETS . . . . . . . . . . . . . . $282,254 $(39,224) $243,030
======== ======== ========
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . .
</TABLE>
See notes to unaudited pro forma financial information.
5
<PAGE> 7
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Trade accounts payable . . . . . . . . . . . . . . . . . . $ 6,483 $ (144) (a) $ 6,339
Accrued liabilities . . . . . . . . . . . . . . . . . . . . 13,407 (705) (a) 12,702
Unearned income . . . . . . . . . . . . . . . . . . . . . . 7,375 (1,017) (a) 6,358
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 578 -- 578
Current portion of long-term debt and
capital lease obligation . . . . . . . . . . . . . . . . 21,266 (12,600) (b) 8,666
--------- -------- ---------
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 49,109 (14,466) 34,643
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . 238,704 (34,300) (b) 204,404
OTHER LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 8,898 (920) (a) 7,978
DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . . . 13,579 (2,685) (a) 10,894
SHAREHOLDERS' DEFICIT
Common stock . . . . . . . . . . . . . . . . . . . . . . . 1 -- 1
Additional paid in capital . . . . . . . . . . . . . . . . 78,570 -- 78,570
Deficit . . . . . . . . . . . . . . . . . . . . . . . . . (106,607) 13,147 (a) (93,460)
-------- -------- ---------
TOTAL SHAREHOLDERS' DEFICIT . . . . . . . . . . . . . . . (28,036) 13,147 (14,889)
-------- -------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT . . . . . . . . . . . . . . . . . . . . . . . . . $282,254 $(39,224) $243,030
======== ======== ========
</TABLE>
See notes to unaudited pro forma financial information.
6
<PAGE> 8
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended March 31, 1996
(In Thousands)
<TABLE>
<CAPTION>
As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $180,937 $(13,387) (a) $ 167,550
COST AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . 73,211 (4,608) (a) 68,603
Selling, general, and administrative . . . . . . 75,237 (4,086) (a) 71,151
Depreciation and amortization . . . . . . . . . . 15,180 (1,946) (a) 13,234
Interest expense . . . . . . . . . . . . . . . . 20,576 (2,533) (b) 18,043
Other, (net) . . . . . . . . . . . . . . . . . 2,869 34 (a) 2,903
-------- -------- --------
TOTAL COST AND EXPENSES . . . . . . . . . . . 187,073 (13,139) 173,934
------- ------- -------
LOSS BEFORE INCOME
TAXES . . . . . . . . . . . . . . . . . . . . . . (6,136) 248 (6,384)
INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . . 152 (223) (a) (71)
-------- ------- --------
NET LOSS . . . . . . . . . . . . . . . . . . . . . $(5,984) $ 471 $(6,455)
======= ======= =======
</TABLE>
See notes to unaudited pro forma financial information.
7
<PAGE> 9
GARDEN STATE NEWSPAPERS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended June 30, 1995
(In Thousands)
<TABLE>
<CAPTION>
As Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING REVENUES $213,045 $(17,419) (a) $195,626
COST AND EXPENSES
Cost of sales . . . . . . . . . . . . . . . . . . 79,098 (5,719) (a) 73,379
Selling, general, and administrative . . . . . . 90,513 (5,525) (a) 84,988
Depreciation and amortization . . . . . . . . . . 18,710 (2,596) (a) 16,114
Interest expense . . . . . . . . . . . . . . . . 25,806 (2,547) (c) 23,259
Other, (net) . . . . . . . . . . . . . . . . . 2,387 132 (a) 2,519
--------- --------- ---------
TOTAL COST AND EXPENSES . . . . . . . . . . . 216,514 (16,255) 200,259
GAIN ON SALE OF NEWSPAPER PROPERTY . . . . . . . . 4,153 - 4,153
--------- ---------- ---------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . 684 (1,164) (480)
INCOME TAX BENEFIT (EXPENSE) . . . . . . . . . . . 364 (344) (a) 20
--------- --------- ----------
NET INCOME (LOSS) . . . . . . . . . . . . . . . . . $ 1,048 $ (1,508) $ (460)
========= ========= =========
</TABLE>
See notes to unaudited pro forma financial information.
8
<PAGE> 10
GARDEN STATES NEWSPAPERS, INC.
NOTES TO UNAUDITED PRO FORMA FINANCIAL INFORMATION
NOTE 1: UNAUDITED PRO FORMA BALANCE SHEETS
(a) To eliminate assets and liabilities of The Johnstown
Tribune Publishing Company as of March 31, 1995, to
reflect the Johnstown Sale.
(b) Apply net cash proceeds of approximately $46.9
million to the reduction of current and long-term debt.
(c) Increase cash to reflect the reduction in interest
expense as a result of paying down long-term debt,
net of cash expenses associated with the Johnstown
Sale.
(d) Record preliminary estimate of fair value of
long-term assets received as consideration in the
Johnstown Sale.
NOTE 2: UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(a) To eliminate revenues and expenses directly
associated with the operations of The Johnstown
Tribune Publishing Company.
(b) To reduce interest expense to reflect the use of the
proceeds from the Johnstown Sale to reduce the
Company's long-term debt. The interest reduction
does not reflect nine months of interest savings on
the full pay down as $21.5 million was borrowed on
August 31, 1995 and $11.0 million was borrowed on
March 10, 1996 in conjunction with the New England
Newspapers and San Mateo acquisitions, respectively.
If the Johnstown Sale had occurred on July 1, 1995,
proceeds from the sale which were not used to pay
debt or acquire additional newspapers would have been
invested in short-term financial instruments, the
effect of which is not reflected in the pro forma
adjustments.
(c) To reduce interest expense to reflect the use of the
proceeds from the Johnstown Sale to reduce the
Company's long-term debt. The reduction in interest
expense in fiscal year-end June 30, 1995, was limited
because $21.1 million of the amounts repaid in
conjunction with the Johnstown Sale were not borrowed
during fiscal year-end 1995. The Company's remaining
debt could not be repaid without substantial
penalties or renegotiations with the note holders.
If the Johnstown Sale had occurred on July 1, 1994,
proceeds from the sale which were not used to pay
down debt of approximately $17.3 million would have
been invested in short-term financial instruments,
the effect of which is not reflected in the pro forma
adjustments.
9
<PAGE> 1
EXHIBIT 2.1
Agreement
Dated as of April 29, 1996
By and Among
American Publishing (1991) Inc.,
Berkshire Newspapers, Inc.,
Evening News Company,
Sidney Publishing Company,
Sterling Publishing Company
And
Garden State Investments, Inc.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Exchange of Assets and Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Agreement to Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Enumeration of American Publishing Newspapers Assets . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 American Publishing Newspapers Excluded
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Agreement to Assume American Publishing
Newspapers Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III Closing, Consideration to be Exchanged at
Closing, Potential Working Capital
Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Allocation of Consideration Exchanged at
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Cash Consideration to be Exchanged by
American Publishing at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Potential American Publishing Working Capital
Adjustment to Additional Cash Consideration
to be paid by American Publishing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Potential Johnstown Working Capital
Adjustment to Additional Cash Consideration
to be Paid by American Publishing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV American Publishing's and the American
Publishing Sellers' Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 Organizational . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.2 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5 Title To and Condition of Assets; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8 Insiders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.9 Advertising and Commercial Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.10 Circulation Matters; Newsprint and Ink
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.11 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
4.13 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.14 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.15 Corporate and Personnel Data; Independent
Contractors; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.16 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.17 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.18 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.19 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.20 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.21 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.22 WARN Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.23 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.24 Deposits/Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.25 Certain Assets Not Owned by American
Publishing or American Publishing Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.26 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V Garden State's Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1 Organizational . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.2 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.3 Financial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.4 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.5 Title to the Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.6 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.8 Title To and Condition of Assets; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.9 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.11 Insiders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.12 Advertising and Commercial Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.13 Circulation Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.14 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.16 Permits and Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.17 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
5.18 Corporate and Personnel Data; Independent
Contractors; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.19 Litigation and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.20 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.22 Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
5.23 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
5.24 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.25 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.26 WARN Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.27 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.28 Deposits/Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
<PAGE> 4
<TABLE>
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5.29 Certain Assets Not Owned by Johnstown . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.30 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE VI Conduct Prior to the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.2 American Publishing's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
6.3 Garden State's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.4 Joint Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE VII Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.1 Employees; Employee Benefit Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
7.2 WARN Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE VIII Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.1 Conditions to American Publishing's
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.2 Conditions to Garden State's Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE IX Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.1 Form of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2 American Publishing's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.3 Garden State's Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE X Post-Closing Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.1 Post-Closing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.2 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.3 Certain Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.4 Use of Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.5 Collection of Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.6 Transactional Costs/Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.7 Disclosure of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.8 Injunctive Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ARTICLE XI Certain Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.1 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.2 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.3 Tax Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.4 Carrybacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.5 Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.6 Reattribution Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XII Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.2 Indemnification Obligations of American
Publishing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
12.3 Indemnification Obligations of Garden State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
12.4 Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
</TABLE>
<PAGE> 5
<TABLE>
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ARTICLE XIII Effect of Termination/Proceeding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.1 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE XIV Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE XV Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
15.1 Non Competition Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
15.2 Dollar Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.4 Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.6 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
15.8 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
15.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
15.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
15.11 Survival; Non-Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.12 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.13 Binding Effect; Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.14 Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
15.16 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
</TABLE>
Exhibits
Exhibit A Categories of Current Assets and Current and Other Liabilities To
Be Reflected on the American Publishing Estimated and Final
Working Capital Statements
Exhibit B Categories of Current Assets and Current and Other Liabilities to
be Reflected on the Johnstown Estimated and Final Working Capital
Statements
Exhibit C Certain Definitions
Exhibit D Opinion of American Publishing's Counsel
Exhibit E Opinion of Garden State's Counsel
Exhibit F Allocation of Consideration Exchanged by Garden State for
American Publishing Newspapers Assets
<PAGE> 6
American Publishing
Disclosure Schedule
<TABLE>
<CAPTION>
Tab
No.
---
<S> <C> <C>
Section 4.2(a) Schedule of Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 4.2(b) Schedule of Conflicts, Breaches and Violations . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 4.3(a) Financial Statements and Schedule of
Exceptions to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.3(b) Schedule of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.5(b) Schedule of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.5(c) Schedule of Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.7 Schedule of Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.8 Schedule of Business Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.9(a) Schedule of Advertising Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.9(b) Schedule of Advertising Cancellations or
Material Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.9(c) Schedule of Commercial Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.10(a) Circulation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.10(b) Schedule of Circulation as of March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.10(c) Schedule of Changes in Advertising and
Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.10(d) Schedule of Independent Distributors, Dealers,
Paid Subscribers, Non-Subscribers, Rack and
and Box Locations, Newsprint and Ink Vendors . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11(b) Schedule of Certain Business Occurrences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.12 Schedule of Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.13 Schedule of Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.14(a) Schedule of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.14(b) Schedule of Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.14(k) Schedule of Persons Receiving Benefits Under
Section 4980 B of the Internal Revenue Code . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15(a) Schedule of Employment, Management, Consulting
and Similar Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.15(b) Schedule of Independent Contractor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.15(c) Schedule of Employee Grievances and Other
Employee Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.16 Schedule of Litigation, Claims and
Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.17(a) Schedule of Decrees, Orders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.17(b) Schedule of Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.18(a) Schedule of Compliance with Laws, Permits,
etc., and Environmental Violations, Claims,
Reports, Tests, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.18(b) Schedule of Releases, Treatment, Etc. of
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.18(c) Schedule of Containers (Above Ground
and Underground Storage Tanks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
ii
<PAGE> 7
<TABLE>
<S> <C> <C>
Section 4.18(d) Schedule of Asbestos Containing Material,
PCBs and Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.19(a) Schedule of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.20(a) Schedule of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.21 Schedule of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.22 Schedule of WARN Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 4.24 Schedule of Security Deposits, Surety
Deposits and Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.25 Schedule of Certain Assets Not Owned or Leased . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
iii
<PAGE> 8
Garden State
Disclosure Schedule
<TABLE>
<CAPTION>
Tab
No.
---
<S> <C> <C>
Section 5.2(a) Schedule of Required Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5.2(b) Schedule of Conflicts, Breaches and Violations . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5.3(a) Financial Statements and Schedule of
Exceptions to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 5.8(b) Schedule of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.8(c) Schedule of Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.10 Schedule of Insurance Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.11 Schedule of Business Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 5.12(a) Schedule of Advertising Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.12(b) Schedule of Advertising Cancellations or
Material Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.12(c) Schedule of Commercial Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.13 Circulation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.14(b) Schedule of Certain Business Occurrences . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.15 Schedule of Contracts and Certain Defaults and
Related Occurrences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.16 Schedule of Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.17(a) Schedule of Employee Benefit Plans, ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5.17(j) Schedule of Persons Receiving Benefits Under
Section 4980 B of the Internal Revenue Code . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.18(a) Schedule of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 5.18(b) Schedule of Employment, Management, Consulting
and Similar Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 5.18(c) Schedule of Independent Contractor Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.18(d) Schedule of Employee Grievances and Other
Employee Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.19 Schedule of Pending and Threatened Claims,
Litigation, Arbitrations and Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.20(a) Schedule of Decrees, Orders, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.20(b) Schedule of Notice of Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.21(a) Schedule of Environmental Permits,
Reports, Tests, Environmental Claims,
Violations, Liabilities, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.21(c) Schedule of Containers (Above Ground
and Underground Storage Tanks) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.21(d) Schedule of Asbestos, PCB's and Hazardous
Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.22(a) Schedule of Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.23(a) Schedule of Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.24 Schedule of Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.25 Schedule of Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.26 Schedule of WARN Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.28 Schedule of Security Deposits, Surety
Deposits and Bond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.29 Schedule of Certain Assets Not Owned or Leased . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
iv
<PAGE> 9
AGREEMENT
This Agreement (the "Agreement") is made as of April 29, 1996 by and among
American Publishing (1991) Inc., a Delaware corporation ("American
Publishing"), Berkshire Newspapers, Inc., a Massachusetts corporation
("Berkshire"), Evening News Company, a New Jersey corporation ("Evening News"),
Sterling Publishing Company, a Delaware corporation ("Sterling"), and Sidney
Publishing Company, a Delaware corporation ("Sidney"), (Berkshire, Evening
News, Sidney and Sterling are hereinafter collectively referred to as the
"American Publishing Sellers"), and Garden State Investments, Inc., a Delaware
corporation ("Garden State").
WHEREAS, the American Publishing Sellers are engaged in the business of
printing, publishing and distributing: (i) The Transcript, a daily newspaper
published Monday - Saturday in North Adams, Massachusetts, (ii) the Bridgeton
Evening News, a daily newspaper published Monday - Saturday in Bridgeton, New
Jersey, and the Millville News, a daily newspaper published Monday - Saturday
in Millville, New Jersey, (ii) the Journal Advocate, a daily newspaper
published Monday - Saturday in Sterling, Colorado, the Fort Morgan Times, a
daily newspaper published Monday - Saturday in Fort Morgan, Colorado, The Lamar
Daily News, a daily newspaper published Monday - Friday in Lamar, Colorado, and
the Akron News - Reporter, the Brush News-Tribune and the Julesberg Advocate,
weekly newspapers, published, respectively, in Akron, Brush and Julesberg,
Colorado and (iv) the Sidney Telegraph, a daily newspaper published Monday -
Friday in Sidney, Nebraska (all of which daily and weekly newspapers are
hereinafter collectively referred to as the "American Publishing Newspapers");
and,
WHEREAS, Garden State, through its wholly owned subsidiary, The Johnstown
Tribune Publishing Company, a Delaware corporation ("Johnstown"), is engaged in
the business of printing, publishing and distributing The Tribune-Democrat, a
daily newspaper published Monday - Sunday, and Saving Your Dollar Shopper and
Star Watch published weekly, in Johnstown, Pennsylvania (all of which daily and
weekly newspapers are hereinafter collectively referred to as "The
Tribune-Democrat"); and,
WHEREAS, as of the Closing Date, as hereinafter defined, American
Publishing and the American Publishing Sellers desire to exchange (a)
substantially all of the assets, properties, liabilities, obligations and
goodwill relating to the American Publishing Newspapers, assets of every kind
and description, wherever located, whether tangible or intangible, real,
personal or mixed, whether or not specifically mentioned or described
hereinafter in this Agreement, other than the Excluded American
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Publishing Newspapers Assets, as hereinafter defined (the "American Publishing
Newspapers Assets") and which also includes the American Publishing Assumed
Liabilities (as hereinafter defined) together with the additional cash sum of
Thirty One Million Four Hundred Thousand Dollars ($31,400,000), which sum shall
be subject to adjustment in amount as hereinafter provided, for (b) all of the
outstanding capital stock of Johnstown (the "Capital Stock");
WHEREAS, Garden State is itself desirous of making such an exchange; and,
WHEREAS, at the Closing, as hereinafter defined, it is contemplated that
the parties hereto will in their sole discretion determine which of their
subsidiaries or Affiliates, currently existing, or hereafter formed, shall
receive the stock or various assets then due to be transferred to the parties
hereto pursuant to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements and warranties herein contained and intending to be legally bound,
the parties agree as follows:
ARTICLE I.
Exchange of Assets and Stock
1.1. Agreement to Exchange. On the terms and subject to the conditions
contained in this Agreement, at the Closing, the American Publishing Sellers
agree to sell, transfer, convey, assign and deliver to Garden State all rights,
title and interests in and to the American Publishing Newspapers Assets and the
Additional Cash Consideration, as hereinafter defined, in consideration of
Garden State's simultaneous conveyance to American Publishing of all rights,
title and interests in and to the Capital Stock and assumption of the American
Publishing Assumed Liabilities, and at the Closing Garden State agrees
simultaneously to effectuate such exchange. The American Publishing Newspapers
Assets which includes shall be transferred to Garden State, and the Capital
Stock shall be transferred to American Publishing, free and clear of any Liens,
except American Publishing Permitted Liens.
1.2. Enumeration of American Publishing Newspapers Assets. Except as
otherwise provided in Section 1.3 hereof, the American Publishing Newspapers
Assets shall include, without limitation, all of the American Publishing
Sellers' rights, title and interests in and to the following items;
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(a) all inventory, including, without limitation, newsprint, ink, raw
materials, work in process, finished goods, service parts and spare parts and
circulation, production, maintenance and office supplies of the American
Publishing Newspapers (collectively, the "American Publishing Inventory");
(b) all furniture, fixtures, improvements, equipment (including
office equipment), machinery, parts, computer hardware, tools, printing
presses, vehicles and all other tangible personal property (other than the
American Publishing Inventory) of the American Publishing Newspapers
(collectively, the "American Publishing Equipment");
(c) that certain real property owned by the American Publishing
Sellers relating to the American Publishing Newspapers and all appurtenances
thereto and improvements thereon, together with all easements, rights of way,
servitudes, options, mineral property, mineral deposits, rights of first
refusal and all other real property rights related thereto which real property,
appurtenances and improvements shall hereinafter collectively be referred to as
the "American Publishing Real Estate";
(d) all accounts receivable, billed or unbilled, of the American
Publishing Newspapers (collectively, the "American Publishing Accounts
Receivable");
(e) any and all claims and rights (and benefits arising therefrom)
relating to the American Publishing Newspapers Assets or the American
Publishing Newspapers against all persons whomsoever, other than claims and
rights relating to the Tax Assets, including, without limitation, all rights
against suppliers under warranties covering any of the American Publishing
Inventory or the American Publishing Equipment and all American Publishing
Permits and American Publishing Environmental Permits, to the extent they are
legally transferable by American Publishing;
(f) any and all trademarks, tradenames, fictitious names and
copyrights of the American Publishing Newspapers (the "American Publishing
Intellectual Property"), and all goodwill associated with such American
Publishing Intellectual Property;
(g) any and all sales orders and sales contracts, quotations and bids
of the American Publishing Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the American Publishing
Newspapers for commercial and printing related services;
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(h) all of the contracts and agreements of the American Publishing
Newspapers, other than insurance policies (hereinafter the "American Publishing
Insurance Policies");
(i) any and all existing books, papers, files and records of American
Publishing with respect to the American Publishing Newspapers located at the
American Publishing Newspapers, whether in hard copy, magnetic or other format
(collectively, "American Publishing's Records"), including, without limitation,
the following types of files and records: books of account and accounting and
Tax information (including, without limitation, Tax audit and inquiry
information), contract files, current and former customer, dealer, advertiser
and supplier files, including, without limitation, advertiser contracts, copies
of newsprint contracts, subscriber and non-subscriber lists (including those of
independent contractors which distribute the American Publishing Newspapers)
and advertiser lists, lists of rack and box locations, lists of dealers,
customer credit information, pricing information, historical and current
circulation draw information, personnel and employment files, manufacturing and
production information, market research and survey reports and records,
equipment maintenance records, equipment warranty information, sales and
advertising material, software, including specifications and drawings for the
software, used in connection with the editorial and classified advertising
departments of the American Publishing Newspapers (including without
limitation, all documentation and source codes), equipment drawings, manuals
and data, written confirmations or certificates relating to the American
Publishing Permits and the American Publishing Environmental Permits;
(j) all prepaid expenses, and any and all other prepaid items and
credits for or toward the purchase of American Publishing Inventory and other
goods and services relating to the American Publishing Newspapers other than
those prepaid expenses included among the American Publishing Newspapers
Excluded Assets (collectively, the "American Publishing Prepaids");
(k) all addresses and, to the extent legally transferable, telephone
numbers of the American Publishing Newspapers;
(l) any and all security deposits, surety deposits and bonds
presently maintained on behalf of the American Publishing Newspapers;
(m) the library, morgue and any and all available back copies of the
American Publishing Newspapers located at the offices of the American
Publishing Newspapers;
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(n) any and all leases of motor vehicles and other tangible personal
property relating to the American Publishing Newspapers ("American Publishing
Personal Property Leases"); and
(o) except for the American Publishing Newspapers Excluded Assets,
all other assets of the American Publishing Newspapers.
1.3. American Publishing Newspapers Excluded Assets. Notwithstanding
Sections 1.1 and 1.2 or any other provision of this Agreement, the American
Publishing Newspapers Assets shall not include the following assets relating to
the American Publishing Newspapers (the "American Publishing Newspapers
Excluded Assets"):
(a) all cash, cash equivalents, bank accounts and related deposits
relating to the American Publishing Newspapers;
(b) all Tax Assets (as defined in Exhibit A to this Agreement) of the
American Publishing Sellers and the American Publishing Newspapers;
(c) all employee welfare and benefit plans relating to the American
Publishing Newspapers;
(d) all rights, title and interests in and to the American Publishing
Insurance Policies and related prepaid expenses;
(e) all rights, title and interests in and to the "American
Publishing" name and any variations thereof;
(f) any interest of the American Publishing Sellers in any litigation
or other claims disclosed in Section 4.16 of the American Publishing Disclosure
Schedule;
(g) items of a corporate overhead nature that are controlled by, and
located at, American Publishing's corporate office, provided that Garden State
is provided reasonable access, at no cost to Garden State, for a period of
ninety (90) days following the Closing Date, to any of such items which may
reasonably be required for the operations of one or more of the American
Publishing Newspapers following the Closing;
(h) the obligations of Graphic News, Inc. in the original principal
amount of $254,718.90 to the Evening News Corporation pursuant to the parties'
Agreement to Repay dated December 14, 1995;
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(i) the real property and improvements located at 100 Cedar Street,
Julesburg, Colorado; and,
(j) the real property and improvements located at the property
described as Parcel 2 on Attachment 4.5(b)-7 of the American Publishing
Disclosure Schedule Section 4.5(b)-Real Estate.
ARTICLE II.
Assumption of Liabilities
2.1. Agreement to Assume American Publishing Newspapers Liabilities. At
the Closing, except as otherwise expressly provided in Section 2.2, Garden
State shall assume and agree to discharge, pay and perform all liabilities and
obligations of the American Publishing Newspapers and all liabilities and
obligations of the American Publishing Sellers relating to the American
Publishing Newspapers, whether known or unknown, asserted or unasserted at the
Closing Date, whether accrued, absolute, contingent or otherwise, and including
liabilities and obligations that may arise in the future, provided, however,
that such assumed liabilities shall not include any liability required to be
included in the Final American Publishing Working Capital Statement, unless
such liability is in fact included therein (all of which assumed liabilities
shall hereinafter be referred to collectively as the "American Publishing
Assumed Liabilities").
2.2. Excluded Liabilities. Notwithstanding Section 2.1 or any other
provision of this Agreement, Garden State shall not assume (a) any obligation
under any of the American Publishing Insurance Policies, (b) any obligation
pertaining to the American Publishing Sellers or the American Publishing
Newspapers under any long-term debt, (c) except as set forth in Article VII,
any obligations related to employee welfare and benefit plans relating to the
American Publishing Newspapers, (d) any income or franchise tax liability
attributable to the American Publishing Sellers, the American Publishing
Newspapers or the American Publishing Newspapers Assets, (e) any obligations of
the American Publishing Newspapers payable to American Publishing, the American
Publishing Sellers or any of their respective Affiliates, (f) any obligations
with respect to health insurance, medical benefits and/or deferred compensation
to which former employees of The Transcript and/or their dependents may be
entitled as of the Closing Date pursuant to employee benefit plans described in
Section 4.14 of the American Publishing Disclosure Schedule (including any
"post-retirement medical benefits") or (g) any liability which American
Publishing has agreed to indemnify Garden State against pursuant to Section
12.2(d)(vi) of this Agreement (collectively, the "American Publishing Excluded
Liabilities").
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ARTICLE III.
Closing, Consideration to be Exchanged at
Closing, Potential Working Capital Adjustments
3.1. Time and Place of Closing. The transaction contemplated by this
Agreement shall be consummated (the "Closing") at the offices of the American
Publishing Sellers' counsel, Kirkpatrick & Lockhart LLP, 1231 Avenue of the
Americas, New York, New York 10020-1104, at 10 o'clock a.m. on April 30, 1996,
if prior thereto, all of the conditions for such Closing set forth in Articles
VIII and IX of this Agreement have been satisfied in full or duly waived, and
if not, upon the last business day of the first month thereafter upon which all
of such conditions have been satisfied, effective as of the last day of such
month, or on such other date, or at such other time or place, as shall be
mutually agreed upon by the American Publishing and Garden State, but not later
than June 30, 1996. The date of the Closing is hereinafter referred to as the
Closing Date.
3.2. Allocation of Consideration Exchanged at Closing. The value of the
consideration exchanged at Closing by Garden State (including the American
Publishing Newspapers Assumed Liabilities) for the American Publishing
Newspapers Assets, less the sum of the Additional Cash Consideration, as
hereinafter defined, shall be allocated among the American Publishing
Newspapers Assets for Tax purposes as set forth in Exhibit F hereto, and all
Tax Returns and reports filed by American Publishing, Garden State and their
respective Affiliates shall be consistent with such allocation.
3.3. Cash Consideration to be Exchanged by American Publishing at Closing.
The Additional Cash Consideration to be paid by American Publishing to Garden
State at Closing, in connection with the exchange at Closing of the Capital
Stock and the American Publishing Newspapers Assets shall be the sum of Thirty
One Million Four Hundred Thousand Dollars ($31,400,000), as adjusted to reflect
any sums payable by American Publishing to Garden State, or from Garden State
to American Publishing, in accordance with the provisions of Sections 3.4 and
3.5 of this Agreement (the "Additional Cash Consideration").
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3.4. Potential American Publishing Working Capital Adjustment to
Additional Cash Consideration to be paid by American Publishing.
(a) Estimated American Publishing Working Capital Statement. Not
later than five (5) business days before the Closing Date, American Publishing
shall prepare and deliver to Garden State a working capital statement of each
of the American Publishing Newspapers (the "Estimated American Publishing
Working Capital Statement") based upon the books and records of the American
Publishing Newspapers as of the time such books and records are closed on the
last day of the month immediately preceding the Closing Date (the "Estimate
Date"). Subject to the provisions of this Section 3.4, the Estimated American
Publishing Working Capital Statement shall be prepared in accordance with GAAP
and shall fairly present the categories of current assets identified on Exhibit
A attached hereto (the "American Publishing Current Assets") and the categories
of current and other liabilities identified on Exhibit A attached hereto which
liabilities shall not however include any liabilities for income or franchise
Taxes attributable to the American Publishing Sellers or the American
Publishing Newspapers or any liabilities which are not to be assumed by Garden
State pursuant to Article II hereof (the "American Publishing Current and Other
Liabilities") of the American Publishing Newspapers as of the Estimate Date.
With respect to the valuation of accounts receivable, accounts receivable shall
be valued consistent with the American Publishing Newspapers' past practices,
except insofar as a different reserve is specified in Exhibit A to this
Agreement with respect to any accounts receivable that are more than 90 days
outstanding as of the Closing. In the event that the amount of the total
American Publishing Current Assets exceeds the amount of the total American
Publishing Current and Other Liabilities, as set forth on the Estimated
American Publishing Working Capital Statement, then the Additional Cash
Consideration shall be adjusted, i.e. reduced by the amount of such excess (the
"Estimated American Publishing Working Capital Excess"). In the event that the
amount of the total American Publishing Current and Other Liabilities exceeds
the amount of the total American Publishing Current Assets as set forth on the
Estimated American Publishing Working Capital Statement, then the Additional
Cash Consideration shall be adjusted, i.e. increased by the amount of such
excess (the "Estimated American Publishing Working Capital Deficiency"). Such
adjustments shall be in addition to and netted against or combined with any
adjustments to the Additional Cash Consideration which may be required pursuant
to Section 3.5(a) of this Agreement, as a result of the Estimated Johnstown
Working Capital Statement, as hereinafter defined.
(b) Final American Publishing Working Capital Statement. Forty-five
(45) days after the Closing Date, American Publishing shall prepare and deliver
to Garden State a working capital
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statement of each of the American Publishing Newspapers (the "Final American
Publishing Working Capital Statement") based upon the books and records of the
American Publishing Newspapers as of the Closing Date. With respect to the
valuation of accounts receivable, accounts receivable shall be valued
consistent with the American Publishing Newspapers' past practices, except
insofar as a different reserve is specified in Exhibit A to this Agreement with
respect to any accounts receivable that are more than 90 days outstanding as of
the Closing. Subject to the provisions of this Section 3.4, the Final American
Publishing Working Capital Statement shall be prepared in accordance with GAAP
and shall fairly present the categories of American Publishing Current Assets
and the American Publishing Current and Other Liabilities identified on Exhibit
A hereto as at the Closing Date, which liabilities shall not however include
any liabilities for income or franchise taxes attributable to the American
Publishing Sellers or the American Publishing Newspapers or any liabilities
which are not to be assumed by Garden State pursuant to Article II hereof. The
amount, if any, by which the amount of the total American Publishing Current
Assets exceeds the amount of the total American Publishing Current and Other
Liabilities of the American Publishing Newspapers as set forth on the Final
American Publishing Working Capital Statement, is referred to herein as the
"Final American Publishing Working Capital Excess". The amount, if any, by
which the amount of the total American Publishing Current and Other Liabilities
exceeds the amount of the total American Publishing Current Assets of the
American Publishing Newspapers as set forth on the Final American Publishing
Working Capital Statement is referred herein as the "Final American Publishing
Working Capital Deficiency".
Within ten (10) days after the earlier of (A) approval of the Final
American Publishing Working Capital Statement and the Final Johnstown Working
Capital Statement, as defined in Section 3.5 of this Agreement, by American
Publishing and Garden State, or (B) the final resolution of any dispute with
respect to either or both of such statements as provided in Sections 3.4(c) and
3.5(c) of this Agreement (such date of approval or final resolution being
referred to as the "Due Date"), Garden State shall pay to American Publishing
the following amount, to the extent applicable:
i) if there is an Estimated American Publishing Working Capital
Excess pursuant to Section 3.4(a), the amount (if any) by which such Estimated
American Publishing Working Capital Excess is less than any Final American
Publishing Working Capital Excess pursuant to this Section 3.4(b) (for example,
if there is an Estimated American Publishing Working Capital Excess of $1.00
and a Final American Publishing Working Capital Excess of $2.00, Garden State
shall pay to American Publishing $1.00); or
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ii) if there is an Estimated American Publishing Working Capital
Deficiency pursuant to Section 3.4(a), the amount (if any) by which any Final
American Publishing Working Capital Excess pursuant to this Section 3.4(b) is
greater than such Estimated American Publishing Working Capital Deficiency
(expressed as a negative number) (for example, if there is an Estimated
American Publishing Working Capital Deficiency of $1.00 and a Final American
Publishing Working Capital Excess of $1.00, Garden State shall pay to American
Publishing $2.00); or
iii) if there is an Estimated American Publishing Working Capital
Deficiency pursuant to Section 3.4(a), the amount (if any) by which such
Estimated American Publishing Working Capital Deficiency is greater than any
Final American Publishing Working Capital Deficiency pursuant to this Section
3.4(b) (for example, if there is an Estimated American Publishing Working
Capital Deficiency of $2.00 and a Final American Publishing Working Capital
Deficiency of $1.00, Garden State shall pay to American Publishing $1.00).
Within ten (10) days after the Due Date, American Publishing shall
pay Garden State the following amount, to the extent applicable:
i) if there is an Estimated American Publishing Working Capital
Excess pursuant to Section 3.4(a), the amount (if any) by which such Estimated
American Publishing Working Capital Excess is greater than any Final American
Publishing Working Capital Excess pursuant to this Section 3.4(b) (for example,
if there is an Estimated American Publishing Working Capital Excess of $2.00
and a Final American Publishing Working Capital Excess of $1.00, American
Publishing shall pay to Garden State $1.00); or
ii) if there is an Estimated American Publishing Working Capital
Excess pursuant to Section 3.4(a), the amount (if any) by which such Estimated
American Publishing Working Capital Excess is greater than any Final American
Publishing Working Capital Deficiency (expressed as a negative number) pursuant
to this Section 3.4(b) (for example, if thereis an Estimated American
Publishing Working Capital Excess of $1.00 and a Final American Publishing
Working Capital Deficiency of $1.00, American Publishing shall pay to Garden
State $2.00); or
iii) if there is an Estimated American Publishing Working Capital
Deficiency pursuant to Section 3.4(a), the amount (if any) by which such
Estimated American Publishing Working Capital Deficiency is less than any Final
American Publishing Working Capital Deficiency pursuant to this Section 3.4(b)
(for example, if there is an Estimated American Publishing Working Capital
Deficiency of $1.00 and a Final American Publishing Working
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Capital Deficiency of $2.00, American Publishing shall pay to Garden State
$1.00).
Any net or combined payment by American Publishing to Garden State or by Garden
State to American Publishing pursuant to this Section 3.4(b) and Section 3.5
shall be deemed to be an adjustment of the Additional Cash Consideration.
(c) Disputes. In the event of a dispute between American Publishing
and Garden State, as to any matter set forth in Section 3.4(a) or 3.4(b),
American Publishing and Garden State shall use reasonable efforts to resolve
any such dispute, but if a final resolution is not obtained within thirty (30)
days after the Final American Publishing Working Capital Statement is delivered
to Garden State, any remaining dispute shall be resolved by the independent
public accounting firm of KPMG Peat Marwick, or, if such firm declines to act
in such capacity, to such other nationally recognized firm of independent
public accountants, as shall be mutually agreed upon by American Publishing and
Garden State. Such accounting firm may use such auditing procedures as it may
deem appropriate and the decision of such accounting firm shall be binding and
conclusive upon the parties. The costs and fees of such accounting firm shall
be borne one-half by American Publishing and one-half by Garden State.
3.5. Potential Johnstown Working Capital Adjustment to Additional Cash
Consideration to be Paid by American Publishing.
(a) Estimated Johnstown Working Capital Statement. Not later than
five (5) business days before the Closing Date, Garden State shall prepare and
deliver to American Publishing a working capital statement of Johnstown (the
"Estimated Johnstown Working Capital Statement") based upon the books and
records of Johnstown as of the Estimate Date. Subject to the provisions of this
Section 3.5, the Estimated Johnstown Working Capital Statement shall be
prepared in accordance with GAAP and shall fairly present the categories of
current assets identified on Exhibit B (the "Johnstown Current Assets") and the
categories of current and other liabilities identified on Exhibit B attached
hereto (the "Johnstown Current and Other Liabilities") of Johnstown as of the
Estimate Date. With respect to the valuation of accounts receivable, accounts
receivable shall be valued consistent with Johnstown's past practices, except
insofar as a different reserve is specified in Exhibit B to this Agreement with
respect to any accounts receivable that are more than 90 days outstanding as of
the Closing. In the event that the amount of the total Johnstown Current Assets
exceeds the amount of the total Johnstown Current and Other Liabilities as set
forth on the Estimated Johnstown Working Capital Statement, then the Additional
Cash Consideration shall be
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adjusted, i.e. increased by the amount of such excess (the "Estimated Johnstown
Working Capital Excess"). In the event that the amount of the total Johnstown
Current and Other Liabilities exceeds the amount of the total Johnstown Current
Assets as set forth on the Estimated Johnstown Working Capital Statement, then
the Additional Cash Consideration shall be adjusted, i.e. reduced by the amount
of such excess (the "Estimated Johnstown Working Capital Deficiency"). Such
adjustments shall be in addition to and netted against or combined with any
adjustments to the Additional Cash Consideration which are required pursuant to
Section 3.4(a) of this Agreement, as a result of the Estimated American
Publishing Working Capital Statement, as therein defined.
(b) Final Johnstown Working Capital Statement. Forty-five (45) days
after the Closing Date, Garden State shall prepare and deliver to American
Publishing a working capital statement of Johnstown (the "Final Johnstown
Working Capital Statement") based upon the books and records of Johnstown as of
the Closing Date. With respect to the valuation of accounts receivable,
accounts receivable shall be valued consistent with Johnstown's past practices,
except insofar as a different reserve is specified in Exhibit B to this
Agreement with respect to any accounts receivable that are more than 90 days
outstanding as of the Closing. Subject to the provisions of this Section 3.5,
the Final Johnstown Working Capital Statement shall be prepared in accordance
with GAAP and shall fairly present the Johnstown Current Assets and Johnstown
Current and Other Liabilities identified on Exhibit B hereto as at the Closing
Date. The amount, if any, by which the amount of the total Johnstown Current
Assets exceeds the amount of the total Johnstown Current and Other Liabilities
as set forth on the Final Johnstown Working Capital Statement, is referred to
herein as the "Final Johnstown Working Capital Excess". The amount, if any, by
which the amount of the total Johnstown Current and Other Liabilities exceeds
the amount of the total Johnstown Current Assets as set forth on the Final
Johnstown Working Capital Statement is referred herein as the "Final Johnstown
Working Capital Deficiency".
Within ten (10) days after the Due Date, American Publishing shall
pay to Garden State the following amount, to the extent applicable:
i) if there is an Estimated Johnstown Working Capital Excess
pursuant to Section 3.5(a), the amount (if any) by which such Estimated
Johnstown Working Capital Excess is less than any Final Johnstown Working
Capital Excess pursuant to this Section 3.5(b) (for example, if there is an
Estimated Johnstown Working Capital Excess of $1.00 and a Final Johnstown
Working Capital Excess of $2.00, American Publishing shall pay to Garden State
$1.00); or
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ii) if there is an Estimated Johnstown Working Capital Deficiency
pursuant to Section 3.5(a), the amount (if any) by which any Final Johnstown
Working Capital Excess pursuant to this Section 3.5(b) is greater than such
Estimated Johnstown Working Capital Deficiency (expressed as a negative number)
(for example, if there is an Estimated Johnstown Working Capital Deficiency of
$1.00 and a Final Johnstown Working Capital Excess of $1.00, American
Publishing shall pay to Garden State $2.00); or
iii) if there is an Estimated Johnstown Working Capital
Deficiency pursuant to Section 3.5(a), the amount (if any) by which such
Estimated Johnstown Working Capital Deficiency is greater than any Final
Johnstown Working Capital Deficiency pursuant to this Section 3.5(b) (for
example, if there is an Estimated Johnstown Working Capital Deficiency of $2.00
and a Final Johnstown Working Capital Deficiency of $1.00, American Publishing
shall pay to Garden State $1.00).
Within ten (10) days after the Due Date, Garden State shall pay
American Publishing the following amount, to the extent applicable:
i) if there is an Estimated Johnstown Working Capital Excess
pursuant to Section 3.5(a), the amount (if any) by which such Estimated
Johnstown Working Capital Excess is greater than any Final Johnstown Working
Capital Excess pursuant to this Section 3.5(b) (for example, if there is an
Estimated Johnstown Working Capital Excess of $2.00 and a Final Johnstown
Working Capital Excess of $1.00, Garden State shall pay to American Publishing
$1.00); or
ii) if there is an Estimated Johnstown Working Capital Excess
pursuant to Section 3.5(a), the amount (if any) by which such Estimated
Johnstown Working Capital Excess is greater than any Final Johnstown Working
Capital Deficiency (expressed as a negative number) pursuant to this Section
3.5(b) (for example, if there is an Estimated Johnstown Working Capital Excess
of $1.00 and a Final Johnstown Working Capital Deficiency of $1.00, Garden
State shall pay to American Publishing $2.00); or
iii) if there is an Estimated Johnstown Working Capital
Deficiency pursuant to Section 3.5(a), the amount (if any) by which such
Estimated Johnstown Working Capital Deficiency is less than any Final Johnstown
Working Capital Deficiency pursuant to this Section 3.5(b) (for example, if
there is an Estimated Johnstown Working Capital Deficiency of $1.00 and a Final
Johnstown Working Capital Deficiency of $2.00, Garden State shall pay to
American Publishing $1.00).
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Any net or combined payment by Garden State to American Publishing or by
American Publishing to Garden State pursuant to this Section 3.5(b) and Section
3.4 shall be deemed to be an adjustment of the Additional Cash Consideration.
(c) Disputes. In the event of a dispute between Garden State and
American Publishing as to any matter set forth in Section 3.5(a) or 3.5(b),
Garden State and American Publishing shall use reasonable efforts to resolve
any such dispute, but if a final resolution is not obtained within thirty (30)
days after the Final Johnstown Working Capital Statement is delivered to
American Publishing, any remaining dispute shall be resolved by the independent
accounting firm of Ernst & Young LLP or, if such firm declines to act in such
capacity, to such other nationally recognized firm of independent public
accountants, as shall be mutually agreed upon by Garden State and American
Publishing. Such accounting firm may use such auditing procedures as it may
deem appropriate and the decision of such accounting firm shall be binding and
conclusive upon the parties. The costs and fees of such accounting firm shall
be borne one-half by Garden State and one-half by American Publishing.
ARTICLE IV.
American Publishing's and the American Publishing Sellers'
Representations and Warranties
American Publishing and the American Publishing Sellers represent and
warrant to Garden State that, except as set forth in the schedule delivered by
American Publishing and the American Publishing Sellers to Garden State
concurrently herewith and identified as the "American Publishing Disclosure
Schedule":
4.1. Organizational.
(a) Each of American Publishing and the American Publishing Sellers
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction under which it was incorporated. Each of such
corporations has all necessary corporate power and authority to own, lease and
operate its properties and assets and to conduct its business as now conducted.
(b) Each of such corporations is duly qualified and in good standing
to conduct business as a foreign corporation, under the laws of all
jurisdictions where the nature of its operations or the nature or location of
its assets requires such qualification.
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(c) Each of American Publishing and the American Publishing Sellers
has full power and authority to execute and deliver this Agreement and all
documents and instruments to be executed by American Publishing and the
American Publishing Sellers pursuant to this Agreement (collectively, "American
Publishing's Ancillary Documents"), to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.
(d) All acts required to be taken by American Publishing or any of
the American Publishing Sellers to authorize the execution and delivery of this
Agreement and each of American Publishing's Ancillary Documents, the
performance of each of its respective obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby,
including, without limitation, the approval of such corporations' stockholders
and board of directors, have been duly and properly taken, and no other
proceedings on the part of American Publishing or the American Publishing
Sellers are necessary to authorize such execution, delivery and performance.
(e) This Agreement has been and American Publishing's Ancillary
Documents will be, duly executed and delivered by duly authorized officers of
American Publishing and the American Publishing Sellers. Assuming due
authorization, execution and delivery by Garden State, each of this Agreement
and the American Publishing Ancillary Documents that is a contract at Closing
will constitute, a legal, valid and binding obligation of American Publishing
and the American Publishing Sellers, as the case may be, and at Closing will
be, enforceable against American Publishing and the American Publishing
Sellers, as the case may be, in accordance with its terms subject to the
possibility that the transactions contemplated hereby may be subject to the
provisions of the Defense Production Act, 50 U.S.C. Sections 2158, et seq. or
regulations proposed or adopted thereunder concerning acquisitions by or on
behalf of a foreign person (collectively, the "Exon-Florio Act").
4.2. No Conflict.
(a) Other than as set forth in Section 4.2(a) of the American
Publishing Disclosure Schedule and except as required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all
applicable regulations thereunder (the "HSR Act") and the Exon-Florio Act, no
consent, authorization, order or approval of, or filing or registration with,
or permit or license from, any foreign or domestic governmental or regulatory
authority or other person is required for the execution and delivery of this
Agreement and American Publishing's Ancillary Documents and the consummation by
American Publishing and the American Publishing
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Sellers of the transactions contemplated by this Agreement and American
Publishing's Ancillary Documents.
(b) Other than as set forth in Section 4.2(b) of the American
Publishing Disclosure Schedule, the execution and delivery of this Agreement
and American Publishing's Ancillary Documents by American Publishing and the
American Publishing Sellers, the performance of the obligations of American
Publishing and the American Publishing Sellers hereunder and under the American
Publishing Ancillary Documents and the consummation by American Publishing and
the American Publishing Sellers of the transactions contemplated hereby and
thereby, will not as of the Closing (i) conflict with or result in a breach of
any of the terms, conditions or provisions of (x) any charter documents or
by-laws of American Publishing or any of the American Publishing Sellers or (y)
any law, rule, regulation, order, writ, injunction, judgment, decree,
determination or award of any court, governmental body or agency applicable to
any of such entities or any of the American Publishing Newspapers Assets, or
(ii) result in any breach of or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation under any of the terms, conditions or provisions of any credit
agreement, note, bond, mortgage, indenture, agreement, commitment, lease,
printing contract or other instrument or obligation to which any of American
Publishing, the American Publishing Sellers or the American Publishing
Newspapers is a party or by which any of American Publishing, the American
Publishing Sellers or the American Publishing Newspapers or any of the American
Publishing Newspapers Assets may be bound, except for such defaults or rights
of termination, cancellation or acceleration as to which requisite waivers or
consents have been obtained or will be obtained on or prior to the Closing Date
and of which copies thereof have been or will be delivered to Garden State; or
(iii) result in the creation or imposition of any Lien upon the American
Publishing Real Property or any of the American Publishing Newspapers Assets.
4.3. Financial.
(a) Other than as set forth in Section 4.3(a) of the American
Publishing Disclosure Schedule, the American Publishing Financial Statements
(as hereinafter defined), as they relate to the American Publishing Newspapers,
have been prepared based upon the books and records of the American Publishing
Newspapers and in accordance with GAAP consistently applied.
(b) Other than as set forth in Section 4.3(b) of the American
Publishing Disclosure Schedule, the unaudited balance
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sheets of each of the American Publishing Newspapers as of December 31, 1994
and December 31, 1995 which are set forth in Section 4.3(a) of the American
Publishing Disclosure Schedule fairly present the financial position of such
entities as of the dates of such balance sheets. The statements of income for
each of the Newspapers for the years ending December 31, 1994 and December 31,
1995 which are set forth in Section 4.3(a) of the American Publishing
Disclosure Schedule fairly present the results of operations of such entities
for such periods. Complete and accurate copies of each of the above described
financial statements are contained in Section 4.3(a) of the American Publishing
Disclosure Schedule (all of the foregoing financial statements described above
are hereinafter referred to as the "American Publishing Financial Statements").
Other than as set forth in Section 4.3(b) of the American Publishing Disclosure
Schedule, the American Publishing Financial Statements are true and correct and
include all adjustments and accruals necessary to present fairly the respective
financial positions and results of operations as at the dates and for the
periods indicated. Other than as set forth in Section 4.3(b) of the American
Publishing Disclosure Schedule, there were no material debts, liabilities or
other obligations of the American Publishing Newspapers of any nature
whatsoever, whether accrued, contingent, absolute or otherwise, not adequately
reflected in such financial statements which are required under GAAP to be
reflected in such financial statements, except as described in Section 4.3(b)
of the American Publishing Disclosure Schedule.
4.4. Taxes.
(a) The amounts provided for Taxes as reflected in the American
Publishing Financial Statements as of December 31, 1995, which are set forth in
Section 4.3(a) of the American Publishing Disclosure Schedule as adjusted for
the period of time through the Closing Date in accordance with the past custom
and practice of American Publishing and the American Publishing Sellers in
filing Tax Returns, are sufficient to cover all unpaid liabilities, direct or
indirect, that American Publishing and the American Publishing Sellers may have
with respect to the American Publishing Newspapers, the American Publishing
Sellers and the American Publishing Newspapers Assets (and all their
properties, assets, personnel and/or activities), or that any taxing
authorities may assert that American Publishing or the American Publishing
Sellers have with respect to the American Publishing Newspapers, the American
Publishing Sellers, the American Publishing Newspapers Assets (and all their
properties, assets, personnel and/or activities), for Taxes (without regard to
whether such liabilities are disputed) accrued or applicable for all periods
ending on or prior to the Closing Date.
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(b) American Publishing and the American Publishing Sellers have
timely and duly paid all Taxes due and payable (or claimed to be due and
payable by any taxing authority) other than (i) Taxes that are not yet due and
payable and which are reflected as liabilities in the American Publishing
Financial Statements and (ii) Taxes that have accrued in the ordinary course of
business since December 31, 1995 and which are not yet due and payable.
American Publishing and the American Publishing Sellers have timely and duly
prepared and filed or caused to be prepared and filed all Tax Returns that
American Publishing and the American Publishing Sellers are required by law to
file and American Publishing and the American Publishing Sellers will timely
and duly prepare and file or cause to be prepared and filed all Tax Returns
described in clauses (i) and (ii) above.
(c) American Publishing and the American Publishing Sellers have
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing by the American Publishing Newspapers or
the American Publishing Newspapers Assets to any employee, independent
contractor, creditor, stockholder, or other third party.
(d) American Publishing and the American Publishing Sellers have no
obligation to make any payment with respect to the American Publishing
Newspapers the deductibility of which would be barred under Section 280G of the
Code.
(e) No claim has been made by any taxing authority of a jurisdiction
where American Publishing and/or the American Publishing Sellers do not file
Tax Returns that it or they, or any of them, may be subject to taxation in that
jurisdiction with respect to the American Publishing Newspapers Assets or the
American Publishing Newspapers.
(f) No Tax Return filed by American Publishing and/or the American
Publishing Sellers contains any material misstatement or omits any material
information that should have been included therein with respect to the American
Publishing Newspapers Assets or the American Publishing Newspapers.
(g) For all taxable periods of American Publishing and/ or the
American Publishing Sellers ending on or before the Closing Date, no
examination of any Tax Return of American Publishing and/or the American
Publishing Sellers with respect to the American Publishing Newspapers Assets or
the American Publishing Newspapers is in progress or pending or, to American
Publishing's knowledge, threatened, and all periods for which any taxing
authority has examined the Tax Returns relating to American Publishing and/or
the American Publishing Sellers have been closed. No member of the affiliated
group of corporations that currently includes American
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Publishing and/or the American Publishing Sellers that file consolidated
federal income Tax Returns or combined or unitary state income or franchise Tax
Returns (the "American Publishing Affiliated Group") has waived any statute of
limitations in respect of Taxes which may be imposed on or with respect to the
American Publishing Newspapers or the American Publishing Newspapers Assets, or
their transfer, or agreed to any extension of time with respect to a Tax
assessment or deficiency for any taxable period. To the knowledge of American
Publishing, there are no audits, examinations, assessments, actions, suits,
proceedings, investigations or claims now proposed, threatened or pending
against American Publishing and/or the American Publishing Sellers in respect
of Taxes, governmental charges or assessments asserted by any taxing authority
which may be imposed on or with respect to the American Publishing Newspapers
Assets or the American Publishing Newspapers.
4.5. Title to and Condition of Assets; Leases.
(a) Except as set forth in Sections 4.5(b), 4.5(c) and 4.20(a) of the
American Publishing Disclosure Schedule, the American Publishing Sellers own
good marketable and unencumbered title to the American Publishing Newspapers
Assets, free and clear of any Liens other than Permitted Liens.
(b) The American Publishing Real Estate is listed and described in
Section 4.5(b) of the American Publishing Disclosure Schedule. The American
Publishing Sellers own good and marketable fee simple title to all the American
Publishing Real Estate listed in Section 4.5(b) of the American Publishing
Disclosure Schedule as owned by it, free and clear of all Liens, other than
Permitted Liens. Except as described in Section 4.5(b) of the American
Publishing Disclosure Schedule there are no leases, subleases, tenancies or
other rights of occupancy affecting all or any part of the American Publishing
Real Estate owned by American Publishing Sellers. All improvements, structures,
and fixtures on the American Publishing Real Estate are, taking due account of
their age, in a condition and state of repair appropriate for their current
use, subject only to normal wear and tear, and are adequate to conduct the
business and operations of the American Publishing Newspapers as they are now
being conducted.
(c) Section 4.5(c) of the American Publishing Disclosure Schedule
describes (i) all material items of tangible personal property and assets owned
by American Publishing Sellers and relating to the American Publishing
Newspapers and (ii) all leases of personal property of American Publishing
Sellers relating to the American Publishing Newspapers. All machinery and
equipment owned or leased by the American Publishing Sellers and used in the
operations of American Publishing Newspapers conform in all
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material respects to all applicable ordinances, regulations and zoning or other
laws, except for violations which would not, individually or in the aggregate,
have a material adverse effect on the assets, liabilities, condition (financial
or otherwise), results of operations or prospects of American Publishing or the
American Publishing Sellers or the American Publishing Newspapers or the use or
value of such machinery or equipment. Except as described in Section 4.5(c) of
the American Publishing Disclosure Schedule, all material items of tangible
personal property that are used in the operations of the American Publishing
Newspapers are, taking due account of their age, in an operating condition and
state of repair appropriate for their current use, subject only to normal wear
and tear, and are adequate to conduct the business and operations of the
American Publishing Newspapers as they are now being conducted.
(d) All real property leased by the American Publishing Sellers with
respect to the American Publishing Newspapers is listed and described in
Section 4.5(b) of the American Publishing Disclosure Schedules. American
Publishing has delivered to Garden State complete and correct copies of all
written leases relating to real or personal property listed in Section 4.5(b)
and 4.5(c) of the American Publishing Disclosure Schedule hereof and, except as
described in Sections 4.5(b) or (c) of the American Publishing Disclosure
Schedule, all such leases are in full force and effect, no event of default has
been declared thereunder and, to the knowledge of American Publishing, no basis
for any default exists. Except as otherwise disclosed in Sections 4.5(b) or (c)
of the American Publishing Disclosure Schedule, no such lease of real or
personal property is subject to termination or modification as a result of the
transactions contemplated hereby.
4.6. Inventory.
All of the American Publishing Inventory is in the physical
possession and control of the American Publishing Newspapers at their
facilities or in transit from suppliers. All of the American Publishing
Inventory is in usable and/or saleable condition, of a quality and quantity
historically usable and/or saleable in the normal course of business and
consistent with past practice, and contains no obsolete, damaged or below
standard quality items in any material amount.
4.7. Insurance.
Section 4.7 of the American Publishing Disclosure Schedule contains a
true and correct list and description of all insurance policies currently in
effect (showing as to each policy
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the carrier, policy number and general description of the types and coverage
limits provided) which pertain to the American Publishing Newspapers. Each of
the American Publishing Newspapers carries and until the Closing Date will
carry libel, property damage, workers' compensation, automobile, and general
liability insurance in such amounts as are adequate and reasonable and against
such risks as are customary in relation to the character and location of such
properties and the nature of the American Publishing Newspapers. All such
insurance policies are and as of the Closing Date will be in full force and
effect. All such insurance policies are occurrence based policies. The American
Publishing Sellers are not and shall not be as of the Closing Date in default
under any such policy of insurance. None of the American Publishing Newspapers
has been denied any application for insurance within the past five (5) years.
American Publishing has not received notice of termination or non-renewal of
any such insurance policies.
4.8. Insiders.
Section 4.8 of the American Publishing Disclosure Schedule sets forth
every business relationship (other than normal employment relationships)
between American Publishing or the American Publishing Sellers, on the one
hand, and any of American Publishing or the American Publishing Sellers or any
of American Publishing's or the American Publishing Sellers' Affiliates,
officers or directors or members of their families (or any entity in which any
of them has a financial interest, directly or indirectly), on the other hand,
which is related in any manner to the American Publishing Newspapers. None of
said parties (other than American Publishing, its subsidiaries or Affiliates)
owns any assets which are used in the operation of American Publishing
Newspapers, except as reflected in Section 4.8 or Section 4.25 of the American
Publishing Disclosure Schedule or is engaged in any business which competes
with the American Publishing Newspapers.
4.9 Advertising and Commercial Printing.
(a) Section 4.9(a) of the American Publishing Disclosure Schedule
sets forth a complete and correct list of the published rates for advertising
lineage for each of the American Publishing Newspapers and a complete and
correct list of and the amount of revenues generated by each of the American
Publishing Newspapers largest (by dollar amount) (i) 5 retail advertisers, (ii)
5 preprint advertisers, and (iii) 5 classified advertisers, in each case, for
the twelve months ending December 31, 1995.
(b) To the knowledge of American Publishing or any of the American
Publishing Sellers, except as set forth in Section
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4.9(b) of the American Publishing Disclosure Schedule, since January 1, 1996,
(i) there has not had been any actual or threatened cancellation, non-renewal
or material modification of any agreements or relationships with advertisers
listed in Section 4.9(a) of the American Publishing Disclosure Schedule, (ii)
none of American Publishing nor any of the American Publishing Sellers has made
any changes in the pricing offered generally to customers of any of the
American Publishing Newspapers for advertising and (iii) no advertisers listed
in Section 4.9(a) of the American Publishing Disclosure Schedule have
threatened in writing to American Publishing or any of the American Publishing
Sellers, or otherwise manifested to any of such persons a firm and present
intention, to cancel previously scheduled or contracted for advertising in any
of the American Publishing Newspapers for the period following the Closing, or
to terminate or modify significantly their relationship as advertisers with
American Publishing or any of the American Publishing Sellers.
(c) Section 4.9(c) of the American Publishing Disclosure Schedule
sets forth a complete and current list of and the amount of revenues generated
by each of the 5 largest (by dollar value) commercial printing customers of
each of the American Publishing Newspapers for the twelve months ended December
31, 1995. To the knowledge of American Publishing or any of the American
Publishing Sellers, except as set forth in Section 4.9(c) of the American
Publishing Disclosure Schedule, since January 1, 1996, (i) there has not been
any actual or threatened cancellation, non-renewal or material modification of
any agreement or relationship with any of the commercial printing customers
listed in Section 4.9(c) of the American Publishing Disclosure Schedule; (ii)
none of the American Publishing Newspapers has made any changes in the pricing
offered generally to their customers for commercial printing services; and
(iii) no commercial printing customer listed in Section 4.9(c) of the American
Publishing Disclosure Schedule has threatened in writing, or otherwise
manifested to any such person a firm and present intention, to cancel
previously scheduled or contracted for commercial printing work for the period
following the Closing, or to terminate or modify significantly its relationship
as printing customers with any of the American Publishing Newspapers.
4.10. Circulation Matters; Newsprint and Ink Purchases. With Respect to
Circulation Matters and Newsprint and Ink Purchases:
(a) Section 4.10(a) of the American Publishing Disclosure Schedule
sets forth (i) the average weekly paid circulation for each of The Akron
News-Reporter, The Brush News-Tribune and the Julesberg Advocate, and (ii) the
average daily paid circulation for each of the daily American Publishing
Newspapers, calcu-
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lated, in each instance in the same manner required by the U.S. Postal Service
for newspapers whose circulation is required to be reported to the U.S. Postal
Service in an annual Statement of Ownership, Management and Circulation
required by 39 U.S.C. Section 3685 for the twelve months ended September 30,
1994 and September 30, 1995. Attached to Section 4.4(a) of the American
Publishing Disclosure Schedule are true and complete copies of the most recent
ABC audit report and publisher's statement pertaining to the Bridgeton Evening
News. All representations contained in such publisher's statement and other
materials submitted by American Publishing or any Affiliate or subsidiary to
the ABC pertaining to the Bridgeton Evening News for the periods covered by
such publisher's statement and audit report were true and complete in all
material respects. Since October 1, 1995, the Bridgeton Evening News has not
been circulated at discounts greater than those reported to the ABC for the
periods covered by such audit report and publisher's statement.
(b) Attached to Section 4.10(b) of the American Publishing Disclosure
Schedule is a list of the daily or weekly paid circulation of each of the
American Publishing Newspapers as of March 31, 1996, determined on a basis
consistent with the information in Section 4.10(a) of the American Publishing
Disclosure Schedule.
(c) Since January 1, 1996, American Publishing, its subsidiaries or
Affiliates have not changed the single copy or home delivery circulation rates
for any of the American Publishing Newspapers, except as set forth in Section
4.10(c) of the American Publishing Disclosure Schedule.
(d) Section 4.10(d) of the American Publishing Disclosure Schedule
sets forth current lists as of January 1, 1996, of all (i) current dealers for
each of the American Publishing Newspapers and (ii) current paid and free
subscribers for each of the American Publishing Newspapers. With respect to all
such lists, American Publishing represents and warrants that, to the best of
American Publishing's knowledge, such lists are not misleading in any way that
would have a material adverse effect on any of the American Publishing
Newspapers, but otherwise American Publishing makes no representations and
warranties with respect to such lists.
4.11. Conduct of Business.
(a) Since January 1, 1996, the American Publishing Sellers have
conducted the business and operations of the American Publishing Newspapers
only in the ordinary course of business in substantially the same manner as
heretofore conducted by the
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American Publishing Sellers and have used all reasonable efforts to preserve
and promote such business and to avoid any act that might have a material
adverse effect on the business or operation of the American Publishing
Newspapers or the American Publishing Newspapers Assets taken as a whole.
(b) Except as set forth in Section 4.10 or 4.11(b) of the American
Publishing Disclosure Schedule, since January 1, 1996, the American Publishing
Sellers, with respect to the American Publishing Newspapers, have not:
i) sold or in any way transferred or otherwise disposed of any of
the American Publishing Newspapers Assets, except for use of the American
Publishing Inventory in the usual and ordinary course of business of the
Newspapers;
ii) suffered any casualty, damage, destruction or loss, or any
material interruption in use, of any material assets or property (whether or
not covered by insurance);
iii) except for write-offs of accounts receivable in the ordinary
course of business, waived any right or canceled or compromised any debt or
claim of the American Publishing Newspapers, other than in the ordinary course
of business and not in excess of $10,000 for any item or $50,000 in the
aggregate;
iv) made any material increase in the rate or terms of
compensation payable or to become payable to employees of the American
Publishing Newspapers, except increases occurring in accordance with customary
practices or in accordance with existing collective bargaining or employment
agreements, or any material modification in employee benefits, or any borrowing
of money from the American Publishing Sellers by any employee of the American
Publishing Newspapers (other than routine travel and similar advances), in any
material amount;
v) entered into, modified, amended, renewed, extended or
terminated any contract or commitment involving total payments or expenditures
to any single person or relating to any of the American Publishing Newspapers
of more than $5,000 on any single contract or commitment, or $25,000 in the
aggregate, or that is to be performed beyond April 30, 1997;
vi) violated or failed to comply with respect to, any law,
regulation, ordinance, rule, order, judgment, injunction or decree applicable
to American Publishing Newspapers, the effect of which (singly or in the
aggregate) could be a material adverse effect upon the American Publishing
Newspapers taken as a whole or upon the business, operations, financial
condition or prospects of the American Publishing Newspapers taken as a whole;
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vii) failed to collect the accounts receivable or to pay the
accounts payable and other current liabilities of the American Publishing
Newspapers in any manner other than consistent with past practice;
viii) made any change by the American Publishing Sellers with
respect to the American Publishing Newspapers in accounting or bookkeeping
methods, principles or practices, except as required by GAAP;
ix) made any borrowing of money, including any increase or
extension of purchase money credit by the American Publishing Sellers with
respect to the American Publishing Newspapers taken as a whole or any increase
in the liabilities of the American Publishing Newspapers taken as a whole from
those reflected in the American Publishing Financial Statements, other than
American Publishing Excluded Liabilities and current liabilities incurred in
the ordinary course of business and consistent with past practice;
x) entered into any transaction relating to the American
Publishing Newspapers or the American Publishing Newspapers Assets other than
in the ordinary course of business and consistent with past practice;
xi) entered into any intercompany transaction with American
Publishing or the American Publishing Sellers or with any officer or director
or with any other subsidiary or operating unit or Affiliate of American
Publishing or the American Publishing Sellers, other than in the ordinary
course of business and consistent with past practice;
xii) made any settlement of any tax claim against the American
Publishing Newspapers or any litigation (net of applicable insurance proceeds)
in excess of $5,000 individually or $20,000 in the aggregate, except with the
prior written consent of Garden State, which consent shall not be unreasonably
withheld;
xiii) made any gift or charitable donation by the American
Publishing Newspapers in excess of $1,000 individually or $5,000 in the
aggregate; or
xiv) entered into any agreement, arrangement or understanding,
whether oral or written, to do any of the foregoing matters listed in clauses
(i) through (xiii) inclusive.
(c) Since January 1, 1996, the American Publishing Sellers with
respect to any of the American Publishing Newspapers, have not suffered or been
threatened, to the knowledge of American Publishing or any of the American
Publishing Sellers, with any
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material adverse change in the business, operations, assets, liabilities,
financial condition or prospects of any of the American Publishing Newspapers
taken as a whole, including, without limiting the generality of the foregoing,
the existence or threat of any labor dispute, or any material adverse change
in, or loss of, any relationship between any of the American Publishing
Newspapers and any of their material customers (including, without limitation,
advertisers, subscribers and dealers), material suppliers or key employees
material to any of the American Publishing Newspapers and to the actual
knowledge of any officer of American Publishing or of any of the American
Publishing Sellers, no paid circulation newspaper which does not currently
compete with one or more of the American Publishing Newspapers with respect to
the sale of print advertising in their respective geographic markets has any
present or future plans to compete materially with any of the American
Publishing Newspapers subsequent to the Closing Date with respect to the sale
of print advertising in a paid circulation newspaper during the twelve month
period following the Closing Date.
4.12 Contracts.
All Contracts that are material to any of the American Publishing
Newspapers or any of the American Publishing Sellers are listed in Section 4.12
of the American Publishing Disclosure Schedule. For purposes of this Section
4.12 "Contract" means any unexpired agreement, license, lease, permit,
arrangement, commitment, instrument, understanding or contract, whether written
or oral, to which any of the American Publishing Newspapers or the American
Publishing Sellers is a party or is bound, or which is otherwise material to
any of the American Publishing Newspapers or the American Publishing Sellers,
or their assets. True and complete copies of all written Contracts listed in
Section 4.12 of the American Publishing Disclosure Schedule have been delivered
to Garden State. Except as set forth in Section 4.12 of the American Publishing
Disclosure Schedule, all such Contracts are in full force and effect and are
legally binding and enforceable by and against the parties thereto, (except as
may be limited by bankruptcy, insolvency, moratorium or similar laws) and none
of the American Publishing Sellers nor, to the knowledge of American Publishing
or any of the American Publishing Sellers, any other party to any of such
Contracts is (with or without the lapse of time or the giving of notice, or
both) in violation thereof or in default thereunder. Except as set forth in
Section 4.12 of the American Publishing Disclosure Schedule, none of the
American Publishing Sellers or the American Publishing Newspapers nor any of
their assets is bound by or subject to any Contract that falls within any of
the following categories:
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i) Contracts arising outside of the ordinary course of business;
ii) collective bargaining agreements, employment agreements,
management agreements or other Contracts with employees, agents,
distributors, representatives or consultants, other than the
collective bargaining agreements and the Benefit Plans described in
Section 4.14 hereof;
iii) continuing Contracts for purchase of any materials, supplies,
equipment or services in excess of $5,000 per year;
iv) continuing Contracts for the sale of commercial printing or
advertising services for each of the five (5) largest advertising and
commercial printing customers of each of the American Publishing
Newspapers for the twelve (12) month period ending December 31, 1995;
v) Contracts for the purchase of any fixed or capital assets, other
than Contracts involving an aggregate expenditure of not more than
$5,000;
vi) Contracts for the sale of any fixed or capital assets having a
value in excess of $5,000 individually or $15,000 in the aggregate;
vii) Contracts for trade, barter and similar arrangements for the
sale of printing, advertising, publication or any other service in
exchange for consideration other than cash;
viii) Except for this Agreement, Contracts with any other person to
sell any capital stock of any of the American Publishing Sellers or
all or any of the assets, of any of the American Publishing
Newspapers, or to effect any merger, consolidation or other
reorganization of any of the American Publishing Newspapers or any of
the American Publishing Sellers, or to enter into any agreement with
respect thereto;
ix) Contracts relating to any borrowing of money by any of the
American Publishing Sellers or mortgaging, pledging or otherwise
placing a lien on any of the assets of any of the American Publishing
Newspapers or the American Publishing Sellers; or
x) any license or royalty agreement.
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4.13 Permits and Licenses. Except for the American Publishing
Environmental Permits, Section 4.13 of the American Publishing Disclosure
Schedule lists all licenses, permits and authorizations currently held by the
American Publishing Newspapers or the American Publishing Sellers with respect
to the American Publishing Newspapers. Each of the American Publishing Sellers
and the American Publishing Newspapers has all material permits, licenses,
authorizations, with and under all Federal, state, local and foreign laws,
authorities and agencies, including non- governmental self-regulatory
organizations, that are required for the respective American Publishing Sellers
to operate each of the American Publishing Newspapers in the manner in which it
is currently being operated (collectively, the "American Publishing Required
Permits") and all such American Publishing Required Permits are in full force
and effect and no suspension of the American Publishing Required Permits is, to
the knowledge of American Publishing threatened. Except as set forth in Section
4.13 of the American Publishing Disclosure Schedule, (i) the licenses, permits
and authorizations listed therein are transferable and not subject to any
restrictions or conditions that would limit the business or operations of the
American Publishing Newspapers as presently conducted; and (ii) there are no
applications by any of the American Publishing Sellers or American Publishing
with respect to American Publishing Newspapers or complaints by other persons
pending or, to the knowledge of American Publishing threatened as of the date
hereof before any domestic or foreign governmental agency relating to any
licenses, permits or authorizations applicable to American Publishing
Newspapers or American Publishing Sellers with respect to American Publishing
Newspapers. Except as set forth in Section 4.13 of the American Publishing
Disclosure Schedule, no foreign or domestic governmental or regulatory consents
or approvals are necessary for the licenses, permits and authorizations listed
in Section 4.13 of the American Publishing Disclosure Schedule to continue in
full force and effect on behalf of the American Publishing Newspapers or Garden
State following consummation of the transactions contemplated hereby.
4.14. Employees.
(a) Section 4.14(a) of the American Publishing Disclosure Schedule
contains a true and complete list of all of the American Publishing Newspapers'
employees as of December 31, 1995 or such later date as is set forth therein,
and such list correctly reflects their salaries, hours, wages, other
compensation (other than benefits under the Benefit Plans) including all
bonuses paid or accrued as of such date, their dates of employment and
positions.
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(b) Section 4.14(b) of the American Publishing Disclosure Schedule
contains a true and complete list and description of all Benefit Plans (as
hereinafter defined) maintained or sponsored by any of the American Publishing
Sellers or any ERISA Affiliate (as hereinafter defined), or with respect to
which any of the American Publishing Sellers or any ERISA Affiliate has or may
have any liability, directly or indirectly, or any obligation to contribute, or
which otherwise covers any of the current or former employees of any of the
American Publishing Sellers or any ERISA Affiliate or their beneficiaries,
whether or not funded and whether or not terminated (hereinafter individually
referred to as an "American Publishing Seller Plan" and collectively referred
to as the "American Publishing Seller Plans"). As used in this Agreement, the
term "Benefit Plans" shall mean all written and unwritten "employee benefit
plans" within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any profit sharing, pension,
savings, deferred compensation, fringe benefit, insurance, medical, medical
reimbursement, life, disability, accident, post-retirement health or welfare
benefit, stock option, stock purchase, sick pay, vacation, employment,
severance, termination or other compensation plan, agreement, contract, policy,
trust fund or arrangement. The term "ERISA Affiliate" shall mean any
corporation which is a member of a controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code of 1986, as amended (the
"Code")) which includes any American Publishing Seller, any trade or business
(whether or not incorporated) which is under common control (within the meaning
of Code Section 414(c)) with any American Publishing Seller, any organization
(whether or not incorporated) which is a member of an affiliated service group
(as defined in Code Section 414(m)) which includes any American Publishing
Seller and any other entity (whether or not incorporated) required to be
aggregated with any American Publishing Seller pursuant to Code Section 414(o).
Each American Publishing Seller Plan which, as of the date hereof, is a defined
benefit plan, as defined in Section 3(35) of ERISA (a "Defined Benefit Plan")
is identified on Section 4.14(b) of the American Publishing Disclosure
Schedule. Each American Publishing Seller Plan which is intended to be a
qualified plan under Section 401(a) of the Code (each a "Qualified Plan") is
identified on Section 4.14(b) of the American Publishing Disclosure Schedule.
(c) All American Publishing Seller Plans comply in all material
respects with and are and have been operated in substantial accordance with
each applicable provision of ERISA, the Code, other Federal statutes, state
law, the regulations and rules promulgated pursuant thereto or in connection
therewith and all collective bargaining agreements applicable thereto. Each
Qualified Plan is qualified under Section 401(a) of the Code and any trust
under such Qualified Plan is exempt from income tax under
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Section 501(a) of the Code. The retroactive cure period with respect to any
plan amendments or plans not yet adopted and/or submitted to the IRS has not
expired. Other than routine claims for benefits submitted by participants or
beneficiaries, there is no litigation, legal action, investigation, claim, or
proceeding pending or, to the knowledge of American Publishing or any American
Publishing Seller, threatened against or with respect to any American
Publishing Seller Plan or against or affecting any fiduciary thereof or the
assets of any trust or insurance contract thereunder, at law or in equity, by
or before any court or governmental department, agency or instrumentality, and
there is no basis for any such action, suit, investigation or proceeding. There
are presently no outstanding judgments, decrees or orders of any court or any
governmental or administrative agency against or affecting the American
Publishing Seller Plans, any fiduciaries thereof or the assets of any trust or
insurance contract thereunder. Neither American Publishing nor any of the
American Publishing Sellers has knowledge of and has not received any written
notice that any American Publishing Seller Plan is under audit or investigation
by any governmental authority and no such completed audit, if any, has resulted
in the imposition of any tax, fine or penalty.
(d) Each American Publishing Seller and each ERISA Affiliate have
made full and timely payment of all amounts which are required under the terms
of each American Publishing Seller Plan and any related trust or collective
bargaining agreement or which are otherwise required by applicable law to be
paid as a contribution to each such plan with respect to all periods through
the Closing Date. No accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code) exists nor has any funding waiver from
the Internal Revenue Service been received or requested with respect to any
American Publishing Seller Plan and no excise tax or other taxes are due or
owing because of any failure to comply with the minimum funding standards of
the Code and ERISA with respect to any of such plans.
(e) With respect to the American Publishing Seller Plans, no
prohibited transaction (within the meaning of Section 406 of ERISA and Section
4975 of the Code) exists which, directly or indirectly, could subject any of
the American Publishing Sellers or any ERISA Affiliate to any liability or tax
under Part 5 of Title I of ERISA or Section 4975 of the Code. None of the
American Publishing Sellers nor any ERISA Affiliate, nor any administrator or
fiduciary of any American Publishing Seller Plan, nor any agent of any of the
foregoing, has engaged in any transaction or acted or failed to act in a manner
which is likely to subject any American Publishing Seller or any ERISA
Affiliate, directly or indirectly, to any material liability for a breach of
fiduciary or other duty under ERISA or any other law.
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(f) Each American Publishing Seller Plan which is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) and which is a group
health plan (within the meaning of Section 5000(b)(1) of the Code) complies
with and has been and operated in accordance with each of the requirements of
Section 162(i) of the Code as in effect for years beginning prior to 1989,
Section 4980B of the Code for years beginning after December 31, 1988, and Part
6 of Subtitle B of Title I of ERISA ("COBRA"). There are no pending or, to the
knowledge of American Publishing or any American Publishing Seller, threatened
claims, suits or other proceedings by any employee or former employee of any
American Publishing Seller or by the beneficiary, dependent or representative
of any such person, involving the failure of any group health plan ever
maintained by any American Publishing Seller to comply with the health care
continuation requirements of COBRA. Except as set forth on Schedule 4.14(b) of
the American Publishing Disclosure Schedules, all American Publishing Seller
Plans providing medical, disability, life or other welfare benefits to retired
former employee can be terminated at any time without material liability in the
aggregate to the American Publishing Sellers and the ERISA Affiliates,
considered as a single enterprise.
(g) None of the American Publishing Sellers nor any ERISA Affiliate
has incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC")
as a result of the voluntary or involuntary termination of an employee pension
benefit plan which is subject to Title IV of ERISA. There is currently no
active filing by any American Publishing Seller or any ERISA Affiliate with the
PBGC (and no proceeding has been commenced by the PBGC) to terminate any
American Publishing Seller Plan. The PBGC has not instituted any proceedings to
terminate any American Publishing Seller Plan.
(h) No American Publishing Seller nor any ERISA Affiliate currently
maintains or is obligated to contribute to, nor has in the past maintained or
contributed to, nor has any liability, contingent or otherwise, to or arising
out of any multiemployer plan, as defined in Section 3(37) of ERISA, and no
American Publishing Seller nor any ERISA Affiliate has suffered a complete
withdrawal or partial withdrawal assuch terms are defined in Sections 4203 and
4205, respectively, of ERISA for which it reasonably expects to incur any
withdrawal liability.
(i) The consummation of the transactions contemplated hereby will not
create, accelerate or increase any liability under any American Publishing
Seller Plan because of the creation, acceleration or increase of any of the
rights or benefits to which employees may be entitled thereunder, including any
obligation to make any payment upon a "change in ownership or control" as such
term is defined for purposes of Section 280G of the Code.
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(j) For each American Publishing Seller Plan, to the extent
applicable to each such American Publishing Seller Plan, true and complete
copies of the following have been delivered to Garden State or will be
delivered as soon as practicable to Garden State (but in any event, no later
than ten (10) days prior to the Closing Date): i) the documents embodying the
American Publishing Seller Plans, including the plan documents, all amendments
thereto, the related trust or funding agreements, insurance contracts, union or
trade agreements and, in the case of any unwritten American Publishing Seller
Plans, written descriptions thereof; ii) the most recent annual reports
including without limitation Forms 5500 and all schedules thereto; iii) the
most recent financial statements; iv) the most recent actuarial reports; v)
each current summary plan description and each summary of material modification
prepared in the last three years for each American Publishing Seller Plan; and
(vi) all employee manuals, handbooks, policy statements and other written
materials given to employees relating to any American Publishing Seller Plans.
(k) Section 4.14(k) of the American Publishing Disclosure Schedule
sets forth a list of all former employees of and their dependents of each
American Publishing Newspaper receiving medical benefits pursuant to the
provisions of Section 4980B of the Code.
(l) Each American Publishing Seller shall make all payments required
under the Employee Benefit Plans and payment of accrued salaries or wages and
vacation pay with respect to employment of any persons by any of the American
Publishing Sellers until the close of business on the Closing Date. Except as
required by Section 4980B of the Code, no American Publishing Seller has any
liability to provide medical benefits to former employees of any American
Publishing Seller or their spouses or dependents.
4.15. Corporate and Personnel Data; Independent Contractors; Labor
Relations.
(a) Section 4.15(a) of the American Publishing Disclosure Schedule
sets forth a list of all oral or written employment agreements, management
agreements and consulting or similar agreements to which any of the American
Publishing Newspapers is a party or is bound. True and correct copies of all
such agreements as are in writing have been delivered to Garden State.
(b) Section 4.15(b) of the American Publishing Disclosure Schedule
sets forth copies of the standard forms of written independent contractor
agreements relating to the distribution or delivery of any of the American
Publishing Newspapers ("American Publishing Delivery Contracts") which are
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currently in use by such American Publishing Newspapers. To the actual
knowledge of the officers of American Publishing and the American Publishing
Sellers, substantially all independent contractors currently distributing or
delivering such American Publishing Newspapers are parties to American
Publishing Delivery Contracts as described in Section 4.15(b) of the American
Publishing Disclosure Schedule and substantially in the forms attached thereto.
(c) Except as set forth in Section 4.15(c) of the American Publishing
Disclosure Schedule: (i) each of the American Publishing Newspapers is in
compliance with all applicable laws and regulations relating to the employment
of labor and employment practices, including those related to terms and
conditions of employment, wages, hours, collective bargaining, discrimination,
occupational safety and health, and the payment of social security or similar
taxes; (ii) none of the American Publishing Newspapers is engaged in any unfair
labor practice; (iii) there are no unfair labor practice claims or charges
pending involving or affecting any of the American Publishing Newspapers; (iv)
none of the American Publishing Newspapers is a party to any collective
bargaining agreement or bound by any other agreement with a labor union; (v)
there are no proceedings pending for certification or representation before the
National Labor Relations Board with respect to the employees of the American
Publishing Newspapers nor, to the knowledge of American Publishing, has there
been any attempt within the past five (5) years to organize any of the
employees of the American Publishing Newspapers into a collective bargaining
unit; (vi) there is no labor strike, dispute, slowdown or stoppage actually
pending nor, to the knowledge of American Publishing, threatened against or
involving any of the American Publishing Newspapers; (vii) no discrimination
charge of any kind with respect to the employees of any of the American
Publishing Newspapers is pending and, to the knowledge of American Publishing
no claim therefor exists; (viii) no grievance with respect to the employees of
any of the American Publishing Newspapers is pending and, to the knowledge of
American Publishing none of the American Publishing Newspapers has in the past
five (5) years experienced any work stoppage or other labor difficulty or
committed any unfair labor practice; and (ix) no act or omission of American
Publishing or the American Publishing Sellers with respect to the American
Publishing Newspapers will result in the imposition upon Garden State of any
obligation or liability relating to any federal, state or local law, regulation
or ordinance relating to plant closings, layoffs, sales or workforce
reductions.
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4.16. Litigation and Claims.
Other than as set forth in Section 4.16 of the American Publishing
Disclosure Schedule, there are no claims, actions, suits, investigations,
litigation, arbitrations, or proceedings, in law or in equity, and there are no
proceedings or governmental investigations before or by any court or foreign,
Federal, state, local, or other governmental department, commission, board,
agency, instrumentality or other administrative authority, pending against or
affecting the American Publishing Sellers or American Publishing with respect
to the American Publishing Newspapers or with respect to the consummation of
the transaction contemplated hereby, or the operations of the American
Publishing Newspapers (either after the Closing or prior thereto) and, to the
knowledge of American Publishing, no such matter is threatened.
4.17. Compliance with Laws.
(a) Other than as set forth in Section 4.17(a) of the American
Publishing Disclosure Schedule, neither the American Publishing Sellers nor the
American Publishing Newspapers is a party to, or bound by, any decree, order or
arbitration award (or agreement entered into in any administrative, judicial or
arbitration proceeding with any domestic or foreign governmental authority)
with respect to its properties, assets, personnel or business activities
related to the American Publishing Newspapers.
(b) Other than as set forth in Sections 4.14(c), 4.15(c), 4.17(b),
4.18(a), 4.18(b) or 4.18(d) of the American Publishing Disclosure Schedule,
neither the American Publishing Sellers nor the American Publishing Newspapers
is in violation of, or delinquent with respect to, any decree, order or
arbitration award or law, statute, or regulation of or agreement with, or
Permit from, any Federal, state or local governmental authority (or to which
its properties, assets, personnel or business activities related to the
American Publishing Newspapers are subject) including, without limitation,
laws, statutes and regulations relating to equal employment opportunities, fair
employment practices, unfair labor practices, terms of employment, occupational
health and safety, wages and hours and discrimination, and zoning ordinances
and building codes, other than violations or delinquencies which would not,
individually or in the aggregate, have a material adverse effect on the assets,
liabilities, business, condition (financial or otherwise), results of operation
or prospects of any of the American Publishing Newspapers and, to the knowledge
of American Publishing, no such complaint or notice is threatened. Copies of
all notices of violation of any of the foregoing which American Publishing
Sellers with respect to the American Publishing Newspapers have received within
the past three
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years are attached to Section 4.17(b) of the American Publishing Disclosure
Schedule.
4.18. Environmental Matters.
(a) Except for environmental matters described in Section 4.18(a) of
the American Publishing Disclosure Schedule, American Publishing Sellers and
the American Publishing Newspapers with respect to the American Publishing Real
Estate and the American Publishing Newspapers are in material compliance with
all Environmental Laws and American Publishing Environmental Permits. A copy of
any notice, citation, inquiry or complaint which American Publishing Sellers,
with respect to the American Publishing Real Estate or the American Publishing
Newspapers, have received in the past three years of any alleged violation of
or liability or potential liability under any Environmental Law or American
Publishing Environmental Permit is contained in Section 4.18(a) of the American
Publishing Disclosure Schedule, and all violations alleged in said notices have
been resolved. There have been no environmental investigations, studies,
audits, tests, reviews or analyses relating to the American Publishing
Newspapers Assets or the American Publishing Real Estate conducted or
authorized by the American Publishing Sellers or any consultant engaged by
American Publishing or the American Publishing Sellers or, to the best of
American Publishing's or American Publishing Seller's knowledge, conducted by
or for any other person, including governmental authority, except as described
in Section 4.18(a) of the American Publishing Disclosure Schedule. True and
complete copies of all written reports issued in connection with such
investigations, etc. listed in Section 4.18(a) of the American Publishing
Disclosure Schedule have previously been provided to Garden State. Except for
environmental matters described in Section 4.18(a) of the American Publishing
Disclosure Schedule, the American Publishing Sellers, on behalf of or the
American Publishing Newspapers, possess all American Publishing Environmental
Permits which are required for the operation of the American Publishing
Newspapers, and are in material compliance with the provisions of all such
American Publishing Environmental Permits. A list of all American Publishing
Environmental Permits is contained in Section 4.18(a) of the American
Publishing Disclosure Schedule. The American Publishing Sellers, on behalf of
or the American Publishing Newspapers, have taken all appropriate measures to
reapply for or renew such American Publishing Environmental Permits where such
action is necessary to keep such American Publishing Environmental Permits in
effect.
(b) Except for environmental matters described in Section 4.18(b) of
the American Publishing Disclosure Schedule, there has been no handling,
storage, treatment, generation, trans-
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portation or Release of any Hazardous Materials by the American Publishing
Sellers, the American Publishing Newspapers, or by any other person or entity
for which the American Publishing Sellers or the American Publishing Newspapers
may be held responsible, or by any other person, at American Publishing
Sellers' direction or authorization (hereinafter, collectively "American
Publishing or American Publishing's Agents or Affiliates") on the American
Publishing Real Estate or other real property owned, leased, operated, managed
or controlled by the American Publishing Sellers with respect to the American
Publishing Newspapers ("American Publishing Sellers Other Real Property") or at
any American Publishing Offsite Facility in violation of, or which could give
rise to any liability or obligation or the incurrence of any damages under
Environmental Laws which would individually or in the aggregate have a material
adverse effect on the American Publishing Newspapers taken as a whole.
(c) Section 4.18(c) of the American Publishing Disclosure Schedule
sets forth a complete list of all Storage Tanks that (i) have been removed by
American Publishing or the American Publishing Sellers from the American
Publishing Real Estate or American Publishing Seller Other Real Property or
(ii) are now present at the American Publishing Real Estate or other real
property owned by the American Publishing Sellers for the American Publishing
Newspapers' operations, or other real property leased or operated by American
Publishing Sellers for the business of the American Publishing Newspapers. All
Storage Tanks which are now present at the American Publishing Real Estate are
in good condition, are not leaking and have not leaked. All Storage Tanks which
heretofore have been removed from the American Publishing Real Estate and such
American Publishing Sellers Other Real Property since the respective dates of
acquisition of such Real Estate and Other Real Property by the American
Publishing Sellers have been removed in accordance with all applicable
Environmental Laws.
(d) Without in any way limiting the generality of the foregoing,
except as disclosed in Section 4.18(d) of the American Publishing Disclosure
Schedule:
i) there is no asbestos contained in or forming part of any
building, building component, structure or office space owned, leased or
operated by American Publishing Sellers for the business of any of the American
Publishing Newspapers or located on any of the American Publishing Real Estate
or American Publishing Sellers Other Real Property;
ii) no polychlorinated biphenyls are used or stored by the
American Publishing Sellers or the American Publishing
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Newspapers on the American Publishing Real Estate or any Other Real Property;
and,
iii) no Lien has been recorded under any Environmental Law with
respect to the American Publishing Real Estate or to the knowledge of American
Publishing any American Publishing Sellers Other Real Property.
(e) None of the American Publishing Real Estate or American
Publishing Sellers Other Real Property is listed or proposed for listing on the
National Priorities List or on the Comprehensive Environmental Response,
Compensation and Liability Information System list, both promulgated under
CERCLA, or on any published state or local list of sites requiring removal,
remedial response or corrective action pursuant to any Environmental Law.
4.19. Real Estate.
(a) The American Publishing Real Estate which is to be purchased by
Garden State pursuant to this Agreement is identified and legally described in
Section 4.19(a) of the American Publishing Disclosure Schedule. Except as
described in Section 4.19(a) of the American Publishing Disclosure Schedule,
the American Publishing Sellers hold, as the case may be or will at the time of
Closing hold, fee simple title to the American Publishing Real Estate, subject
only to American Publishing Permitted Liens. None of the improvements
comprising the American Publishing Real Estate, nor the businesses conducted by
American Publishing or the American Publishing Sellers thereon, are in
violation of any use or occupancy restriction, limitation, condition or
covenant of record or any zoning or building law, code or ordinance or public
utility easement other than violations which would not, individually or in the
aggregate, have a material adverse effect on the assets, liabilities, business,
condition (financial or otherwise), results of operation or prospects of
American Publishing or the American Publishing Sellers or the American
Publishing Newspapers or the use or value of the American Publishing Real
Estate. Complete and correct copies of any title opinions, surveys and
appraisals and any policies of title insurance currently in force and in
possession of American Publishing or the American Publishing Sellers with
respect to each parcel of the American Publishing Real Estate, and each
leasehold interest in real property related to the American Publishing
Newspapers, if any, will be delivered to Garden State within a reasonable
period of time prior to the Closing.
(b) The American Publishing Real Estate currently is served by
utilities adequate to operate such facilities at their current rate of
production, and none of the utility companies serving any such facilities has
threatened American Publishing or
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the American Publishing Sellers with any reduction in service. All of said
utilities are installed and operating and all installation and connection
charges have been paid for in full, except for any amounts that may be
reflected on the Final American Publishing Working Capital Statement.
(c) The continued maintenance and operation of the American
Publishing Real Estate as currently maintained and operated is not dependent on
facilities owned or occupied by American Publishing, its subsidiaries or
Affiliates located at other property, and the continued maintenance and
operation of any other property is not dependent on facilities located on the
American Publishing Real Estate; to the knowledge of American Publishing no
building or other improvement not part of the American Publishing Real Estate
relies on the American Publishing Real Estate or any part thereof or any
interest therein to fulfill any governmental requirement; and no building or
other improvement on the American Publishing Real Estate relies on any property
not included within the American Publishing Real Estate to fulfill any
governmental requirement.
(d) There are no challenges or appeals pending regarding the amount
of the Taxes on, or the assessed valuation of, the American Publishing Real
Estate, and no special arrangements or agreements exist with any governmental
authority with respect thereto.
(e) There is no Tax assessment (in addition to the normal, annual
general real estate Tax assessment) pending or, to the knowledge of American
Publishing and of the American Publishing Sellers, threatened with respect to
any portion of the American Publishing Real Estate.
(f) There are no condemnation proceedings pending or, to the
knowledge of American Publishing and of the American Publishing Sellers,
threatened with respect to any portion of the American Publishing Real Estate.
4.20. Intellectual Property.
(a) All of American Publishing Newspapers' (i) trademarks, service
marks, slogans, trade names, trade dress and the like (collectively with the
associated goodwill of each, the "American Publishing Trademarks"); (ii)
proprietary formulations, manufacturing methods, know-how and trade secrets;
(iii) patents on and pending applications to patent any technology or design;
(iv) registrations of and applications to register copyrights; and (v) licenses
of rights in computer software, the American Publishing Trademarks, patents,
copyrights, unpatented
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formulations, manufacturing methods and other know-how, whether to or by
American Publishing or American Publishing Sellers, in each event with respect
to the American Publishing Newspapers, are identified in Section 4.20(a) of the
American Publishing Disclosure Schedule and are referred to herein collectively
as the "American Publishing Intellectual Property".
(b) (i) The American Publishing Sellers are the owners of each
Trademark and its associated goodwill; (ii) the American Publishing Sellers
have not received any notice or claim from any other firm, corporation,
association or person indicating that any such firm, corporation, association
or person claims the right to use in connection with similar or closely related
goods and in the same geographic area, any mark which is identical or
confusingly similar to any of the Trademarks; (iii) the American Publishing
Sellers have no knowledge of any claim with respect to, and have no reason to
believe that any third party asserts ownership rights in, any of the American
Publishing Intellectual Property; (iv) the American Publishing Sellers have no
knowledge of any claim and have no reason to believe that any of the American
Publishing Newspapers' use of any American Publishing Intellectual Property
infringes any right of any third party; (v) the American Publishing Sellers
have no knowledge or any reason to believe that any third party is infringing
any of the American Publishing Newspapers' rights in any of the Intellectual
Property; (vi) the American Publishing Sellers are under no obligation to pay
any royalties or similar payments in connection with any license of the
American Publishing Intellectual Property; (vii) the consummation of the
transaction contemplated by this Agreement will not result in the impairment of
any of the American Publishing Newspapers' right to use any of the American
Publishing Intellectual Property nor infringe upon the rights of any third
party; and (viii) the American Publishing Sellers are the owners of all
American Publishing Intellectual Property necessary for the conduct of the
American Publishing Newspapers and the operation of the American Publishing
Newspapers Assets as now conducted and operated.
4.21. Guarantees. Except as set forth in Section 4.21 of the American
Publishing Disclosure Schedule, none of the American Publishing Newspapers nor
the American Publishing Newspapers Assets is or at the Closing will be,
directly or indirectly, (i) liable, by guarantee or otherwise, upon or with
respect to, (ii) obligated by discount or repurchase agreement or in any other
way to provide funds with respect to, or (iii) obligated to guarantee or
assume, any debt, dividend or other obligation of any person, corporation,
association, partnership or other entity including, without limitation,
American Publishing or any parent, subsidiary or other Affiliate, except
endorsements made in the ordinary course of business in connection with the
deposit of items for collection.
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4.22. WARN Matters. Except as set forth in Section 4.22 of the American
Publishing Disclosure Schedule, neither the American Publishing Sellers nor
American Publishing with respect to the American Publishing Newspapers has
taken any action within the ninety (90) day period prior to the date hereof
which resulted or will result in an "employment loss" as such term is defined
in the Worker Adjustment and Retraining Notification Act, 29 U.S.C. Sections
2101-2109 (the "WARN Act"), with respect to any employee of the American
Publishing Newspapers.
4.23. Second Class Mail. All reports filed with the United States Postal
Service by the American Publishing Sellers in connection with, and second class
mail postal permits applicable to, the American Publishing Newspapers were true
and correct in all material respects at the time of their filing.
4.24. Deposits/Bonds. Section 4.24 of the American Publishing Disclosure
Schedule is a true and correct schedule of all security deposits, surety
deposits and bonds presently maintained in whole or in part on behalf of any of
the American Publishing Newspapers.
4.25. Certain Assets Not Owned by American Publishing or American
Publishing Sellers. Section 4.25 of the American Publishing Disclosure Schedule
describes each item of tangible personal property which is located upon any of
the American Publishing Real Estate or any premises leased pursuant to any
lease described in Section 4.5(b) of the American Publishing Disclosure
Schedule (hereinafter, collectively, the "American Publishing Premises"), and
which is not either an American Publishing Newspapers Excluded Asset or an
American Publishing Newspapers Asset, as defined in the Agreement (hereinafter,
a "Schedule 4.26 Asset"). No Schedule 4.25 Assets will remain upon the American
Publishing Premises as of the Closing, unless Garden State shall have confirmed
in writing its consent thereto.
4.26. General.
(a) Accuracy. The representations and warranties of American
Publishing contained in this Agreement do not and will not contain any untrue
statement of a material fact or omit or will omit to state a material fact
required to be stated herein or therein in order to make such representations
and warranties not misleading.
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(b) Certain Fees. Neither American Publishing nor any of its
subsidiaries or Affiliates has dealt with any person or entity who is or may be
entitled to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transaction contemplated hereby or
introducing the parties to each other.
ARTICLE V.
Garden State's Representations and Warranties;
Garden State represents and warrants to American Publishing that, except
as set forth in the schedule delivered by Garden State to American Publishing
concurrently herewith and identified as the "Garden State Disclosure Schedule":
5.1. Organizational.
(a) Each of Garden State and Johnstown is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction under which it is incorporated. Each of such corporations has all
necessary corporate power and authority to own, lease and operate its
properties and assets and to conduct its business as now conducted.
(b) Each of such corporations is duly qualified and in good standing
to do business as a foreign corporation, under the laws of all jurisdictions
where the nature of its operations or the nature or location of its assets
requires such qualification.
(c) Garden State has full power and authority to execute and deliver
this Agreement and all documents and instruments to be executed and delivered
by Garden State pursuant to this Agreement (collectively, Garden State's
Ancillary Documents), to perform its obligations hereunder and thereunder, and
to consummate the transactions contemplated hereby and thereby.
(d) All acts required to be taken by Garden State or Johnstown to
authorize the execution and delivery of this Agreement and each of Garden
State's Ancillary Documents, the performance of each of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the approval of such
corporations' stockholders and boards of directors, have been duly and properly
taken, and no other proceedings on the part of Garden State or Johnstown are
necessary to authorize such execution, delivery and performance.
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(e) This Agreement and Garden State's Ancillary Documents will be
duly executed and delivered by duly authorized officers of Garden State.
Assuming due authorization, execution and delivery by American Publishing and
the American Publishing Sellers, each of this Agreement and Garden State's
Ancillary Documents that is a contract at Closing will constitute, a legal,
valid and binding obligation of Garden State and at Closing will be,
enforceable against Garden State in accordance with its terms. Complete and
correct copies of the Certificate of Incorporation and Bylaws of Johnstown,
together with all amendments thereto, have been delivered to American
Publishing.
5.2. No Conflict.
(a) Other than as set forth in Section 5.2(a) of the Garden State
Disclosure Schedule and except as required under the HSR Act and the
Exon-Florio Act, no consent, authorization, order or approval of, or filing or
registration with, or permit or license from any foreign or domestic
governmental or regulatory authority or other person is required for the
execution and delivery of this Agreement and Garden State's Ancillary Documents
and the consummation by Garden State of the transactions contemplated by this
Agreement and Garden State's Ancillary Documents.
(b) Other than as set forth in Section 5.2(b) of the Garden State
Disclosure Schedule, the execution and delivery of this Agreement and of Garden
State's Ancillary Documents by Garden State, the performance of the obligations
of Garden State hereunder and under Garden State's Ancillary Documents by
Garden State, and the consummation by Garden State of the transactions
contemplated hereby and thereby, will not as of the Closing (i) conflict with
or result in a breach of any of the terms, conditions or provisions of (x) any
charter documents or by-laws of Garden State or Johnstown, or (y) any law,
rule, regulation, order, writ, injunction, judgment, decree, determination or
award of any court, governmental body or agency applicable to Garden State,
Johnstown, The Tribune-Democrat or any of their assets or (ii) result in any
breach of or constitute a default (or event which with the giving of Notice or
lapse of time, or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation under any of the
terms, conditions or provisions of any credit agreement, note, bond, mortgage,
indenture, agreement, commitment, lease, printing contract or other instrument
or obligation to which any of Garden State, Johnstown, or The Tribune-Democrat
is a party or by which any of Garden State, Johnstown, The Tribune-Democrat or
any of the assets of Johnstown may be bound, except for such defaults or rights
of termination, cancellation or acceleration as to which requisite waivers or
consents have been obtained or will be obtained on or prior to the Closing Date
and of
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which copies thereof have been or will be delivered to American Publishing; or
(iii) result in the creation or imposition of any Encumbrance upon the
Johnstown Real Property or any of the assets of Johnstown.
5.3. Financial.
(a) Other than as set forth in Section 5.3(a) of the Garden State
Disclosure Schedule, the Johnstown Financial Statements have been prepared
based upon the books and records of Johnstown and in accordance with GAAP
consistently applied.
(b) The unaudited balance sheets of Johnstown as of December 31, 1995
and June 30, 1995 which are set forth in Section 5.3(a) of the Garden State
Disclosure Schedule fairly present the financial position of Johnstown of the
dates of such balance sheets. The statements of income for Johnstown for the
six months ended December 31, 1995 and for the years ending June 30, 1995 and
June 30, 1994 which are set forth in Section 5.3(a) of the Garden State
Disclosure Schedule fairly present the results of operations of Johnstown for
such periods. Complete and accurate copies of each of the above described
financial statements are contained in Section 5.3(a) of the Garden State
Disclosure Schedule (all of the foregoing financial statements described above
are hereinafter referred to as the "Johnstown Financial Statements"). The
Johnstown Financial Statements are true and correct and include all adjustments
and accruals necessary to present fairly the respective financial positions and
results of operations as at the dates and for the periods indicated. Other than
as set forth in Section 5.3(a) of the Garden State Disclosure Schedule, there
were no material debts, liabilities or other obligations of Johnstown or The
Tribune-Democrat of any nature whatsoever, whether accrued, contingent,
absolute or otherwise, not adequately reflected in such financial statements
which are required under GAAP to be reflected in such financial statements
except as and to the extent described in Section 5.3(a) of the Garden State
Disclosure Schedule.
5.4. Capital Stock.
The authorized capital stock of Johnstown consists solely of 1,000
shares of Common Stock, par value $1.00 per share. Of these shares, 10 shares
are issued and outstanding and are owned of record and beneficially solely by
Garden State. The Capital Stock constitutes all of the issued and outstanding
capital stock of Johnstown. Each of the shares of Capital Stock is validly
issued, fully paid and non-assessable. There are no outstanding or authorized
subscriptions, agreements, options, warrants, calls or
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other commitments, rights (including conversion rights) or privileges (whether
preemptive or contractual) pursuant to which Johnstown is or may become
obligated to issue, sell or transfer any shares of its capital stock or any
debt security of Johnstown or any other security convertible into or evidencing
the right to subscribe for any shares of Johnstown's capital stock or any debt
security of Johnstown. There are no shareholder or voting trust agreements,
rights of first refusal, options to purchase or restrictions upon transfer or
alienability of or with respect to the capital stock of Johnstown or any other
similar agreement or understanding otherwise affecting the Capital Stock.
5.5. Title to the Capital Stock.
Garden State has good, marketable and unencumbered title to the Capital
Stock, (other than as may be encumbered by this Agreement), rights of first
refusal and options of any kind or nature whatsoever, and has full right and
authority to transfer and deliver the Capital Stock to Buyer as contemplated
hereby. Upon consummation of the transactions contemplated hereby, Garden State
will have transferred to American Publishing good, marketable and unencumbered
title to the Capital Stock, free and clear of all Liens, agreements, rights of
first refusal and options of any kind or nature whatsoever.
5.6. Subsidiaries.
Johnstown does not own securities representing or convertible into more
than 5% of the outstanding capital stock of any corporation or more than 5% of
the capital interest in any partnership or other entity.
5.7. Taxes.
(a) The amounts provided for all Taxes as reflected in the Johnstown
Financial Statements, as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of Johnstown and Garden
State in filing Tax Returns, are sufficient to cover all unpaid Tax
liabilities, direct or indirect, that Johnstown may have, or that any taxing
authorities may assert that Johnstown has, for Taxes (without regard to whether
such liabilities are disputed) accrued or applicable for all periods up to and
including the Closing Date.
(b) Johnstown has timely and duly paid all Taxes that have become due
and payable (or claimed to be due and payable by any taxing authority) other
than (i) Taxes that are not yet due and
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payable and are reflected as liabilities in the Johnstown Financial Statements;
and (ii) Taxes that have accrued in the ordinary course of business since June
30, 1995 and that are not yet due and payable. Johnstown has timely and duly
prepared and filed or caused to be prepared and filed all Tax Returns that
Johnstown is required by law to file and Johnstown will timely and duly prepare
and file or cause to be prepared and filed all Tax Returns that are required by
law to be filed by it on or prior to the Closing Date. No claim has been made
by any taxing authority of a jurisdiction where Johnstown does not file Tax
Returns that it is or may be subject to taxation in that jurisdiction.
(c) Except as provided in Section 5.19(a) of the Garden State
Disclosure Schedule, Johnstown has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party.
(d) Johnstown has no obligation to make any payment the deductibility
of which would be barred under Code Section 280G.
(e) No Tax Return filed by Johnstown contains any material
misstatement or omits any material information that should have been included
therein.
(f) Johnstown has maintained all Tax records as required by law.
Complete copies of all Tax Returns filed by Johnstown since Johnstown's 1991
tax year and all material written communications with taxing authorities
relating thereto have been provided to American Publishing.
(g) For all taxable periods of Johnstown ending on or before the
Closing Date, no examination of any Tax Return of Johnstown is in progress or
pending or, to Garden State's knowledge, threatened, and all periods for which
any taxing authority has examined the Tax Returns relating to Johnstown have
been closed. No member of the affiliated group of corporations that currently
includes Garden State and Johnstown that file consolidated federal income Tax
Returns or combined or unitary state income or franchise Tax Returns (the
"Garden State Affiliated Group") has waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to an income
Tax assessment or deficiency for any taxable period during which Johnstown was
a member of the Garden State Affiliated Group in the case of any combined or
unitary state income or franchise Tax Return, with respect to Johnstown. To the
knowledge of Garden State, there are no audits, examinations, assessments,
actions, suits, proceedings, investigations or claims now proposed, threatened
or pending against Johnstown in respect of Taxes,
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governmental charges or assessments asserted by any taxing authority.
(h) As of the Closing Date and effective as of that time, Johnstown
will be removed as a party to any Tax allocation or sharing agreement and shall
not have any further obligation to contribute or make further payments
thereunder, and shall not have any further rights to any credits, receipts or
other payments thereunder. Johnstown has not been (nor does it have any
liability for unpaid Taxes because it once was) a member of an affiliated group
of corporations (other than the Garden State Affiliated Group) during any part
of any consolidated return year.
(i) As of June 30, 1995, Johnstown had a federal net operating loss
carryover of approximately $7,300,000. Prior to the Closing Date, Johnstown
will not be restricted in its ability to utilize this amount under Code section
382. As of May 1, 1996, Johnstown's adjusted basis in its depreciable assets
for federal income tax purposes will be not less than $440,000.
5.8. Title to and Condition of Assets; Leases.
(a) Except as set forth in Sections 5.8(b), 5.8(c) and 5.21(a) of the
Garden State Disclosure Schedule, Johnstown owns good, marketable and
unencumbered title, free and clear of any Liens, other than Permitted Liens to
all of the tangible and intangible assets used in, held for use in or necessary
to conduct the business and operations of The Tribune-Democrat as now being
conducted.
(b) The Johnstown Real Estate is listed and described in Section
5.8(b) of the Garden State Disclosure Schedule. Johnstown owns good and
marketable fee simple title to all Johnstown Real Estate listed in Section
5.8(b) of the Garden State Disclosure Schedule as owned by it, free and clear
of all Liens subject only to real estate taxes not delinquent and to covenants,
conditions, restrictions and easement of record, all of which are described in
Section 5.8(b) of the Garden State Disclosure Schedule, none of which makes
title to the Johnstown Real Estate unmarketable and none of which are violated
by Johnstown or will interfere with Johnstown's use thereof subsequent to the
Closing Date for the same purposes for which the Johnstown Real Estate is
currently used except as described in Section 5.8(b) of the Garden State
Disclosure Schedule there are no leases, subleases, tenancies or other rights
of occupancy affecting all or any part of the Johnstown Real Estate owned by
Johnstown. All buildings and improvements on the Johnstown Real Estate comply
with all applicable ordinances, regulations and zoning or other laws and do not
encroach upon or over any other parcel of real estate or any easement or right
of way or building line, and there are no
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restrictive covenants, ordinances, regulations or zoning or other laws which in
any material way restrict or prohibit the use of the lands, buildings or
improvements included with the Johnstown Real Estate, other than violations and
restrictive covenants, etc., which would not individually or in the aggregate
have a material adverse effect on the assets, liabilities, businesses,
conditions (financial or otherwise), results of operations or prospects of
Johnstown or the use or value of the Johnstown Real Estate. Except as described
in Section 5.8(b) of the Garden State Disclosure Schedule, there is no pending
or, to the knowledge of Garden State and Johnstown, threatened change of any
Johnstown Real Estate, and there is no pending or, to the knowledge of Garden
State and Johnstown, threatened condemnation of any of the Johnstown Real
Estate. All improvements, structures, and fixtures on the Johnstown Real Estate
are, taking due account of their age, in a condition and state of repair
appropriate for their current use, subject only to normal wear and tear, and
are adequate to conduct the business and operations of The Tribune-Democrat as
they are now being conducted or as contemplated.
(c) Section 5.8(c) of the Garden State Disclosure Schedule describes
(i) all material items of tangible personal property and assets owned by
Johnstown and relating to The Tribune-Democrat and (ii) all leases of personal
property of Johnstown. All machinery and equipment owned or leased by Johnstown
and used in the operations of The Tribune-Democrat conform to all applicable
ordinances, regulations and zoning or other laws other than violations which
would not individually or in the aggregate have a material adverse effect on
the assets, liabilities, businesses, condition (financial or otherwise),
results of operations or prospects of Johnstown or the use or value of such
machinery or equipment. Except as described in Section 5.8(c) of the Garden
State Disclosure Schedule, all material items of tangible personal property
that are used in The Tribune-Democrat are, taking due account of their age, in
an operating condition and state of repair appropriate to their current use,
subject only to normal wear and tear, and are adequate to conduct the business
and operations of The Tribune-Democrat as they are now being conducted.
(d) All real property leased by Johnstown is listed and described in
Section 5.8(b) of the Garden State Disclosure Schedule. Garden State has
delivered to American Publishing complete and correct copies of all written
leases relating to real or personal property listed in Section 5.8(b) and
5.8(c) of the Garden State Disclosure Schedule hereof and, except as described
in Sections 5.8(b) or (c) of the Garden State Disclosure Schedule, all such
leases are in full force and effect, no event of default has been declared
thereunder and, to the knowledge of Garden State and Johnstown, no basis for
any default exists. Except as otherwise disclosed in Sections 5.8(b) or (c) of
the Garden State Disclosure
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Schedule, no such lease of real or personal property is subject to termination
or modification as a result of the transactions contemplated hereby.
5.9. Inventory.
All inventory, including, without limitation, newsprint, ink, raw
materials, work in process, finished goods, service parts and spare parts and
circulation, production, maintenance and office supplies of Johnstown
(collectively, the "Johnstown Inventory") is in the physical possession and
control of Johnstown at its facility or in transit from suppliers. All of the
Johnstown Inventory is in usable and/or saleable condition, of a quality and
quantity historically usable and/or saleable in the normal course of business
and consistent with past practice, and contains no obsolete, damaged or below
standard quality time.
5.10. Insurance.
Section 5.10 of the Garden State Disclosure Schedule contains a true and
correct list and description of all insurance policies (showing as to each
policy the carrier, policy number and general currently in effect description
of the types and coverage limits provided) which are owned by Johnstown or
which name Johnstown as insured or which pertain to Johnstown, The
Tribune-Democrat, or the employees of Johnstown. Each of Johnstown or Garden
State with respect to Johnstown, the assets of Johnstown, the employees of
Johnstown, or The Tribune-Democrat carries and until the Closing Date will
carry libel, property damage, workers' compensation, automobile, and general
liability insurance in such amounts as are adequate and reasonable and against
such risks as are customary in relation to the character and location of such
properties and the nature of The Tribune-Democrat. All such insurance policies
are and as of the Closing Date will be in full force and effect. All such
policies are occurrence based policies Johnstown is not and shall not be as of
the Closing Date in default under any such policy of insurance. Neither
Johnstown nor Garden State, with respect to Johnstown or The Tribune-Democrat
has been denied any application for insurance within the past five (5) years.
Neither Johnstown nor Garden State has received notice of termination or
non-renewal of any such insurance policies.
5.11. Insiders.
Section 5.11 of the Garden State Disclosure Schedule sets forth every
business relationship (other than normal employment relationships) between
Johnstown, on the one hand, and any of Johnstown's or any of
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Johnstown's Affiliates, officers, directors, employees or stockholders or
members of their families (or any entity in which any of them has a financial
interest, directly or indirectly), on the other hand, which is related to
Johnstown or The Tribune-Democrat. None of said parties (other than Johnstown)
owns any assets which are used relative to Johnstown or The Tribune-Democrat,
except as reflected in Section 5.11 of the Garden State Disclosure Schedule or
is engaged in any business which competes with The Tribune-Democrat or
Johnstown.
5.12. Advertising and Commercial Printing.
(a) Section 5.12(a) of the Garden State Disclosure Schedule sets
forth a complete and correct list of the published rates for advertising
lineage for The Tribune-Democrat and a complete and correct list of and the
amount of revenues generated by The Tribune-Democrat largest (by dollar amount)
(i) 10 retail advertisers, (ii) 10 preprint advertisers, and (iii) 10
classified advertisers, in each case, for the twelve months ending December,
31, 1995.
(b) To the knowledge of Garden State, except as set forth in Section
5.12(b) of the Garden State Disclosure Schedule, since January 1, 1996, there
has not been any actual or threatened cancellation, non-renewal or material
modification of any agreements or relationships with advertisers listed in
Section 5.12(a) of the Garden State Disclosure Schedule, nor has Johnstown made
any changes in the pricing offered generally to customers of The Tribune-
Democrat for advertising and, no advertisers listed in Section 5.12(a) of the
Garden State Disclosure Schedule have threatened in writing to Johnstown or
otherwise manifested to Johnstown a firm and present intention to cancel
previously scheduled or contracted for advertising in The Tribune-Democrat for
the period following the Closing, or to terminate or modify significantly their
relationship with Garden State.
(c) Section 5.12(c) of the Garden State Disclosure Schedule sets
forth the current rates for each of the commercial printing activities included
within the operation of Johnstown. This section of the Garden State Disclosure
Schedule sets forth a complete and current list of and the amount of revenues
generated by each of the 10 largest (by dollar value) commercial printing
customers of each of the commercial printing activities included within the
operation of Johnstown for the twelve months ended December 31, 1995. Except as
set forth in this section of the Garden State Disclosure Schedule, since
January 1, 1996, there has not been any actual or threatened cancellations,
non-renewal or material modification of any agreement or relationship with any
of the commercial printing customers listed in such section, nor has
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Johnstown made any changes in the pricing offered generally to its customers
for commercial printing services, nor, to the knowledge of Garden State, has
any commercial printing customer listed in such section threatened Johnstown in
writing, or otherwise manifested to Johnstown an intention, to cancel
previously scheduled or contracted for commercial printing work for the period
following the Closing, or to terminate or modify significantly their business
relationship with Johnstown.
5.13. Circulation Matters.
(a) Section 5.13 of the Garden State Disclosure Schedule sets forth
the average daily and weekly paid circulation of The Tribune-Democrat as of
December 31, 1995 and for the three months then ended, calculated in the manner
required by ABC. There has been no material decline in the daily or weekly
circulation or distribution of The Tribune-Democrat since December 31, 1995.
(b) Johnstown has filed all the Annual Reports with the U.S. Postal
Service with respect to The Tribune- Democrat. All such Annual Reports, when
filed, were true and complete in all material respects. Johnstown has delivered
to American Publishing true and complete copies of all Annual Reports relating
to The Tribune-Democrat, along with copies of all circulation or distribution
audits by ABC or similar organizations relating to The Tribune-Democrat for the
past three (3) years.
(c) Since January 1, 1996, Johnstown has not made any change in its
policies for the pricing of circulation for The Tribune-Democrat, except such
changes as are set forth in Section 5.13(c) of the Garden State Disclosure
Schedule.
(d) Johnstown has not, during the twelve months ended December 31,
1995, circulated The Tribune-Democrat at discounts more than the discounts
reported to the ABC.
5.14. Conduct of Business.
(a) Since January 1, 1996, Johnstown has conducted its business and
operations only in the ordinary course of business in substantially the same
manner as heretofore conducted and has used all reasonable efforts to preserve
and promote such business and to avoid any act that might have a material
adverse effect upon the business, The Tribune-Democrat or the assets of
Johnstown.
(b) Except as set forth in Section 5.14(b) of the Garden State
Disclosure Schedule, since January 1, 1996, Johnstown has not:
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i) sold or in any way transferred or otherwise disposed of any of
its assets or property, except for (A) use of the Johnstown Inventory in the
usual and ordinary course of Johnstown's business and (B) cash applied in
payment of Johnstown's liabilities in the usual and ordinary course of
business;
ii) suffered any casualty, damage, destruction or loss, or any
material interruption in use, of any material assets or property (whether or
not covered by insurance);
iii) waived any right or canceled or compromised any debt or
claim, other than in the ordinary course of business and not in excess of
$10,000 for any item or $50,000 in the aggregate;
iv) made any material increase in the rate or terms of
compensation payable or to become payable to employees of Johnstown, except
increases occurring in accordance with customary practices or in accordance
with existing collective bargaining or employment agreements, or any material
modification in employee benefits, or any borrowing of money from Johnstown by
any employee of Johnstown (other than routine travel and similar advances);
v) entered into, modified, amended, renewed, extended or
terminated any contract or commitment involving total payments or expenditures
to any single person or entity of more than $10,000 on any single contract or
commitment, or $50,000 in the aggregate, or that is to be performed beyond
April 30, 1997;
vi) violated, or failed to comply with respect to, any law,
regulation, ordinance, rule, order, judgment, injunction or decree applicable
to Johnstown, The Tribune-Democrat, or Garden State with respect to Johnstown
or The Tribune-Democrat, the effect of which (singly or in the aggregate) could
be a material adverse effect upon Johnstown or upon The Tribune-Democrat, or
upon the business, operations, financial condition or prospects of Johnstown;
vii) failed to collect the accounts receivable or to pay the
accounts payable and other current liabilities of Johnstown in any manner other
than consistent with past practice;
viii) made any change in accounting or bookkeeping methods,
principles or practices, except as required by GAAP;
ix) made any borrowing of money, including any increase or
extension of purchase money credit or any increase in the liabilities of
Johnstown from those reflected in the Johnstown Financial Statements, other
than current liabilities incurred in the ordinary course of business and
consistent with past practice;
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x) entered into any transaction relating to Johnstown, The
Tribune-Democrat or the assets of Johnstown other than in the ordinary course
of business and consistent with past practice;
xi) entered into any intercompany transaction with Garden State
or with any officer or director or with any other subsidiary or operating unit
or Affiliate of Garden State or Johnstown, other than in the ordinary course of
business and consistent with past practice;
xii) made any settlement of any Tax claim against Johnstown or
any litigation (net of applicable insurance proceeds) in excess of $10,000
individually or $50,000 in the aggregate, except with the prior written consent
of American Publishing, which consent shall not be unreasonably withheld;
xiii) made any gift or charitable donation in excess of $2,000
individually or $10,000 in the aggregate; or
xiv) entered into any agreement, arrangement or understanding,
whether oral or written, to do any of the foregoing matters listed in clauses
(i) through (xiii) inclusive.
(c) Since January 1, 1996, Johnstown has not suffered or been
threatened, to the knowledge of Garden State and Johnstown, with any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of The Tribune-Democrat, including, without limiting the
generality of the foregoing, the existence or threat of any labor dispute, or
any material adverse change in, or loss of, any relationship between Johnstown
and any of its material customers (including, without limitation, advertisers,
subscribers and dealers), material suppliers or key employees, material to
Johnstown, and to the knowledge of Garden State, no paid circulation newspaper
which does not currently compete with Johnstown with respect to the sale of
print advertising has any present or future plans to compete with Johnstown
subsequent to the Closing Date with respect to the sale of print advertising
during the twelve month period following the Closing Date.
5.15. Contracts.
All Contracts that are material to Johnstown or The Tribune-Democrat are
listed in Section 5.15 of the Garden State Disclosure Schedule. For purposes of
this Section 5.15 "Contract" means any unexpired agreement, license, lease,
permit, arrangement, commitment, instrument, understanding or contract, whether
written or oral, to which any of or either of The Tribune-Democrat or Garden
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State with respect to Johnstown or The Tribune-Democrat is a party or is bound
and is material to Johnstown, The Tribune-Democrat, or the assets of Johnstown.
True and complete copies of all written Contracts, instruments and other
documents listed in Section 5.15 of the Garden State Disclosure Schedule have
been delivered to American Publishing. Except as set forth in Section 5.15 of
the Garden State Disclosure Schedule, all such Contracts are in full force and
effect and are legally binding and enforceable by and against the parties
thereto, and neither Garden State, Johnstown nor, to the knowledge of Garden
State and Johnstown, any other party to any of such Contracts is (with or
without the lapse of time or the giving of notice, or both) in violation
thereof or in default thereunder. Except as set forth in Section 5.15 of the
Garden State Disclosure Schedule, none of Johnstown, The Tribune-Democrat or
Garden State with respect to Johnstown or The Tribune-Democrat, nor any of the
assets of Johnstown will as of the Closing be bound by or subject to any
Contract that falls within any of the following categories:
i) Contracts arising outside of the ordinary course of business;
ii) collective bargaining agreements, employment agreements,
management agreements or other Contracts with employees, agents,
distributors, representatives or consultants, other than the
collective bargaining agreements and the Benefit Plans described in
Section 5.17 hereof;
iii) continuing Contracts for purchase of any materials, supplies,
equipment or services in excess of $5,000 per year;
iv) continuing Contracts for the sale of any printing, advertising,
publication or any other service in excess of $10,000;
v) Contracts for the purchase of any fixed or capital assets, other
than Contracts involving an aggregate expenditure of not more than
$10,000;
vi) Contracts for the sale of any fixed or capital assets having a
value in excess of $10,000 individually or $25,000 in the aggregate;
vii) Contracts for trade, barter and similar arrangements for the
sale of printing, advertising, publication or any other service in
exchange for consideration other than cash;
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viii) Contracts with any other person to sell any capital stock, or
all or any of the assets, of Johnstown or to effect any merger,
consolidation or other reorganization of Johnstown, or to enter into
any agreement with respect thereto;
ix) Contracts relating to any borrowing of money by Johnstown or
mortgaging, pledging or otherwise placing a lien on any of the
Assets; or
x) any license or royalty agreement.
5.16. Permits and Licenses. Except for the Johnstown Environmental
Permits, Section 5.16 of the Garden State Disclosure Schedule lists all
material licenses, permits and authorizations as are currently held by
Johnstown or The Tribune-Democrat. Johnstown has all permits, licenses,
approvals, authorizations, registrations, qualifications and filings with and
under all Federal, state, local and foreign laws, authorities and agencies,
including non-governmental self-regulatory organizations, that are required for
Johnstown to operate The Tribune-Democrat in the manner in which it is
currently being operated (collectively, the "Johnstown Required Permits") and
all such Johnstown Required Permits are in full force and effect and no
suspension of the Johnstown Required Permits is, to the knowledge of Garden
State and Johnstown, threatened. Except as set forth in Section 5.16 of the
Garden State Disclosure Schedule, (i) such licenses, permits and authorizations
are transferable and not subject to any restrictions or conditions that would
limit the business or operations of Johnstown as presently conducted; and (ii)
there are no applications by Johnstown or Garden State with respect to
Johnstown or The Tribune-Democrat, or complaints by other persons pending or,
to the knowledge of Garden State and of Johnstown, threatened as of the date
hereof before any domestic or foreign governmental agency relating to any
licenses, permits or authorizations applicable to Johnstown, The
Tribune-Democrat or Garden State with respect to Johnstown or The
Tribune-Democrat. Except as set forth in Section 5.16 of the Garden State
Disclosure Schedule, no foreign or domestic governmental or regulatory consents
or approvals are necessary for such licenses, permits and authorizations to
continue in full force and effect on behalf of Johnstown or American Publishing
following consummation of the transactions contemplated hereby.
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5.17. Employee Benefit Plans; ERISA.
(a) Section 5.17(a) of the Garden State Disclosure Schedule contains
a true and complete list of all Benefit Plans (as hereinafter defined)
maintained or sponsored by Johnstown or any ERISA Affiliate (as hereinafter
defined), or with respect to which Johnstown or any ERISA Affiliate has or may
have any liability, directly or indirectly or any obligation to contribute, or
which otherwise covers any of the current or former employees of Johnstown or
any ERISA Affiliate or their beneficiaries, whether or not funded and whether
or not terminated (hereinafter individually referred to as a "Johnstown Plan"
and collectively referred to as the "Johnstown Plans"). As used in this
Agreement, the term "Benefit Plans" shall mean all written and unwritten
"employee benefit plans" within the meaning of Section 3(3) of the ERISA, and
any profit sharing, pension, savings, deferred compensation, fringe benefit,
insurance, medical, medical reimbursement, life, disability, accident,
post-retirement health or welfare benefit, stock option, stock contribution,
stock purchase, sick pay, vacation, employment, severance, termination or other
compensation plan, agreement, contract, policy, trust fund or arrangement. The
term "ERISA Affiliate" shall mean any corporation which is a member of a
controlled group of corporations (within the meaning of Section 414(b) of the
Code which includes Johnstown, any trade or business (whether or not
incorporated) which is under common control (within the meaning of Code Section
414(c)) with Johnstown, any organization (whether or not incorporated) which is
a member of an affiliated service group (as defined in Code Section 414(m))
which includes Johnstown and any other entity (whether or not incorporated)
required to be aggregated with Johnstown pursuant to Code Section 414(o). Each
Johnstown Plan which, as of the date hereof, is a Defined Benefit Plan and is
identified on Section 5.17(a) of the Garden State Disclosure Schedule. Each
Johnstown Plan which is intended to be a Qualified Plan is identified on
Section 5.17(a) of the Garden State Disclosure Schedule.
(b) All Johnstown Plans comply in all material respects with and are
and have been operated in substantial accordance with each applicable provision
of ERISA, the Code, other Federal statutes, state law, the regulations and
rules promulgated pursuant thereto or in connection therewith and all
collective bargaining agreements applicable thereto. Each Qualified Plan is
qualified under Section 401(a) of the Code and any trust under such Qualified
Plan is exempt from income tax under Section 501(a) of the Code. The
retroactive cure period with respect to any plan amendments or plans not yet
adopted and/or submitted to the IRS has not expired. Other than routine claims
for benefits submitted by participants or beneficiaries, there is no
litigation, legal action, investigation, claim, or proceeding pending or, to
the knowledge of Garden State and Johnstown, threatened against or with respect
to any Johnstown
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Plan or against or affecting any fiduciary thereof or the assets of any trust
or insurance contract thereunder, at law or in equity, by or before any court
or governmental department, agency or instrumentality, and there is no basis
for any such action, suit, investigation or proceeding. There are presently no
outstanding judgments, decrees or orders of any court or any governmental or
administrative agency against or affecting the Johnstown Plans, any fiduciaries
thereof or the assets of any trust or insurance contract thereunder. Neither
Garden State nor Johnstown has knowledge of and has not received any written
notice that any Johnstown Plan is under audit or investigation by any
governmental authority and no such completed audit, if any, has resulted in the
imposition of any tax, fine or penalty.
(c) Johnstown and each ERISA Affiliate have made full and timely
payment of all amounts which are required under the terms of each Johnstown
Plan and any related trust or collective bargaining agreement or which are
otherwise required by applicable law to be paid as a contribution to each such
plan with respect to all periods through the Closing Date. No accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code) exists nor has any funding waiver from the Internal Revenue Service been
received or requested with respect to any Johnstown Plan and no excise tax or
other taxes are due or owing because of any failure to comply with the minimum
funding standards of the Code and ERISA with respect to any of such plans.
(d) With respect to the Johnstown Plans, no prohibited transaction
(within the meaning of Section 406 of ERISA and Section 4975 of the Code)
exists which, directly or indirectly, could subject Johnstown or any ERISA
Affiliate to any liability or tax under Part 5 of Title I of ERISA or Section
4975 of the Code. Neither Johnstown nor any ERISA Affiliate, nor any
administrator or fiduciary of any Johnstown Plan, nor any agent of any of the
foregoing, has engaged in any transaction or acted or failed to act in a manner
which is likely to subject Johnstown or any ERISA Affiliate, directly or
indirectly, to any material liability for a breach of fiduciary or other duty
under ERISA or any other law.
(e) Each Johnstown Plan which is an employee welfare benefit plan
(within the meaning of Section 3(1) of ERISA) and which is a group health plan
(within the meaning of Section 5000(b)(1) of the Code) complies with and has
been and operated in accordance with each of the requirements of Section 162(i)
of the Code as in effect for years beginning prior to 1989, Section 4980B of
the Code for years beginning after December 31, 1988, and COBRA. There are no
pending or, to the knowledge of Garden State and Johnstown, threatened claims,
suits or other proceedings by any employee or former employee of Johnstown or
by the beneficiary, dependent or representative of any such person, involving
the
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failure of any group health plan ever maintained by Johnstown to comply with
the health care continuation requirements of COBRA. Except as set forth on
Schedule 5.17(a) of the Garden State Disclosure Schedules, all Johnstown Plans
providing medical, disability, life or other welfare benefits to retired former
employee can be terminated at any time without material liability in the
aggregate to Johnstown and the ERISA Affiliates, considered as a single
enterprise.
(f) Neither Johnstown nor any ERISA Affiliate has incurred any
liability to the PBGC as a result of the voluntary or involuntary termination
of an employee pension benefit plan which is subject to Title IV of ERISA.
There is currently no active filing by the Johnstown or any ERISA Affiliate
with the PBGC (and no proceeding has been commenced by the PBGC) to terminate
any Johnstown Plan. The PBGC has not instituted any proceedings to terminate
any Johnstown Plan.
(g) Neither Johnstown nor any ERISA Affiliate currently maintains or
is obligated to contribute to, nor has in the past maintained or contributed
to, nor has any liability, contingent or otherwise, to or arising out of any
multiemployer plan, as defined in Section 3(37) of ERISA, and neither the
Johnstown nor any ERISA Affiliate has suffered a complete withdrawal or partial
withdrawal as such terms are defined in Sections 4203 and 4205, respectively,
of ERISA for which it reasonably expects to incur any withdrawal liability.
(h) The consummation of the transactions contemplated hereby will not
create, accelerate or increase any liability under any Johnstown Plan because
of the creation, acceleration or increase of any of the rights or benefits to
which employees may be entitled thereunder, including any obligation to make
any payment upon a "change in ownership or control" as such term is defined for
purposes of Section 280G of the Code.
(i) For each Johnstown Plan, to the extent applicable to each such
Johnstown Plan, true and complete copies of the following have been delivered
to American Publishing or will be delivered as soon as practicable to American
Publishing (but in any event, no later than ten (10) days prior to the Closing
Date): i) the documents embodying the Johnstown Plans, including the plan
documents, all amendments thereto, the related trust or funding agreements,
insurance contracts, union or trade agreements and, in the case of any
unwritten Johnstown Plans, written descriptions thereof; ii) the most recent
annual reports including without limitation Forms 5500 and all schedules
thereto; iii) the most recent financial statements; iv) the most recent
actuarial reports; v) each current summary plan description and each summary of
material modification prepared in the last three years for each
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Johnstown Plan; and (vi) all employee manuals, handbooks, policy statements and
other written materials given to employees relating to any Johnstown Plans.
(j) Section 5.17(j) of the Garden State Disclosure Schedule sets
forth a list of all former employees of Johnstown and their dependents
receiving medical benefits pursuant to the provisions of Section 4980B of the
Code.
(k) Johnstown shall, in accordance with past practice, make all
payments required under the Employee Benefit Plans and payment of accrued
salaries or wages and vacation pay with respect to employment of any persons by
Johnstown until the close of business on the Closing Date. Except as required
by Section 4980B of the Code, Johnstown has no liability to provide medical
benefits to former employees of Johnstown or their spouses or dependents.
5.18. Corporate and Personnel Data; Independent Contractors; Labor
Relations.
(a) Section 5.18(a) of the Garden State Disclosure Schedule contains
a true and complete list of all Johnstown's employees as of December 31, 1995
or such later date as is specified therein, and such list correctly reflects
their salaries, hours, wages, other compensation (other than benefits under the
Employee Benefit Plans) including all bonuses paid or accrued as of such date,
their dates of employment, union affiliations and positions.
(b) Section 5.18(b) of the Garden State Disclosure Schedule sets
forth a list of all oral or written employment agreements, management
agreements and consulting or similar agreements to which any of Johnstown, The
Tribune-Democrat or Garden State with respect to Johnstown or The
Tribune-Democrat is a party or is bound. True and correct copies of all such
agreements as are in writing have been delivered to American Publishing.
(c) Section 5.18(c) of the Garden State Disclosure Schedule sets
forth all oral and written independent contractor agreements to which any of
Johnstown, The Tribune-Democrat or Garden State with respect to Johnstown or
The Tribune-Democrat is a party or is bound. True and correct copies of all
such agreements as are in writing have been delivered to American Publishing.
(d) Except as set forth in Section 5.18(d) of the Garden State
Disclosure Schedule: (i) Johnstown is in compliance with all applicable laws
and regulations relating to the employment of labor and employment practices,
including those related to terms and
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conditions of employment, wages, hours, collective bargaining, discrimination,
occupational safety and health, and the payment of Social Security or similar
taxes; (ii) Johnstown is not engaged in any unfair labor practice; (iii) there
are no unfair labor practice claims or charges pending involving or affecting
Johnstown or The Tribune-Democrat; (iv) neither Johnstown nor Garden State with
respect to Johnstown or The Tribune-Democrat is a party to any collective
bargaining agreement or bound by any other agreement with a labor union; (v)
there are no proceedings pending for certification or representation before the
National Labor Relations Board with respect to the employees of Johnstown nor,
to the knowledge of Garden State and Johnstown, has there been any attempt
within the past five (5) years to organize any of the employees of Johnstown
into a collective bargaining unit; (vi) there is no labor strike, dispute,
slowdown or stoppage actually pending nor, to the knowledge of Garden State and
Johnstown, threatened against or involving Johnstown; (vii) no discrimination
charge of any kind with respect to the employees of Johnstown is pending and,
to the knowledge of Garden State and Johnstown, no claim therefor exists;
(viii) no grievance with respect to any of the employees of Johnstown is
pending and, to the knowledge of Garden State and Johnstown, neither Johnstown
or The Tribune-Democrat has in the past five (5) years experienced any work
stoppage or other labor difficulty or committed any unfair labor practice; and
(ix) no act or omission of Johnstown or Garden State will result in the
imposition upon American Publishing of any obligation or liability relating to
any federal, state or local law, regulation or ordinance relating to plant
closings, layoffs, sales or workforce reductions.
5.19. Litigation and Claims.
Other than as set forth in Section 5.19(a) of the Garden State
Disclosure Schedule, there are no claims, actions, suits, investigations,
litigation, arbitrations, or proceedings, in law or in equity, and there are no
proceedings or governmental investigations before or by any court or foreign,
Federal, state, local, or other governmental department, commission, board,
agency, instrumentality or other administrative authority, pending or against
or affecting Johnstown, or with respect to the assets of Johnstown or The
Tribune-Democrat or with respect to the consummation of the transaction
contemplated hereby, or the operations of The Tribune-Democrat (either after
the Closing or prior thereto) and, to the knowledge of Garden State and
Johnstown, no such matter is threatened.
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5.20. Compliance with Laws.
(a) Other than as set forth in Section 5.20(a) of the Garden State
Disclosure Schedule, neither Johnstown nor The Tribune-Democrat is a party to,
or bound by, any decree, order or arbitration award (or agreement entered into
in any administrative, judicial or arbitration proceeding with any domestic or
foreign governmental authority) with respect to its properties, assets,
personnel or business activities.
(b) Other than as set forth in Section 5.20(b) of the Garden State
Disclosure Schedule, neither Johnstown nor The Tribune-Democrat is in violation
of, or delinquent with respect to, any decree, order or arbitration award or
law, statute, or regulation of or agreement with, or Permit from, any Federal,
state or local governmental authority (or to which its properties, assets,
personnel, business activities or the Johnstown Real Estate are subject or to
which they, themselves, are subject), including, without limitation, laws,
statutes and regulations relating to equal employment opportunities, fair
employment practices, unfair labor practices, terms of employment, occupational
health and safety, wages and hours and discrimination, and zoning ordinances
and building codes, other than violations or delinquencies which would not,
individually or in the aggregate, have a material adverse effect on the assets,
liabilities, business, condition (financial or otherwise), results of operation
or prospects of the Johnstown or The Tribune-Democrat and to the knowledge of
Garden State and Johnstown, no such complaint or notice is threatened. Copies
of all notices of violation of any of the foregoing which Johnstown has
received within the past three years are attached to Section 5.20(b) of the
Garden State Disclosure Schedule.
5.21. Environmental Matters.
(a) Except for environmental matters described in Section 5.21(a) of
the Garden State Disclosure Schedule, Johnstown and The Tribune-Democrat are in
material compliance with all Environmental Laws and Johnstown Environmental
Permits. A copy of any notice, citation, inquiry or complaint which Johnstown
or The Tribune-Democrat has received in the past five years of any alleged
violation of or liability or potential liability under any Environmental Law or
Johnstown Environmental Permit is contained in Section 5.21(a) of the Garden
State Disclosure Schedule, and all violations alleged in said notices have been
resolved. There have been no environmental investigations, studies, audits,
tests, reviews or analyses relating to Johnstown and its assets and business,
including The Tribune-Democrat and the Johnstown Real Estate conducted or
authorized by Garden State, Johnstown, or any consultant engaged by Garden
State or Johnstown, or to the best of
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Garden State's or Johnstown's knowledge conducted by or for any other person,
including, governmental authority except as described in Section 5.21(a) of the
Garden State Disclosure Schedule. True and complete copies of all documents,
results or reports issued in connection with such investigations, etc. listed
in Section 5.21(a) of the Garden State Disclosure Schedule have previously been
provided to American Publishing. Johnstown or The Tribune-Democrat possesses
all Johnstown Environmental Permits which are required for the operation of
Johnstown, including without limitation, The Tribune-Democrat, and is in
material compliance with the provisions of all such Johnstown Environmental
Permits. A list of all Johnstown Environmental Permits is contained in Section
5.20(a) of the Garden State Disclosure Schedule. Johnstown or The
Tribune-Democrat has taken all appropriate measures to reapply for or renew
such Johnstown Environmental Permits where such action is necessary to keep
such Johnstown Environmental Permits in effect.
(b) Except for environmental matters described in Section 5.21(b) of
the Garden State Disclosure Schedule, there has been no handling, storage,
treatment, generation, transportation or Release of any Hazardous Materials by
Garden State, Johnstown, The Tribune-Democrat or by any other person or entity
for which Johnstown or The Tribune-Democrat is or may be held responsible, or
by any other person, at Garden State's or Johnstown's direction or
authorization (hereinafter, collectively "Garden State or Garden State's Agents
or Affiliates") on (i) the Johnstown Real Estate, (ii) other real property
owned, leased or operated, managed or controlled by Johnstown, The Tribune-
Democrat or Garden State with respect to Johnstown or The Tribune-Democrat
("Johnstown Other Real Property"), (iii) at any Johnstown Offsite Facility or
(iv) at other real property previously owned, leased, operated, managed or
controlled by Johnstown, The Tribune-Democrat or Garden State with respect to
Johnstown or The Tribune-Democrat ("Johnstown Prior Property"), which in any
case is or was in violation of, or which could give rise to, any liability or
obligation or the incurrence of any damages under, Environmental Laws which
would individually or in the aggregate have a material adverse effect on
Johnstown or The Tribune-Democrat.
(c) Section 5.21(c) of the Garden State Disclosure Schedule sets
forth a complete list of all (i) Storage Tanks that are now present at, or have
heretofore been removed from, the Johnstown Real Estate or Johnstown Other Real
Property and (ii) which were owned or operated at, or removed by Garden State
or Johnstown from, any Johnstown Prior Property. All Storage Tanks which are
present at the Johnstown Real Estate are in good condition, are not leaking and
have not leaked. All Storage Tanks which have been heretofore removed from the
Johnstown Real Estate and the Johnstown Other Real Property have been removed
in accordance with all applicable Environmental Laws.
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(d) Without in any way limiting the generality of the foregoing,
except as disclosed in Section 5.21(d) of the Garden State Disclosure Schedule:
i) there is no asbestos contained in or forming part of any
building, building component, structure or office space owned, operated,
leased, managed or controlled by Johnstown or by Garden State with respect to
Johnstown or The Tribune-Democrat or located on the Johnstown Real Estate or
the Johnstown Other Property;
ii) no polychlorinated biphenyls are now or have been used or
stored by Garden State or Johnstown or The Tribune-Democrat on the Johnstown
Real Estate or the Johnstown Other Property;
iii) no Lien has been recorded under any Environmental Law with
respect to the Johnstown Real Estate or the Johnstown Other Real Property.
(e) None of the Johnstown Real Estate, Johnstown Other Real Property
or Johnstown Prior Property is listed or proposed for listing on the National
Priorities List or on the Comprehensive Environmental Response, Compensation
and Liability Information System list, both promulgated under CERCLA, or on any
published state or local list of sites requiring removal, remedial response or
corrective action pursuant to any Environmental Law.
5.22. Real Estate.
(a) The real property owned by Johnstown and all appurtenances
thereto and improvements thereon, together with all easements, rights of way,
servitudes, options, mineral property, mineral deposits, risks of first refusal
and all other real property rights related thereto is identified and legally
described in Section 5.22(a) of the Garden State Disclosure Schedule
collectively referred to as the "Johnstown Real Estate." Except as described in
Section 5.22(a) of the Garden State Disclosure Schedule, Johnstown holds, or
will at the time of Closing hold, fee simple title to the Johnstown Real
Estate, subject only to real estate taxes not delinquent and to covenants,
conditions, restrictions and easements of record, all of which are set forth or
described in Section 5.22(a) of the Garden State Disclosure Schedule, none of
which makes title to the Johnstown Real Estate unmarketable and none of which
are violated by Johnstown or will interfere with American Publishing's use
thereof. None of the improvements comprising the Johnstown Real Estate, nor the
businesses conducted by Johnstown thereon, are in violation of any use or
occupancy restriction, limitation, condition or covenant of
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record or any zoning or building law, code or ordinance or public utility
easement other than violations which would not, individually or in the
aggregate, have a material adverse effect on the assets, liabilities, business,
condition (financial or otherwise), results of operation or prospects of
Johnstown or The Tribune-Democrat or the use or value of the Johnstown Real
Estate. Complete and correct copies of any title opinions, surveys and
appraisals and any policies of title insurance currently in force and in
possession of Garden State with respect to each parcel of the Johnstown Real
Estate, and each leasehold interest in real property held by Johnstown, if any,
will be delivered to American Publishing within a reasonable period of time
prior to the Closing.
(b) The Johnstown Real Estate currently is served by utilities
adequate to operate such facility at its current rate of production, and none
of the utility companies serving any such facility has threatened Johnstown
with any reduction in service. All of said utilities are installed and
operating and all installation and connection charges have been paid for in
full.
(c) The continued maintenance and operation of the Johnstown Real
Estate as currently maintained and operated is not dependent on facilities
owned or occupied by Johnstown located at other property, and the continued
maintenance and operation of any other property is not dependent on facilities
located on the Johnstown Real Estate; to the knowledge of Garden State and
Johnstown, no building or other improvement not part of the Johnstown Real
Estate relies on the Johnstown Real Estate or any part thereof or any interest
therein to fulfill any governmental requirement; and no building or other
improvement on the Johnstown Real Estate relies on any property not included
within the Johnstown Real Estate to fulfill any governmental requirement.
(d) There are no challenges or appeals pending regarding the amount
of the Taxes on, or the assessed valuation of, the Johnstown Real Estate, and
no special arrangements or agreements exist with any governmental authority
with respect thereto.
(e) There is no Tax assessment (in addition to the normal, annual
general real estate Tax assessment) pending or, to the knowledge of Garden
State and Johnstown, threatened with respect to any portion of the Johnstown
Real Estate.
(f) There are no condemnation proceedings pending or, to the
knowledge of Garden State and Johnstown, threatened with respect to any portion
of the Johnstown Real Estate.
5.23. Intellectual Property.
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(a) All of Johnstown's (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "Johnstown Trademarks"); (ii) proprietary formulations, manufacturing
methods, know-how and trade secrets; (iii) patents on and pending applications
to patent any technology or design; (iv) registrations of and applications to
register copyrights; and (v) licenses of rights in computer software, Johnstown
Trademarks, patents, copyrights, unpatented formulations, manufacturing methods
and other know-how, whether to or by Johnstown, in each event with respect to
The Tribune-Democrat, are identified in Section 5.23(a) of the Garden State
Disclosure Schedule and are referred to herein collectively as the "Johnstown
Intellectual Property".
(b) (i) Johnstown is the owner of each Johnstown Trademark and its
associated goodwill; (ii) Johnstown has not received any notice or claim from
any other firm, corporation, association or person indicating that any such
firm, corporation, association or person claims the right to use in connection
with similar or closely related goods and in the same geographic area, any mark
which is identical or confusingly similar to any of the Johnstown Trademarks;
(iii) neither Garden State nor Johnstown has knowledge of any claim with
respect to, and have no reason to believe that any third party asserts
ownership rights in, any of the Johnstown Intellectual Property; (iv) neither
Garden State nor Johnstown has no any knowledge of any claim and has any reason
to believe that Johnstown's use of any Johnstown Intellectual Property
infringes any right of any third party; (v) neither Garden State nor Johnstown
has any knowledge or any reason to believe that any third party is infringing
any of Johnstown's rights in any of the Johnstown Intellectual Property; (vi)
Johnstown is under no obligation to pay any royalties or similar payments in
connection with any license of Johnstown Intellectual Property; (vii) the
consummation of the transaction contemplated by this Agreement will not result
in the impairment of Johnstown's right to use any of the Johnstown Intellectual
Property nor infringe upon the rights of any third party; and (viii) Johnstown
is the owner of all Johnstown Intellectual Property necessary for or useful in
the conduct of The Tribune-Democrat and the operation thereof as now conducted
and operated.
5.24. Guarantees. Except as set forth in Section 5.24 of the Garden State
Disclosure Schedule, neither Johnstown nor any of the assets of Johnstown is or
at the Closing will be, directly or indirectly, (i) liable, by guarantee or
otherwise, upon or with respect to, (ii) obligated by discount or repurchase
agreement or in any other way to provide funds with respect to, or (iii)
obligated to guarantee or assume, any debt, dividend or other obligation of any
person, corporation, association, partnership
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or other entity including, without limitation, Garden State or any parent,
subsidiary or other Affiliate of Johnstown, except endorsements made in the
ordinary course of business in connection with the deposit of items for
collection.
5.25. Bank Accounts. Section 5.25 of the Garden State Disclosure Schedule
contains a complete and correct description of all banking, safe deposit box
and lockbox arrangements currently maintained by Johnstown and/or The
Tribune-Democrat, all powers of attorney in connection with such arrangements,
and the names of all persons authorized to draw thereon or to have access
thereto.
5.26. WARN Matters. Except as set forth in Section 5.26 of the Garden
State Disclosure Schedule, neither Johnstown nor The Tribune-Democrat has taken
any action within the ninety (90) day period prior to the date hereof which
resulted or will result in an "employment loss" as such term is defined in the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. Sections 2101-2109
(the "WARN Act"), with respect to any employee of Johnstown.
5.27. Second Class Mail. All reports filed with the United States Postal
Service in connection with, and second class mail postal permits applicable to,
The Tribune-Democrat were true and correct in all material respects at the time
of their filing.
5.28. Deposits/Bonds. Section 5.28 of the Garden State Disclosure Schedule
is a true and correct schedule of all security deposits, surety deposits and
bonds presently maintained in whole or in part on behalf of Johnstown.
5.29. Certain Assets Not Owned by Johnstown. Section 5.29 of the Garden
State Disclosure Schedule describes each item of tangible personal property
which is located upon any of the Johnstown Real Estate or any premises leased
by Johnstown pursuant to any lease described in Section 5.8(b) of the Garden
State Disclosure Schedule (hereinafter, collectively, the "Johnstown
Premises"), and which is not either owned by Johnstown or leased by Johnstown
pursuant to a lease identified and described in Section 5.8(b) of the Garden
State Disclosure Schedule (hereinafter, a "Schedule 5.29 Asset"). No Schedule
5.29 Assets will remain upon the Johnstown Premises as of the Closing, unless
American Publishing shall have confirmed in writing its consent thereto.
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5.30. General.
(a) Accuracy. The representations and warranties of Garden State
contained in this Agreement do not and will not contain any untrue statement of
a material fact or omit or will omit to state a material fact required to be
stated herein or therein in order to make such representations and warranties
not misleading.
(b) Certain Fees. Neither Garden State, Johnstown nor any of their
Affiliates has dealt with any person or entity who is or may be entitled to a
broker's commission, finder's fee, investment banker's fee or similar payment
for arranging the transaction contemplated hereby or introducing the parties to
each other.
ARTICLE VI.
Conduct Prior to the Closing
6.1. General. American Publishing and Garden State shall have the rights
and obligations with respect to the period between the date hereof and the
Closing Date which are set forth in the remainder of this Article VI.
6.2. American Publishing's Obligations. The following are American
Publishing's obligations as they relate to the American Publishing Newspapers
and the transactions described herein:
(a) American Publishing shall give to Garden State's officers,
employees, attorneys, consultants and accountants reasonable access during
normal business hours to all of the properties, books, contracts, documents,
records and personnel of American Publishing and the American Publishing
Sellers relating to the American Publishing Newspapers located at American
Publishing corporate offices (but not any of the American Publishing
Newspapers) and shall furnish to Garden State such information relating thereto
as Garden State may at any time and from time to time reasonably request.
Garden State shall not have access to any such information or personnel located
at any of the American Publishing Newspapers without American Publishing's
prior written consent;
(b) American Publishing shall use commercially reasonable efforts
(and Garden State shall cooperate with American Publishing) to obtain all
required consents and/or approvals specified by Garden State or alternate
arrangements satisfactory to
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Garden State with respect to the transactions herein contemplated (the
"American Publishing Consents");
(c) Without the prior written consent of Garden State, and without
limiting the generality of any other provision of this Agreement, American
Publishing and the American Publishing Sellers shall not, without Garden
State's prior written consent do any of the following:
i) incur or commit to incur any capital expenditures in excess of
$5,000 not disclosed in the American Publishing Disclosure Schedule;
ii) directly or indirectly, enter into or assume any contract,
agreement, obligation, lease, license or commitment pursuant to which the
aggregate annual obligations or liabilities exceed $5,000 other than with
respect to the purchase of newsprint or which are not cancelable without
penalty upon 90 days notice or less;
iii) incur any management or consulting fee which is not paid
prior to the Closing;
iv) sell, transfer or otherwise dispose of any material asset or
property of the American Publishing Newspapers (other than Excluded American
Publishing Newspapers Assets) except for use of the American Publishing
Inventory in the usual and ordinary course of business;
v) create any Lien on any asset or property or compromise or
cancel any debts or claims relating thereto, other than for fair value and in
the ordinary course of business;
vi) amend, terminate or give notice of termination with respect
to any existing agreement relating to any of the American Publishing
Newspapers, or waive any material rights thereunder; or
vii) fail to pay any accounts payable when due consistent with
past practices.
(d) American Publishing shall promptly disclose to Garden State any
information contained in its representations and warranties or the American
Publishing Disclosure Schedule which, because of an event occurring after the
date hereof, is incomplete or is no longer correct as of all times after the
date hereof until the Closing Date; provided, however, that none of such
disclosures shall be deemed to modify, amend or supplement the representations
and warranties of American Publishing or the American Publishing
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Disclosure Schedule hereto for the purposes of Article IV hereof, unless Garden
State shall have consented thereto in writing.
6.3. Garden State's Obligations. The following are Garden State's
obligations as they relate to Johnstown, The Tribune-Democrat and the
transactions described herein:
(a) Garden State shall give to American Publishing's officers,
employees, attorneys, consultants and accountants reasonable access during
normal business hours to all of the properties, books, contracts, documents,
records and personnel of Johnstown located at Garden State's corporate offices
and shall furnish to American Publishing such information relating thereto as
American Publishing may at any time and from time to time reasonably request.
American Publishing will not have access to any such information or personnel
located at Johnstown's corporate office or at The Tribune-Democrat without
Garden State's prior written consent;
(b) Garden State shall use commercially reasonable efforts (and
American Publishing shall cooperate with Garden State) to obtain all required
consents and/or approvals specified by American Publishing, or alternate
arrangements satisfactory to American Publishing with respect to the
transactions herein contemplated (the "Garden State Consents");
(c) Without the prior written consent of American Publishing, and
without limiting the generality of any other provision of this Agreement,
Johnstown and Garden State shall not, without American Publishing's prior
written consent, do any of the following:
i) incur or commit to incur any capital expenditures in excess
of $10,000 not disclosed in the Garden State Disclosure Schedule;
ii) directly or indirectly, enter into or assume any contract,
agreement, obligation, lease, license or commitment pursuant to which the
aggregate annual obligations or liabilities exceed $25,000 other than with
respect to the purchase of newsprint or which are not cancelable without
penalty upon 90 days notice or less;
iii) incur any management or consulting fee which is not paid
prior to the Closing;
iv) sell, transfer or otherwise dispose of any material asset or
property (other than Excluded Assets) except for
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use of Johnstown Inventory in the usual and ordinary course of business;
v) create any Lien on any asset or property or compromise or
cancel any debts or claims relating thereto, other than for fair value and in
the ordinary course of Johnstown's business;
vi) amend, terminate or give notice of termination with respect
to any existing agreement to which Johnstown is a party, or waive any material
rights thereunder; or
vii) fail to pay any accounts payable when due consistent with
past practices.
(d) Garden State shall promptly disclose to American Publishing any
information contained in its representations and warranties or the Garden State
Disclosure Schedule which, because of an event occurring after the date hereof,
is incomplete or is no longer correct as of all times after the date hereof
until the Closing Date; provided, however, that none of such disclosures shall
be deemed to modify, amend or supplement the representations and warranties of
Garden State or the Garden State Disclosure Schedule hereto for the purposes of
Article V hereof, unless American Publishing shall have consented thereto in
writing.
6.4. Joint Obligations. The following shall apply with equal force to
American Publishing and Garden State.
(a) Without implication that such laws apply to the transactions
contemplated hereby, American Publishing and Garden State shall not comply with
the provisions of the laws of any state relating to bulk sales.
(b) Each party hereto will (i) take all commercially reasonable steps
necessary or desirable, and proceed diligently and in good faith and use all
commercially reasonable efforts, as promptly as practicable to obtain all
consents, approvals or actions of, to make all filings with and to give all
notices to governmental or regulatory bodies required of such parties or their
Affiliates to consummate the transactions contemplated hereby, (ii) provide
such other information and communications to such governmental or regulatory
bodies as such parties or such governmental or regulatory bodies may reasonably
request in connection therewith and (iii) cooperate with each other as promptly
as practicable in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to governmental or regulatory bodies
required of each party or any of its Affiliates to consummate the transactions
contemplated hereby. Each party hereto will provide
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prompt notification to each other party hereto when any such consent, approval,
action, filing or notice referred to in clause (i) above is obtained, taken,
made or given, as applicable, and will advise each other party hereto of any
communications and, unless precluded by law.
ARTICLE VII.
Employee Matters
7.1. Employees; Employee Benefit Arrangements.
(a) As of the Closing Date, Garden State shall employ all of the
American Publishing employees employed by the American Publishing Newspapers
immediately prior to the Closing, including those American Publishing
Newspapers Employees on vacation, leave of absence, disability or sick-leave
(hereinafter collectively referred to as the "American Publishing Newspapers
Employees"). As of the Closing Date, Garden State will assume all of American
Publishing and the American Publishing Sellers' liabilities with respect to the
American Publishing Newspapers Employees and with respect to any dependent or
beneficiary of any American Publishing Newspapers Employee related to salaries,
wages, incentive pay, benefits under all severance and similar programs, and
vacation benefits (including earned, banked or otherwise accrued vacation
benefits), without regard to when such liabilities arose, to the extent such
liabilities are reflected on the American Publishing Final Working Capital
Statement, if they are of the sort required by this Agreement to be reflected
thereon.
(b) Other Employees Benefits. For a period of not less than two years
following the Closing Date, Garden State shall indemnify American Publishing
and the American Publishing Sellers against any failure to provide the American
Publishing Newspapers Employees with benefits (including, without limitation,
welfare benefits) that are comparable, taken as a whole, to the benefits in
effect on the Closing Date.
(c) Credit for Past Service. To the extent that service is relevant
for purposes of eligibility, vesting or benefit accrual under any employee
benefit plan, program or arrangement established or maintained by Garden State
for the benefit of American Publishing Newspapers Employees, such plan, program
or arrangement shall credit such employees or former employees for service on
or prior to the Closing with American Publishing Sellers, or any Affiliate
thereof including the American Publishing Newspapers and Garden State shall
waive any participation requirement, waiting period or pre-existing condition
exclusion in con-
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nection with determining eligibility of the American Publishing Newspapers
Employees. Garden State will also provide COBRA benefits for all former
employees of the American Publishing Newspapers who are receiving COBRA
benefits as of the Closing Date and will provide such benefits to such
individuals for the respective periods in which they are entitled to received
such benefits.
7.2. WARN Act. In the event Garden State does not continue all the
operations of the American Publishing Newspapers and/or does not employ all
employees of the American Publishing Newspapers after the Closing, Garden State
shall be liable and responsible for any notification required to be provided
under the Worker Adjustment and Retraining Notification Act, and Garden State
shall indemnify American Publishing and the American Publishing Sellers for any
claims arising out of a breach of this covenant.
ARTICLE VIII.
Conditions to Closing
8.1. Conditions to American Publishing's Obligations. The obligations of
American Publishing and the American Publishing Sellers to consummate the
transactions contemplated hereby are subject to the fulfillment or waiver of
all of the following conditions on or prior to the Closing Date:
(a) Each and every representation and warranty made by Garden State
shall have been true and correct in all material respects when made and shall
be true and correct in all material respects as if originally made on and as of
the Closing Date;
(b) All obligations of Garden State to be performed hereunder
through, and including on, the Closing Date shall have been performed;
(c) American Publishing and the American Publishing Sellers shall
have received all of the agreements, certificates, documents and items
specified in Sections 8.2 and 9.3 of this Agreement;
(d) All of the American Publishing Consents and all other material
consents of third parties required with respect to the transactions
contemplated hereby shall have been obtained;
(e) No suit, proceeding or investigation shall have been commenced by
any governmental authority or private person on any
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grounds to restrain, enjoin or hinder, or to seek material damages on account
of, the consummation of the transactions contemplated hereby;
(f) Garden State shall have complied with all applicable requirements
of the HSR Act necessary to permit the consummation of the transactions
contemplated by the Agreement as of the Closing Date;
(g) American Publishing shall have completed prior to April 29, 1996
at its sole expense such due diligence investigations of Johnstown, including
but not limited to such environmental assessments as American Publishing deems
appropriate, and an audit of the balance sheet of Johnstown as of June 30,
1995, and American Publishing shall be satisfied, in its good faith discretion,
with respect to the results of such audit and investigations; provided,
however, that no such audit, investigation or assessment shall in any manner be
deemed to relieve Garden State of any obligations with respect to any
warranties, representations, covenants or other undertakings made hereunder or
to be made under this Agreement;
(h) American Publishing shall have obtained final marked commitments
to issue to American Publishing: (i) ALTA owner's policies of title insurance
(with appropriate state endorsements) for the Johnstown Real Estate in coverage
amounts equal to the fair market values of such Johnstown Real Estate, insuring
good and marketable fee simple title to such Johnstown Real Estate; and (ii) if
applicable, leasehold owner's policies of title insurance (with appropriate
state endorsements) in coverage equal to the fair market values of any
leasehold interests in real property held by Johnstown, insuring good title to
any such leases, with mechanic's liens coverage and such endorsements as
American Publishing may have reasonably requested and with exceptions only for
(1) ALTA standard printed exceptions (other than mechanic's and materialmen's
liens and rights of possession), (2) Johnstown Permitted Liens, and (3) other
encumbrances acceptable to American Publishing;
(i) With respect to all parcels of Johnstown Real Estate, American
Publishing shall have received surveys of such property which conform to the
standards set forth in the ALTA/American Congress on Surveying and Mapping
Minimum Standard Detail Requirements for Land Title Surveys and which disclose
no state of facts inconsistent with the representations and warranties of
Garden State set forth in Section 5.20 hereof; and,
(j) There shall not have been any material adverse change in the
business, financial condition, results of operations or prospects of Johnstown
or The Tribune-Democrat.
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8.2. Conditions to Garden State's Obligations. The obligation of Garden
State to consummate the transactions contemplated hereby is subject to the
fulfillment or waiver of all of the following conditions on or prior to the
Closing Date:
(a) Each and every representation and warranty made by American
Publishing shall have been true and correct when made and shall be true and
correct in all material respects as if originally made on and as of the Closing
Date;
(b) All obligations of American Publishing to be performed hereunder
through, and including on, the Closing Date shall have been performed;
(c) Garden State shall have received all of the agreements,
certificates, documents and items specified in Sections 8.1 and 9.2 of this
Agreement;
(d) All of the Garden State Consents and all other consents of third
parties required with respect to the transactions contemplated hereby shall
have been obtained;
(e) No suit, proceeding or investigation shall have been commenced by
any governmental authority or private person on any grounds to restrain, enjoin
or hinder, or to seek material damages on account of, the consummation of the
transactions contemplated hereby;
(f) American Publishing shall have complied with all applicable
requirements of the HSR Act necessary to permit the consummation of the
transactions contemplated by the Agreement as of the Closing Date;
(g) Garden State shall have completed prior to April 29, 1996 at its
sole expense such due diligence investigations of the American Publishing
Newspapers as is customary with respect to transactions of the sort herein
contemplated, including but not limited to such environmental assessments as
Garden State deems appropriate, and Garden State shall be satisfied, in its
good faith discretion, with respect to the results of such investigations;
provided, however, that no such investigation or assessment shall in any manner
be deemed to relieve American Publishing of any obligations with respect to any
warranties, representations, covenants or other undertakings made hereunder or
to be made under this Agreement;
(h) There shall not have been any material adverse change in the
business, financial condition, results of operations
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or prospects of the American Publishing Newspapers considered as a whole.
ARTICLE IX.
Closing
9.1. Form of Documents. At the Closing, the parties shall deliver the
documents, and shall perform the acts, which are set forth in this Article IX.
All documents which American Publishing shall deliver shall be in form and
substance reasonably satisfactory to Garden State and Garden State's counsel.
All documents which Garden State shall deliver shall be in form and substance
reasonably satisfactory to American Publishing and American Publishing's
counsel.
9.2. American Publishing's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Section 8.1 of this Agreement, American
Publishing and the American Publishing Sellers shall execute and/or deliver to
Garden State at the Closing all of the following:
(a) the Additional Cash Consideration, which shall be paid in full in
cash at the Closing;
(b) a certified copy of the charter and by-laws of American
Publishing and each of the American Publishing Sellers;
(c) a certificate of good standing of American Publishing and each of
the American Publishing Sellers, issued not earlier than ten (10) days prior to
the Closing Date by the Secretary of State of Delaware;
(d) an incumbency and specimen signature certificate with respect to
the officers of American Publishing and the American Publishing Sellers
executing this Agreement and American Publishing's and the American Publishing
Sellers' Ancillary Documents on behalf of American Publishing and the American
Publishing Sellers;
(e) a certified copy of resolutions of the board of directors of
American Publishing and each of the American Publishing Sellers, authorizing
the execution, delivery and performance of this Agreement and American
Publishing's and the American Publishing Sellers' Ancillary Documents;
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(f) a closing certificate executed by the Chief Executive Officer of
American Publishing (or any other officer of American Publishing specifically
authorized to do so), on behalf of American Publishing, pursuant to which
American Publishing represents and warrants to Garden State that American
Publishing's and the American Publishing Sellers' representations and
warranties to Garden State are true and correct in all material respects as of
the Closing Date as if then originally made (or, if any such representation or
warranty is untrue in any respect, specifying the respect in which the same is
untrue), that all covenants required by the terms hereof to be performed by
American Publishing and the American Publishing Sellers on or before the
Closing Date, to the extent not waived by Garden State in writing, have been so
performed (or, if any such covenant has not been performed, indicating that
such covenant has not been performed), and that all documents to be executed
and delivered by American Publishing and the American Publishing Sellers at the
Closing have been executed by duly authorized officers of American Publishing;
(g) A certificate of the Chief Financial Officer of American
Publishing, dated as of the Closing Date, stating that there has been no change
in the information disclosed in Section 4.3(b) of the American Publishing
Disclosure Schedule which would have a material adverse effect on the American
Publishing Newspapers, taken as a whole.
(h) bills of sale, executed by the American Publishing Sellers,
conveying all of the American Publishing Inventory, American Publishing
Equipment and other tangible personal property included in the American
Publishing Newspapers Assets to Garden State, free and clear of all Liens other
than American Publishing Permitted Liens;
(i) assignment and assumption agreements duly executed by the
respective American Publishing Sellers;
(j) releases of any Liens other than American Publishing Permitted
Liens on the American Publishing Newspapers Assets, including without
limitation, as applicable, termination statements and releases of security
interests and mortgages and collateral assignments of leases and rents;
(k) a special or limited warranty deed, subject only to American
Publishing Permitted Liens and such exceptions as may be reasonably acceptable
to Garden State and its counsel, with respect to each parcel of the American
Publishing Real Estate;
(l) ALTA extended coverage statements/affidavits for each parcel of
American Publishing Real Estate, and any leasehold interests, if applicable,
executed by an officer of the record
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owner, or holder of the lease, as the case may be, to which the
statements/affidavits relate thereto in form and substance satisfactory to
Garden State's title insurer regarding title, mechanic's liens and such other
customary matters as may be reasonably requested by Garden State or Garden
State's title insurer;
(m) certificates of title or origin (or like documents) with respect
to all vehicles included in the American Publishing Newspapers Assets and other
American Publishing Equipment for which a certificate of title or origin is
required in order for title thereto to be transferred to Garden State; and
(n) an opinion from Kirkpatrick & Lockhart LLP, in the form appended
to this Agreement as Exhibit D.
9.3. Garden State's Deliveries. Subject to the fulfillment or waiver of
the conditions set forth in Section 9.1 of this Agreement, Garden State shall
execute and/or deliver to American Publishing all of the following:
(a) a certified copies of the charter documents and by-laws of Garden
State and Johnstown;
(b) a certificate of good standing of each of Garden State and
Johnstown issued not earlier than ten (10) days prior to the Closing Date by
the Secretary of State of its state of incorporation;
(c) an incumbency and specimen signature certificate with respect to
the officers of Garden State executing this Agreement and Garden State's
Ancillary Documents on behalf of Garden State;
(d) a certified copy of resolutions or consents to action without a
meeting of the board of directors and stockholders of Garden State, authorizing
the execution, delivery and performance of this Agreement and Garden State's
Ancillary Documents;
(e) a closing certificate duly executed by the Chief Executive
Officer of Garden State (or any other officer of Garden State specifically
authorized to do so) on behalf of Garden State, pursuant to which Garden State
represents and warrants to American Publishing that Garden State's
representations and warranties to American Publishing are true and correct as
of the Closing Date as if then originally made (or if any such representation
or warranty is untrue in any respect, specifying the respect in which the same
is untrue), that all covenants required by the terms hereof to be performed by
Garden State on or before the Closing Date, to the extent not waived by
American Publishing in writing, have been so
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performed (or, if any such covenant has-not-been so performed, indicating that
such covenant has not been performed), and that all documents to be executed
and delivered by Garden State at the Closing have been executed by duly
authorized officers of Garden State;
(f) a certificate of the Chief Financial Officer of Garden State,
dated as of the Closing Date, stating that there has been no change in the
information disclosed in Section 5.3 of the Garden State Disclosure Schedule
which would have a material adverse effect on Johnstown;
(g) to the extent obtained, all necessary Garden State Consents or
alternate arrangements with respect thereto, all as reasonably acceptable to
American Publishing; and
(h) assignment and assumption agreements duly executed by Garden
State;
(i) certificates representing the Capital Stock accompanied by
appropriate stock powers duly endorsed in blank and accompanied by any required
Tax stamps;
(j) the original stock books and corporate minutes of Johnstown which
contain the minutes of all meetings, all consents of its directors and
shareholders and all capital stock records;
(k) the resignations, effective as of the Closing Date of each of the
then officers and directors of Johnstown;
(l) releases of all Liens other than Johnstown Permitted Liens,
including without limitation, as applicable, termination statements and
releases of security interests and mortgages and collateral assignment of
leases and rent;
(m) ALTA extended coverage statements/affidavits for each parcel of
Johnstown Real Estate, or any leasehold interests, if applicable, executed by
an officer of Garden State in form and substance satisfactory to American
Publishing's title insurer regarding title, mechanic's liens and such other
customary matters as may be reasonably requested by American Publishing or
American Publishing's title insurer;
(n) an opinion from Verner, Liipfert, Bernhard, McPherson and Hand in
the form appended to this Agreement as Exhibit E; and
(o) documents, in form and substance reasonably acceptable to counsel
for American Publishing and Garden State,
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releasing Johnstown as a party from all tax sharing, management services or
related agreements as of the Closing Date.
ARTICLE X.
Post-Closing Matters
10.1. Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article X.
10.2. Inspection of Records. American Publishing shall deliver to Garden
State at the Closing all of the books, records and Tax filings of American
Publishing and the American Publishing Sellers relating to the American
Publishing Newspapers (other than filings relating to income Taxes), as set
forth in Section 1.2(i) above. Garden State shall keep and make any of such
books, records and Tax filings of American Publishing available for inspection
by American Publishing, or by American Publishing's representatives, for
reasonable business purposes at all reasonable times during normal business
hours, for a seven (7) year period after the Closing Date, with respect to all
transactions occurring prior to and those relating to the Closing and the
historical financial condition, assets, liabilities, results of operations and
cash flows of American Publishing. Garden State shall deliver to American
Publishing at the Closing all of the books and records and Tax filings of
Johnstown. American Publishing shall keep and make any of such books, records
and Tax filings of Johnstown available for inspection by Garden State or by
Garden State's representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a seven (7) year period
after the Closing Date, with respect to all transactions occurring prior to and
those relating to the Closing and the historical financial condition, assets,
liabilities, results of operations and cash flows of Johnstown. As used in this
Section 10.2, the right of inspection includes the right to make extracts or
copies.
10.3. Certain Assignments. Any other provision of this Agreement to the
contrary notwithstanding, this Agreement shall not constitute an agreement to
transfer or assign, or a transfer or assignment of, any claim, contract, lease,
Permit, environmental permit, commitment, or sales order, or any benefit
arising thereunder or resulting therefrom, if an attempt at transfer or
assignment thereof without the consent required or necessary for such
assignment would constitute a breach thereof or in any way adversely affect the
rights of American Publishing or Garden State thereunder. If such a consent or
agreement to transfer or assign
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is not obtained for any reason, American Publishing and Garden State shall
cooperate in any arrangement the affected party may reasonably request to
provide for the benefits under such claim, contract, lease, Permit,
environmental permit, commitment or order.
10.4. Use of Trademarks. Effective as of the Closing, American Publishing,
its subsidiaries and Affiliates shall cease to use and shall not license or
otherwise authorize any third party to use any of the names listed on Exhibit E
hereto or any name, slogan, logo or trademark which is similar or deceptively
similar to any such names. Effective as of the Closing, Garden State, its
subsidiaries and Affiliates shall cease to use and shall not license or
otherwise authorize any third party to use any of the names listed on Exhibit F
hereto or any name, slogan, logo or trademark which is similar or deceptively
similar to such names.
10.5. Collection of Accounts Receivable. Garden State and American
Publishing shall be diligent and use commercially reasonable efforts to collect
for full value all of the accounts receivable transferred to, or placed under
the control of, them, their subsidiaries or Affiliates at Closing. In the event
American Publishing, its subsidiaries or Affiliates shall receive subsequent to
the Closing Date any instrument of payment of any of the American Publishing
Accounts Receivable, American Publishing shall immediately deliver it to Garden
State, endorsed where necessary, without recourse, in favor of Garden State. In
the event Garden State, its subsidiaries or Affiliates shall receive subsequent
to the Closing Date any instrument of payment of any of the Johnstown Accounts
Receivable, Garden State shall immediately deliver it to American Publishing,
endorsed where necessary, without recourse, in favor of American Publishing.
10.6. Transactional Costs/Expenses. Except as otherwise expressly herein
provided, each party shall bear all fees and expenses incurred by such party in
connection with, relating to or arising out of the consummation of the
transactions contemplated hereby, including, without limitation, attorneys',
accountants, and other professional fees and expenses. All applicable sales,
use, bulk sales and real estate transfer taxes will be borne solely by Garden
State with respect to the American Publishing Newspapers Assets and solely by
American Publishing with respect to Johnstown. All applicable costs and
expenses relating to real estate title searches, title insurance premiums and
surveys and environmental assessments will be borne solely by Garden State with
respect to the American Publishing Newspapers Assets and solely by American
Publishing with respect to Johnstown. American Publishing and
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Garden State shall separately pay all fees applicable to such parties as an
acquiring person under the HSR Act.
10.7. Disclosure of Confidential Information. American Publishing shall,
and shall cause its Affiliates to, hold in strictest confidence, and not,
without the prior written approval of Garden State, use for its own benefit or
the benefit of any party other than Garden State or disclose to any person,
firm or corporation other than Garden State (other than as required by law or
regulations or by any recognized stock exchange or market) any confidential
information relating to the American Publishing Newspapers or this Agreement,
except such information as is publicly available. Garden State shall, and shall
cause its Affiliates to, hold in strictest confidence, and not, without the
prior written approval of American Publishing, use for its own benefit or the
benefit of any party other than American Publishing or disclose to any person,
firm or corporation other than American Publishing (other than as required by
law) any confidential information of any kind relating to Johnstown, The
Tribune-Democrat or this Agreement, except such information as is publicly
available prior to the Closing Date.
10.8. Injunctive Relief. American Publishing specifically recognizes that
any breach of Section 10.7 or Section 15.1 by it will cause irreparable injury
to Garden State and that actual damages may be difficult to ascertain, and, in
any event, will be inadequate. Accordingly (and without limiting the
availability of legal or equitable, including injunctive, remedies under any
other provisions of this Agreement), American Publishing agrees that in the
event of any such breach, Garden State shall be entitled to injunctive relief
in addition to such other legal and equitable remedies that may be available.
Garden State specifically recognizes that any breach of Section 10.7 or Section
15.1 by it will cause irreparable injury to American Publishing and that actual
damages may be difficult to ascertain, and, in any event, may be inadequate.
Accordingly (and without limiting the availability of legal or equitable,
including injunctive, remedies under any other provisions of this Agreement),
Garden State agrees that in the event of any such breach, American Publishing
shall be entitled to injunctive relief in addition to such other legal and
equitable remedies that may be available. American Publishing and Garden State
recognize that the absence of a time limitation in Section 10.7 and the time
limitation and geographic scope of the covenants contained Section 15.1,
respectively, are reasonable and properly required for the protection of Garden
State and American Publishing and in the event that such provisions relating to
the geographic scope or limitation or absence thereon is deemed to be
unreasonable by a court of competent jurisdiction, American
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Publishing and Garden State agree and submit to the imposition of such a
geographic scope or time limitation, as the case may be, as said court shall
deem reasonable.
10.9. Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the American Publishing Newspapers Assets to Garden State or the Capital
Stock to American Publishing, on the terms herein contained, and to otherwise
comply with the terms of this Agreement and consummate the transactions
contemplated hereby.
ARTICLE XI.
Certain Tax Matters
11.1. Indemnity.
(a) Garden State and Johnstown shall include the income of Johnstown
on the Garden State Affiliated Group's consolidated federal income Tax Return
and any applicable state income Tax Returns for all periods up to and including
the Closing Date and Garden State will pay any Tax due thereon which is not
reflected as current liabilities in the Johnstown Final Working Capital
Statement. Subject to the provisions of Section 11.1(c), Garden State shall
pay, indemnify, defend and hold harmless American Publishing and Johnstown,
against any and all Taxes not reflected as current liabilities in the Johnstown
Final Working Capital Statement including interest and penalties and any
pending or future tax assessments attributable to Johnstown and not reflected
as current liabilities in the Johnstown Final Working Capital Statement with
respect to any taxable period up to and including the Closing Date. Taxes for
which Garden State shall be liable and for which it shall hold American
Publishing and Johnstown harmless from and against under the preceding sentence
shall include, without limitation, to the extent the same are not reflected as
current liabilities in the Johnstown Final Working Capital Statement, Taxes
with respect to any such taxable year or Tax period (i) the liability for which
arises under Treasury Regulation Sections 1.1502-6 or 1.1502-78 or comparable
provisions of state or local law as a result of Johnstown being included in a
group filing consolidated federal income Tax Returns or combined or unitary
state income Tax Returns or (ii) the liability for which arises because
Johnstown ceases to be a member of a group filing consolidated, combined or
unitary income Tax Returns.
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(b) American Publishing shall include the income of Johnstown on the
American Publishing Affiliated Group's consolidated federal income Tax Return
and any applicable state income Tax Returns for all periods after the Closing
Date and American Publishing will pay any Tax due thereon. Subject to the
provisions of Section 11.1(c), American Publishing and Johnstown shall pay,
indemnify, defend and hold harmless Garden State against all Taxes including
interest and penalties attributable to Johnstown with respect to any taxable
period beginning after the Closing Date, provided, however, that such indemnity
shall not apply to any Tax liabilities of the sort required to be reflected on
the Final Johnstown Working Capital Statement unless those Tax liabilities are
in fact reflected on the Final Johnstown Working Capital Statement.
(c) Any Taxes attributable to Johnstown or its operations for a Tax
period beginning before the Closing Date and ending after the Closing Date
shall be apportioned between Garden State and American Publishing, in the case
of real and personal property Taxes and franchise or other Taxes not based on
gross or net income, on a per diem basis and, in the case of Taxes based on
gross or net income, shall be determined based on the actual operations of
Johnstown during the portion of such period ending on the Closing Date and the
portion of such period beginning the day after the Closing Date. Each such
portion of such period shall be deemed to be a Tax period subject to the
provisions of Section 11.1(a) and Section 11.1(b) above.
(d) Subject to the provisions of Section 11.1(e), American Publishing
and the American Publishing Sellers shall pay, indemnify, defend and hold
harmless Garden State against any and all Taxes, including any interest and
penalties, and any pending or future Tax assessments attributable to the
American Publishing Newspapers and/or the American Publishing Newspapers Assets
with respect to any taxable period up to and including the Closing Date. Garden
State shall pay, indemnify, defend and hold harmless American Publishing and
the American Publishing Sellers against all Taxes including interest and
penalties attributable to the American Publishing Newspapers and/or the
American Publishing Newspapers Assets with respect to any taxable period
beginning after the Closing Date.
(e) Any Taxes attributable to the American Publishing Newspapers
and/or the American Publishing Newspapers Assets for a Tax period beginning
before the Closing Date and ending after the Closing Date shall be apportioned
between Garden State and American Publishing or the American Publishing
Sellers, in the case of real and personal property Taxes and franchise or other
Taxes not based on gross or net income, or a per diem basis and, in the case of
Taxes based on gross or net income, shall be determined based on
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the actual operations of the American Publishing Newspapers and/or the American
Publishing Newspaper Assets during the portion of such period ending on the
Closing Date and the portion of such period beginning the day after the Closing
Date. Each such portion of such period shall be deemed to be a Tax period
subject to the provisions of Section 11.1(d) above.
11.2. Tax Returns. American Publishing and Garden State, as the case may
be, shall file or cause to be filed any federal, state, local or foreign Tax
Returns required to be filed after the Closing Date, other than Tax Returns
which relate to Tax periods ending on or prior to the Closing Date, with
respect to the business, activities or the assets of Johnstown or the American
Publishing Newspapers Assets, respectively, (the "Post-Closing Tax Returns")
and, without limiting Garden State's or American Publishing's obligations set
forth in Section 11.1, each shall pay or cause its subsidiaries or Affiliates
to pay all Taxes shown as due (and not previously paid as estimated taxes) on
such Post-Closing Tax Returns. Any Post-Closing Tax Returns that relate (in
whole or in part) to Tax periods beginning before the Closing Date and ending
after the Closing Date (the "Straddle Returns") shall be prepared as promptly
as possible after the Closing Date, but in no event later than four weeks prior
to the due dates thereof, as such dates may be extended. Immediately after
preparation of the Straddle Returns, American Publishing or Garden State, as
the case may be, shall provide the other with copies of the Straddle Returns.
11.3. Tax Refunds. Any refunds of Taxes that were paid in respect of a Tax
year or Tax period (including a period deemed to be a Tax period under Section
11.1(c)) of Johnstown ending on or before the Closing Date shall be for the
account of Garden State, and any refund of Taxes that were paid in respect of a
taxable year or Tax period (including a period deemed to be a Tax period under
Section 11.1(c)) of Johnstown beginning after the Closing Date shall be for the
account of American Publishing. Any refunds of Taxes that were paid in respect
of a Straddle Return shall be allocated between American Publishing and Garden
State in the same manner as provided in Section 11.1(c) hereof. American
Publishing or Garden State, as the case may be, shall promptly pay the amount
of any such refund to the other party within 15 days after receipt or credit
thereof.
11.4. Carrybacks. Notwithstanding Section 11.3, Johnstown will not carry
back any item of loss, deduction or credit that arises in any taxable period
beginning on or after the Closing Date
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(a "Subsequent Loss") to a Tax Return of Garden State or Johnstown for any
taxable period ending on or before the Closing Date.
11.5. Contests.
(a) If American Publishing or Johnstown becomes aware of any
assessment, official inquiry, examination or proceeding that could result in an
official determination with respect to any Tax for which Garden State could be
liable, American Publishing shall promptly so notify Garden State in writing.
If Garden State becomes aware of any official inquiry, examination or
proceeding that could result in an official determination with respect to Taxes
for which American Publishing or Johnstown could be liable, Garden State shall
promptly so notify American Publishing or Johnstown in writing.
(b) Garden State shall have the right to exercise control over the
contest and/or settlement, in any official inquiry, examination or proceeding,
of any issue that relates to or adversely affects Taxes for which Garden State
would be liable (in whole or in part) to American Publishing; and Garden State
shall pay any expenses incurred by it in connection with such contest. Garden
State shall keep American Publishing informed of any material development with
respect to such inquiry, examination or proceeding that relates to any Tax for
which American Publishing or Johnstown could be liable to Garden State.
American Publishing shall cooperate with Garden State, as Garden State may
reasonably request, in any such inquiry, examination or proceeding, including
the authorization (by power of attorney where appropriate) of representatives
designated by Garden State. Garden State shall not settle or compromise any
such inquiry, examination or proceeding that relates to any Tax for which
American Publishing or Johnstown without the consent of American Publishing or
Johnstown, which consent shall not be unreasonably withheld.
(c) American Publishing shall have the right to exercise control over
the contest and/or settlement, in any official inquiry, examination or
proceeding, of any issue that relates to or adversely affects Taxes for which
American Publishing would be liable (in whole or in part) to Garden State and
American Publishing shall pay any expenses incurred by it in connection with
any such contest. American Publishing shall keep Garden State informed of any
material development with respect to such inquiry, examination or proceeding
that relates to any Tax for which Garden State could be liable. Garden State
shall cooperate with American Publishing, as American Publishing may reasonably
request, in any such inquiry, examination or proceeding, including the
authorization (by power of attorney where appropriate) of representatives
designated by Garden State. American Publishing shall not settle
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or compromise any such inquiry, examination or proceeding that relates to any
Tax for which Garden State could be liable without the consent of Garden State,
which consent shall not be unreasonably withheld.
11.6. Reattribution Election. Garden State or its Affiliates shall not
make the election specified in Treasury Regulation Section 1.1502-20(g) to
reattribute to Garden State or its Affiliates all of the net operating loss
carryovers and net capital loss carryovers attributable to Johnstown to the
extent that the loss realized by Garden State with respect to the disposition
of the Johnstown Capital Stock is disallowed pursuant to Treasury Regulation
Section 1.1502-20(g).
ARTICLE XII.
Indemnification
12.1. General.
(a) The provisions of Article XI shall govern the parties'
indemnification obligations hereunder with respect to Tax matters, except that
Section 12.4 hereunder shall govern procedural matters except insofar as such
matters are addressed in Section 11.5. The provisions of this Article XII shall
govern all other indemnification obligations of the parties hereunder.
(b) From and after the Closing, the parties shall indemnify each
other as provided in this Article XII. For the purposes of this Article XII,
each party shall be deemed to have remade all of its representations and
warranties contained in this Agreement at the Closing with the same effect as
if originally made at the Closing. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies or losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants',
investigators', and experts' fees and expenses sustained or incurred in
connection with the defense or investigation of any such claim.
12.2. Indemnification Obligations of American Publishing. Notwithstanding
any other provision of this Agreement, American Publishing shall defend,
indemnify, save and keep harmless Garden State and its successors and permitted
assigns against and from all
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Damages sustained or incurred by any of them resulting from or arising out of
or by virtue of:
(a) any inaccuracy in or breach of any representation or warranty
made by American Publishing or the American Publishing Sellers in this
Agreement or in the certificates described in Sections 9.2(f) and 9.2(g) of
this Agreement, irrespective of whether known to Garden State as of or prior to
the Closing Date.
(b) any breach by American Publishing or the American Publishing
Seller of, or failure by American Publishing to comply with, any of its
covenants or obligations under this Agreement (including, without limitation,
its obligations under this Article XII);
(c) the failure to discharge when due any of the American Publishing
Excluded Liabilities, or any claim against Garden State with respect to any
American Publishing Excluded Liability; or
(d) without being limited by the foregoing paragraphs (a) through
(c), and without regard to whether any one or more of the items listed in this
paragraph (d) may be disclosed in the American Publishing Disclosure Schedule
or otherwise known to Garden State as of the date hereof or the Closing Date,
and notwithstanding the provisions of Section 2.2 of this Agreement any of the
following matters, except insofar as a liability with respect thereto shall
have been reflected on the American Publishing Estimated or Final Working
Capital Statement, in accordance with the requirements of Exhibit A to this
Agreement:
i) any material violation of, or delinquency with respect to, any
decree, order, arbitration award, law, statute, or regulation in effect on or
prior to the Closing Date, or any material license, American Publishing Permit
or American Publishing Environmental Permit from, any Federal, state or local
governmental authority, to which the properties, assets, personnel or business
activities of the American Publishing Newspapers are subject (or to which
American Publishing, or any subsidiary or Affiliate is subject as it relates to
the properties, assets, personnel or business activities of the American
Publishing Newspapers), including, without limitation, laws, statutes and
regulations relating to occupational health and safety, building codes, zoning,
equal employment opportunities, fair employment practices and discrimination,
other than violations or delinquencies which do not have a material adverse
effect on the assets, liabilities or operations of one or more of the American
Publishing Newspapers, as currently conducted;
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ii) any generation, transportation, storage, treatment or Release
of any Hazardous Material occurring on or prior to the Closing Date (including
without limitation those that result in any Release or treatment of Hazardous
Materials after the Closing Date attributable to such activities occurring
prior to the Closing Date, but excluding any Release which results from any act
or omission of or by Garden State, a subsidiary or Affiliate of Garden State,
or employee, agent, contractor or assign of Garden State or its subsidiary or
Affiliate) regardless of when liability is asserted, at (A) any Facility
relating to any of the American Publishing Newspapers, regardless of whether
American Publishing, or any subsidiary or Affiliate owned, operated or leased
such Facility at the time any such activity occurred, or (B) any American
Publishing Offsite Facility;
iii) any discharges to or from storm, ground or surface waters or
wetlands, and any air emissions or pollution, emanating from any of the
American Publishing Real Estate, which (a) with respect to the real property
and all appurtenances thereto, and improvements thereon described in Section
1.2 of this Agreement, result from or are caused by any activities of American
Publishing or any subsidiary or Affiliate of American Publishing or any events,
conditions or occurrences on or prior to the Closing Date unless such discharge
is a result of any act or omission of or by Garden State, a subsidiary or
Affiliate of Garden State, or employee, agent, contractor or assign of Garden
State or its subsidiary or Affiliate, and (b) with respect to all other real
property leased by any of such parties and relating to any of the American
Publishing Newspapers, and all appurtenances thereto and improvements thereon,
result from or are caused by any activities on or prior to the Closing Date of
any of such parties during the term of any leases with respect thereto or any
events, conditions or occurrences during the terms of such leases;
iv) the exposure of, and resulting consequences to, any persons
to any Hazardous Materials created, generated, processed, handled or
originating on or prior to the Closing Date at a Facility or other site
otherwise used by American Publishing or any subsidiary or Affiliate of
American Publishing in the conduct of the American Publishing Newspapers or
contained in or constituting a part of merchandise sold on or prior to the
closing Date by any such party in connection with the business of any of the
American Publishing Newspapers;
v) any material violation or alleged violation of, or obligation
imposed by, any Environmental Law as a result of activities, events, conditions
or occurrences with respect to the American Publishing Newspapers prior to the
Closing Date, regardless of when the violation or alleged violation or
obligation arises or is asserted other than obligations or violations which do
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not have a material adverse effect on the assets, liabilities or operations of
one or more of the American Publishing Newspapers, as currently conducted; or
vi) any liability disclosed or required to be disclosed in
Sections 4.15(c)(i), (ii), (iii), or (v)- (ix) or 4.16 of the American
Publishing Disclosure Schedule.
American Publishing's obligations under Section 12.2 shall, with respect
to Third Party Claims, apply to all claims with respect to which Garden State
shall have provided American Publishing with a written demand for
indemnification prior to the expiration of the applicable statute of
limitations for the filing of such claims by third parties. With respect to
claims for indemnification under Section 12.2(a) hereof relating to breaches of
American Publishing warranties or representations regarding title to any of the
American Publishing Newspapers Assets set forth in Sections 4.5, 4.19 or 4.20,
there shall be no time limitation for the filing of such claims. With respect
to all other claims for indemnification by Garden State, including, but not
limited to, claims for all other breaches of American Publishing's obligations
under Section 12.2(a) hereof, American Publishing's obligations under this
Section 12.2 shall only apply to claims for which a written demand for
indemnification is provided to American Publishing in accordance with the
provisions of Section 12.4 within two years of the Closing Date.
Notwithstanding anything to the contrary in this Agreement, except as
provided in the next sentence hereof, American Publishing shall not be liable
to Garden State with respect to any claims arising under any provision of this
Agreement other unless the aggregate of all Damages suffered by Garden State,
its subsidiaries and Affiliates under the provisions of the Agreement, in the
aggregate with respect to such claims, exceeds $100,000, and then only to the
extent of the excess of such claims above such $100,000 threshold. The
foregoing sentence shall not apply to claims by Garden State under (a) Article
XI of this Agreement, (b) Section 12.2(a) of this Agreement with respect to
breaches of the warranties and representations set forth in Sections 4.4 or
4.18 of this Agreement, (c) Sections 12.2(d)(ii)-(v) of this Agreement, (d)
Section 12.2(d)(i) of this Agreement, but only with respect to claims relating
to Environmental Permits or Environmental Laws, or (e) Section 12.2(d)(vi) with
respect to any matter disclosed in Section 4.15(c)(i), (ii), (iii) or (v)-(ix)
or 4.16 of the American Publishing Disclosure schedule.
12.3. Indemnification Obligations of Garden State. Notwithstanding any
other provision of this Agreement, Garden State shall defend, indemnify, save
and keep harmless American Publishing and
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its successors and permitted assigns against and from all Damages sustained or
incurred by any of them resulting from or arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation or warranty
made by Garden State in this Agreement or in the certificates described in
Sections 9.3(e) and 9.3(f) of this Agreement irrespective of whether known to
American Publishing as of or prior to the Closing Date.
(b) any breach by Garden State of, or failure by Garden State to
comply with, any of its covenants or obligations under this Agreement
(including, without limitation, its obligations under this Article XII);
(c) Garden State's failure to pay, discharge or perform any of the
American Publishing Assumed Liabilities or any of the liabilities to be assumed
or discharged by Garden State pursuant to Section 3.1 of this Agreement; or
(d) any claims, liabilities, transactions or occurrences affecting
Johnstown, The Tribune-Democrat, and the assets of Johnstown or the Capital
Stock and which relate to or arise from any business, operation or activity
other than Johnstown's operation or ownership of The Tribune-Democrat; or
(e) without being limited by the foregoing paragraphs (a) through
(c), and without regard to whether any one or more of the items listed in this
paragraph (d) may be disclosed in the Garden State Disclosure Schedule or
otherwise known to American Publishing as of the date hereof or the Closing
Date, and notwithstanding the provisions of Section 2.2 of this Agreement:
i) any material violation of, or delinquency with respect to, any
decree, order, arbitration award, law, statute, or regulation in effect on or
prior to the Closing Date, or any material license, Johnstown Permit or
Johnstown Environmental Permit granted from, any Federal, state or local
governmental authority, to which the properties, assets, personnel or business
activities of Johnstown are subject including, without limitation, laws,
statutes and regulations relating to occupational health and safety, building
codes, zoning, equal employment opportunities, fair employment practices and
discrimination, other than violations or delinquencies which do not have a
material adverse effect on the assets, liabilities or operations of Johnstown,
as currently conducted;
ii) any generation, transportation, storage, treatment or Release
of any Hazardous Material occurring on or prior to the Closing Date (including
without limitation those that
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result in any Release or treatment of Hazardous Materials after the Closing
Date) regardless of when liability is asserted, at (A) any Facility relating to
Johnstown, regardless of whether Johnstown or any Affiliate owned, operated or
leased such Facility at the time any such activity occurred, or (B) any
Johnstown Offsite Facility with regard to any Hazardous Materials with which
any of such parties were involved in any way at any time;
iii) any discharges to or from storm, ground or surface waters or
wetlands, and any air emissions or pollution, emanating from any of the
Johnstown Real Estate, which (a) with respect to the real property and all
appurtenances thereto, and improvements thereon described previously in this
Agreement, result from or are caused by any activities of Johnstown or any
Affiliate or any events, conditions or occurrences on or prior to the Closing
Date and (b) with respect to all other real property leased by any of such
parties, and all appurtenances thereto and improvements thereon, result from or
are caused by any activities of any of such parties during the term of any
leases with respect thereto or any events, conditions or occurrences during the
terms of such leases.
iv) the exposure of, and resulting consequences to, any persons
to any Hazardous Materials created, generated, processed, handled or
originating on or prior to the Closing Date at a Facility or other site
otherwise used by Johnstown or any Affiliate in the conduct of the Johnstown's
business or contained in or constituting a part of merchandise sold by any such
party;
v) any material violation or alleged violation of, or obligation
imposed by, any Environmental Law as a result of activities, events, conditions
or occurrences with respect to the operations of Johnstown prior to the Closing
Date, regardless of when the violation or alleged violation or obligation
arises or is asserted, other than violations or obligations which do not have a
material adverse effect on the assets, liabilities or operations of Johnstown,
as currently conducted;
vi) any liability disclosed or required to be disclosed in
Sections 5.18(d)(i), (ii), (iii) or (v)- (ix) or 5.19 of the Garden State
Disclosure Schedule; or
vii) Johnstown's federal net loss carryover as of the Closing
Date being less than $7,300,000, as finally determined upon the filing of
Garden State's consolidate federal tax return for the tax year ending June 30,
1996. For each $1.00 by which Johnstown's federal net loss carryover as of the
Closing Date is less than $7,300,000, Garden State shall reimburse American
Publishing $0.25, simultaneously with Garden State's filing of its
aforementioned tax return.
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Garden State's obligations under this Section 12.3 shall, with respect to
Third Party Claims, apply to all claims with respect to which American
Publishing shall have provided Garden State with a written demand for
indemnification prior to the expiration of the applicable statute of
limitations for the filing of such claims. With respect to claims for
indemnification under Section 12.3(a) hereof relating to breaches of Garden
State's representations or warranties set forth in Section 5.5 of this
Agreement, there shall be no time limitation for the filing of such claims.
With respect to all other claims for indemnification by American Publishing,
including, but not limited to, claims for all other breaches of Garden State's
obligations under Section 12.3(a) hereof, Garden State's obligations under this
Section 12.3 shall only apply to claims for which a written demand for
indemnification is provided to Garden State within two years of the Closing
Date.
Notwithstanding anything to the contrary in this Agreement, except as
provided in the next sentence hereof, Garden State shall not be liable to
American Publishing with respect to any claims arising under any provision of
this Agreement unless the aggregate of all Damages suffered by American
Publishing, its subsidiaries and Affiliates under this Agreement, in the
aggregate with respect to such claims, exceeds $200,000, and then only to the
extent of the excess of such claims above such $200,000 threshold. The
foregoing sentence shall not apply to any claims by American Publishing under
(a) Article VII of this Agreement, (b) Article XI of this Agreement, (c)
Section 12.3(a) of this Agreement with respect to breaches of warranties and
representations set forth in Sections 5.7 or 5.21 of this Agreement, (d)
Sections 12.3(d)(ii)-(v) of this Agreement, (e) Section 12.3(d)(i) of this
Agreement, but only with respect to claims relating to Environmental Permits or
Environmental Laws, (f) Section 12.3(d)(vi) of this Agreement with respect to
any matter disclosed in Sections 5.18(d)(i), (ii), (iii) or (v)-(ix) or 5.19 of
the Garden State Disclosure Schedule, or (f) Section 12.3(d)(vii) of this
Agreement.
12.4. Third Party Claims. Promptly following the receipt of notice of a
Third Party Claim, the party receiving the notice of the Third Party Claim
shall (a) notify the other party in writing at the address set forth in Section
15.9 hereof of its existence setting forth with reasonable specificity the
facts and circumstances of which such party has received notice and (b) if the
party giving such notice is an Indemnified Party, specifying the basis
hereunder upon which the Indemnified Party's claim for indemnification is
asserted. No failure to give notice of a claim shall affect the indemnification
obligations of the Indemnifying Party hereunder, except to the extent that the
Indemnifying Party can demonstrate that such failure materially prejudiced such
Indemnifying Party's ability to successfully defend the matter
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giving rise to the claim. The Indemnified Party may, upon reasonable notice,
tender the defense of a Third Party Claim to the Indemnifying Party. If:
(a) the defense of a Third Party Claim is so tendered and such tender
is accepted without qualification by the Indemnifying Party; or
(b) within thirty (30) days after the date on which written notice of
a Third Party Claim has been given pursuant to this Section 12.4 the
Indemnifying Party shall acknowledge without qualification its indemnification
obligations as provided in this Article XII in writing to the Indemnified
Party;
then, except as hereinafter provided, the Indemnified Party shall not have the
right to defend or settle such Third Party Claim. The Indemnified Party shall
have the right to be represented by counsel at its own expense in any such
contest, defense, litigation or settlement conducted by the Indemnifying Party;
provided that the Indemnified Party shall be entitled to reimbursement therefor
by the Indemnifying Party if the Indemnifying Party shall lose its right to
contest, defend, litigate and settle the Third Party Claim as herein provided.
The Indemnifying Party shall lose its right to defend and settle the Third
Party Claim if it shall fail to diligently contest the Third Party Claim. So
long as the Indemnifying Party has not lost its right and/or obligation to
defend and settle as herein provided, the Indemnifying Party shall have the
right to contest, defend and litigate the Third Party Claim and shall have the
right, in its discretion exercised in good faith, and upon the advice of
counsel, to settle any such matter, either before or after the initiation of
litigation, at such time and upon such terms as it deems fair and reasonable;
provided that in any event the Indemnifying Party shall consult with the
Indemnified Party and all decisions with respect to contesting or settling such
matter shall be made by mutual agreement of the Indemnifying Party and the
Indemnified Party, not to be unreasonably withheld by either. All expenses
(including without limitation attorneys' fees) incurred by the Indemnifying
Party in connection with the foregoing shall be paid by the Indemnifying Party.
Notwithstanding the foregoing, in connection with any settlement negotiated by
an Indemnifying Party, no Indemnified Party shall be required by an
Indemnifying Party to (w) enter into any settlement that does not include as an
unconditional term thereof the delivery by the claimant or Plaintiff to the
Indemnified Party of a release from all liability in respect of such claim or
litigation, (x) enter into any settlement that attributes by its terms
liability to the Indemnified Party, (y) consent to the entry of any judgment
that does not include as a term thereof a full dismissal of the litigation or
proceeding with prejudice or (z) enter into any settlement which would, or
could
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reasonably be expected to, result in or relate to either a nonmonetary
obligation or restriction of any kind whatsoever being imposed upon the
Indemnified Party or otherwise) or Damages other than Damages which are
indemnifiable under this Article XII; provided, however, that the Indemnifying
Party may enter into the settlements described in (w) and (y) above if (1) such
settlement is not in any way materially damaging or harmful to the Indemnified
arty, and (2) the Indemnifying Party agrees to remain liable to the Indemnified
Party for indemnification with respect to such claim indefinitely thereafter.
No failure by an Indemnifying Party to acknowledge in writing its
indemnification obligations under this Article XII shall relieve it of such
obligations to the extent they exist. If an Indemnified Party is entitled to
indemnification against a Third Party Claim, and the Indemnifying Party fails
to accept the defense of a Third Party Claim tendered pursuant to this Section
12.4, or if, in accordance with the foregoing, the Indemnifying Party shall
lose its right to contest, defend, litigate and settle such a Third Party
Claim, the Indemnified Party shall have the right, without prejudice to its
right of indemnification hereunder, in its discretion exercised in good faith
and upon the advice of-counsel, to contest, defend and litigate such Third
Party Claim, and may settle such Third Party Claim, either before or after the
initiation of litigation, at such time and upon such terms as the Indemnified
Party deems fair and reasonable; provided that at least ten (10) days prior to
any such settlement, written notice of its intention to settle is given to the
Indemnifying Party. If, pursuant to this Section 12.4, the Indemnified Party so
defends or (except as hereinafter provided) settles a Third Party Claim, for
which it is entitled to indemnification hereunder, as hereinabove provided, the
Indemnified Party shall be reimbursed by the Indemnifying Party all costs and
expenses reasonably incurred in settling or defending the Third Party claim
(including reasonable attorneys' fees, forthwith following the presentation to
the Indemnifying Party of proper substantiation for such costs and expenses.
ARTICLE XIII.
Effect of Termination/Proceeding
13.1. Right to Terminate. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing by prompt notice
given in accordance with Section 15.3:
(a) by the mutual written consent of American Publishing and Garden
State;
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(b) by either American Publishing or Garden State if the Closing
shall not have occurred on or before June 30, 1996; or
(c) by American Publishing and the American Publishing Sellers on the
one hand or Garden State on the other hand if, prior to the Closing, there has
been a material breach of any material representation, warranty, covenant or
agreement on the part of the non-terminating party and either (i) such breach
has not been substantially cured within a reasonable time after the
non-terminating party has received written notice of such breach from the
terminating party and in any event not later than June 30, 1996 or (ii) the
non-terminating party has not agreed on or before June 30, 1996 to adjust the
amount of the Additional Cash Consideration to be paid at Closing by an amount
sufficient to compensate fully the terminating party for any loss or injury
which may be suffered as a consequence of such breach.
13.2. Remedies. In the event of termination of this Agreement pursuant to
this Article XIII, each party shall immediately thereupon return to the other
party all documentary information relating to such parties, its subsidiaries'
and Affiliates' businesses obtained during the course of this transaction, and
each party, its subsidiaries and Affiliates, shall thereafter refrain from
disclosing any of the information thus returned to any third party. Upon such
return, no party hereto (or any of its officers, directors or Affiliates) shall
have any further liability or obligations to any other party hereto in
connection with this Agreement or the transactions contemplated hereby.
ARTICLE XIV.
Risk of Loss
The risk of loss, prior to the Closing, by fire, earthquake, hurricane or
for any other reason, to the American Publishing Newspapers Assets between the
date of the Agreement and the Closing, shall be upon American Publishing.
American Publishing shall maintain the existing insurance on all such property
at all times prior to the Closing and shall promptly take all reasonable steps
to repair, replace and restore any such property which is lost, destroyed or
damaged prior to the Closing, or at Garden State's option, pay to Garden State
at the Closing the proceeds from insurance claims with respect to such losses.
The risk of loss, prior to the Closing, by fire, earthquake, hurricane or for
any other reason, to the assets of Johnstown between the date of the Agreement
and the Closing, shall be upon Garden State. Garden State shall maintain the
existing insurance on all such assets at
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all times prior to the Closing and shall promptly take all reasonable steps to
repair, replace and restore any property which is lost, destroyed or damaged
prior to the Closing, or at American Publishing's option, pay to American
Publishing at the Closing the proceeds from insurance claims with respect to
such losses.
ARTICLE XV.
Miscellaneous
15.1. Non Competition Covenants.
(a) Garden State, on behalf of itself and all of its Affiliates,
covenants and agrees that it will not, for a period of five (5) years after the
Closing Date, without American Publishing's prior written consent, by itself or
in partnership or in conjunction with any other person, firm, corporation or
other entity or as a management company, agent or consultant of any other
person, firm, corporation or other entity, either directly or indirectly,
undertake or carry on or be engaged or have a financial interest in, or in any
other manner advise or assist any person, firm, corporation or other entity
engaged or interested in, any newspaper publishing business or any other
business involving the printing, publication or distribution of any newspaper,
flyer, shopper, circular or other publication carrying advertising, or any
other business involving the solicitation of local advertising, or any
advertising business or any job printing business located in any county in
which The Tribune-Democrat derives a significant portion of its circulation;
provided, however, that the foregoing provisions shall not apply to the
ownership, directly or indirectly, of not more than five percent (5%) of the
outstanding securities of any corporation which is listed on any recognized
securities exchange or market in Canada or the United States.
(b) American Publishing, on behalf of itself and all of its
Affiliates, covenants and agrees that it will not, for a period of five (5)
years after the Closing Date, without Garden State's prior written consent, by
itself or in partnership or in conjunction with any other person, firm,
corporation or other entity or as a management company, agent or consultant of
any other person, firm, corporation or other entity, either directly or
indirectly, undertake or carry on or be engaged or have a financial interest
in, or in any other manner advise or assist any person, firm, corporation or
other entity engaged or interested in, any newspaper publishing business or any
other business involving the printing, publication or distribution of any
newspaper, flyer, shopper circular or other publication carrying advertising,
or
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any other business involving the solicitation of local advertising, or any
advertising business or any job printing business located in any county in
which any of the American Publishing Newspapers derives a significant portion
of its circulation; provided, however, that the foregoing provisions shall not
apply to the ownership, directly or indirectly, of not more than five percent
(5%) of the outstanding securities of any corporation which is listed on any
recognized securities exchange or market in Canada or the United States.
15.2. Dollar Amounts. Except as expressly indicated, all dollar amounts in
this Agreement are stated in and shall be interpreted to be in United States
dollars.
15.3. Further Assurances. From time to time as and when requested by any
of the parties, or their respective successors or assigns, any of the parties
shall execute and deliver such deeds and other instruments of transfer and
shall take or cause to be taken such further or other actions as shall be
necessary or advisable in order to carry out the purpose and intention of this
Agreement or to vest or perfect in the parties, or to confirm of record or
otherwise to the parties, title to and possession of all of the property,
interests, assets, rights, privileges, franchises, immunities, powers and
purposes of the American Publishing Newspapers or the Capital Stock.
15.4. Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be made, if given, in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 15.4.
15.5. Counterparts. This Agreement may be executed in one or more
counterparts, none of which need contain the signatures of all parties, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
96
<PAGE> 105
15.6. No Third Party Beneficiaries. No person who is not a party to this
Agreement, including without limitation any employee or former employee of the
American publishing Newspapers or Johnstown or any predecessor owner of the
American Publishing Newspapers, or any of the American Publishing Newspapers
Assets, Johnstown, The Tribune- Democrat, or any of the assets of Johnstown,
shall be deemed to be a beneficiary of any provision of this Agreement, and no
such person shall have any claim, cause of action, right or remedy pursuant to
this Agreement.
15.7. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other tribunal
to be invalid, void, unenforceable or against its public or regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
15.8. Publicity. American Publishing and Garden State agree (on behalf of
themselves and their respective controlling persons) not to make any public
disclosures about the existence or contents of this Agreement or the
transactions contemplated hereby without prior notice to and approval of the
other party, except that either party may make any disclosure that it
determines in good faith (after consulting with counsel) is required by
applicable law or regulations (including, without limitation, in connection
with the filings contemplated by the HSR Act) or the requirements of any
recognized securities exchange or market, provided that the parties will use
their best efforts to provide notice to the other parties of any such
requirement.
15.9. Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail, return
receipt requested. Notices delivered by hand, by facsimile or by nationally
recognized private carrier shall be deemed given on the first business day
following receipt; provided, however, that a notice delivered by facsimile
shall only be effective if such notice is also delivered by hand, or deposited
in the United States mail, postage prepaid, registered or certified mail,
return receipt requested, on or before two (2) business days after its delivery
by facsimile. All notices shall be addressed as follows:
97
<PAGE> 106
If to American Publishing or the American Publishing Sellers:
Addressed to:
American Publishing (1991) Inc.
c/o Hollinger International Inc.
401 North Wabash Avenue
Chicago, Illinois 60611
Attn: F. David Radler, President
with a copy to:
American Publishing (1991) Inc.
c/o Hollinger International Inc.
401 North Wabash Avenue
Chicago, Illinois 60611
Attn: Kenneth L. Serota, Esq.
Vice President and Secretary
Facsimile: (312) 321-0629
and
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Attn: Jerry H. Owens, Esq.
Facsimile: (412) 355-6501
If to Garden State:
Addressed to:
Garden State Investments, Inc.
c/o MediaNews Group, Inc.
1560 Broadway, Suite 1485
Denver, Colorado 80202
Attn: W. Dean Singleton, Vice
President, Chief Executive
Officer and President
with a copy to:
Verner, Liipfert, Bernhard,
McPherson & Hand, Chartered
901 15th Street, N.W., Suite 700
Washington, D.C. 20005
Attn: Howell E. Begle, Jr., Esq.
Facsimile: (202) 371-6279
98
<PAGE> 107
and\or to such other respective addresses and/or addressees as may be
designated by notice given in accordance with the provisions of this Section
15.9.
15.10. Entire Agreement. This Agreement, the instruments to be delivered
by the parties pursuant to the provisions hereof, and the Exhibits and
Schedules attached hereto constitute the entire agreement and understanding
between the parties with respect to the transactions contemplated by this
Agreement. Each exhibit hereto, and the American Publishing Disclosure Schedule
and Garden State Disclosure Schedule, shall be considered incorporated into
this Agreement. This Agreement supersedes all prior discussions, negotiations,
agreements and understandings (both written and oral) between the parties with
respect to the transactions contemplated hereby that are not reflected or set
forth in this Agreement or the Exhibits and Schedules attached hereto.
15.11. Survival; Non-Waiver. All representations, warranties and
indemnification obligations under this Agreement shall survive the Closing
regardless of any investigation or lack of investigation by any of the parties
hereto, provided, however, that the representation, warranty and
indemnification obligations under this Agreement shall not extend beyond the
time periods specified in the last paragraph of Sections 12.2 and 12.3 hereof.
In the event of a breach of any representations, warranties or covenants, the
party to whom such representations, warranties or covenants have been made
shall have all rights and remedies for such breach available to it under this
Agreement, American Publishing's Ancillary Documents, Garden State's Ancillary
Documents or otherwise, whether at law or in equity, regardless of any
disclosure to, or investigation made by or on behalf of, such party on or
before the Closing Date. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement or to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, right or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or
waiver had occurred. No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party.
15.12. Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the state of Delaware.
99
<PAGE> 108
15.13. Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their successors, permitted
assigns and legal representatives. Nothing in this Agreement, express or
implied, is intended to confer on any person other than the parties hereto and
their respective successors, permitted assigns and legal representatives any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
15.14. Assignability. This Agreement shall not be assignable by any party
without the prior written consent of the other parties. Notwithstanding the
foregoing, no assignment of this Agreement shall relieve any of the parties
hereto of any of their respective obligations hereunder, including, without
limitation, obligations under Article XI and Article XII hereof.
15.15. Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing that identifies this agreement and is
executed and delivered on behalf of each of the parties hereto.
15.16. Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
100
<PAGE> 109
IN WITNESS WHEREOF, the following parties have executed this Agreement as
of the date first above written:
AMERICAN PUBLISHING (1991) INC.
By:___________________________
Title:________________________
BERKSHIRE NEWSPAPERS, INC.
By:___________________________
Title:________________________
EVENING NEWS COMPANY
By:___________________________
Title:________________________
SIDNEY PUBLISHING COMPANY
By:___________________________
Title:________________________
STERLING PUBLISHING COMPANY
By:___________________________
Title:________________________
GARDEN STATE INVESTMENTS, INC.
By:___________________________
Title: _______________________
101
<PAGE> 110
Exhibit A
CATEGORIES OF CURRENT ASSETS AND
CURRENT AND OTHER LIABILITIES TO BE
REFLECTED ON THE AMERICAN PUBLISHING
ESTIMATED AND FINAL WORKING CAPITAL STATEMENTS
(1) All current assets of the American Publishing Newspapers which are
reflected on the books and records of such entities as of the Closing Date in
accordance with GAAP and which are being transferred to Garden State or its
designees as of such date, other than the excluded assets described in Section
1.3 of this Agreement. Such current assets shall include, but shall not
necessarily be limited to: (a) accounts receivable (less any applicable
reserves/ allowances for doubtful accounts), (b) inventory and (c) prepaid
expenses.
(2) All current liabilities of the American Publishing Newspapers which
are reflected or should be reflected on the books and records of such entities
as of the Closing Date in accordance with GAAP and which are being assumed by
Garden State or its designees as of such date, other than the excluded
liabilities described in Section 2.2 of this Agreement. Such current
liabilities shall include, but shall not necessarily be limited to: (a) trade
accounts payable, (b) accrued expenses, (c) accrued employee compensation and
related payroll taxes, (d) other accrued taxes (other than income or franchise
taxes), (e) accrued vacation benefits, (f) other accrued employee benefits and
(g) unearned subscription income.
(3) The following additional liabilities of the American Publishing
Newspapers, regardless of whether current, as of the Closing Date which are
being assumed by Garden State or its designees as of such date:
(a) All non-competition payments due as of or subsequent to the
Closing Date to Fern Spencer, Robert W. Spencer, Robert W. Spencer, Jr., Sue
Spencer, Robert D. Spencer, James Bzdeck, Sharon Bzdeck, John Schofield and
Dean Schofield, pursuant to agreements described in Section 4.12 of the
American Publishing Disclosure Schedule, except for any portion of such
payments which shall be past due as of the Closing Date. All of such
liabilities shall conclusively be valued in the aggregate at $1,031,706 as of
the Closing Date, for purposes of the Estimated and Final American Publishing
Working Capital Statement, of which $209,212 shall be deemed to relate to the
Fort Morgan Times, $792,214 shall be deemed to relate to the Bridgeton Evening
News and $30,280 shall be deemed to relate to the Julesburg Advocate, and
(b) liabilities in the aggregate amount of $45,000 for remediation of
the various environmental concerns addressed in the April 15, 1996 letter from
HWS Consulting Group, Inc. to MediaNews
<PAGE> 111
Group, a copy of which is appended to this Exhibit, other than those relating
to the potential removal of acoustical ceiling material at the Lamar Daily News
and the Sterling Journal-Advocate.
(4) The reserves for doubtful accounts to be reflected in the Johnstown
Estimated and Final Working Capital Schedules shall be calculated consistently
with the following reserves determined as of March 31, 1996 for the American
Publishing Newspapers:
<TABLE>
<S> <C>
North Adams $ 64,096
Bridgeton $ 247,000
Ft. Morgan $ 11,000
Sterling $ 3,500
Lamar $ 1,623
Sidney $ 5,756
Julesburg $ 2,106
Akron $ 2,500
Brush $ 3,702
---------
$ 341,283
</TABLE>
The corresponding reserves actually reflected in the books and records of the
American Publishing Newspapers, as of March 31, 1996, for comparative purposes
are as follows:
<TABLE>
<S> <C>
North Adams $ 18,381
Bridgeton $ 121,835
Fort Morgan $ 7,452
Sterling $ 2,583
Lamar $ 1,623
Sidney $ 5,756
Julesburg $ 2,106
Akron $ 966
Brush $ 3,702
---------
$ 164,403
</TABLE>
103
<PAGE> 112
Exhibit B
CATEGORIES OF CURRENT ASSETS AND
CURRENT AND OTHER LIABILITIES TO BE
REFLECTED ON THE JOHNSTOWN ESTIMATED
AND FINAL WORKING CAPITAL STATEMENTS
(1) All current assets of Johnstown which are reflected on/in the books
and records of Johnstown as of the Closing Date in accordance with GAAP. Such
current assets shall include, but shall not necessarily be limited to: (a) all
cash, cash equivalents, bank account balances and related deposits, (b)
accounts receivable (less any applicable reserves and/or allowances for
doubtful accounts), (c) inventory, (d) prepaid expenses, (e) the net present
value of the insurance policies relating to Johnstown's salary continuation
obligations to Charles J. Hipp, Mortin H. Robbins, Richard H. Mayer, John G.
Hudson, D. Dwight Lehman, M. Wayne Sherbin, George Roberts and Pamela Mayer
pursuant to various of the contracts described in Section 5.15 and/or 5.18 of
the Garden State Disclosure Schedule (the "Johnstown Salary Continuation
Obligations") (i.e., the policies' present cash value as of the Closing Date,
less the accumulated policy loans as of such date) and (f) the value of prepaid
pension benefits, calculated in the manner reflected in the Johnstown financial
statements identified and described in Section 5.3 of the Garden State
Disclosure Schedule, provided, however, that the value thereof, as of the
Closing Date, shall not, as reflected in the Johnstown Estimated and Final
Working Capital Statement, exceed the lesser of (i) the excess of the fair
market value as of the Closing Date of the assets of The Johnstown Publishing
Company Bargained and Non-Bargained Pension Plans (the "Plans") over the
present value, of all accumulated benefits under those Plans as of the Closing
Date, as determined by the Plan's actuaries or (ii) the excess of the present
value as of the Closing Date of the Johnstown Salary Continuation Obligations,
calculated as described in (3) below, over the net present value of the
insurance policies relating to such obligations, as described in clause (e)
above.
(2) All current liabilities of Johnstown which are reflected or should be
reflected on the books and records of Johnstown as of the Closing Date in
accordance with GAAP. Such current liabilities shall include, but shall not
necessarily be limited to: (a) trade accounts payable, (b) accrued expenses,
(c) accrued employee compensation and related payroll taxes, (d) other accrued
taxes (other than income or franchise taxes), (e) accrued vacation benefits,
(f) other accrued employee benefits and (g) unearned subscription revenues.
(3) The present value of the Johnstown Salary Continuation Obligations as
of the Closing Date, calculated in the same manner as reflected in the
Johnstown financial statements described in Section 5.3 of the Garden State
Disclosure Schedule.
<PAGE> 113
EXHIBIT C
CERTAIN DEFINITIONS
"ABC" means the Audit Bureau of Circulations, Inc.
"ADA" means the Americans with Disabilities Act, 42 U.S.C. 1201 et seq.
"Additional Cash Consideration" shall have the meaning specified in Section
3.3.
"Affiliate" means any person or entity which controls a party to this
Agreement, which that party controls, or which is under common control
with that party. "Control" means the power, direct or indirect, to direct
or cause the direction of the management and policies of a person or
entity through voting securities, contracts or otherwise.
"Agreement" shall have the meaning specified in the introductory paragraph to
this Agreement.
"American Publishing" shall have the meaning specified in the introductory
paragraph to this Agreement.
"American Publishing Accounts Receivable" shall have the meaning specified in
Section 1.2(d).
"American Publishing Affiliated Group" shall have the meaning specified in
Section 4.4.
"American Publishing Assumed Liabilities" shall have the meaning specified in
Section 2.1.
"American Publishing Consents" shall have the meaning specified in Section
6.2(b).
"American Publishing Current Assets" shall have the meaning set forth in
Section 3.4(a).
"American Publishing Current and Other Liabilities" shall have the meaning set
forth in Section 3.4(a).
"American Publishing Delivery Contracts" shall have the meaning set forth in
Section 4.15.
"American Publishing Disclosure Schedule" shall have the meaning set forth in
Article 4.
"American Publishing Environmental Permits" means licenses, permits,
registrations, governmental approvals, agreements and consents which are
required under or are issued pursuant to Environmental Laws and are
necessary to the current operation of any American Publishing Newspapers.
"American Publishing Equipment" shall have the meaning set forth in Section
1.2(b).
<PAGE> 114
"American Publishing Excluded Liabilities" shall have the meaning set forth in
Section 2.2.
"American Publishing Financial Statements" shall have the meaning set forth in
Section 4.3(b).
"American Publishing Insurance Policies" shall have the meaning set forth in
Section 1.2(h).
"American Publishing Intellectual Property" shall have the meaning set forth in
Section 1.2(f).
"American Publishing Inventory" shall have the meaning set forth in Section
1.2.
"American Publishing Newspapers" shall have the meaning assigned to such term
in the recitals hereto.
"American Publishing Newspapers Assets" shall have the meaning specified in the
recitals.
"American Publishing Newspaper Employees" shall have the meaning set forth in
Section 7.1(a)
"American Publishing Newspapers Excluded Assets" shall have the meaning set
forth in Section 1.3.
"American Publishing Offsite Facility" means any Facility which is not
presently, and has not heretofore been, owned, leased or operated by
American Publishing Sellers or the American Publishing Newspapers.
"American Publishing Required Permits" shall have the meaning specified in
Section 4.14.
"American Publishing Permitted Liens" shall mean the Liens listed in Section
4.5(b) or 4.5(c) of the American Publishing Disclosure Schedule.
"American Publishing Personal Property Leases" shall have the meaning specified
in Section 1.2(n).
"American Publishing Premises" shall have the meaning specified in Section
4.27.
"American Publishing Prepaids" shall have the meaning specified in Section
1.2(j).
"American Publishing Real Estate" shall have the meaning specified Section
1.2(c).
"American Publishing Trademarks" shall have the meaning specified in Section
4.20(a).
"American Publishing Working Capital Statement" shall have the meaning set
forth in Section 3.4(a).
<PAGE> 115
"American Publishing's Ancillary Documents" shall have the meaning specified in
Section 4.1(c).
"American Publishing's Records" shall have the meaning specified in Section
1.2(i).
"American Publishing Sellers" shall have the meaning specified in the
introductory paragraph to this Agreement.
"American Publishing Sellers' Agents or Affiliates" shall have the meaning
specified in Section 4.18.
"Benefit Plan" has the meaning set forth in Section 5.17.
"Berkshire" shall have the meaning set forth in the introductory paragraph
Agreement.
"Capital Stock" shall have the meaning specified in the recitals of this
Agreement.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 et seq., as amended and existing as of
the date of closing.
"Closing" shall have the meaning specified in Section 3.1.
"Closing Date" shall have the meaning specified in Section 3.1.
"COBRA" shall have the meaning specified in Section 5.17(e).
"Code" shall have the meaning specified in Section 5.17(a).
"Contract" shall have the meaning set forth in Section 4.12.
"Damages" shall have the meaning specified in Section 12.1.
"Defined Benefit Plan" has the meaning set forth in Section 5.17(a).
"Due Date" shall have the meaning specified in Sections 3.4(b) and 3.5(b).
"Employee Benefit Plans" shall have the meaning specified in Section 5.17(a).
"Environment" means any surface water, groundwater, drinking water supply, land
surface or subsurface strata, or ambient air, including, without
limitation, any indoor location.
"Environmental Laws" means all Federal, state and local statutes, regulations,
ordinances, rules, regulations and policies, all court orders and decrees
and arbitration awards, and the common law as interpreted or existing as
of the date of Closing, which pertain to environmental matters or
contamination of any type whatsoever. Environmental Laws include, without
limitation, those relating to: manufacture, processing, use, distribution,
treatment, storage, disposal,
<PAGE> 116
generation, transportation or cleanup of Hazardous Materials; air, surface
or ground water or noise pollution,Releases; protection of wildlife,
endangered species, wetlands, and natural resources; storage tanks; health
and safety of employees and other persons; and notification requirements
relating to the foregoing.
"ERISA" shall have the meaning specified in Section 5.17(a).
"ERISA Affiliate" shall have the meaning specified in Section 5.17(a).
"Estimate Date" shall have the meaning specified in Sections 3.4(a) and 3.5(a).
"Estimated American Publishing Working Capital Deficiency" shall have the
meaning specified in Section 3.4.
"Estimated American Publishing Working Capital Excess" shall have the meaning
specified in Section 3.4(a).
"Estimated American Publishing Working Capital Statement" shall have the
meaning specified in Section 3.4.
"Estimated Johnstown Working Capital Deficiency" shall have the meaning
specified in Section 3.5(a).
"Estimated Johnstown Working Capital Excess" shall have the meaning specified
in Section 3.5(a).
"Estimated Johnstown Working Capital Statement" shall have the meaning
specified in Section 3.5(a).
"Evening News" shall have the meaning set forth in the introductory paragraph
Agreement.
"Exon-Florio Act" shall have the meaning set forth in Section 4.1(e).
"Facility" means any facility as defined in CERCLA.
"Final American Publishing Working Capital Deficiency" shall have the meaning
specified in Section 3.4(b).
"Final American Publishing Working Capital Excess" shall have the meaning
specified in Section 3.4(b).
"Final American Publishing Working Capital Statement" shall have the meaning
specified in Section 3.4(b).
"Final Johnstown Working Capital Deficiency" shall have the meaning specified
in Section 3.4(b).
<PAGE> 117
"Final Johnstown Working Capital Excess" shall have the meaning specified in
Section 3.4(b).
"Final Johnstown Working Capital Statement" shall have the meaning specified in
Section 3.4(b).
"GAAP" shall mean generally accepted accounting principles in effect at the
date when applied, consistent with prior periods.
"Garden State" shall have the meaning specified in the introductory paragraph
to this Agreement.
"Garden State Affiliated Group" shall have the meaning set forth in Section
5.7(g).
"Garden State Consents" shall have the meaning specified in Section 6.3(b).
"Garden State Disclosure Schedule" shall have the meaning set forth in Article
V.
"Garden State's Agents or Affiliates" shall have the meaning set forth in
Section 5.21(b).
"Garden State's Ancillary Documents" shall have the meaning set forth in
Section 5.1(c).
"Hazardous Materials" means: pollutants, contaminants, pesticides, radioactive
substances, solid wastes or hazardous or extremely hazardous substances,
special, dangerous or toxic wastes, substances, chemicals or materials as
defined or regulated by any Environmental Law, including without
limitation all pollutants, contaminants, hazardous, dangerous or toxic
chemical materials, wastes or any other substances which could pose a
hazard to the environment or the health and safety of any person.
"HSR" Act" shall have the meaning specified in Section 4.2(a).
"Indemnified Party" means a party entitled to indemnification under this
Agreement.
"Indemnifying Party" means a party from whom indemnification is sought under
this Agreement.
"Johnstown" shall have the meaning specified in the recitals to this Agreement.
"Johnstown Current Assets" shall have the meaning set forth in Section 3.5(a).
"Johnstown Current and Other Liabilities" shall have the meaning set forth in
Section 3.5(a).
"Johnstown Equipment" shall have the meaning set forth in Section 5.2.
<PAGE> 118
"Johnstown Environmental Permits" means licenses, permits, registrations,
governmental approvals, agreements and consents which are required under
or are issued pursuant to Environmental Laws and are necessary to the
current operation of Johnstown or The Tribune-Democrat.
"Johnstown Financial Statements" shave have the meaning set forth in Section
5.3(b).
"Johnstown Intellectual Property" shall have the meaning set forth in Section
5.23(a).
"Johnstown Inventory" shall have the meaning set forth in Section 5.9.
"Johnstown Permitted Liens" shall mean with respect to Johnstown liens for
current real or personal Property Taxes not due and payable as of the
Closing and worker's, carrier's and materialman's liens and encumbrances
that are immaterial in character, amount and extent, and which do not
detract from the value or interfere with the present or proposed use of
the properties they affect.
"Johnstown Plan" and collectively "Johnstown Plans" has the meaning set forth
in Section 5.17.
"Johnstown Premises" shall have the meaning set forth in Section 5.29.
"Johnstown Real Estate" shall have the meaning set forth in Section 5.22.
"Johnstown Trademarks" shall have the meaning set forth in Section 5.23(a).
"Liens" shall mean any lien, security interest, mortgage, restriction, pledge,
option, lease or sublease, claim, easement, encroachment or encumbrance.
"Multiemployer Plan" shall have the meaning assigned to such term in ERISA.
"PBGC" shall have the meaning specified in Section 5.17(f).
"Post Closing Tax Returns" shall have the meaning set forth in Section 11.2.
"Qualified Plan" has the meaning set forth in Section 5.17(a).
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6902 et
seq., as amended and existing as of the date of closing.
<PAGE> 119
"Release" means any spill, discharge, leak, emission, escape, injection,
dumping, disposal or other release or threatened release of any Hazardous
Materials into the environment other than a governmental permitted
release, whether or not notification or reporting to any governmental
agency was or is required, including, without limitation, any Release
which is subject to CERCLA.
"Schedule 4.25 Asset" shall have the meaning specified in Section 4.25.
"Schedule 5.29 Asset" shall have the meaning specified in Section 5.29.
"Sidney" shall have the meaning set forth in the introductory paragraph
Agreement.
"Sterling" shall have the meaning set forth in the introductory paragraph
Agreement.
"Storage Tanks" means (a) underground storage tanks (as defined in RCRA and
including tanks used for storing heating oil) and (b) above-ground storage
tanks which have a capacity of 100 gallons or more.
"Straddle Returns" shall have the meaning set forth in Section 11.2.
"Subsequent Loss" shall have the meaning set forth in Section 11.4.
"Tax" or "Taxes" shall mean all taxes and other charges imposed by any
governmental authority, together with any interest or any penalty related
thereto whether disputed or not.
"Tax Assets" shall mean all Taxes receivable from a governmental authority and
all Tax refunds receivable from a governmental authority (but not
including prepaid Taxes)
"Tax Return" shall mean all returns, declarations, reports, claims for refund,
or information returns or statements, including any schedules or
attachments thereto, and including any amendments thereof relating to any
Tax.
"Territory" shall have the meaning set forth in Section 15.1(a) [also 15.1(b)].
"The Tribune-Democrat" shall have the meaning specified in the recitals to this
Agreement.
"Third Party Claims" shall mean any claims for Damages or for equitable relief
which are asserted or threatened by a party other than the parties hereto,
their successors and permitted assigns, against any Indemnified Party or
to which an Indemnified Party is subject.
"Warn Act" shall have the meaning set forth in Section 4.23.
<PAGE> 120
"Welfare Plan" shall have the meaning assigned to such term in ERISA.
<PAGE> 1
EXHIBIT 2.2
AGREEMENT
DATED AS OF APRIL 30, 1996
BY AND AMONG
GARDEN STATE INVESTMENTS, INC.
AND
THE DENVER POST CORPORATION
FOR THE SALE/PURCHASE
OF
THE CAPITAL STOCK
OF
EASTERN COLORADO PUBLISHING COMPANY
VLDC01-102525.2
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
R E C I T A L S .................................................... 1
Section 1. Purchase and Sale of Shares ..................... 2
Section 1.1. Purchase and Sale of Shares ..................... 2
Section 1.2. Payment of Purchase Price ....................... 2
Section 1.3. Working Capital Adjustment ...................... 2
Section 2. The Closing ..................................... 3
Section 2.1. The Closing ..................................... 3
Section 2.2. Deliveries at Closing ........................... 3
Section 3. Representations and Warranties .................. 3
Section 3.1. Representations and Warranties of the Seller .... 3
Section 3.1.1. Good Standing ................................... 3
Section 3.1.2. Authorization of Transaction .................... 3
Section 3.1.3. The Shares ...................................... 4
Section 3.1.4. 4
Section 3.2. Representations and Warranties of the Buyer ..... 4
Section 3.2.1. Organization of Buyer ........................... 4
Section 3.2.2. Authorization of Transaction .................... 4
Section 3.2.3. No Distribution ................................. 5
Section 3.2.4. No Broker or Finder Fee ......................... 5
Section 4. Remedies for Breaches of This Agreement ......... 5
Section 4.1. Survival ........................................ 5
Section 4.2. Indemnification By Buyer ........................ 5
Section 4.3. Indemnification by Seller ....................... 5
Section 5. Conditions to Obligations of the Parties ........ 5
Section 5.1. Conditions to Obligation of the Buyer. 5
Section 5.1.1. Absence of Proceedings .......................... 6
Section 5.1.2. Board of Directors Approval ..................... 6
Section 5.1.3. Incumbency Certificate .......................... 6
Section 5.2. Conditions to Obligation of the Seller .......... 6
Section 5.2.1. Absence of Proceedings .......................... 6
Section 5.2.2. Board of Directors Approval ..................... 6
Section 5.2.3. Incumbency Certificate .......................... 6
Section 6. Miscellaneous ................................... 7
Section 6.1. Indemnification Rights of Seller Pursuant
to Section 12.2 of the American
Publishing Exchange Agreement ................. 7
Section 6.2. Entire Agreement ................................ 7
</TABLE>
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<TABLE>
<S> <C>
Section 6.3. Further Assurances .............................. 7
Section 6.4. Succession and Assignment ....................... 7
Section 6.5. Counterparts/Facsimile Signatures ............... 7
Section 6.6. Headings ........................................ 7
Section 6.7. Notices ......................................... 7
Section 6.8. Governing Law ................................... 8
Section 6.9. Amendments and Waivers .......................... 8
Section 6.10. Severability .................................... 9
Section 6.11. Specific Performance ............................ 9
</TABLE>
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<PAGE> 4
STOCK PURCHASE AGREEMENT
This Agreement is entered into this 30th day of April, 1996 by and
between Garden State Investments, Inc., a Delaware corporation (the "Seller")
and the Denver Post Corporation, a Colorado corporation (the "Buyer").
WHEREAS, Seller is the owner of all of the issued and outstanding
capital stock of a newly formed corporation, Eastern Colorado Publishing
Company, a Delaware corporation ("Eastern Colorado" and the "Shares"); and,
WHEREAS, Seller is a party to a certain agreement dated as of April ___,
1996 by and among Seller, American Publishing (1991) Inc., a Delaware
corporation ("American Publishing"), Sterling Publishing Company, a Delaware
corporation and certain other parties (the "American Publishing Exchange
Agreement), a copy of which is appended to this Agreement as Attachment A
hereto; and,
WHEREAS, pursuant to the American Publishing Exchange Agreement, Seller
has this date caused to be assigned and transferred to Eastern Colorado
substantially all of the assets of the Journal Advocate, the Fort Morgan Times
and The Lamar Daily News, daily newspapers published, respectively, in
Sterling, Fort Morgan and Lamar, Colorado, and the Julesberg Advocate, Akron
News-Reporter and the Brush News-Tribune weekly newspapers published,
respectively, in Julesberg, Akron and Brush, Colorado and the Sidney Telegraph,
a daily newspaper published in Sidney, Nebraska, together with various related
liabilities (the "Newspapers), all as more fully described in the American
Publishing Exchange Agreement; and,
WHEREAS, Buyer is this date desirous of purchasing from Seller all of
Seller's rights, title and interest in all of the outstanding capital stock of
Eastern Colorado, for a purchase price of Fifteen Million Five Hundred Thousand
Dollars ($15,500,000), subject to adjustment, as hereinafter provided; and,
WHEREAS, Seller is this date desirous of consummating such sale, upon
the terms and conditions hereinafter set forth;
NOW THEREFOR, the parties do hereby agree as follows:
<PAGE> 5
Section 1. Purchase and Sale of Shares
Section 1.1. Purchase and Sale of Shares. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to purchase from the Seller, and
the Seller agrees to sell to the Buyer, all of the Shares for an aggregate
purchase price of Fifteen Million Five Hundred Thousand Dollars ($15,500,000),
subject to adjustment as hereinafter provided (the "Purchase Price").
Section 1.2. Payment of Purchase Price. The Purchase Price for the Shares
shall be paid in full at the Closing (as hereinafter defined) to the Seller by
wire transfer to such bank as the Seller designates in writing to the Buyer
prior to the Closing.
Section 1.3. Working Capital Adjustment.
(a) Not later than three (3) business days before the Closing Date,
Seller shall deliver to Buyer an estimated working capital statement for each
of the Newspapers (the "Estimated Working Capital Statements") which shall be
identical to the Estimated American Publishing Working Capital Statements for
such Newspapers received by Seller from American Publishing pursuant to Section
3.4(a) of the American Publishing Exchange Agreement. In the event that the
aggregate value of the current assets reflected in all of the Estimated Working
Capital Statements exceeds the aggregate value of all of the liabilities
reflected in all of such Statements, the Purchase Price payable at the Closing
shall be increased by the amount of such excess. Conversely, in the event that
the aggregate value of all of the liabilities reflected in all of such
Statements exceeds the aggregate value of all of the current liabilities
reflected in all of such Statements, then the Purchase Price payable at the
Closing shall be decreased by the amount of such excess.
(b) Not later than three (3) business days following Seller and
American Publishing agreeing upon (or otherwise resolving any dispute which may
arise with respect to) the Final American Publishing Working Capital Statements
for each of the Newspapers (as such term is defined in Section 3.4(b) of the
American Publishing Exchange Agreement, Seller shall deliver to Buyer a final
working capital statement for each of the Newspapers (the "Final Working
Capital Statements") which shall be identical to the Final American Publishing
Working Capital Statements for such Newspapers which Seller shall have received
from American Publishing pursuant to Section 3.4(b) of the American Publishing
Exchange Agreement. Within three (3) business days following the delivery of
such Statements, to the extent the aggregate working capital for the Newspapers
reflected in all of the Final Working Capital Statements exceeds the aggregate
working capital for the Newspapers reflected in all of the Estimated Working
Capital Statements for the Newspapers , Buyer shall, within three (3)
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<PAGE> 6
business days of its receipt of the Final Working Capital Statement pay to
Seller in cash or its equivalent the full amount of such excess. Conversely, to
the extent the aggregate working capital for the Newspapers reflected in all of
the Estimated Working Capital Statements exceeds the aggregate working capital
for the Newspapers reflected in all of the Final Working Capital Statements,
upon Seller's delivery of the Final Working Capital Statement, Seller shall pay
to Buyer in cash or its equivalent the full amount of such excess.
Section 2. The Closing.
Section 2.1. The Closing. The Closing shall take place at the offices of
Kirkpatrick & Lockhart LLP, 1231 Avenue of the Americas, New York, New York
10020-1104, at 10 o'clock a.m. on April 30, 1996, or at such other time and
place to which the Parties agree (the "Closing Date").
Section 2.2. Deliveries at Closing. At the Closing (i) the Seller will
deliver to the Buyer the various certificates, instruments and documents
referred to in Section 5.1 hereof, stock certificates evidencing the Shares,
duly endorsed to the Buyer or accompanied by appropriate duly executed stock
powers, and (ii) the Buyer will deliver to the Seller the various certificates,
instruments and documents referred to in Section 5.2 hereof, together with the
Purchase Price.
Section 3. Representations and Warranties.
Section 3.1. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer that the statements contained in this
Section 3.1 are correct and complete as of the date hereof.
Section 3.1.1. Good Standing. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Section 3.1.2. Authorization of Transaction. The Seller has full corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally binding
obligation of the Seller, enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally. Except as disclosed in Schedule 3.1.2 hereto, the
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any
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<PAGE> 7
government or governmental agency or other person or entity in order to
consummate the transactions contemplated by this Agreement.
Section 3.1.3. The Shares.
(a) The Seller holds of record and owns beneficially the Shares set
forth herein, free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act of 1933, as amended, and state securities
laws), claims, taxes, security interests, liens generally, options, warrants,
rights, contracts, calls, commitments, and demands.
(b) The Seller is not a party to, any option, warrant, right,
contract, call, put, or other agreement or commitment providing for the
disposition or acquisition of any capital stock of Eastern Colorado.
(c) At the Closing, the Seller will transfer to the Buyer good and
marketable title to the Shares, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act of 1993, and state
securities laws), and claims, taxes, security interests, liens generally,
options, warrants, rights, contracts, calls, commitments and demands created by
or arising through the Seller.
Section 3.1.4. The Seller has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could become obligated.
Section 3.2. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the statements contained in this
Section 3.2 are correct and complete as of the date hereof.
Section 3.2.1. Organization of Buyer. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado.
Section 3.2.2. Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Buyer, enforceable in accordance with its terms, except as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles relating to or limiting creditors' rights
generally. Except for such as have been obtained, Buyer need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or
4
<PAGE> 8
governmental agency or other person or entity in order to consummate the
transactions contemplated by this Agreement.
Section 3.2.3. No Distribution. The Buyer is not acquiring the Shares with
a view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act; provided, however, that nothing in this
Agreement shall restrict any rights of the Buyer to assign or transfer the
Shares to any person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Buyer (an "Affiliate").
Section 3.2.4. No Broker or Finder Fee. The Buyer has no liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which the Seller
could become obligated.
Section 4. Remedies for Breaches of This Agreement.
Section 4.1. Survival. All of the representations, warranties and
covenants of the Parties contained in this Agreement shall survive the Closing
(even if the damaged Party knew or had reason to know of any misrepresentation
or breach of warranty at the time of Closing and elected to proceed with the
Closing notwithstanding such knowledge) and continue in full force and effect.
Section 4.2. Indemnification By Buyer. The Buyer hereby agrees to
indemnify and hold the Seller harmless from and against any damage to the
Seller resulting from any material inaccuracies in any representation or
warranty or covenant or breach of any covenant made herein by the Buyer,
including all actions, suits, judgments, costs and legal and accounting
expenses incident to any of the foregoing.
Section 4.3. Indemnification by Seller. The Seller hereby agrees to
indemnify and hold the Buyer harmless from and against any damage to the Buyer
resulting from any material inaccuracies in any representation or warranty or
covenant or breach of any covenant made herein by the Seller, including all
actions, suits, 31 judgments, costs and legal and accounting expenses incident
to any of the foregoing.
Section 5. Conditions to Obligations of the Parties.
Section 5.1. Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions contemplated herein is subject to
satisfaction of the following conditions:
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<PAGE> 9
Section 5.1.1. Absence of Proceedings. No action, suit, or proceeding
brought by any third party shall be pending before any court or quasi-judicial
or administrative agency of any federal, state, local, or foreign jurisdiction
(A) seeking to enjoin or prevent consummation of any of the transactions
contemplated by this Agreement, (B) seeking to cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, or (C)
challenging in any material respect the right of the Buyer to own, operate or
control the Shares or Eastern Colorado (and no such judgment, order, decree,
stipulation, injunction or charge shall be in effect).
Section 5.1.2. Board of Directors Approval. The Seller shall have
delivered to the Buyer a copy of the resolutions of the Board of Directors or
Executive Committee of the Seller authorizing the transactions contemplated by
this Agreement, which resolutions shall be certified by an officer of the
Seller.
Section 5.1.3. Incumbency Certificate. The Seller shall have delivered to
the Buyer a Certificate of Incumbency with respect to the Seller's officers
executing this Agreement.
Section 5.2. Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions contemplated herein is subject to
satisfaction of the following conditions:
Section 5.2.1. Absence of Proceedings. No action, suit, or proceeding
brought by any third party shall be pending before any court or quasi-judicial
or administrative agency or any federal, state, local, or foreign jurisdiction
(A) seeking to enjoin or prevent consummation of any of the transactions
contemplated by this Agreement, or (B) seeking to cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such judgment, order, decree, stipulation, injunction, or charge shall be in
effect).
Section 5.2.2. Board of Directors Approval. The Buyer shall have delivered
to the Seller a copy of the resolutions of the Board of Directors or the
Executive Committee of the Buyer authorizing the transactions contemplated
pursuant to this Agreement, which resolutions shall be certified by an officer
of the Buyer.
Section 5.2.3. Incumbency Certificate. The Buyer shall have delivered to
the Seller a Certificate of Incumbency with respect to the Buyer's officers
executing this Agreement.
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<PAGE> 10
Section 6. Miscellaneous.
Section 6.1. Indemnification Rights of Seller Pursuant to Section 12.2 of
the American Publishing Exchange Agreement. If, with respect to any of the
Newspapers, Seller shall have one or more indemnification claims against
American Publishing, then upon Buyer's written request to Seller that Seller do
so, Seller shall with reasonable diligence, and in accordance with Buyer's
reasonable written instructions, pursue all such indemnification claims against
American Publishing on Buyer's behalf, and shall promptly remit to Buyer any
sums recovered from American Publishing with respect to such claims.
Furthermore, Seller shall not waive, settle or otherwise compromise any such
claim without the prior written concurrence of Buyer.
Section 6.2. Entire Agreement. This Agreement (including the Recitals,
Schedules and Exhibits hereto) and the Letter Agreement constitute the entire
agreement among the Parties with regard to the subject matter hereof and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, that may have related in any way to the subject
matter hereof.
Section 6.3. Further Assurances. Each Party will at any time and from time
to time execute and deliver additional agreements and documents, including
documents of conveyance and transfer, and take such other action as may be
reasonably necessary to consummate, confirm or evidence the transactions
contemplated in this Agreement.
Section 6.4. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior
written approval of the other Party.
Section 6.5. Counterparts/Facsimile Signatures. This Agreement may be
executed in one or more counterparts and may be executed by facsimile
signature, each of which shall be deemed an original and all of which together
will constitute one and the same instrument.
Section 6.6. Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement. Use of the singular includes the plural
and use of the masculine gender includes the feminine and neuter.
Section 6.7. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any
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<PAGE> 11
notice, request, demand, claim, or other communication hereunder shall be
deemed duly given upon personal delivery to the Party to be notified or upon
deposit with a reputable overnight courier or with a United States Post Office,
by registered or certified mail, return receipt requested, postage prepaid, and
addressed to the intended recipient as set forth below:
If to the Seller Garden State Investments, Inc.
c/o MediaNews Group, Inc.
1560 Broadway, Suite 1485
Denver, Colorado 80202
Attention: Joseph J. Lodovic, IV,
Executive Vice President and Chief
Financial Officer
With a Copy to: Verner, Liipfert, Bernhard,
McPherson and Hand, Chartered
901 15th Street, N.W., Suite 700
Washington, D.C. 20005-2301
Attention: Howell E. Begle, Jr., Esq.
If to the Buyer The Denver Post Corporation
c/o MediaNews Group, Inc.
1560 Broadway, Suite 1485
Denver, Colorado 80202
Attention: Joseph J. Lodovic, IV,
Executive Vice President and Chief
Financial Officer
With a Copy to: Verner, Liipfert, Bernhard,
McPherson and Hand, Chartered
901 15th Street, N.W., Suite 700
Washington, D.C. 20005-2301
Attention: Howell E. Begle, Jr., Esq.
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
Section 6.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law governing
conflicts of laws) of the State of Delaware.
Section 6.9. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to
8
<PAGE> 12
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence.
Section 6.10. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending terms or provision in
any other situation or in any other jurisdiction.
Section 6.11. Specific Performance. Each of the Parties acknowledges and
agrees that the other Party would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
(temporary and/or permanent), without the necessity of proving actual damages,
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any
proceeding instituted pursuant to this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement or
caused this Agreement to be executed on the date first above written.
GARDEN STATE INVESTMENTS, INC.
By: /s/ Joseph J. Lodovic
---------------------------------
Joseph J. Lodovic, IV,
Executive Vice President and
Chief Financial Officer
THE DENVER POST CORPORATION
By: /s/ Joseph J. Lodovic
---------------------------------
Joseph J. Lodovic, IV,
Executive Vice President and
Chief Financial Officer
9
