<PAGE>
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) March 31, 1999
Garden State Newspapers, Inc.
(Exact name of registrant as specified in its charter)
Delaware 22-2675173
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) 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>
Item 2. Acquisition or Disposition of Assets
On March 31, 1999, Garden State Newspapers, Inc. (the
Registrant"), through its wholly owned subsidiary, West Coast MediaNews LLC,
Donrey Newspapers, LLC, and an entity owned by Gannett Company, Inc.
(together, the "Partners"), have entered into a contribution agreement
whereby they have agreed to contribute certain assets to the California
Newspapers Partnership as described below.
We contributed our Alameda Newspaper Group, comprised of six daily
newspapers we publish in the San Francisco Bay area; our San Gabriel Valley
Newspapers, which includes three daily newspapers we publish in the Los
Angeles area; the TIMES-STANDARD, a daily newspaper we publish in Eureka,
California; and all the weekly publications published by these daily
newspapers. Donrey Newspapers LLC contributed its ten daily newspapers and
two non-daily newspapers, located in California, most of which are located in
close proximity to the Garden State newspaper publications contributed.
Gannett contributed the SAN BERNARDINO COUNTY SUN. The California Newspapers
Partnership published twenty-one daily newspapers with daily circulation of
approximately 607,000 and Sunday circulation of approximately 573,000.
The Partners and their respective ownership percentages are as
follows:
<TABLE>
<CAPTION>
PARTNER INTEREST
<S> <C>
1. Garden State . . . . . . . . . . 58.8%
2. Donrey . . . . . . . . . . . . . 28.5%
3. Gannett . . . . . . . . . . . . . 12.7%
</TABLE>
The descriptions of the purchase transaction set forth herein are
qualified in their entirety by the provisions of the purchase and credit
agreements, which are attached hereto as exhibits.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Because it is impracticable at this time to file the financial statements
required under this Item, such information is not included in this
report. The required financial statements will be filed at the earliest
practicable date and, in any event, no later than June 14, 1999.
(b) Unaudited Pro Forma Financial Information
Because it is impracticable at this time to file the pro forma financial
information required under this Item, the required information will be
filed at the earliest practicable date and, in any event, no later than
June 14, 1999.
1
<PAGE>
(c) Exhibits
<TABLE>
<CAPTION>
Item No. Description
------- ------------------------------------------------------------
<S> <C>
2.1 Partnership Agreement for California Newspapers Partnership,
a Delaware General Partnership, by and among West Coast
MediaNews LLC, Donrey Newspapers LLC, the Sun Company of San
Bernardino, California and MediaWest-SBC, Inc.
2.2 Contribution Agreement by and among Garden State Newspapers,
Inc., Alameda Newspapers, Inc., V&P Publishing, Inc.,
Internet Media Publishing, Inc., DR Partners, MediaWest-SBC,
Inc. and The Sun Company of San Bernardino, California.
</TABLE>
2
<PAGE>
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: April 7, 1999 By: /s/ Joseph J. Lodovic, IV
-----------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer
3
<PAGE>
Partnership Agreement
For
California Newspapers Partnership
A Delaware General Partnership
By and Among
West Coast MediaNews LLC
Donrey Newspapers LLC
The Sun Company of San Bernardino, California
And
MediaWest - SBC, Inc.
March 31, 1999
<PAGE>
TABLE OF CONTENTS
Article I
Definitions
-----------
Article II
The Partnership
---------------
<TABLE>
<S> <C>
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.3 Business Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.4 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . .6
2.5 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.6 Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . .6
2.7 Title to Partnership Property . . . . . . . . . . . . . . . . . . . . . . . .6
2.8 The Initial Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.9 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.10 Representations and Warranties of the Parties . . . . . . . . . . . . . . . .7
Article III
Capital Structure and Contributions
-----------------------------------
3.1 Capital Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
3.2 No Other Mandatory Capital Contributions. . . . . . . . . . . . . . . . . . 10
3.3 No Right of Withdrawal. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Loans by Third Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Article IV
Capital Accounts; Allocation
Of Profits And Losses
---------------------
4.1 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Book Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE>
Article V
Distributions
-------------
<TABLE>
<S> <C>
5.1 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Article VI
Accounting And Reports
----------------------
6.1 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Reports to Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Annual Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 Actions in Event of Audit . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 Tax Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Article VII
Actions By Partners
-------------------
7.1 Consents and Other Actions by Sun and MWSB. . . . . . . . . . . . . . . . . 16
7.2 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Actions by the Partners . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Article VIII
Management
----------
8.1 The Management Committee. . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.2 Removal of Members; Vacancies . . . . . . . . . . . . . . . . . . . . . . . 17
8.3 Meetings of the Management Committee; Notice. . . . . . . . . . . . . . . . 18
8.4 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.6 Certain Matters Requiring a Unanimous
Vote of the Management Committee. . . . . . . . . . . . . . . . . . . . . 18
8.7 Action by Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.8 Executive Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.9 Provision of Services to Partnership by MediaNews . . . . . . . . . . . . . 21
</TABLE>
ii
<PAGE>
Article IX
Transfer of Partnership Interests;
Additional and Substitute Partners
----------------------------------
<TABLE>
<S> <C>
9.1 Prohibited Transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
9.2 Permitted Transfer by Partners. . . . . . . . . . . . . . . . . . . . . . . 22
9.3 Substitute Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.4 Involuntary Withdrawal by a Partner . . . . . . . . . . . . . . . . . . . . 23
9.5 Right of First Refusal of Sale of Partnership Interests . . . . . . . . . . 23
9.6 Tag-Along Rights Regarding Sales of Partnership Interests . . . . . . . . . 26
9.7 West Coast MediaNews Drag-Along Rights. . . . . . . . . . . . . . . . . . . 27
9.8 Admission of Additional Partners. . . . . . . . . . . . . . . . . . . . . . 28
9.9 Donrey Put Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.10 Gannett's Put Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.11 Partnership's Call Option re Section 9.10 Put Option. . . . . . . . . . . . 31
9.12 Acknowledgment of Pledge of Interests . . . . . . . . . . . . . . . . . . . 32
Article X
Dissolution and Liquidation
---------------------------
10.1 Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.2 Election to Continue the Business . . . . . . . . . . . . . . . . . . . . . 33
10.3 Closing of Affairs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Article XI
Amendment to Agreement
----------------------
Article XII
Indemnification
---------------
12.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.2 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . 35
12.3 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.4 Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.5 Other Indemnification Claims. . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
iii
<PAGE>
Article XIII
General Provisions
------------------
<TABLE>
<S> <C>
13.1 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.3 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.4 Entire Agreement, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.5 Construction Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.7 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.10 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
13.11 Additional Documents and Acts . . . . . . . . . . . . . . . . . . . . . . . 41
13.12 No Third Party Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . 41
13.13 Formation of Subsidiary Limited Partnership . . . . . . . . . . . . . . . . 41
</TABLE>
Exhibits
Exhibit 1 - Schedule of Certain Partnership Assets and Liabilities To Be
Transferred to Subsidiary Limited Partnership.
iv
<PAGE>
PARTNERSHIP AGREEMENT
FOR
CALIFORNIA NEWSPAPERS PARTNERSHIP
A DELAWARE GENERAL PARTNERSHIP
THIS PARTNERSHIP AGREEMENT OF CALIFORNIA NEWSPAPERS PARTNERSHIP, a
Delaware general partnership (the "Partnership") is made and entered into as
of this 31st day of March, 1999 by and among West Coast MediaNews LLC, a
Delaware limited liability company ("West Coast MediaNews"), Donrey
Newspapers LLC, an Arkansas limited liability company ("Donrey", The Sun
Company of San Bernardino, California, a California corporation ("Sun"),
Media West - SBC, Inc., a Delaware corporation ("MWSB", with Sun and MWSB
being sometimes hereinafter collectively referred to as "Gannett") and each
other individual or business entity who may hereafter be admitted from time
to time as a Partner hereunder. West Coast MediaNews Donrey Sun, MWSB and
any other individual and/or business entity subsequently admitted shall be
known as and referred to as "Partners" and individually as a "Partner".
RECITALS
WHEREAS, the Partners desire to form a general partnership
under the laws of the State of Delaware; and
WHEREAS, the parties desire to enter into a written agreement
as to the affairs of the Partnership and the conduct of its business,
NOW THEREFORE, in consideration of the mutual covenants
contained herein, they agree as follows:
ARTICLE I
DEFINITIONS
"ADDITIONAL CAPITAL CONTRIBUTIONS" means any additional Capital
Contributions made pursuant to Section 3.1(b) of this Agreement.
"ADDITIONAL CONTRIBUTION TERMS" shall have the meaning ascribed to
it in Section 3.1(b) of this Agreement.
"ADDITIONAL PARTNER" means any additional person admitted to
the Partnership, pursuant to Section 9.8 of this Agreement, but does not
include a Substitute Partner.
<PAGE>
"AFFILIATE" means any person controlled by, controlling, or
under common control with the entity in question.
"BOOK VALUE" means, with respect to any asset of the
Partnership, the adjusted basis of such asset as of the relevant date for
federal income tax purposes, except as follows:
(i) the initial Book Value of any asset contributed by a
Partner to the Partnership shall be the fair market value of such asset;
(ii) the Book Values of all Partnership assets (including
intangible assets such as goodwill) shall be adjusted to equal their
respective fair market values as of the following times:
(A) the acquisition of an additional Interest in the
Partnership by any new or existing Partner in exchange for more than a DE
MINIMIS Capital Contribution;
(B) the distribution by the Partnership to a Partner
of more than a DE MINIMIS amount of money or Partnership property as
consideration for an Interest in the Partnership; and
(C) the liquidation of the Partnership within the
meaning of Regulation section 1.704-1(b)(2) (iv)(f)(5)(ii);
(iii) the Book Value of the Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code section 734(b) or Code section 743(b), but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Regulation section 1.704-1(b)(2)(iv)(m); and
(iv) if the Book Value of an asset has been determined or
adjusted pursuant to subsection (i), (ii) or (iii) above, such Book Value
shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Profits and Losses and other
items allocated pursuant to Section 4.2.
The foregoing definition of Book Value is intended to comply
with the provisions of Regulation section 1.704-1(b)(2)(iv) and shall be
interpreted and applied consistently therewith.
"BUSINESS DAY" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of California).
"BUSINESS PLAN" means the business plan for the Partnership for
the period ending June 30, 1999, substantially in the form attached hereto as
Exhibit A, and as adopted annually thereafter by the Management Committee.
2
<PAGE>
"CAPITAL ACCOUNT" means, for each Partner, the capital account
maintained by the Partnership for such Partner as described in Section 4.1.
"CAPITAL CONTRIBUTION" means the amount of money and the other
property (net of any liabilities that the Partnership is considered to
assume, or take subject to, pursuant to Code Section 752, except to the
extent such liabilities are in fact discharged by the Partners contributing
such property) which is contributed by a Partner to the Partnership pursuant
to Article III hereof, including Additional Capital Contributions.
"CODE" means the Internal Revenue Code of 1986, as currently
amended.
"CONTRIBUTION AGREEMENT" means that contribution agreement
described in Section 3.1 of the Agreement.
"DEPRECIATION" means, for each Fiscal Year or part thereof, an
amount equal to the depreciation, amortization, or other cost recovery
deduction allowable for federal income tax purposes with respect to an asset
for such Fiscal Year or part thereof, except that if the Book Value of an
asset differs from its adjusted basis for federal income tax purposes, the
depreciation, amortization or other cost recovery deduction for such Fiscal
Year or part thereof shall be an amount which bears the same ratio to such
Book Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such Fiscal Year or part thereof bears to such
adjusted tax basis. If such asset has a zero adjusted tax basis, the
depreciation, amortization or other cost recovery deduction for each Fiscal
Year shall be determined under a method reasonably selected by the Tax
Matters Partner.
"EXECUTIVE OFFICERS" means the following officers of the
Partnership: its president and chief executive officer, chief financial
officer and any other individual who would be an "executive officer" of the
Partnership as determined in accordance with Rule 3b-7 promulgated under the
Securities Exchange Act of 1934.
"FISCAL YEAR" means the fiscal year of the Partnership as
defined in Section 2.9 hereof.
"FORMATION DATE" means the date on which the term of the
Partnership shall commence as defined in Section 2.5 hereof.
3
<PAGE>
"GAAP" means generally accepted accounting principles, as in
effect from time to time.
"INDEBTEDNESS" means those obligations for borrowed money which
were assumed by the Partnership as a consequence of, or to which property of
the Partnership was subject immediately following the Partner's initial
Capital Contributions, within the meaning of Section 3.1(a) hereof and any
obligation of a Partner to pay money to the Partnership which has been
assumed by the Partnership other than such obligations which are included on
the working capital statement described in Section 4.5 of the Contribution
Agreement, as set forth on Schedule A hereto.
"INITIAL PARTNERS" means those Partners whose names are set
forth in Section 2.8 hereof.
"INTEREST" means, with respect to any Partner at any time, such
Partner's entire beneficial ownership interest in the Partnership and its
property at such time, including such Partner's Capital Account, voting
rights (if any), and right to share in Profits and Losses, all items of
income, gain, loss, deduction and credit, distributions and all other
benefits of the Partnership as specified in this Agreement, together with
such Partner's obligations to comply with all of the terms of this Agreement.
"INVOLUNTARY TRANSFER" shall have the meaning ascribed thereto
in Section 9.4.
"MAJORITY" means the Partners having a majority of the
Percentage Interests.
"PERCENTAGE INTEREST" means, for each Partner, such Partner's
percentage interest as set forth in Section 3.1 hereof as such may be
adjusted from time to time in accordance with this Agreement.
"PROFITS" and "LOSSES" means, for each Fiscal Year or part
thereof, the taxable income or loss of the Partnership for such Fiscal Year
determined in accordance with Code section 703(a) (for this purpose, all
items of income, gain, loss or deduction required to be stated separately
pursuant to Code section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments:
(i) any income of the Partnership that is exempt from
federal income tax shall be added to such taxable income or loss;
(ii) any expenditures of the Partnership described in Code
section 705(a)(2)(B) or treated as such pursuant to Regulation section
1.704-1(b)(2)(iv)(I) shall be subtracted from such taxable income or loss;
4
<PAGE>
(iii) any Depreciation for such Fiscal Year or part thereof
shall be taken into account in lieu of the depreciation, amortization and
other cost recovery deductions taken into account in computing such taxable
income or loss;
(iv) gain or loss resulting from any disposition of
Partnership property with respect to which gain or loss is recognized for
federal income tax purposes shall be computed with reference to the Book
Value of the property disposed of, rather than the adjusted tax basis of such
property;
(v) in the event the Book Value of any Partnership asset is
adjusted pursuant to section (ii) or (iii) of the definition of Book Value
hereof, the amount of such adjustment shall be taken into account as gain or
loss from the disposition of such assets for purposes of computing Profits
and Losses; and
(vi) such taxable income or loss shall be deemed not to
include any income, gain, loss, deduction or other item thereof allocated
pursuant to Section 4.3.
"REGULATIONS" means the income tax regulations promulgated
under the Code by the Department of the Treasury, as such regulations may be
amended from time to time.
"SUBSTITUTE PARTNER" means a person who has become a substitute
Partner pursuant to Section 9.3 hereof, but does not include an Additional
Partner.
"TRANSFER" means any sale, assignment, gift, alienation, or
other disposition, whether voluntary or by operation of law (other than a
transfer which may arise by reason of death or incapacity), of an interest or
any portion thereof, but shall not include any pledge, hypothecation or
granting of a security interest in such Interest.
"TRANSFEREE" means a purchaser, transferee, assignee (other
than collateral assignees) or any other person who takes, in accordance with
the terms of this Agreement, an Interest in the Partnership.
ARTICLE II
THE PARTNERSHIP
5
<PAGE>
2.1 FORMATION. The parties hereto have formed a partnership in
accordance with the further terms and provisions hereof. Each of the
Partners shall execute or cause to be executed from time to time all other
instruments, certificates, notices and documents, and shall do or cause to be
done all such filing, recording, publishing and other acts, in each case, as
may be necessary or appropriate from time to time to comply with all
applicable requirements for the formation and/or operation and, when
appropriate, termination of a partnership in the State of Delaware and all
other jurisdictions where the Partnership shall desire to conduct its
business.
2.2 NAME. The name of the Partnership shall be "California
Newspapers Partnership" and its business shall be carried on in this name
with such variations and changes as the Management Committee, in its sole
judgment, deems necessary or appropriate to comply with the requirements of
the jurisdictions in which the Partnership's operations are conducted.
2.3 BUSINESS PURPOSE. The purpose of the Partnership is to carry
on any lawful business and to engage in any lawful act or activity for which
a partnership may be formed under the laws of the State of Delaware;
PROVIDED, HOWEVER, that the business of the Partnership shall, without the
unanimous consent of the Management Committee, be limited to activities
involving the ownership, operation, and publication (in printed and
electronic form) of newspapers and related publications and business
activities directly related or incidental to such ownership, operation and
publication including, without limitation, commercial printing, alternate
distribution services and direct mail activities.
2.4 REGISTERED OFFICE AND AGENT. The registered office of the
Partnership in the State of Delaware and its registered agent for service of
process on the Partnership in the State of Delaware shall be as determined by
the Management Committee.
2.5 TERM. The term of the Partnership shall commence on the date
of this Agreement (the "Formation Date") and shall continue until December
31, 2048 unless earlier dissolved and liquidated in accordance with Article
XI hereof.
2.6 PRINCIPAL PLACE OF BUSINESS. The Partnership shall maintain
its principal place of business at 21221 Oxnard Street, Woodland Hills,
California 91367 or such other location or locations as the Management
Committee may from time to time select.
2.7 TITLE TO PARTNERSHIP PROPERTY. Except as shown in Schedule B,
legal title to all property of the Partnership other than leased property shall
be held and conveyed in the name of the Partnership.
6
<PAGE>
2.8 THE INITIAL PARTNERS. The name and place of residence of each
Initial Partner is as follows:
<TABLE>
<CAPTION>
NAME RESIDENCE
<S> <C>
West Coast MediaNews c/o MediaNews Group, Inc.
1560 Broadway, Suite 1450
Denver, Colorado 80202
Donrey c/o Stephens Group, Inc.
111 Center Street, Suite 2500
Little Rock, Arkansas 72201-4430
Sun c/o Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
MWSB 50 W. Liberty Street
Suite 802
Reno, Nevada 89501
</TABLE>
2.9 FISCAL YEAR. Unless the Tax Matters Partner shall otherwise
determine in accordance with Section 706 of the Code, the fiscal year of the
Partnership shall end on June 30 of each year, and the initial Fiscal Year of
the Partnership shall commence on the Formation Date and end on June 30,
1999.
2.10 REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each of the
parties represents and warrants that:
(a) It is a corporation or limited liability corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;
(b) It has all requisite power and authority to enter into
this Agreement; the execution and delivery by such party of this Agreement
and the consummation by such party of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
such party; and this Agreement has been duly and validly executed and
delivered by such party and constitutes (assuming the due and valid execution
and delivery of this Agreement by the other parties), the legal, valid and
binding obligation of each party, enforceable against each party in
accordance with its terms;
(c) Except as set forth in Schedule 2.10(c) hereto, there is
no litigation pending or, to the best knowledge of such party, threatened
against such party which has a reasonable likelihood of materially and
adversely affecting the operations, properties or business of the Partnership
or any of such party's obligations under this Agreement;
7
<PAGE>
(d) The execution, delivery and performance by such party of
this Agreement will not, as of and after the Closing Date, result in a breach
of any of the terms, provisions or conditions of any agreement to which such
party is a party which has a reasonable likelihood of materially and
adversely affecting the operations, properties or business of the Partnership
or such party's obligations under this Agreement;
(e) The execution and delivery by such party of this
Agreement and the formation of the Partnership does not require any filing by
it with, or approval or consent of, any governmental authority which has not
already been made.
ARTICLE III
CAPITAL STRUCTURE AND CONTRIBUTIONS
3.1 CAPITAL CONTRIBUTIONS.
(a) INITIAL CONTRIBUTIONS. Each Partner shall make (or
cause to be made) a Capital Contribution to the Partnership as set forth in
the Contribution Agreement among Garden State Newspapers, Inc., Alameda
Newspapers, Inc., V&P Publishing, Inc., and Internet Media Publishing, Inc.
(on behalf of West Coast MediaNews), DR Partners (on behalf of Donrey), Sun
and MWSB, dated as of March 3, 1999 (the "Contribution Agreement"). As a
result of such Capital Contributions, West Coast MediaNews will receive a
Percentage Interest in the Partnership of 58.8%, Donrey will receive a
Percentage Interest in the Partnership of 28.5% and Sun will receive a
Partnership Interest in the Partnership of 11.4% and MWSB will receive a
Partnership Interest of 1.3%. Percentage Interests shall not be adjusted on
account of the payment of any sums, or the contribution of any property,
treated as a Capital Contribution without the unanimous consent of the
Partners.
(b) ADDITIONAL CAPITAL CONTRIBUTIONS. At any time, and from
time to time after the Formation Date, the Management Committee, in its sole
and absolute discretion, may, by unanimous vote, determine that the
Partnership requires additional capital contributions (the "Additional
Capital Contributions") and the amount, terms and conditions thereof. Such
Additional Capital Contributions will be used by the Partnership for such
activities as are designated by the Management Committee in its approval
resolution. All Additional Capital Contributions will be made by the
Partners in proportion to their then-current Percentage Interests in the
Partnership. In addition, with the unanimous consent of the Management
Committee, Additional Capital Contributions may be obtained by the admittance
of Additional Partners in accordance with Section 9.8. In the event
Additional Partners are admitted, the Percentage Interests of the existing
and Additional Partners shall be adjusted as determined by the Management
Committee, voting unanimously. From the date of the Management Committee's
determination that an Additional Capital Contribution is required until it
has been paid, a Partner's obligation to make that
8
<PAGE>
contribution shall accrue interest at a rate of 9% per annum until such
obligation (and all accrued interest, if any, with respect thereto) has been
paid in full. All cash distributions to which such Partner shall otherwise
be entitled to receive pursuant to Section 5.1(a) hereof, shall instead be
retained by the Partnership and credited to the discharge of such obligations
and accrued interest. Any amounts so retained shall be treated as
distributed to such Partner and, first paid to the Partnership in the amount
of the accrued interest and, second, with respect to the remainder thereof,
contributed to the Partnership as an Additional Capital Contribution on
behalf of the Partner owing such obligation.
(c) CAPITAL CONTRIBUTIONS REQUIRED UNDER SECTION 12.2. As
provided in Section 12.2 of this Agreement, any Partner owing an
indemnification obligation to the Partnership arising under Article XII of
this Agreement shall make a capital contribution in cash or other immediately
available funds in the amount of such obligation promptly upon the
determination of such obligation. Furthermore, from the date of the
determination of such obligation until the date such capital contribution is
made in cash or other immediately available funds, the amount of such
obligation shall accrue interest owing to the Partnership at a rate of 9 per
cent per annum, and until such obligation (and all accrued interest, if any,
with respect thereto) has been paid in full in cash or other immediately
available funds, all cash distributions to which a Partner shall otherwise be
entitled to receive pursuant to Section 5.1(a) hereof, shall instead be
retained by the Partnership and credited to the discharge of such obligations
and accrued interest. Any amounts so retained shall be treated as
distributed to such Partner and, first paid to the Partnership in the amount
of the accrued interest and, second, with respect to the remainder thereof,
contributed to the Partnership as an Additional Capital Contribution on
behalf of the Partner owing such obligation.
(d) OTHER CONTRIBUTIONS. At any time during the term of
this Agreement, any Partner may offer to contribute to the Partnership as an
additional capital contribution any newspapers, mastheads or related assets
owned by it that are located in the State of California. Should the
Management Committee, by a unanimous vote, agree to accept such contribution,
the Capital Account and, if determined by unanimous vote of the Management
Committee, as provided in Section 8.6 hereof, the Percentage Interest, of the
contributing Partner will be adjusted upward to reflect the fair market value
of such contribution and, if determined by unanimous vote of the Management
Committee, as provided in Section 8.6 hereof, the Percentage Interest of the
other Partners will be adjusted downward proportionately to reflect the
increase in the contributing Partner's Percentage Interest.
3.2 NO OTHER MANDATORY CAPITAL CONTRIBUTIONS. Except as specified
in Section 3.1(b), Section 3.1(c) or Section 12.2, no Partner shall be
obligated to make any Additional Capital Contribution to the Partnership's
capital.
3.3 NO RIGHT OF WITHDRAWAL. No Partner shall have the right to
withdraw any portion of such Partner's Capital Contributions to, or to
receive any distributions from, the Partnership, except as provided in
Articles V, IX and X hereof.
9
<PAGE>
3.4 LOANS BY THIRD PARTIES. Subject to the provisions of Section 8.6
hereof, the Partnership may borrow funds or enter into other similar credit,
guarantee, financing or refinancing arrangements for any purpose from any
Partner or from any person upon such terms as the Management Committee
determines, in its sole and absolute discretion, are appropriate.
ARTICLE IV
CAPITAL ACCOUNTS; ALLOCATION
OF PROFITS AND LOSSES
4.1 CAPITAL ACCOUNTS. Each Partner shall have a capital account (a
"Capital Account") which account shall be (1) increased by the amount of (a)
the Capital Contributions of such Partner, (b) the allocations to such
Partner of Profits and items of income or gain pursuant to Section 4.2, and
(c) any positive adjustment to such Capital Account by reason of an
adjustment to the Book Value of such Partner's share of Partnership assets,
and (2) decreased by the amount of (x) any cash and the Book Value of any
property (net of liabilities secured by such property that such Partner is
considered to assume or take subject to under Code section 752) distributed
to such Partner, (y) the allocation to such Partner of Losses and items of
loss pursuant to Section 4.2, and (z) any negative adjustment to such Capital
Account by reason of an adjustment to the Book Value of such Partner's share
of Partnership assets. The provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Regulation
section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Regulation.
4.2 BOOK ALLOCATION.
(a) IN GENERAL. This Section 4.2 sets forth the general
rules for book allocations of Profits, Losses and similar items to the
Partners as reflected in their Capital Accounts.
(b) PROFITS AND LOSSES. Profits shall be allocated to the
Partners in proportion to their Percentage Interests. Losses shall be
allocated to the Partners in proportion to their Percentage Interests except
that any interest expense or other deduction attributable to any Indebtedness
(other than any depreciation or amortization deductions attributable to
property which is contributed to the Partnership subject to such
Indebtedness) and any deductions attributable to any indemnity payments
described in Section 12.2 shall be allocated to the Partner that contributed
such property or such indemnity payment.
(c) SPECIAL RULES.
(i) Notwithstanding the general allocation rules set
forth in Section 4.2(b), in the case of any deduction allocable to a
"nonrecourse liability" (as that term is defined in Regulations Section
1.704-2(b)(3)) and any deduction allocable to a "partner nonrecourse
liability" (as that term is defined in Regulations Section 1.704-2(b)(4)),
shall be subject to the rules applicable thereto and described in Regulations
Section 1.704-2.
10
<PAGE>
(ii) If in the opinion of independent tax counsel for
the Partnership, it is necessary to provide special allocation rules in order
to avoid a significant risk that a material portion of any allocation set
forth in this Article IV would not be respected for federal income tax
purposes, the Partners shall negotiate in good faith any amendments to this
Agreement as, in the opinion of such counsel, are necessary or desirable,
taking into account the interests of the Partners as a whole and all other
relevant factors, to avoid or reduce significantly such risk to the extent
possible without materially changing the amounts allocable and distributable
to any Partner pursuant to this Agreement.
(iii) If there is a change made, by unanimous vote of
the Management Committee in accordance with the provisions of Section 8.6
hereof, in any Partner's share of the Profits, Losses or other items of the
Partnership during any Fiscal Year, allocations among the Partners shall be
made in accordance with their interests in the Partnership from time to time
during such Fiscal Year in accordance with Code section 706, using the
closing-of-the-books method, except that Depreciation shall be deemed to
accrue ratably on a daily basis over the entire Fiscal Year during which the
corresponding asset is owned by the Partnership.
(iv) Except as otherwise provided in Sections 4.2(b)
and 4.3(b)(i), each item of income, gain, loss, and deduction and all other
items governed by Code section 702(a) shall be allocated among the Partners
in proportion to the allocation of Profits, Losses and other items to the
Partners hereunder, provided that any gain recognized from any disposition of
a Partnership asset that is treated as ordinary income because it is
attributable to the recapture of any depreciation or amortization shall be
allocated among the Partners in the same ratio as the prior allocations of
Profits, Losses or other items that included such depreciation or
amortization, but not in excess of the gain otherwise allocable to each
Partner.
4.3 TAX ALLOCATIONS.
(a) IN GENERAL. Except as set forth in Section 4.3(b),
allocations for tax purposes of items of Profit, Loss and other items of
income, gain, loss, deduction, credit and distribution therefor, shall be
made in the same manner as allocations for book purposes set forth in Section
4.2(b). All such allocations pursuant to Section 4.3(b) shall be considered
made solely for purposes of federal, state and local income taxes, and shall
not affect or in any way be taken into account in computing any Partner's
Capital Account or share of Profits, Losses, other items or gain, deduction
and distribution pursuant to any provision of this Agreement.
11
<PAGE>
(b) SPECIAL RULES.
(i) ELIMINATION OF BOOK/TAX DISPARITIES. In
determining a Partner's allocable share of Partnership taxable income, the
Partner's allocable share of each item of Profits and Losses shall be
properly adjusted to reflect the difference between such Partner's share of
the adjusted tax basis and the Book Value of Partnership assets used in
determining such item under any method adopted by the Tax Matters Partner and
allowable under Code Section 704(c), provided, however, that any deductions
for depreciation or amortization attributable to property contributed to the
Partnership by a Partner shall be allocated to the Partner contributing such
property. In the event that the method for the allocation of depreciation or
amortization deductions attributable to contributed property described in the
previous sentence is disallowed, then the Tax Matters Partner shall make such
compensating allocations of items including (notwithstanding the second
sentence of Section 4.3(a)) such book allocations as are intended to
accomplish the same economic result.
(ii) TAX CREDITS. Any tax credits shall be allocated
among the Partners in accordance with Regulation section 1.704-1(b)(4)(ii),
unless the applicable Code provision shall otherwise require.
(c) CONFORMITY OF REPORTING. The Partners are aware of the
income tax consequences of the allocations made or to be made pursuant to
this Article 4 and Section 6.5 and hereby agree to be bound by the provisions
of this Article 4 and Section 6.5 in reporting their shares of Partnership
profits, gains, income, losses, deductions, credits and other items for
income tax purposes.
ARTICLE V
DISTRIBUTIONS
5.1 DISTRIBUTIONS.
(a) The Management Committee (or, at the Management
Committee's direction, the Executive Officers of the Partnership), on or
before the last day of each month shall (i) determine the amount (x) of
earnings or other Partnership funds available for distribution to Partners
(whether as a distribution of earnings or as loans or advances) and (y) the
amount of working capital needed for the continuing operations of the
business of the Partnership (including, without limitation, capital
expenditures), and (ii) cause the excess, if any, of (x) over (y) to be
distributed to the Partners (subject to the provisions of Sections 3.1(b) and
3.1(c) hereof relating to the Partnership's retention of sums otherwise
distributable to a Partner to discharge certain unpaid capital
contributions). Except as otherwise provided herein, all distributions shall
be made in proportion to the Partners' Percentage Interests. For the
purposes of this Section 5.1(a), any payment of principal or interest with
respect to Indebtedness shall be treated as distributed by the Partnership to
the Partner that transferred the property to the Partnership to which such
Indebtedness relates, and then as contributed to the Partnership by such
Partner as an Additional Capital Contribution.
12
<PAGE>
(b) If a distribution of cash is deemed made pursuant to
Sections 3.1(b), 3.1(c) or 5.1(a) and, the distribution is not in proportion
to the Partner's Percentage Interest, then the Management Committee shall
adjust subsequent distributions so that the cumulative distributions deemed
made pursuant to Sections 3.1(b), 3.1(c) or 5.1(a) and this Section 5.1(b)
are, in the aggregate, in proportion to the Partners' Percentage Interests.
ARTICLE VI
ACCOUNTING AND REPORTS
6.1 BOOKS AND RECORDS.
(a) The Partnership shall maintain or cause to be maintained
at an office of the Partnership this Agreement and all amendments thereto and
full and accurate books of the Partnership showing all receipts and
expenditures, assets and liabilities, Profits and Losses, and all other
books, records and information required by the Act as necessary for recording
the Partnership's business and affairs. The Partnership's books and records
shall be maintained in accordance with GAAP except to the extent otherwise
provided hereunder for purposes of maintaining Capital Accounts in accordance
with Article IV hereof and calculating the Profits or Losses charged or
credited thereto. Such documents, books and records shall be maintained at
such office or such designated successor office until two (2) years after the
termination and liquidation of the Partnership.
(b) Each Partner shall have the right at reasonable times
during usual business hours to inspect the facilities of the Partnership, to
observe the Partnership's operations and to examine, audit and make copies of
the books of account and other books and records of the Partnership and other
books and records relating to the reserves, assets, liabilities and expenses
of the Partnership and expenditures by the Management Committee on behalf of
the Partnership; PROVIDED, HOWEVER, that none of the foregoing activities
shall be conducted in a manner that unreasonably interferes with the
Partnership's operations or business or the Management Committee'
management thereof. Such right may be exercised through any agent or
employee of a Partner designated in writing by it or by an independent public
accountant, engineer, attorney or other consultant so designated. The
Partner making the request shall bear all expenses incurred in any
inspection, audit or examination made at such Partner's behest. Should any
inspection, audit or examination disclose any errors or improper charges, the
Management Committee shall make, or cause to be made, appropriate adjustments
therefor.
6.2 REPORTS TO PARTNERS.
(a) As soon as practicable and in any event within thirty
(30) days after the end of each calendar month, the Tax Matters Partner shall
cause to be prepared and sent to each Partner unaudited statements of
income, cash flow and changes in retained
13
<PAGE>
earnings and Partners' equity, for the month in question and from the
beginning of such Fiscal Year to the end of such month and an unaudited
balance sheet as of the close of such month, all of which shall (i) be
prepared in accordance with GAAP (except that certain footnotes may be
omitted) and (ii) set forth in each case in comparative form the figures for
the same monthly period for the previous fiscal year.
(b) As soon as practicable and in any event within
seventy-five (75) days after the end of each Fiscal Year, the Tax Matters
Partner shall provide to each Partner audited statements of income, retained
earnings, cash flow and Partner's equity, for such Fiscal Year and a balance
sheet as of the close of such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, prepared and
certified as to the scope of its audit by the accounting firm of Ernst &
Young or such other certified public accountants as may be selected by the
Management Committee.
(c) As requested, the Tax Matters Partner shall provide to
each Partner such information as may be necessary for them to comply with
applicable financial reporting requirements of any competent governmental
authorities or agencies or stock exchange on which the securities of any such
Partner are listed including, without limitation, the U.S. Securities and
Exchange Commission and such information regarding the financial position,
business, properties or affairs of the Partnership as a Partner may
reasonably request.
6.3 ANNUAL TAX RETURNS.
(a) West Coast MediaNews is hereby designated the "Tax
Matters Partner" for federal income tax purposes pursuant to Section 6231 of
the Code with respect to all taxable years of the Partnership and is
authorized to do whatever is necessary to qualify as such. If West Coast
MediaNews is no longer a Partner or has resigned as the Tax Matters Partner,
the Tax Matters Partner shall be any Partner designated as such by a
unanimous vote of the Partners, and in the absence of a unanimous vote, as
shall be determined under applicable provisions of the Code and/or
Regulations. The Tax Matters Partner shall, as soon as practicable under the
circumstances, inform each Partner of all tax-related matters that are, or
have the reasonable potential to become, material to the Partnership that
come to its attention in its capacity as Tax Matters Partner.
(b) The Tax Matters Partner shall prepare or cause to be
prepared all tax returns required of the Partnership, which returns shall be
reviewed in advance of filing by Ernst & Young LLP or another certified
public accountant selected by the Management Committee. As soon as
practicable after the end of each Fiscal Year, the Tax Matters Partner shall
furnish to each Partner such information in the possession of the Tax Matters
Partner requested by such Partner as necessary to timely fulfill such
Partner's federal, state, local and foreign tax obligations, including Form
K-1, or any similar form as may be required by the Code or the Internal
Revenue Service (the "IRS") or, to the extent any such information is not in
the Tax Matters Partner's possession, the Tax Matters Partner shall take all
reasonable steps necessary to have such information provided to the
requesting Partner. No later than forty-five (45) business days prior to
filing with the IRS, the Tax Matters Partner shall deliver to each Partner
for its review a complete copy of the federal income tax return proposed to
be filed by the Partnership. The Tax Matters
14
<PAGE>
Partner shall consider in good faith, consistent with Section 6.3(c) hereof,
any comments of the Partners with respect to such return made within thirty
(30) business days of sending the copy of such return. The Partners shall
file their individual or corporate returns in a manner consistent with the
Partnership tax and information returns.
(c) The Tax Matters Partner shall, consistent with the
Business Plan, use its best efforts to do all acts and take whatever steps
are required to maximize, in the aggregate, the federal, state and local
income tax advantages available to the Partnership and shall defend all tax
audits and litigation with respect thereto. The Tax Matters Partner shall
maintain the books, records and tax returns of the Partnership in a manner
consistent with the acts, elections and steps taken by the Partnership.
6.4 ACTIONS IN EVENT OF AUDIT. If an audit of any of the
Partnership's tax returns shall occur, each Partner shall, at the expense of
the Partnership, participate in the audit. No Partner may contest, settle or
otherwise compromise assertions of the auditing agent which may be adverse to
the Partnership or any Partner without the approval of a unanimous Management
Committee. The Management Committee may, if it determines that the retention
of accountants or other professionals would be in the best interests of the
Partnership, retain such accountants or other professionals, to assist in any
such audits. The Partnership shall indemnify and reimburse the Management
Committee for all expenses, including legal and accounting fees, claims,
liabilities, losses, and damages to the extent borne by the Management
Committee, incurred in connection with any administrative or judicial
proceeding with respect to any audit of the Partnership's tax returns. The
payment of all such expenses to which this indemnification applies shall be
made before any distributions are made to the Partners under Article V
hereof. Neither the Tax Matters Partner, nor any other person shall have any
obligation to provide funds for such purpose. The taking of any action and
the incurring of any expense by the Management Committee in connection with
any such proceeding, except to the extent required by law, is a matter in the
sole discretion of the Management Committee.
6.5 TAX ELECTIONS. The Tax Matters Partner shall, in its
reasonable discretion, determine (x) whether or not to cause the Partnership
to file an election under Code section 754 and the Regulations thereunder and
a corresponding election under the applicable section of state and local law,
(y) which method to apply to any asset of the Partnership under Section
704(c) of the Code consistent with Section 4.3(b) hereof and whether or not
to make any other elections provided for under related state and local laws,
and (z) any other tax elections.
15
<PAGE>
ARTICLE VII
ACTIONS BY PARTNERS
7.1 CONSENTS AND OTHER ACTIONS BY SUN AND MWSB. In each instance
under this Agreement when any consent, approval or other action is required
or authorized to be taken by Sun and/or MWSB in their capacity as Partners,
and in each instance hereunder when Sun and/or MWSB are entitled to the
receipt of notice of any matter, it is hereby agreed by each of the parties
hereto that (a) Sun shall act on behalf of Sun and MWSB, (b) that any
consent, approval or other action made, given or taken by Sun shall be deemed
to have been made, given and taken on behalf of both Sun and MWSB and (c)
that any notice duly delivered to Sun shall be deemed to have been duly
delivered to Sun and MWSB, however, notices shall also be sent to MWSB.
7.2 MEETINGS. Meetings of the Partners shall be held at the place
and time designated from time to time unanimously by the Partners. The
Partners may take action by the vote of Partners at a meeting in person or by
proxy, or without a meeting by written consent. In no instance where action
is authorized by written consent need a meeting of Partners be called or
noticed.
7.3 ACTIONS BY THE PARTNERS. All actions required or permitted to
be taken by the Partners with respect to the Partnership require the vote or
consent of all of the Partners.
ARTICLE VIII
MANAGEMENT
8.1 THE MANAGEMENT COMMITTEE. The business and affairs of the
Partnership shall be managed under the direction and authority of a
Management Committee, who shall annually adopt a Business Plan.
(a) NUMBER, APPOINTMENT AND TERM OF MANAGERS. The
Management Committee shall be comprised of seven members. Four members shall
be appointed by West Coast MediaNews, two members shall be appointed by
Donrey and one member shall be appointed jointly by Sun and MWSB. The
managers shall act solely as the agents of the Partners appointing them.
Each manager shall serve at the pleasure of the Partner appointing him and
until his successor has been duly appointed, or until his resignation or
removal. In addition, the Chief Executive Officer of the Partnership, as
named pursuant to Section 8.8(a), shall be entitled to attend all meetings
and participate in all discussions of the Management Committee except as to
matters regarding the Chief Executive Officer or as otherwise determined by
the Management Committee. Each Partner shall also be entitled to designate
one non-voting observer to attend and participate in all meetings of the
Management Committee.
16
<PAGE>
(b) DUTIES AND POWERS. The Management Committee may
exercise all such powers of the Partnership and do all such lawful acts and
things as are not directed or required to be exercised or done by the
Partners. Each member of the Management Committee may delegate to a
representative by written proxy the right to act on behalf of the member in
any respect, including without limitation the right to attend meetings or
telephone conferences, and to vote upon resolutions with or without a meeting.
8.2 REMOVAL OF MEMBERS; VACANCIES. A member of the Management
Committee may be removed at any time, with or without cause, by the Partner
(or Partners) who appointed such member. Any vacancy on the Management
Committee resulting from removal, resignation, death or incapacity shall be
filled by the Partner (or Partners) who is entitled to appoint such member.
8.3 MEETINGS OF THE MANAGEMENT COMMITTEE; NOTICE. The Management
Committee shall meet in regular meetings held at least quarterly at such time
and place as may from time to time be determined by the Management Committee
either in person or by telephone. Special meetings of the Management
Committee may be called by any member. Written notice of regular and special
meetings of the Management Committee, stating the place, date and hour of the
meeting shall be delivered to each member together with a reasonably detailed
agenda for such meeting not less than five Business Days before the date of
the meeting, provided, that the foregoing notice requirement may be waived by
the Management Committee with respect to any meeting at which at least four
(4) members of the Management Committee (including at least one member
appointed by each Partner) vote for waiver of notice. Notice may be
delivered to members in person, by telephone, telecopy, fax, electronic mail
or other means of telecommunication. The meetings of the Management Committee
shall be convened by the chairman (if one has been elected) or in the absence
or unavailability of the chairman, by the member who requested the meeting.
8.4 QUORUM. Four (4) members of the Management Committee shall
constitute a quorum for the transaction of all such business as shall have
been set forth with reasonable specificity in the agenda accompanying the
notice for such meeting, either in person or by telephone provided that such
four (or more) members who are in attendance at such meeting include members
appointed by at least two Partners. For the transaction of all other
business at a regular or special meeting of the Management Committee, four
(4) members of the Management Committee, whether present in person or by
telephone, shall again constitute a quorum, provided that such four (4) or
more members who are in attendance include members appointed by each of the
Partners.
8.5 VOTING. Any matter brought before the Management Committee
shall be decided by a majority of members present, except for matters that
require a unanimous
17
<PAGE>
vote of the Management Committee as provided in this Agreement or as
otherwise provided under the laws of the State of Delaware.
8.6 CERTAIN MATTERS REQUIRING A UNANIMOUS VOTE OF THE MANAGEMENT
COMMITTEE. The Partnership shall not, without a unanimous vote of all seven
members of the Management Committee:
(a) admit any new Partners to the Partnership;
(b) sell, lease, transfer or otherwise dispose of (other
than PRO RATA to the Partners) substantially all of the assets, property and
goodwill of any newspaper or related publication owned by the Partnership;
(c) except for distributions to Partners pursuant to Section
5.1 which may be deemed to be advances, commit or cause the Partnership to
invest in or purchase the securities of, or any interests of, any person
except short-term investments in U.S. Government securities,
federally-insured certificates of deposit, repurchase agreements for such
securities, or commercial paper rated A-1 or better by Standard and Poor's or
P-1 or better by Moody's or its equivalent by a nationally recognized
statistical rating organization;
(d) commit or cause the Partnership to acquire all or
substantially all of the capital stock or all or substantially all of the
assets of any person or business;
(e) obligate the Partners to make any Additional Capital
Contribution or adjust any Partner's Percentage Interest;
(f) cause the Partnership to create, or enter into, any
corporation, partnership, joint venture, association, trust or other business
entity or to merge or consolidate with any person;
(g) except as provided in Section 8.9 hereof, commit or
cause the Partnership to enter into any contract, agreement, understanding or
transaction (i) with any person, that is other than in the ordinary course of
the Partnership's business, (ii) with a Partner or an affiliate of any
Partner, which would have the result of imposing terms or conditions on the
Partnership that are more onerous or less advantageous to the Partnership
than those customarily provided by such Affiliate to its affiliates or (iii)
with a Partner or an Affiliate of any Partner that either involves goods,
services or properties of a value of more than $1,000,000 in the aggregate
over the entire term of such contract, agreement, understanding or
transaction, or does not reflect standard and customary commercial terms;
18
<PAGE>
(h) accept the contribution of any additional newspapers or
related assets from any Partner as an Additional Capital Contribution under
the provision of Section 3.1(c) hereof;
(i) commit or cause the Partnership (i) to borrow any funds;
(ii) to enter into any capitalized leases, in each case in excess of an
aggregate of $500,000 per year (on a combined basis), except for refinancings
or extensions of any existing indebtedness of the Partnership (including,
without limitation, the Indebtedness) or (iii) enter into any hedge agreement;
(j) make any single capital expenditure in excess of $1.0
million or make capital expenditures in any Fiscal Year in excess of $2.5
million in the aggregate;
(k) except as permitted pursuant to Article XI hereof,
dissolve or liquidate the Partnership;
(l) make any material change to the nature of the
Partnership's business as described in Section 2.3.; or
(m) adopt any portion of the Business Plan which would, of
itself, require a unanimous vote of the Management Committee.
8.7 ACTION BY CONSENT. Any action required or permitted to be
taken on behalf of the Partnership at any meeting of the Management Committee
may be taken without a meeting by written consent signed by the number of
members of the Management Committee required to approve such action, provided
that such members include at least one member appointed by each of the
Partners.
8.8 EXECUTIVE OFFICERS.
(a) The Management Committee shall elect a chief executive
officer of the Partnership (the "Chief Executive Officer") who shall have the
responsibility for managing the day-to-day business operations and affairs of
the Partnership and supervising its other officers, subject to the direction,
supervision and control of the Management Committee and the Partners. In
general, the Chief Executive Officer shall have such other powers and perform
such other duties as usually pertain to the office of a chief executive
officer, and as from time to time may be assigned to him by the Management
Committee, including, without limitation, the authority to retain and
terminate employees of the Partnership. The powers and duties of the Chief
Executive Officer shall at all times be subject to the provisions of this
Agreement.
(b) The Management Committee shall also elect a chief
financial officer of the Partnership (the "Chief Financial Officer") who
shall have the responsibility for managing the Partnership's financial
affairs and books of account, subject to the direction
19
<PAGE>
of the Management Committee, the Chief Executive Officer, and the Partners.
In general, the Chief Financial Officer shall have such other powers and
perform such other duties as usually pertain to the office of a chief
financial officer, and as from time to time may be assigned to him by the
Management Committee. The powers and duties of the Chief Financial Officer
shall at all times be subject to the provisions of this Agreement.
(c) The Management Committee may in its discretion also
elect from time to time such other Executive Officers as it may determine,
each of whom shall have such powers and perform such duties as usually
pertain to such offices and as from time to time may be assigned to such
persons by the Management Committee. The powers and duties of each Executive
Officer shall be subject to the provisions of this Agreement.
(d) Except during a reasonable transition period following
the execution of this Agreement, both the Partnership's Chief Executive
Officer (other than with the approval of at least two of the Partners) and
the Chief Financial Officer shall be employees of the Partnership and shall
not simultaneously be employees of any Partner nor any Affiliate of any
Partner.
(e) Subject to the provisions of this Agreement and to the
directives and policies of the Management Committee, the Chief Executive
Officer, the Chief Financial Officer and the other officers of the
Partnership shall have the power, acting individually or jointly, to
represent and bind the Partnership in all matters, in accordance with the
scope of their respective duties subject to Section 8.6 hereof and any other
limitations imposed by the Management Committee.
8.9 PROVISION OF SERVICES TO PARTNERSHIP BY MEDIANEWS. The
Partners hereby agree that the Partnership shall obtain management services,
operating, administrative, accounting, electronic media and/or other support
services, newsprint purchase services, financial reporting services, human
resource services, risk management services, tax reporting and tax return
preparation services and other similar services which MediaNews Group, Inc.,
a Delaware corporation, and the parent company of West Coast MediaNews
("MediaNews") provides to its own operating affiliates (collectively, the
"MediaNews Support Services") from MediaNews. In exchange for these
services, the Partnership shall pay MediaNews, on a monthly basis, an amount
equal to 1.25 percent of the Partnership's gross revenues (as calculated in
accordance with generally accepted accounting principles); PROVIDED, HOWEVER,
that the amount of 1.25 percent may not be altered at any time without the
unanimous vote of the Management Committee. All services and supplies
including employee benefits and newsprint, shall be provided at cost without
any adjustment for overhead or any other direct or indirect payment to
MediaNews or its affiliates. MediaNews by agreeing to provide management
services, agrees to perform those services with the degree of care that a
reasonably prudent person would exercise and shall not enter into any
transaction in which it may have a conflict of interest without the unanimous
consent of the members of the Management Committee. If MediaNews should at
anytime, due to bankruptcy, insolvency or similar incapacity,
20
<PAGE>
become unable to continue to provide such services on behalf of the
Partnership, the Partners shall, by mutual agreement, make appropriate
arrangements for the provisions of such services by one or more of the other
Partners or their Affiliates, or by one or more third parties.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS;
ADDITIONAL AND SUBSTITUTE PARTNERS
9.1 PROHIBITED TRANSFERS. No Partner may Transfer its Interest or
any part thereof in any way whatsoever, and any such Transfer in violation of
this Article IX shall be null and void as against the Partnership, except as
otherwise permitted herein or provided by law, and the Transferring or
withdrawing Partners shall be liable to the Partnership and the other
Partners for all damages that they may sustain as a result of such attempted
Transfer or withdrawal.
9.2 PERMITTED TRANSFERS BY PARTNERS. No Partner may Transfer all
or a portion of its Interest unless:
(a) the Partner desiring to consummate such Transfer (the
"Assigning Partner"), and the prospective Transferee each execute,
acknowledge and deliver to all the other Partners such instruments of
transfer and assignment with respect to such Transfer and such other
instruments as are reasonably satisfactory in form and substance to all the
Partners (including those written instruments described in 9.6(d));
(b) the Transfer will not violate any federal or state laws;
(c) the Transfer will not cause any violation of or an event
of default under, or result in acceleration of any indebtedness under, any
note, mortgage, loan, or similar instrument or document to which the
Partnership is a party;
(d) the Transfer will not cause a material adverse tax
consequence to the Partnership or any of the Partners including but not
limited to any material adverse tax consequence resulting, directly or
indirectly, from the termination of the Partnership under section 708 of the
Code;
(e) the Transfer will not cause the Partnership to be
classified as an entity other than a partnership for purposes of the Code; and
(f) except for transfers of a Partner's Interest to an
Affiliate of such Partner, any amendments to this Agreement required by or
made a condition by any Partner to its consent to the transfer, have been
made.
21
<PAGE>
9.3 SUBSTITUTE PARTNER. A Transferee of the whole or any part of
an Interest who satisfies the conditions set forth in Section 9.2 hereof
shall have the right to become a Partner in place of the Assigning Partner
only if all of the following conditions are satisfied:
(a) the fully executed and acknowledged written instrument
of assignment that has been filed with the Partnership sets forth a statement
of the intention of the Assigning Partner that the Transferee become a
Substitute Partner in its place;
(b) the Transferee executes, adopts and acknowledges this
Agreement (as it may be amended) and agrees to assume all the obligations of
the Assigning Partner; and
(c) any costs of the Transfer incurred by the Partnership
shall have been reimbursed by the Assigning Partner or the Transferee to the
Partnership.
9.4 INVOLUNTARY WITHDRAWAL BY A PARTNER.
With respect to the Transfer of a Partner's Interest due to
bankruptcy, or other insolvency, involuntary dissolution or liquidation, or
foreclosure (or other exercise of remedies by a party holding a security
interest in such Interest) (each, an "Involuntary Transfer"), the Partner
with respect to whom such event occurred shall forthwith cease to be a
Partner and shall have no rights or powers as a Partner except for such
rights as are specified pursuant to Articles III, IV and V and Section
10.3(b) hereof.
9.5 RIGHT OF FIRST REFUSAL FOR SALE OF PARTNERSHIP INTERESTS.
(a) Except as otherwise herein provided, no Partner may
voluntarily transfer all or any part of its Interest in the Partnership to
any party (i) in any case prior to January 1, 2004 or (ii) after that date
unless it has complied with the procedures of Section 9.2 and first offers to
sell such Interest to the other Partner(s) pursuant to the terms of this
Section 9.5; PROVIDED that this Section 9.5 shall not be applicable with
respect to a Transfer to an Affiliate of the Transferring Partner.
(b) A Partner (the "Offering Partner") who has received a
firm, written, bona fide offer from a third-party for its Interest ( a "Third
Party Offer") or who has otherwise determined to offer its Interest for sale
shall, before offering such Interest or agreeing to accept such offer for
such Interest (in either case, the "Offered Interest"), give written notice
to the other Partners that are not Affiliates of the Offering Partner (each
an "Option Partner") of such offer or intent including, in the case of a
Third Party Offer, a copy of such Third Party Offer and a complete
description thereof including, by way of
22
<PAGE>
example but not of limitation, the nature and extent of such Third Party
Offer, the purchase price therein, the terms of payment and the time for
performance.
(c) Upon receiving the Offering Partner's written notice
pursuant to Section 9.5(b), the Option Partner(s) shall have a period of
thirty (30) days following the date of receipt by the Option Partner of the
Offering Partner's notice to elect to purchase the Offered Interest at the
price determined in accordance with Section 9.5(f). If an Option Partner
desires to purchase the Offered Interest it shall give written notice to the
Offering Partner in the manner set forth in Section 13.2 hereof within such
30-day period. To be effective, this notice must be received by the Offering
Partner within such 30-day period. In no event may the Option Partner(s)
elect to acquire less than all of the Offered Interest. To the extent there
are more than one Option Partners, the Option Partners accepting such offer
shall be jointly and severally liable to the Offering Partner to purchase all
of the Offered Interest.
(d) The closing of the sale and purchase of the Offered
Interest shall be promptly completed, but in any event, to the extent
practicable, within ninety (90) days after the receipt of the Option
Partner(s)' notice of acceptance (or such later date as necessary to obtain
any necessary regulatory approvals). The Management Committee shall assist
in coordinating the closing. At the closing, the Offering Partner shall sell
the Offered Interest, free and clear of all liens and encumbrances, and
execute and deliver such assignment(s) and all other documents or other
instruments of assignment or conveyance necessary to effect and evidence the
assignment. At the closing, the Option Partner(s) shall deliver to the
Offering Partner cash, a certified or official bank check or shall pay by
wire transfer of immediately available funds for the applicable purchase
price.
(e) If the Option Partner(s) do not elect to purchase all of
the Offered Interest pursuant to this Section 9.5, then the Offering Partner
shall be free to sell, assign, transfer, pledge, encumber or otherwise
dispose of the Offered Interest pursuant to the Third Party Offer or, in the
case of a non-Third Party Offer, to any third party for an amount equal to
fair market value, as hereunder determined, in either case, within six
month's after the date of the Option Partner(s)' notice of refusal or after
the expiration of the 30-day response period, whichever occurs first. For
purposes of this Section 9.5(e), a sale shall be deemed made when there is
executed a legally binding agreement between the Offering Partner and the
prospective purchaser, subject to no condition or contingency which permits
the prospective purchaser to terminate or cancel the agreement, except for
the default of the Offering Partner, and routine approvals or conditions. If
a sale within the meaning of this Section 9.5(e) is not made within such
6-month period, then the Offered Interest shall remain subject to the
restrictions of this Agreement and must again be first offered to the Option
Partner(s) if the Offering Partner thereafter wishes to sell its Interest to
a third party.
(f) (i) In the case of a Third Party Offer, if the
consideration offered by the prospective purchaser is offered in cash and/or
a promissory or other similar instrument to be issued by the prospective
purchaser, the price shall be the price offered
23
<PAGE>
by such prospective purchaser. If (A) the consideration offered by the
prospective purchaser is offered in a form other than cash and/or a
promissory note or other similar instrument or (B) the Offering Partner has
not received a Third Party Offer, then in either case, the price shall be the
Fair Market Value of the Offered Interest, as defined below.
(ii) For the purposes of this Agreement, "Fair Market
Value" shall be the amount that would be paid for the Interest in the
Partnership as a going concern, on a consolidated basis, by a willing buyer
to a willing seller. The Offering Partner and the Option Partner(s) may
mutually agree as to the Fair Market Value of the Interest in question. If
the Offering Partner and the Option Partner(s) are unable to agree on such
Fair Market Value within fifteen (15) days after the Offering Partner's
written notice of the proposed sale, then in such event Fair Market Value
shall be determined pursuant to Section 9.5(f)(iii) by two independent
qualified appraisers, one to be appointed by the Offering Partner and the
other to be appointed by the Option Partner(s).
(iii) The two independent appraisers shall be appointed
within fifteen (15) days after receipt by the Option Partner(s) of the notice
of proposed sale. If either side fails to appoint an appraiser within such
period, then its right to do so shall lapse and the appraisal made by the one
independent appraiser who is timely appointed shall be the Fair Market Value.
If two appraisals are made, and if the two appraised values differ by less
than 15 percent, Fair Market Value shall be the average of the two
appraisals, and if the two appraised values differ by more than 15 percent,
the two appraisers shall jointly select a third appraiser and, the Fair
Market Value shall be the average of the two of the three appraisals that are
closest together in amount. All appraisals shall be made within thirty (30)
days of appointment of an appraiser, and written notice of the results of
such appraisals shall be given to all parties within such 30-day period. The
Fair Market Value shall be determined based upon the value of the Partnership
in its entirety as a going concern, with the Offering Partner receiving a
proportionate part of such total value based upon its Percentage Interest.
In making any appraisal hereunder, all debts and liabilities shall be taken
into account. Each side shall pay the fees of the appraiser selected by them.
24
<PAGE>
9.6 TAG-ALONG RIGHTS REGARDING SALES OF PARTNERSHIP INTERESTS.
(a) Except for Transfers of a Partner's Interest to an
Affiliate of such Partner and except following an Involuntary Transfer of a
Partner's Interest, in any case where a Partner has declined to exercise its
rights of first refusal under Section 9.5, no Partner (the "Tag-Along
Offeror") shall, individually or collectively, in any one transaction or
series of transactions, directly or indirectly, sell or otherwise dispose of
its Interest, to any person (a "Third Party") unless the terms and conditions
of such sale or other disposition to such Third Party shall include an offer
to each other Partner (each, a "Tag-Along Offeree") to include, at the option
of each Tag-Along Offeree, in the sale or other disposition to the Third
Party, such Tag-Along Offeree's Interest (the "Tag-Along Right"). Each
Partner proposing to effect such a sale or other disposition shall send a
written notice (the "Tag-Along Notice") to each of the Tag-Along Offerees
setting forth the terms of the offer. At any time within 15 days after its
receipt of the Tag-Along Notice, each Tag-Along Offeree may exercise its
Tag-Along Option by furnishing written notice of such exercise (the
"Tag-Along Exercise Notice") to the Tag-Along Offeror.
(b) If the proposed sale or other disposition to the Third
Party by the Partner providing the Tag-Along Notice is consummated, each
Tag-Along Offeree shall have the right to sell such Third Party all of its
Interest.
(c) Each Partner participating in the sale or other
disposition to the Third Party shall have the right, in their sole
discretion, at all times prior to consummation of the proposed sale or other
disposition giving rise to the Tag-Along Right granted by this Section to
abandon, rescind, annul, withdraw or otherwise terminate such sale or other
disposition as it relates to such Partner's Interest whereupon that Partner's
Tag-Along Rights in respect of such sale or other disposition pursuant to
this Section shall become null and void, and neither the Tag-Along Offeror
nor the Third Party shall have any liability or obligations to the
withdrawing Tag-Along Offeree with respect thereto by virtue of such
abandonment, rescission, annulment, withdrawal or termination.
(d) The purchase of each Tag-Along Offeree's Interest
pursuant to this Section shall be on the same terms and conditions, including
but not limited to the purchase price (as adjusted for any difference in size
of the respective Interest's), as are applicable to the Partner giving the
Tag-Along Notice, which shall be stated in such Tag-Along Notice. In
determining the purchase price of any Interest under this Section, the
aggregate purchase price of all Interests being acquired by the Third Party
shall be increased to the extent any of the selling Partners shall receive
additional compensation (A) for covenants not to compete or (B) for services
(such as pursuant to consulting agreements or management agreements) which
are in excess of the amounts which would be payable for comparable services
as a result of an arm's-length transaction.
(e) If, within 15 days after receipt of a Tag-Along Notice,
any Tag-Along Offeree has not delivered a Tag-Along Exercise Notice, such
Tag-Along Offeree will be deemed to have waived any and all of its rights
with respect to the sale or other
25
<PAGE>
disposition of Interests described in such Tag-Along Notice and the other
Partners shall have 135 days following the expiration of such 15-day period
in which to consummate such sale or other disposition on terms not more
favorable to such other Partners than those described in the Tag-Along
Notice. If, at the end of 150 days following receipt of such Tag-Along
Notice, the sale or other disposition described therein has not been
completed, then all restrictions on sale or other disposition contained in
this Agreement shall again be in effect.
9.7 WEST COAST MEDIANEWS DRAG-ALONG RIGHTS.
(a) If, at any time after January 1, 2005, West Coast
MediaNews receives a bona fide written offer to purchase all of the Interests
in the Partnership from an independent third party, in one transaction or a
series of transactions, and West Coast MediaNews determines to accept such
offer, then, notwithstanding any other provisions of this Agreement, at West
Coast MediaNews's election, all other Partners shall, subject to (b) below,
be required to sell their respective Interests on the same terms and
conditions (except for adjustments based upon the relative size of Percentage
Interests) as have been offered to West Coast MediaNews (the West Coast
MediaNews Drag-Along Rights); PROVIDED THAT the aggregate purchase price of
all Interests being acquired by the Third Party shall be increased to the
extent any of the selling Partners shall receive additional compensation (A)
for covenants not to compete or (B) for services (such as pursuant to
consulting agreements or management agreements) which are in excess of the
amounts which would be payable for comparable services as a result of an
arm's-length transaction; AND FURTHER PROVIDED THAT all other Partners
receive fair market value (as determined in accordance with Section 9.5(f))
for their Interest.
(b) If West Coast MediaNews elects to exercise its
Drag-Along Rights, it shall provide written notice (the "Drag-Along Notice")
to each other Partner of such election at least 30 days in advance of the
closing date for such transaction, which notice shall describe the terms and
conditions of such offer and the proposed closing date. Upon receipt of the
Drag-Along Notice, each other Partner shall be obligated to sell its entire
Interest to the Third Party making such offer on the terms set forth in the
Drag-Along Notice. However, if the transaction is not completed within 90
days after the giving of the Drag-Along Notice, then any sale thereafter by
West Coast MediaNews of its Interest with respect to which it wishes to
exercise its Drag-Along Rights shall require a new notice under this Section
9.7(b).
9.8 ADMISSION OF ADDITIONAL PARTNERS. A person shall become an
Additional Partner only if and when each of the following conditions is
satisfied:
(a) the Management Committee, unanimously and in its sole
and absolute discretion, determine the Additional Contribution Terms;
26
<PAGE>
(b) the Partnership has complied with the terms of Section
3.1(b);
(c) all of the Partners consent in writing to such
admission, which consent may be withheld by any such Partner in its sole and
absolute discretion;
(d) the Management Committee receives written instruments
(including, without limitation, such person's consent to be bound by this
Agreement (as it may be amended) as an Additional Partner) that are in a form
satisfactory to the Management Committee (as determined in its sole and
absolute discretion);
(e) the Partnership has received such person's Capital
Contribution; and
(f) any amendments to this Agreement required by or made a
condition by any Partner to its consent to the transfer, have been made.
9.9 DONREY PUT OPTION.
(a) At any time on or after January 1, 2005, Donrey may, by
written notice to West Coast MediaNews and Gannett, require West Coast
MediaNews and Gannett to cause the Partnership to enter into a contract to
redeem all of Donrey's Interest in the Partnership in exchange for a
distribution of cash equal to the then-determined Fair Market Value of such
Interest (net of any liabilities allocable to such Interest) plus the amounts
described in Section 9.9(b) below within 2 years of the date the Fair Market
Value of such Interest is determined under this Section 9.9. Such Fair
Market Value shall be determined in accordance with the procedures set forth
in Section 9.5(a) through (f) above, PROVIDED, HOWEVER, that the period for
negotiation between the Partners set forth in Section 9.5(f)(ii) shall be 90
days. At the time such Fair Market Value is determined, the Interest of
Donrey in the Partnership shall terminate and Donrey shall be treated as a
"retiring partner" for purposes of Code Section 736 and the payment described
in this Section 9.9(a) shall be treated as described in Code Section 736(b).
(b) Upon the date of the determination of such Fair Market
Value, Donrey's right to receive any distribution or allocation of Profits
from the Partnership under Section 4.2(b) shall convert automatically into a
first priority interest in the Profits of the Partnership equal to the
product of (x) the determined Fair Market Value of such Interest and (y) the
30-day London Inter-Bank Offered Rate ("LIBOR") plus (I) 1 percent for the
first 6-month period following the date of determination of the Fair Market
Value; (II) 2 percent for the seventh through ninth months following the date
of determination of the Fair Market Value; (III) 3 percent for the tenth
through twelfth months following the date of determination of the Fair Market
Value; (IV) 4 percent for the thirteenth through fifteenth months following
the date of determination of the Fair Market Value; (V) 5 percent for the
sixteenth through eighteenth months following the date of determination of
the Fair Market Value; (VI) 6 percent for the nineteenth through twenty-first
months following the date of determination of the Fair Market Value; and
(VII) 7 percent for the twenty-second through
27
<PAGE>
twenty-fourth months following the date of determination of the Fair Market
Value. The payments described in this Section 9.9(b) shall be treated as
distributions of partnership income as described in Code Section 736(a).
(c) In connection with Donrey's exercise of the put option
described in subsection (a) above, each of the other Partners shall be
obligated, effective as of the closing for the Partnership's acquisition of
Donrey's Interest in the Partnership, to make as an additional capital
contribution their pro rata share of such additional cash sums as may be
required by the Partnership to acquire Donrey's Interest in the Partnership
under the terms of this Section 9.9. Notwithstanding the foregoing, however,
(i) if West Coast MediaNews shall advise Gannett, in its sole discretion, of
its election, with Gannett's concurrence, to contribute less than its pro
rata share of such required additional capital contributions, then Gannett
shall, at its option, be permitted to contribute the portion of such funds
which West Coast MediaNews elects not to contribute and (ii) if at the time
Donrey exercises its put Gannett's Percentage Interest is less than 20%,
Gannett shall, in its sole election, in any event be permitted to contribute
so much of the additional cash sums required for the Partnership to acquire
Donrey's interest as shall appropriately cause Gannet's Percentage Interest
(after the making of both Gannett's and West Coast Media News' capital
contribution) to be increased to 20%. Immediately following the making of the
additional capital contributions required for the Partnership to acquire
Donrey's interest, Gannett's and West Coast Media News' Percentage Interests
shall be appropriately re-adjusted.
(d) If prior to the closing for the Partnership's
acquisition of Donrey's Interest in the Partnership pursuant to Donrey's
exercise of its put option pursuant to subsection (a) above, Gannett shall
have exercised its put option pursuant to Section 9.10 of this Agreement, all
obligations of the Partnership to Donrey and Gannett relative to the exercise
of both put options shall rank PARI PASSU.
9.10 GANNETT PUT OPTION.
(a) At any time on or after January 1, 2003, Gannett may, by
written notice to West Coast MediaNews and Donrey, require West Coast
MediaNews and Donrey to cause the Partnership to enter into a contract to
redeem all of Gannett's Interest in the Partnership in exchange for a
distribution of cash equal to the then-determined Fair Market Value of such
Interest (net of any liabilities allocable to such Interest) plus the amounts
described in Section 9.10(b) below within 2 years of the date the Fair Market
Value of such Interest is determined under this Section 9.10. Such Fair
Market Value shall be determined in accordance with the procedures set forth
in Section 9.5(a) through (f) above, PROVIDED, HOWEVER, that the period for
negotiation between the Partners set forth in Section 9.5(f)(ii) shall be 90
days. At the time such Fair Market Value is determined, the Interest of
Gannett in the Partnership shall terminate and Gannett shall be treated as a
"retiring partner" for purposes of Code Section 736 and the payment described
in this Section 9.9(a) shall be treated as described in Code Section 736(b).
28
<PAGE>
(b) Upon the date of the determination of such Fair Market
Value, Gannett's right to receive any distribution or allocation of Profits
from the Partnership under Section 4.2(b) shall convert automatically into a
first priority interest in the Profits of the Partnership equal to the
product of (x) the determined Fair Market Value of such Interest and (y)
LIBOR plus (I) 1 percent for the first 6-month period following the date of
determination of the Fair Market Value; (II) 2 percent for the seventh
through ninth months following the date of determination of the Fair Market
Value; (III) 3 percent for the tenth through twelfth months following the
date of determination of the Fair Market Value; (IV) 4 percent for the
thirteenth through fifteenth months following the date of determination of
the Fair Market Value; (V) 5 percent for the sixteenth through eighteenth
months following the date of determination of the Fair Market Value; (VI) 6
percent for the nineteenth through twenty-first months following the date of
determination of the Fair Market Value; and (VII) 7 percent for the
twenty-second through twenty-fourth months following the date of
determination of the Fair Market Value. The payments described in this
Section 9.10(b) shall be treated as distributions of partnership income as
described in Code Section 736(a).
(c) In connection with Gannett's exercise of the put option
described in subsection (a) above, each of the other Partners shall be
obligated, effective as of the closing for the Partnership's acquisition of
Gannett's Interest in the Partnership, to make as an additional capital
contribution their pro rata share of such additional cash sums as may be
required by the Partnership to acquire Gannett's Interest in the Partnership
under the terms of this Section 9.9. Notwithstanding the foregoing, however,
if West Coast MediaNews shall advise Donrey, in its sole discretion, of its
election, with Donrey's concurrence, to contribute less than its pro rata
share of such required additional capital contributions, then Donrey shall,
at its option, be permitted to contribute the portion of such funds which
West Coast MediaNews elects not to contribute. In that circumstance,
Donrey's and West Coast Media News' Percentage Interests shall be
appropriately re-adjusted following the making of such additional capital
contribution.
(d) If prior to the closing for the Partnership's
acquisition of Gannett's Interest in the Partnership pursuant to Gannett's
exercise of its put option pursuant to subsection (a) above, Donrey shall
have exercised its put option pursuant to Section 9.9 of this Agreement, all
obligations of the Partnership to Donrey and Gannett relative to the exercise
of both put options shall rank PARI PASSU.
9.11 PARTNERSHIP CALL OPTION RE SECTION 9.10 PUT OPTION.
(a) At any time subsequent to the exercise by Donrey of its
put option set forth in Section 9.9 of this Agreement, the Partnership shall
have the option, by written notice to Gannett, to call the put option set
forth in Section 9.10 of this Agreement, if at the time of such call (i) such
put option shall not previously have been exercised and (ii) the Percentage
Interest of Gannett shall be less than 20%.
29
<PAGE>
(b) Upon the exercise by the Partnership of its call option
set forth in subsection (a) hereof, the Partnership shall undertake to redeem
all of Gannett's interest in the Partnership, in exchange for a distribution
of cash equal to the then-determined Fair Market Value of such Interest (net
of any liabilities allocable to such Interest) plus the amounts described in
Section 9.11(c) below within 2 years of the date the Fair Market Value of
such Interest is determined under this Section 9.11. Such Fair Market Value
shall be determined in accordance with the procedures set forth in Section
9.5(a) through (f) above, PROVIDED, HOWEVER, that the period for negotiation
between the Partners set forth in Section 9.5(f)(ii) shall be 90 days. At
the time such Fair Market Value is determined, the Interest of Gannett in the
Partnership shall terminate and Gannett shall be treated as a "retiring
partner" for purposes of Code Section 736 and the payment described in this
Section 9.11(b) shall be treated as described in Code Section 736(b).
(c) Upon the date of the determination of such Fair Market
Value, Gannett's right to receive any distribution or allocation of Profits
from the Partnership under Section 4.2(b) shall convert automatically into a
first priority interest in the Profits of the Partnership equal to the
product of (x) the determined Fair Market Value of such Interest and (y)
LIBOR plus (I) 1 percent for the first 6-month period following the date of
determination of the Fair Market Value; (II) 2 percent for the seventh
through ninth months following the date of determination of the Fair Market
Value; (III) 3 percent for the tenth through twelfth months following the
date of determination of the Fair Market Value; (IV) 4 percent for the
thirteenth through fifteenth months following the date of determination of
the Fair Market Value; (V) 5 percent for the sixteenth through eighteenth
months following the date of determination of the Fair Market Value; (VI) 6
percent for the nineteenth through twenty-first months following the date of
determination of the Fair Market Value; and (VII) 7 percent for the
twenty-second through twenty-fourth months following the date of
determination of the Fair Market Value. The payments described in this
Section 9.11(c) shall be treated as distributions of partnership income as
described in Code Section 736(a).
9.12 ACKNOWLEDGMENT OF PLEDGES OF INTERESTS.
(a) Donrey and Gannett hereby each acknowledges that West
Coast MediaNews's Interest in the Partnership has been pledged as security
under an Amended and Restated Credit Agreement dated as of October 31, 1996
among Garden State Newspapers, Inc., The Bank of New York, as agent, and
other banks.
(b) West Coast MediaNews and Gannett each hereby
acknowledges that DR Partners has pledged Donrey's Interest in the
Partnership under the following agreements: (i) the Amended and Restated
Credit Agreement among DR Partners, NationsBank and other banks dated as of
December 15, 1993; and (ii) the Senior Secured Note Purchase Agreement dated
as of December 15, 1993.
30
<PAGE>
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.1 DISSOLUTION.
(a) The Partnership shall be dissolved upon the first to
occur (each a "Dissolution Event"):
(i) December 31, 2048;
(ii) At any time after January 1, 2004, the election
by written notice to the other Partners by one or more Partners (the
"Electing Partner") to terminate the Partnership prior to December 31, 2048;
PROVIDED, HOWEVER, that such right may be exercised at any time in connection
with an Involuntary Transfer of a Partner's Interest or to the extent
required to effect compliance with the provisions of any indenture applicable
to publicly held indebtedness of a Partner; or
(iii) The occurrence of any other event specified under
the Delaware Uniform Partnership Law (6 Del. C. 1953, '1501 ET SEQ.) as one
effecting such dissolution.
(b) Notwithstanding the provisions of subsection (a)(ii)
above, a dissolution of the Partnership shall not occur if, within 10
business days of receipt of the written notice described in subsection
(a)(ii) above, both of the Partners other than the Partner who is the
Electing Partner provide written notice to the Electing Partner of their
election to continue the business of the Partnership and of their undertaking
to cause the Partnership to enter into a contract to redeem all of the
Interest in the Partnership of the Partner electing to terminate the
Partnership, in exchange for a distribution of cash equal to the
then-determined Fair Market Value of such Interest (net of any liabilities
allocable to such Interest) plus the amounts described in the second to last
sentence of this subsection within 2 years of the date the Fair Market Value
of such Interest is determined under this Section 10.1(b). Such Fair Market
Value shall be determined in accordance with the procedures set forth in
Section 9.5(a) through (f) above, PROVIDED, HOWEVER, that the period for
negotiation between the Partners set forth in Section 9.5(f)(ii) shall be 90
days. At the time such Fair Market Value is determined, the Interest of the
Electing Partner in the Partnership shall terminate and Electing Partner
shall be treated as a "retiring partner" for purposes of Code Section 736 and
the payment described in this Section 9.9(a) shall be treated as described in
Code Section 736(b). Upon the date of the determination of such Fair Market
Value, the Electing Partner's right to receive any distribution or allocation
of Profits from the Partnership under Section 4.2(b) shall convert
automatically into a first priority interest in the Profits of the
Partnership equal to the product of (x) the determined Fair Market Value of
such Interest and (y) LIBOR plus (I) 1 percent for the first 6-month period
following the date of determination of the Fair Market Value; (II) 2 percent
for the seventh through ninth months following the date of determination of
the Fair Market Value; (III) 3 percent for the tenth through twelfth months
following the date of determination of
31
<PAGE>
the Fair Market Value; (IV) 4 percent for the thirteenth through fifteenth
months following the date of determination of the Fair Market Value; (V) 5
percent for the sixteenth through eighteenth months following the date of
determination of the Fair Market Value; (VI) 6 percent for the nineteenth
through twenty-first months following the date of determination of the Fair
Market Value; and (VII) 7 percent for the twenty-second through twenty-fourth
months following the date of determination of the Fair Market Value. The
payments described in this Section shall be treated as distributions of
partnership income as described in Code Section 736(a).
10.2 ELECTION TO CONTINUE THE BUSINESS. The Partnership shall also
not be dissolved pursuant to a Dissolution Event specified in Sections
10.1(a)(i) or (iii) (except as otherwise provided in the Act), if, within 20
business days of such Dissolution Event, all the remaining Partners
unanimously agree in writing to continue the business of the Partnership.
10.3 CLOSING OF AFFAIRS.
(a) In the event of the dissolution of the Partnership for
any reason, and in the absence of an election pursuant to Section 10.2 hereof
to continue the business of the Partnership, the Management Committee shall
commence to close the affairs of the Partnership, to liquidate or retain for
distribution to the Partners its investments and to terminate the
Partnership, in each instance in such manner as the Management Committee may
reasonably determine to be appropriate, provided, however, that no
distribution of any Partnership property shall be made to any of the Partners
(except for PRO RATA distributions) except upon the prior approval of all of
the Partners. Upon complete liquidation of the Partnership's property and
compliance with the distribution provisions set forth in Section 10.3(b)
hereof, the Partnership shall cease to be such, and the Management Committee
shall cause to be executed, acknowledged and filed all certificates necessary
to terminate the Partnership.
(b) In liquidating the Partnership, the assets of the
Partnership shall be applied to the extent permitted by the Act in the
following order of priority:
(i) FIRST, to pay the costs and expenses of the
closing of the affairs and liquidation of the Partnership;
(ii) SECOND, to pay the matured debts and liabilities
of the Partnership;
(iii) THIRD, to establish reserves adequate to meet any
and all contingent or unforeseen liabilities or obligations of the
Partnership, provided that at the expiration of such period of time as the
Management Committee may deem advisable, the
32
<PAGE>
balance of such reserves remaining after the payment of such contingencies or
liabilities shall be distributed as hereinafter provided;
(iv) FOURTH, to all Partners in proportion to each
Partner's Percentage Interest in the Partnership, after taking appropriate
account of, and making appropriate adjustments for, (A) any Indebtedness then
remaining outstanding which is attributable to any Partnership assets
previously contributed by a particular partner, and (B) any portion of any
required capital contributions or accrued but unpaid interest described in
either Section 3.1(b) or 3.1(c) of this Agreement which then remains
outstanding (provided, however, that to the extent that any Partner has a
finally adjudicated indemnity obligation to any other Partner, any
distribution that would otherwise be distributed to the partner subject to
such obligation shall be distributed to the Partner entitled to the benefit
of the indemnity obligation to the extent thereof).
(c) No Partner shall have any obligation to restore a
deficit balance in its Capital Account.
ARTICLE XI
AMENDMENT TO AGREEMENT
Amendments to this Agreement and to the Certificate of Formation of
the Partnership shall be approved in writing by all of the Partners. An
amendment shall become effective as of the date specified in the Partners'
approval or if none is specified as of the date of such approval or as
otherwise provided in the Act.
ARTICLE XII
INDEMNIFICATION
12.1 GENERAL. From and after the Closing, the Partners shall
indemnify each other as provided in this Article XII. 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, losses (including, without
limitation, any adverse tax consequences to other parties arising directly or
indirectly from a violation of a covenant in this Agreement by a party),
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. Notwithstanding any other
provision of this Agreement, each party (an "INDEMNIFYING PARTY") shall
defend, indemnify, save and keep harmless the other Partners, the Partnership
and their respective successors and permitted
33
<PAGE>
assigns (collectively, the "INDEMNIFIED PARTIES") against and from any and
all Damages sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any breach of any representation or warranty made by the
Indemnifying Party in this Agreement or in any closing document delivered to
the Indemnified Parties in connection with this Agreement;
(b) any breach by the Indemnifying Party of, or failure by
the Indemnifying Party to comply with, any of its covenants or obligations
under this Agreement (including, without limitation, their obligations under
this Article XII); or
(c) any indemnification obligation of such party or any
affiliate thereof arising under the provisions of Article XI of the
Contribution Agreement.
In no event, however, shall any party be liable to indemnify the other
parties with respect to any breach of which such other Partner(s) had actual
knowledge prior to the Closing.
Any indemnification obligation arising under this Article XII and/or
Article X of the Contribution Agreement shall be discharged by a capital
contribution by the Partner owing such obligation to the Partnership in the
amount of the Damages relating thereto. Any payment by the Partnership of
Damages to which an indemnification obligation relates shall be charged as a
distribution to the Indemnifying Partner and taken into account for purposes
of current and future distributions made by the Partnership pursuant to
Section 5.1. In addition, no item of Partnership property shall be revalued
to reflect such indemnification payment. From the date of determination of
such obligation (which shall be the date agreed by the parties or the date of
a final binding determination by a mediator or the date of a final,
non-appealable determination by a court of competent jurisdiction, as
applicable) and until such obligation (and all accrued interest, if any, with
respect thereto) has been paid in full in cash or other immediately available
funds, all cash distributions to which a Partner shall otherwise be entitled
to receive pursuant to Section 5.1(a) hereof, shall instead be retained by
the Partnership and credited to the discharge of such obligations and accrued
interest. Any amounts so retained shall be treated as distributed to such
Partners and, first paid to the Partnership in the amount of the accrued
interest and, second, with respect to the remainder thereof, contributed to
the Partnership as an Additional Capital Contribution on behalf of the
Partner owing such obligation.
12.3 EXCLUSIVE REMEDY. The sole and exclusive remedy of Indemnified
Parties with respect to any and all claims relating to the subject matter of
this Agreement shall be pursuant to the indemnification provisions set forth
in this Article XII.
12.4 THIRD PARTY CLAIMS. Promptly following the receipt of notice of
any claim for Damages or for equitable relief which are asserted or threatened
by a party other than the
34
<PAGE>
parties hereto, their successors or permitted assigns (a "THIRD PARTY
CLAIM"), the party receiving the notice of the Third Party Claim shall (a)
notify the other Partners in writing in accordance with Section 13.2 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 giving rise to the claim. The Indemnified Party shall tender the
defense of a Third Party Claim to the Indemnifying Party.
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. 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 with respect to settling such matter which decision 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 reasonably be expected to, result in or relate to either a material
nonmonetary obligation or restriction of any kind whatsoever being imposed
upon the Indemnified Party 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 Partnership's business or the Indemnified Parties, as the case may be,
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
35
<PAGE>
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; provided that the Indemnifying
Party shall be entitled to participate, at its expense, with counsel of its
choice, and any settlement shall be approved by the Indemnifying Party, such
approval not to be unreasonably withheld, 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 subject to the
preceding sentence may settle such Third Party Claim, either before or after
the initiation of litigation. 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 for the reasonable attorneys' fees and other expenses of
defending the Third Party Claim which is incurred from time to time,
forthwith following the presentation to the Indemnifying Party of itemized
bills for said attorneys' fees and other expenses.
12.5 OTHER INDEMNIFICATION CLAIMS. The Indemnified Party shall give
the Indemnifying Party prompt notice of any Indemnification Claim (other than
a Third Party Claim) 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 or otherwise respond to
the matter giving rise to the claim. In respect of any Indemnification Claim
other than a Third Party Claim, the Partnership shall provide the
Indemnifying Party with the opportunity and all appropriate access to the
applicable facilities, personnel, books and records to conduct (under the
Indemnifying Party's control) necessary to respond to such Indemnification
Claim.
ARTICLE XIII
GENERAL PROVISIONS
13.1 MEDIATION. Each Partner agrees that, in the event of any
dispute among such Partners regarding the interpretation or application of
this Agreement (including any dispute regarding the operation of the
Partnership that cannot be resolved by the procedures created by the
provisions of this Agreement), it will follow the following procedures:
(a) it will give each other Partner written notice of the
matter in dispute;
(b) it will negotiate reasonably and in good faith with the
other Partners in order to resolve such dispute for a period of not less than
fifteen (15) business days following receipt of the notice in (a);
36
<PAGE>
(c) if the dispute has not been resolved by negotiation
pursuant to (b), it will cooperate with the other Partners to submit the
dispute to an independent mediator (to be selected by the unanimous consent
of the Partners, which shall only be withheld on the basis of good faith
concerns about the independence or adequacy of expertise of the proposed
mediator) who shall have ten (10) business days after the matter is fully
submitted to him or her to propose a settlement of the dispute;
(d) if any Partner refuses, in its sole and unreviewable
discretion to accept the proposed resolution of the mediator, it shall give
prompt written notice of such refusal to the other Partners and, at any time
following receipt of any such notice, any Partner shall be free to pursue any
legal, equitable or other remedies available to it regarding the matter in
dispute.
Notwithstanding the foregoing, no Partner shall be required to pursue
the notice, negotiation or mediation steps set forth above if it determines,
reasonably and in good faith, the delay involved in such procedure would
cause irreparable, material harm to it or its interest in the Partnership.
13.2 NOTICES. Unless otherwise specifically provided in this
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing, directed or addressed to the respective
addresses set forth in Schedule 13.2 attached hereto, and shall be either (i)
delivered by hand, (ii) delivered by a nationally recognized commercial
overnight delivery service, (iii) mailed postage prepaid by registered or
certified mail, or (iv) transmitted by facsimile, with receipt confirmed.
Such notices shall be effective: (a) in the case of hand deliveries when
received; (b) in the case of an overnight delivery service, when received in
accordance with the records of such delivery service; (c) in the case of
registered or certified mail, upon the date received by the addressee as
determined by the U.S. Postal Service; and (d) in the case of facsimile
notices, when electronic indication of receipt is received. Any party may
change its address and telecopy number by written notice to the other parties
given in accordance with this Section 13.2.
13.3 CONFIDENTIALITY. Each of the Partners agrees that, except as
required by law, legal process, government regulators, or as reasonably
necessary for performance of its obligations or enforcement of its rights
under this Agreement, without the prior written consent of the other
Partners, it will treat and hold as confidential (and not disclose or provide
access to any person other than such Partner's attorneys or accountants) and
it will cause its Affiliates, officers, managers, partners, employees and
agents to treat and hold as confidential (and not divulge or provide access
to any person) all information relating to (i) the business of the
Partnership and (ii) any patents, inventions, designs, know-how, trade
secrets or other intellectual property relating to the Partnership, in each
case excluding (A) information in the public domain when received by such
Partner or thereafter in the public domain through sources other than such
Partner, (B) information
37
<PAGE>
lawfully received by such Partner from a third party not subject to a
confidentiality obligation and (C) information developed independently by
such Partner. The obligations of the Partners hereunder shall not apply to
the extent that the disclosure of information otherwise determined to be
confidential is required by applicable law, provided, however, that prior to
disclosing such confidential information to any party other than a
governmental agency exercising its ordinary regulatory oversight of a
Partner, a Partner shall notify the Partnership thereof, which notice shall
include the basis upon which such Partner believes the information is
required to be disclosed. This Section 13.3 shall survive for a period of
four years with respect to any Partner that withdraws from the Partnership
and, with respect to any dissolution or termination of the Partnership
pursuant to Article X hereof, for a period of time agreed by the all of
Partners.
13.4 ENTIRE AGREEMENT, ETC. This Agreement, together with the
Contribution Agreement, constitutes the entire agreement among all of the
parties hereto relating to the subject matter hereof and supersedes all prior
contracts, agreements and understandings among all of them, except for such
agreements that may make specific reference to this provision. No course of
prior dealings among all of the parties shall be relevant to supplement or
explain any term used in the Agreement. Acceptance or acquiescence in a
course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or the
acquiescing party has knowledge of the nature of the performance and an
opportunity for objection. All waivers, amendments and modifications of this
Agreement must be in writing, executed by a duly authorized officer of the
party against whom enforcement of any waiver, modification or consent is
sought. No waiver of any terms or conditions of this Agreement in one
instance shall operate as a waiver of any other term or condition or as a
waiver in any other instance.
13.5 CONSTRUCTION PRINCIPLES. As used in this Agreement words in
any gender shall be deemed to include all other genders. The singular shall
be deemed to include the plural and vice versa. The captions and article and
section headings in this Agreement are inserted for convenience of reference
only and are not intended to have significance for the interpretation of or
construction of the provisions of this Agreement.
13.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts by the parties hereto, each of which when so executed will be an
original, but all of which together will constitute one and the same
instrument.
13.7 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable for any reason, such provision shall be ineffective
to the extent of such invalidity or unenforceability; provided, however, that
the remaining provisions will continue in full force without being impaired
or invalidated in any way unless such invalid or unenforceable provision or
clause shall be so significant as to materially affect the parties'
38
<PAGE>
expectations regarding this Agreement. Otherwise, the parties hereto agree
to replace any invalid or unenforceable provision with a valid provision
which most closely approximates the intent and economic effect of the invalid
or unenforceable provision.
13.8 EXPENSES. The Initial Partners each agree to bear their own
costs for all matters involved in the negotiation, execution and performance
of this Agreement and related transactions unless otherwise specified herein.
13.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware as applied to
transactions taking place wholly within Delaware between Delaware residents.
13.10 BINDING EFFECT. Subject to the provisions of this Agreement
relating to transferability, this Agreement shall be binding upon, and inure
to the benefit of, the Partners and their respective permitted distributees,
heirs, successors and assigns.
13.11 ADDITIONAL DOCUMENTS AND ACTS. Each Partner agrees to execute
and deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions, and conditions of this Agreement
and of the transactions contemplated hereby.
13.12 NO THIRD PARTY BENEFICIARY. This Agreement is made solely for
the benefit of the parties hereto and their permitted distributees, heirs,
successors and assigns and no other person shall have any rights, interest,
or claims hereunder or otherwise be entitled to any benefits under or on
account of this Agreement as a third party beneficiary or otherwise.
13.13 FORMATION OF SUBSIDIARY LIMITED PARTNERSHIP. Concurrently with
the formation of the Partnership, the Partners shall cause the Partnership to
contribute (by such means as the Partnership may deem appropriate) all of the
Partnership's assets and liabilities relating to the business and assets of
the newspapers listed on Exhibit 1 to this Agreement to a new California
limited partnership to be established among the Partnership, Donrey and West
Coast MediaNews, pursuant to a limited partnership agreement in form and
substance acceptable to each of the Partners (the "Limited Partnership, and
the "Limited Partnership Agreement"). In exchange for (i) its contribution
of such assets and liabilities to the Limited Partnership and (ii) its
undertaking to guarantee the discharge/performance of all of the liabilities
and obligations of the Limited Partnership, the Partnership shall receive a
Limited Partner interest in such Limited Partnership equal to 99.99% of all
the partnership interests in the Limited Partnership. In exchange for cash
equal to .005% of
39
<PAGE>
the net value of the assets and liabilities transferred to the Limited
Partnership, each of Donrey and West Coast MediaNews shall receive a general
partnership interest in the Limited Partnership, equal to .05% of the total
partnership interests in the Limited Partnership. Under the Limited
Partnership Agreement the Partners contemplate that the rights of the Limited
Partner shall not include any right which would in Gannett's judgment cause
the Federal Communications Commission (the "FCC") to conclude that the
Limited Partner is not sufficiently insulated from being able to exert
influence over the media business of the Limited Partnership to preclude
ownership of such business being attributed to the Limited Partner; provided,
however that the Partners agree to reform the Limited Partnership in the
event that FCC rules would permit the Partners to own the newspapers in such
a structure but would not permit ownership (without disposition of a
business) in the General Partnership structure.
40
<PAGE>
IN WITNESS WHEREOF, each Partner has duly executed this Agreement as
of this 31st day of March, 1999.
West Coast MediaNews LLC
By: ______________________
Name:
Title:
Donrey Newspapers, LLC
By: ______________________
Name:
Title:
The Sun Company of
San Bernardino, California
By: ______________________
Name:
Title:
Media West - SBC, Inc.
By: ______________________
Name:
Title:
41
<PAGE>
Contribution Agreement
By and Among
Garden State Newspapers, Inc.
Alameda Newspapers, Inc.
V & P Publishing, Inc.
Internet Media Publishing, Inc.
DR Partners
Media West - SBC, Inc.
And
The Sun Company
of San Bernardino, California
March 31, 1999
<PAGE>
TABLE OF CONTENTS
Article I
Formation of West Coast MediaNews LLC
<TABLE>
<S> <C>
1.1 Formation of West Coast MediaNews LLC . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded MediaNews Assets . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Excluded MediaNews Liabilities. . . . . . . . . . . . . . . . . . . . . . . 5
Article II
Formation of Donrey Newspapers LLC
2.1 Formation of Donrey Newspapers LLC. . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Donrey Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Excluded Donrey Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9
Article III
Transfer of Gannett Assets to Partnership and
Assumption of Gannett Liabilities by Partnership
3.1 Transfer of Gannett Assets. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Excluded Gannett Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Excluded Gannett Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 13
Article IV
Formation of California Newspapers
Partnership; Closing
4.1 Formation of California Newspapers Partnership. . . . . . . . . . . . . . . 13
4.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Working Capital Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE>
Article V
Representations, Warranties and
Covenants of the MediaNews Parties
<TABLE>
<S> <C>
5.1 Organization of the MediaNews Parties . . . . . . . . . . . . . . . . . . . 18
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.10 Ownership and Transfer of MediaNews Assets. . . . . . . . . . . . . . . . . 21
5.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 22
5.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 22
5.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.16 No Misstatements of Omissions . . . . . . . . . . . . . . . . . . . . . . . 24
5.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.18 MediaNews Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 29
5.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 30
Article VI
Representations, Warranties and
Covenants of DR Partners
6.1 Organization of DR Partners . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
6.10 Ownership and Transfer of Donrey Assets . . . . . . . . . . . . . . . . . . 33
6.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 33
6.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 34
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.16 No Misstatements or Omissions . . . . . . . . . . . . . . . . . . . . . . . 36
6.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.18 Donrey Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.19 Donrey Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . 38
6.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 41
6.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 41
Article VII
Representations, Warranties and
Covenants of Gannett
7.1 Organization of MWSB and Sun. . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Ownership and Transfer of Gannett Assets. . . . . . . . . . . . . . . . . . 44
7.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 44
7.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 44
7.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.16 No Misstatements of Omissions . . . . . . . . . . . . . . . . . . . . . . . 47
7.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.18 Gannett Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
7.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 52
7.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 52
Article VIII
Additional Agreements
8.1 Conduct of the Business of the MediaNews Parties. . . . . . . . . . . . . . 53
8.2 Conduct of the Business of DR Partners. . . . . . . . . . . . . . . . . . . 54
8.3 Conduct of the Business of Gannett. . . . . . . . . . . . . . . . . . . . . 56
8.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.6 Authorizations and Consents . . . . . . . . . . . . . . . . . . . . . . . . 60
8.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.8 Satisfaction of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9 Confidentiality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10 Continuation of Arrangements with Affiliates. . . . . . . . . . . . . . . . 63
Article IX
Conditions to Closing
9.1 Conditions to Obligations of the MediaNews Parties. . . . . . . . . . . . . 64
9.2 Conditions to Obligations of DR Partners. . . . . . . . . . . . . . . . . . 65
9.3 Conditions to Obligations of Gannett. . . . . . . . . . . . . . . . . . . . 66
Article X
Termination of Agreement
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Article XI
Indemnification
11.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.2 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . 69
11.3 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.4 Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.5 Other Indemnification Claims. . . . . . . . . . . . . . . . . . . . . . . . 71
</TABLE>
iv
<PAGE>
Article XII
General
<TABLE>
<S> <C>
12.1 Liability for Covenants, Representations and Warranties after Closing . . . 72
12.2 Transactional Costs/Expenses. . . . . . . . . . . . . . . . . . . . . . . . 72
12.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.4 Assignment; No Third Party Beneficiary Rights . . . . . . . . . . . . . . . 72
12.5 Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.7 Governing Law and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.8 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.9 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.14 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.15 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
EXHIBITS
Exhibit A Definitions
Exhibit B Schedule of MediaNews Newspapers
Exhibit C Schedule of Permitted MediaNews Liens
Exhibit D Schedule of MediaNews Excluded Assets
Exhibit E Schedule of Excluded MediaNews Liabilities
Exhibit F Schedule of Donrey Newspapers
Exhibit G Schedule of Permitted Donrey Liens
Exhibit H Schedule of Donrey Excluded Assets
Exhibit I Schedule of Excluded Donrey Liabilities
Exhibit J Schedule of Gannett Newspapers
Exhibit K Schedule of Permitted Gannett Liens
Exhibit L Schedule of Gannett Excluded Assets
Exhibit M Schedule of Excluded Gannett Liabilities
Exhibit N Form of Partnership Agreement
Exhibit O Form of Assignment Agreement
Exhibit P Form of Assumption Agreement
Exhibit Q Form of MediaNews Parties' and West Coast MediaNews LLC's Opinion
of Counsel
Exhibit R Form of DR Partners' and Donrey's Opinion of Counsel
Exhibit S Form of Gannett's Opinion of Counsel
Exhibit T Schedule of Categories of Items to be Excluded/Included in
Estimated and Final Working Capital Statement
Exhibit U Form of USA TODAY Printing Agreement
v
<PAGE>
MediaNews Newspapers
Disclosure Schedule
Section 5.3 Schedule of Conflicts, Breaches and Violations
Section 5.5 Schedule of MediaNews Newspapers Financial Statements and
GAAP Exceptions
Section 5.6 Notices of Violations
Section 5.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 5.9 Schedule of Certain Employee Related Matters
Section 5.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of MediaNews Assets
Section 5.12 Schedule of Certain Contractual Defaults
Section 5.13 Schedule of Certain Changes or Events
Section 5.14 Schedule of Certain Tax Related Matters
Section 5.17 Schedule of Certain Environmental Matters
Section 5.18 Schedule of MediaNews Real Estate
Section 5.19 Schedule of MediaNews Intellectual Property
Section 5.21 Schedule of Certain Circulation Related Matters
Section 5.22 Schedule of Certain Advertising Related Matters
Section 5.25 Schedule of Affiliate Relationships
Donrey Newspapers
Disclosure Schedules
Section 6.3 Schedule of Conflicts, Breaches and Violations
Section 6.5 Schedule of Donrey Newspapers Financial Statements and GAAP
Exceptions
Section 6.6 Notices of Violation
Section 6.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 6.9 Schedule of Certain Employee Related Matters
Section 6.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of Donrey Newspapers Assets
Section 6.12 Schedule of Certain Contractual Defaults
Section 6.13 Schedule of Certain Changes or Events
Section 6.14 Schedule of Certain Tax Related Matters
Section 6.17 Schedule of Certain Environmental Matters
Section 6.18 Schedule of Donrey Newspapers Real Estate
Section 6.19 Schedule of Donrey Newspapers Intellectual Property
Section 6.21 Schedule of Certain Circulation Related Matters
Section 6.22 Schedule of Certain Advertising Related Matters
Section 6.25 Schedule of Affiliate Relationships
vi
<PAGE>
Gannett Newspapers
Disclosure Schedules
Section 7.3 Schedule of Conflicts, Breaches and Violations
Section 7.5 Schedule of Gannett Newspapers Financial Statements and
GAAP Exceptions
Section 7.6 Notices of Violation
Section 7.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 7.9 Schedule of Certain Employee Related Matters
Section 7.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of Gannett Newspapers Assets
Section 7.12 Schedule of Certain Contractual Defaults
Section 7.13 Schedule of Certain Changes or Events
Section 7.14 Schedule of Certain Tax Related Matters
Section 7.17 Schedule of Certain Environmental Matters
Section 7.18 Schedule of Gannett Newspapers Real Estate
Section 7.19 Schedule of Gannett Newspapers Intellectual Property
Section 7.21 Schedule of Certain Circulation Related Matters
Section 7.22 Schedule of Certain Advertising Related Matters
Section 7.25 Schedule of Affiliate Relationships
vii
<PAGE>
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "AGREEMENT"), dated as of March 3, 1999,
among Garden State Newspapers, Inc., a Delaware corporation ("GSN"), Alameda
Newspapers, Inc., a Delaware corporation ("ALAMEDA"), V & P Publishing, Inc.,
a California corporation ("V & P"), Internet Media Publishing, Inc. a
Delaware corporation ("IMP") DR Partners, a Nevada general partnership ("DR
PARTNERS") Media West - SBC, Inc., a Delaware corporation ("MWSB") and The
Sun Company of San Bernardino, California, a California corporation ("Sun").
R E C I T A L S :
Each of GSN, Alameda, V&P, IMP, DR Partners MWSB and Sun owns and
operates certain newspaper properties and/or related assets located in the
State of California. Each of these parties desire to combine certain of those
specific newspaper properties into a single business operation through the
creation of the California Newspapers Partnership, a Delaware general
partnership (the "PARTNERSHIP").
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto hereby agree as follows:
I. FORMATION OF WEST COAST MEDIANEWS LLC
1.1 FORMATION OF WEST COAST MEDIANEWS LLC.
(a) Prior to the Closing (as defined below), GSN, Alameda, V
& P and IMP will form and organize a limited liability company to be called
"WEST COAST MEDIANEWS LLC" under the laws of the State of Delaware (hereafter
"WEST COAST MEDIANEWS") and shall be the sole members thereof at formation.
GSN, Alameda, V & P and IMP are hereinafter referred to collectively as the
"MEDIANEWS PARTIES". Upon the terms and subject to the conditions of this
Agreement, each of the MediaNews Parties shall (or shall cause the
appropriate person to), on the Closing Date (as defined below), assign,
transfer, convey and deliver to the Partnership, as a capital contribution
to, and in exchange for membership interests in West Coast MediaNews, all
their right, title and interest in and to all of the assets, properties and
goodwill (such assets, properties and goodwill being referred to herein as
the "MEDIANEWS ASSETS") used, held for use in, located at the premises of or
shown on the financial statements of the businesses of the newspapers listed
in the schedule appended hereto as Exhibit B (the "MEDIANEWS NEWSPAPERS"),
except as otherwise provided in Section 1.2 hereof. The MediaNews Assets
shall include, without limitation, the following items:
<PAGE>
(i) 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
(collectively, "INVENTORY") of the MediaNews Newspapers;
(ii) all furniture, fixtures, improvements, equipment
(including office equipment), on or off site, machinery, parts, computer
hardware, tools, printing presses, vehicles and all other tangible personal
property (other than the Inventory or leased personal property)
(collectively, "EQUIPMENT") of the MediaNews Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the MediaNews Newspapers;
(iv) all accounts receivable, billed or unbilled,
notes receivable, negotiable instruments and chattel paper, including credit
card receivables relative to subscriptions and advertising charged by
customers to credit cards and all accrued interest charges relating thereto
(collectively, "ACCOUNTS RECEIVABLE") of the MediaNews Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the MediaNews Assets or the MediaNews Newspapers
against all persons whomsoever, including, without limitation, all rights
against suppliers under warranties covering any of the Inventory or Equipment
and all Permits and Environmental Permits, to the extent they are legally
transferable by the MediaNews Parties, exclusive of rights and claims to Tax
Assets or those related to any Excluded MediaNews Asset or the subject matter
of any MediaNews Excluded Liabilities;
(vi) all Intellectual Property of the MediaNews
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the MediaNews Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the MediaNews Newspapers and
for the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the MediaNews Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all
advertising service contracts, all service and feature contracts, all
computer software and related hardware licensed or leased with respect to the
MediaNews Newspapers and all other leases, powers of attorney, other
contracts, permits, licenses, authorizations and instruments relating to the
MediaNews Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all MediaNews Excluded Assets, as defined in Section
1.3 of this Agreement;
2
<PAGE>
(ix) all existing books, papers, files and records of
the MediaNews Parties relating to the MediaNews Newspapers and not also
relating to other publications owned by the MediaNews Parties or their
Affiliates whether in hard copy, magnetic or other format (collectively, the
"MEDIANEWS PARTIES' RECORDS"), including, without limitation, the following
types of files and records: books of account and accounting information, such
Tax information as the Partnership may reasonably request relating to the
MediaNews Assets, 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 MediaNews
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, proprietary software used in connection with
the editorial and classified advertising departments of the MediaNews
Newspapers (including without limitation, all documentation and source codes
and specifications and drawings for such software), equipment drawings,
manuals and data, written confirmations or certificates relating to MediaNews
Permits and MediaNews Environmental Permits, industry information and
information relating to the MediaNews Newspapers' trade secrets and customer
specifications;
(x) all prepaid expenses, all advances and other
prepaid items and credits for or toward the purchase of goods, services and
Inventory (collectively, the "PREPAIDS") by the MediaNews Parties or as
relating to the MediaNews Newspapers, other than those hereinafter defined as
MediaNews Excluded Assets, or relating to MediaNews Excluded Assets, which
have not as of the Closing Date been received in full by the MediaNews
Parties;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the MediaNews Newspapers;
(xii) all of the MediaNews Parties' rights, title and
interest in all security deposits, surety deposits and bonds presently
maintained on behalf of the MediaNews Parties relative to the MediaNews
Newspapers which relate to contracts, leases and agreements being assigned to
and assumed by the Partnership at the Closing;
(xiii) the library of the MediaNews Newspapers,
including, but not limited to the MediaNews Parties' and/or their Affiliates'
right, title and interest in photography, art, clippings, files, prints,
telephone and city directories, historic facts and memorabilia, all microfilm
and microfiche reproductions of back issues, proprietary software, books,
computer printouts, computer data and other reference materials, the morgue,
all bound copies of back issues, and all unbound back issues of each of the
MediaNews Newspapers;
3
<PAGE>
(xiv) all leases of motor vehicles and other tangible
personal property of the MediaNews Parties relating to the MediaNews
Newspapers, to the extent assignable to the Partnership, but excluding all
MediaNews Excluded Assets as defined in Section 1.3; and,
(xv) except for the MediaNews Excluded Assets, all
other assets, whether tangible or intangible, not hereinafter expressly
mentioned which are now, or as of the Closing will be, used in or held for
future use in the MediaNews Newspapers' operations, or which are necessary
for the operation of the MediaNews Newspapers as a going concern.
(b) All of the MediaNews Assets shall be assigned,
transferred, conveyed and delivered to the Partnership free and clear of all
security interests, mortgages, pledges, restrictions, charges, liens of any
kind or other material encumbrances ("LIENS") other than Liens described in
Exhibit C hereto (the "PERMITTED MEDIANEWS LIENS") .
1.2 EXCLUDED MEDIANEWS ASSETS. Notwithstanding the provisions of
Section 1.1, the MediaNews Parties shall not assign, transfer, convey or
deliver to the Partnership, and the term "MEDIANEWS ASSETS" shall not
include, any of the following (the "EXCLUDED MEDIANEWS ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by the MediaNews Parties as
of the Closing for the account of or related to the MediaNews Newspapers;
(b) all income taxes receivable from a governmental
authority and all income tax refunds receivable from a governmental authority
(collectively, "TAX ASSETS") of the MediaNews Newspapers and all leases and
agreements relating to the MediaNews Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of the MediaNews
Newspapers as of the Closing relating to MediaNews Excluded Assets or
pursuant to contracts which are not being assigned as of the Closing Date to
the Partnership;
(d) all of the MediaNews Parties' corporate records;
(e) the MediaNews Parties' interests in any retroactive
refunds for worker's compensation insurance premiums paid with respect to
work performed prior to the Closing Date by employees of the MediaNews
Newspapers; and,
(f) all rights and claims relating to any Excluded MediaNews
Asset or the subject matter of any MediaNews Excluded Liabilities.
(g) all newsprint purchase agreements and insurance
policies, except those insurance policies being transferred on a provisional
basis with respect to all or a
4
<PAGE>
portion of the 90 day transition period following the Closing, as more fully
described on Exhibit D hereto;
(h) all employee benefit plans relating to the MediaNews
Newspapers, except those being transferred on a provisional basis with
respect to all or a portion of the 90 day transition period following the
Closing, as more fully described on Exhibit D hereto; and,
(i) such other assets, if any, as are specifically described
in Exhibit D hereto.
1.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date the Partnership shall
assume, and agree to pay, perform and discharge when due, all debts,
liabilities and obligations of any kind, character or description, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined
or undetermined (collectively, "LIABILITIES") of the MediaNews Parties
relating to the MediaNews Newspapers and/or MediaNews Assets other than the
Excluded MediaNews Liabilities (as defined below) (collectively, the "ASSUMED
MEDIANEWS LIABILITIES").
1.4 EXCLUDED MEDIANEWS LIABILITIES. Notwithstanding the
provisions of Section 1.3, the MediaNews Parties shall retain, and shall be
responsible for paying, performing and discharging when due, and the
Partnership shall not assume or have any responsibility for, and the term
"ASSUMED MEDIANEWS LIABILITIES" shall not include, any of the Liabilities
relating to the MediaNews Newspapers and/or MediaNews Assets which arise out
of the MediaNews Parties' operation or ownership thereof prior to the Closing
Date and those other liabilities described in Exhibit E hereto (the "EXCLUDED
MEDIANEWS LIABILITIES").
II. FORMATION OF DONREY NEWSPAPERS LLC
2.1 FORMATION OF DONREY NEWSPAPERS LLC.
(a) Prior to the Closing, DR Partners shall cause the
formation and organization of a limited liability company to be called
"DONREY NEWSPAPERS LLC" (hereafter "DONREY"). Donrey shall be organized
under the laws of the State of Arkansas. Only DR Partners shall be a member
of, or otherwise own an equity interest in, Donrey at formation. Upon the
terms and subject to the conditions of this Agreement, DR Partners shall (or
shall cause the appropriate person to), on the Closing Date, assign,
transfer, convey and deliver to the Partnership, as a capital contribution
to, and in exchange for membership interests in Donrey, all their right,
title and interest in and to the following assets and properties (such assets
and properties being referred to herein as the "DONREY ASSETS") used, held
for use in, located at the premises of or shown on the financial statements
of the businesses of the newspapers listed in the schedule appended hereto as
Exhibit F (the "DONREY NEWSPAPERS"), except as otherwise provided in Section
2.2 hereof. The Donrey Assets shall include, without limitation, the
following items:
5
<PAGE>
(i) 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 Donrey Newspapers;
(ii) all Equipment (other than the Donrey Inventory or
leased personal property) of the Donrey Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the Donrey Newspapers;
(iv) all Accounts Receivable of the Donrey Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the Donrey Assets or the Donrey Newspapers against all
persons whomsoever, including, without limitation, all rights against
suppliers under warranties covering any of the Inventory or Equipment and all
Permits and Environmental Permits, to the extent they are legally
transferable by DR Partners, exclusive of rights and claims to Tax Assets or
those relating to any Excluded Donrey Asset or the subject matter of any
Donrey Excluded Liability;
(vi) all Intellectual Property of the Donrey
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the Donrey Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the Donrey Newspapers and for
the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the Donrey Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all newsprint
contracts, all advertising service contracts, all service and feature
contracts, all computer software and related hardware licenses or leased with
respect to the Donrey Newspapers and all other leases, powers of attorney,
other contracts, permits, licenses, authorizations and instruments relating
to the Donrey Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all Donrey Excluded Assets, as defined in Section 2.3
of this Agreement;
(ix) all existing books, papers, files and records of
DR Partners relating to the Donrey Newspapers and not also relating to other
publications owned by DR Partners or its Affiliates, whether in hard copy,
magnetic or other format (collectively, the "DR Partners" Records"),
including, without limitation, the following types of files and records:
books of account and accounting information, such Tax information as the
6
<PAGE>
Partnership may reasonably request relating to the Donrey Assets, 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 Donrey 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, proprietary software used in connection with the
editorial and classified advertising departments of the Donrey Newspapers
(including without limitation, all documentation and source codes and
specifications and drawings for such software), equipment drawings, manuals
and data, written confirmations or certificates relating to Permits and
Environmental Permits, industry information and information relating to the
Donrey Newspapers' trade secrets and customer specifications;
(x) all Prepaids relating to the Donrey Newspapers,
other than those hereinafter defined as Donrey Excluded Assets, or relating
to Donrey Excluded Assets, which have not as of the Closing Date been
received in full by DR Partners;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the Donrey Newspapers;
(xii) all of DR Partners' rights, title and interest in
all security deposits, surety deposits and bonds presently maintained on
behalf of DR Partners relative to the Donrey Newspapers which relate to
contracts, leases and agreements being assigned to and assumed by the
Partnership at the Closing;
(xiii) the library of the Donrey Newspapers, including,
but not limited to DR Partners' and/or its Affiliates' right, title and
interest in photography, art, clippings, files, prints, telephone and city
directories, historic facts and memorabilia, all microfilm and microfiche
reproductions of back issues, proprietary software, books, computer
printouts, computer data and other reference materials, the morgue, all bound
copies of back issues, and all unbound back issues of each of the Donrey
Newspapers;
(xiv) all leases of motor vehicles and other tangible
personal property of DR Partners relating to the Donrey Newspapers, to the
extent assignable to the Partnership, but excluding all Donrey Excluded
Assets as defined in Section 2.3; and,
(xv) except for the Donrey Excluded Assets, all other
assets, whether tangible or intangible, not hereinafter expressly mentioned
which are now, or as of the Closing will be, used in or held for future use
in the Donrey Newspapers' operations, or which are necessary for the
operation of the Donrey Newspapers as a going concern.
(b) All of the Donrey Assets shall be assigned, transferred,
conveyed and delivered to the Partnership free and clear of all Liens other
than the Liens described in Exhibit G hereto (the "PERMITTED DONREY LIENS").
7
<PAGE>
2.2 EXCLUDED DONREY ASSETS. Notwithstanding the provisions of
Section 2.1, DR Partners shall not assign, transfer, convey or deliver to the
Partnership, and the term "DONREY ASSETS" shall not include, any of the
following (the "DONREY EXCLUDED ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by DR Partners as of the
Closing for the account of or related to the Donrey Newspapers;
(b) all Tax Assets of the Donrey Newspapers and all leases
and agreements relating to the Donrey Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of DR Partners as of
the Closing relating to Donrey Excluded Assets or pursuant to contracts which
are not being assigned as of the Closing Date to the Partnership;
(d) all of DR Partners' partnership records;
(e) DR Partners' interests in any retroactive refunds for
worker's compensation insurance premiums paid with respect to work performed
prior to the Closing Date by employees of the Donrey Newspapers;
(f) all rights and claims relating to any Excluded Donrey
Asset or the subject matter of any Donrey Excluded Liability;
(g) all newsprint purchase agreements and insurance
policies, except those insurance policies being transferred on a provisional
basis with respect to all or a portion of the 90 day transition period
following the Closing, as more fully described on Exhibit H hereto;
(h) all employee benefit plans relating to the Donrey
Newspapers, except those being transferred on a provisional basis with
respect to all or a portion of the 90 day transition period following the
Closing, as more fully described on Exhibit H hereto; and,
(i) such other assets, if any, as are specifically described
in Exhibit H hereto.
2.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Partnership shall
assume, and agree to pay, perform and discharge when due, all Liabilities of
DR Partners relating to the Donrey Newspapers and/or Donrey Assets other than
the Excluded Donrey Liabilities (as defined below) (collectively, the
"ASSUMED DONREY LIABILITIES").
8
<PAGE>
2.4 EXCLUDED DONREY LIABILITIES. Notwithstanding the provisions of
Section 2.3, the DR Partners shall retain, and shall be responsible for
paying, performing and discharging when due, and the Partnership shall not
assume or have any responsibility for, and the term "ASSUMED DONREY
LIABILITIES" shall not include any of the Liabilities relating to the Donrey
Newspapers and/or Donrey Assets which arise out of DR Partners' operations
and ownership thereof prior to the Closing Date and those other Liabilities
described in Exhibit I hereto (the "EXCLUDED DONREY LIABILITIES").
III. TRANSFER OF GANNETT ASSETS TO PARTNERSHIP AND
ASSUMPTION OF GANNETT LIABILITIES BY PARTNERSHIP
3.1 TRANSFER OF GANNETT ASSETS.
(a) Upon the terms and subject to the conditions of this
Agreement, MWSB and Sun (hereinafter collectively referred to as "Gannett")
shall (or shall cause the appropriate person to), on the Closing Date,
assign, transfer, convey and deliver to the Partnership, as a capital
contribution to, all of MWSB's and Sun's right, title and interest in and to
the following assets and properties (such assets and properties being
referred to herein as the "GANNETT ASSETS") used, held for use in, located at
the premises of or shown on the financial statements of the businesses of the
newspaper or newspapers listed in the schedule appended hereto as Exhibit J
(the "GANNETT NEWSPAPERS"), except as otherwise provided in Section 3.2
hereof. The Gannett Assets shall include, without limitation, the following
items:
(i) 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 Gannett Newspapers;
(ii) all Equipment (other than the Gannett Inventory
or leased personal property) of the Gannett Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the Gannett Newspapers;
(iv) all Accounts Receivable of the Gannett Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the Gannett Assets or the Gannett Newspapers against
all persons whomsoever, including, without limitation, all rights against
suppliers under warranties covering any of the Inventory or Equipment and all
Permits and Environmental Permits, to the extent they are legally
transferable by Gannett, exclusive of rights and claims to Tax Assets or
those relating to any Excluded Gannett Assets or the subject matter of any
Gannett Excluded Liability;
9
<PAGE>
(vi) all Intellectual Property of the Gannett
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the Gannett Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the Gannett Newspapers and for
the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the Gannett Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all newsprint
contracts, all advertising service contracts, all service and feature
contracts, all computer software and related hardware licenses or leased with
respect to the Gannett Newspapers and all other leases, powers of attorney,
other contracts, permits, licenses, authorizations and instruments relating
to the Gannett Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all Gannett Excluded Assets, as defined in Section 3.3
of this Agreement;
(ix) all existing books, papers, files and records of
Gannett relating to the Gannett Newspapers and not also relating to other
publications owned by Gannett and/or its Affiliates, whether in hard copy,
magnetic or other format (collectively, the "Gannett Records"), including,
without limitation, the following types of files and records: books of
account and accounting information, such Tax information as the Partnership
may reasonably request relating to the Gannett Assets, 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 Gannett 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, proprietary software used in connection with the
editorial and classified advertising departments of the Gannett Newspapers
(including without limitation, all documentation and source codes and
specifications and drawings for such software), equipment drawings, manuals
and data, written confirmations or certificates relating to Permits and
Environmental Permits, industry information and information relating to the
Gannett Newspapers' trade secrets and customer specifications;
(x) all Prepaids relating to the Gannett Newspapers,
other than those hereinafter defined as Gannett Excluded Assets, or relating
to Gannett Excluded Assets, which have not as of the Closing Date been
received in full by Gannett;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the Gannett Newspapers;
10
<PAGE>
(xii) all of Gannett's rights, title and interest in
all security deposits, surety deposits and bonds presently maintained on
behalf of Gannett relative to the Gannett Newspapers which relate to
contracts, leases and agreements being assigned to and assumed by the
Partnership at the Closing;
(xiii) the library of the Gannett Newspapers, including,
but not limited to Gannett's and/or its Affiliates' right, title and interest
in photography, art, clippings, files, prints, telephone and city
directories, historic facts and memorabilia, all microfilm and microfiche
reproductions of back issues, proprietary software, books, computer
printouts, computer data and other reference materials, the morgue, all bound
copies of back issues, and all unbound back issues of each of the Gannett
Newspapers;
(xiv) all leases of motor vehicles and other tangible
personal property of Gannett relating to the Gannett Newspapers, to the
extent assignable to the Partnership, but excluding all Gannett Excluded
Assets as defined in Section 3.3; and,
(xv) except for the Gannett Excluded Assets, all other
assets, whether tangible or intangible, not hereinafter expressly mentioned
which are now, or as of the Closing will be, used in or held for future use
in the Gannett Newspapers' operations, or which are necessary for the
operation of the Gannett Newspapers as a going concern.
(b) All of the Gannett Assets shall be assigned,
transferred, conveyed and delivered to the Partnership free and clear of all
Liens other than the Liens described in Exhibit K hereto (the "PERMITTED
GANNETT LIENS").
3.2 EXCLUDED GANNETT ASSETS. Notwithstanding the provisions of
Section 3.1, Gannett shall not assign, transfer, convey or deliver to the
Partnership, and the term "GANNETT ASSETS" shall not include, any of the
following (the "GANNETT EXCLUDED ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by Gannett as of the Closing
for the account of or related to the Gannett Newspapers;
(b) all Tax Assets of the Gannett Newspapers and all leases
and agreements relating to the Gannett Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of Gannett as of the
Closing relating to Gannett Excluded Assets or pursuant to contracts which
are not being assigned as of the Closing Date to the Partnership;
(d) all of Gannett's corporate records;
11
<PAGE>
(e) Gannett's interests in any retroactive refunds for
worker's compensation insurance premiums paid with respect to work performed
prior to the Closing Date by employees of the Gannett Newspapers;
(f) all rights and claims relating to any Excluded Gannett
Assets or the subject matter of any Gannett Excluded Liability;
(g) all newsprint purchase agreements and insurance policies;
(h) all employee benefit plans relating to the Gannett
Newspapers and all specific computer support systems and all specific Gannett
intercompany contracts to which Sun is a party which are specifically
described on Exhibit L hereto, except those being transferred on a
provisional basis with respect to all or a portion of the 90 day transition
period following the Closing, as more fully described in Exhibit L hereto;
and,
(i) the use of the name Gannett and such other assets, if
any, as are specifically described in Exhibit L hereto.
3.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Partnership shall
assume, and agree to pay, perform and discharge when due, all Liabilities of
Gannett relating to the Gannett Newspapers and/or Gannett Assets other than
the Excluded Gannett Liabilities (as defined below) (collectively, the
"ASSUMED GANNETT LIABILITIES").
12
<PAGE>
3.4 EXCLUDED GANNETT LIABILITIES. Notwithstanding the provisions
of Section 3.3, the Gannett shall retain, and shall be responsible for
paying, performing and discharging when due, and the Partnership shall not
assume or have any responsibility for, and the term "ASSUMED GANNETT
LIABILITIES" shall not include any of the Liabilities relating to the Gannett
Newspapers and/or Gannett Assets which arise out of Gannett's operation or
ownership thereof prior to the Closing Date and those other Liabilities
described in Exhibit M hereto (the "EXCLUDED GANNETT LIABILITIES").
IV. FORMATION OF CALIFORNIA
NEWSPAPERS PARTNERSHIP; CLOSING
4.1 FORMATION OF CALIFORNIA NEWSPAPERS PARTNERSHIP.
(a) At the Closing, upon the terms and subject to the
conditions of this Agreement, the MediaNews Parties, DR Partners and Gannett
shall jointly cause West Coast MediaNews, Donrey and Gannett to form and
organize a general partnership, to be called California Newspapers
Partnership pursuant to the partnership agreement substantially in the form
of Exhibit N hereto (the "PARTNERSHIP AGREEMENT"). The Partnership shall be
organized under the laws of the State of Delaware. Donrey, West Coast
MediaNews and Gannett shall be partners in the Partnership. At the Closing,
upon the terms and subject to the conditions of this Agreement, Donrey, West
Coast MediaNews and Gannett shall jointly cause each of DR Partners, the
MediaNews Parties and Gannett to assign, transfer, convey and deliver to the
Partnership, for the benefit of Donrey, West Coast MediaNews and Gannett, and
as a capital contribution to the Partnership by Donrey, West Coast MediaNews
and Gannett, in exchange for the Percentage Interests of the Partnership set
forth in the Partnership Agreement, all their right, title and interest in
and to the Donrey Assets, the MediaNews Assets and the Gannett Assets.
(b) All of the Donrey Assets, the MediaNews Assets and the
Gannett Assets shall be assigned, transferred, conveyed and delivered to the
Partnership free and clear of all Liens other than the Permitted MediaNews
Liens, the Permitted Donrey Liens and the Permitted Gannett Liens.
(c) In addition to the foregoing contributions, West Coast
MediaNews shall contribute to the Partnership, on the Closing Date, cash in
the amount of $588,000, Donrey shall contribute to the Partnership, on the
Closing Date, cash in the amount of $285,000 and Gannett shall contribute to
the Partnership, on the Closing Date, cash in the amount of $127,000.
13
<PAGE>
4.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Donrey, West Coast MediaNews
and Gannett shall jointly cause the Partnership to assume, and agree to pay,
perform and discharge when due, all Assumed Donrey Liabilities, all Assumed
MediaNews Liabilities and all Assumed Gannett Liabilities.
4.3 CLOSING. Upon the terms and subject to the conditions of this
Agreement, the transactions contemplated by Sections 4.1 and 4.2 shall take
place at a closing (the "CLOSING") to be held at the offices of Verner,
Liipfert, Bernhard, McPherson & Hand Chartered, 901 15th Street, N.W.,
Washington, D.C. 20005 at 10:00 a.m., Washington, D.C., on the later of March
31, 1999 or the second business day following the satisfaction or waiver of
all of the conditions to the obligations of the parties set forth in Article
IX hereof, or at such other time and place as DR Partners, the MediaNews
Parties and Gannett may mutually agree upon in writing, effective as of the
close of business March 31, 1999. (The day on which the Closing is deemed to
be effective being hereinafter referred to as the "CLOSING DATE").
4.4 CLOSING DELIVERIES.
(a) At the Closing, the MediaNews Parties shall deliver (or
shall cause the delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by DR Partners
or Gannett to transfer the MediaNews Assets to the Partnership and/or
evidence such transfer on the public records;
(ii) an executed counterpart of the assumption
agreement, substantially in the form of Exhibit P hereto (an "ASSUMPTION
AGREEMENT");
(iii) an executed counterpart of the Partnership
Agreement in the form of Exhibit N hereto;
(iv) an opinion of counsel on behalf of the MediaNews
Parties and West Coast MediaNews LLC in the form appended as Exhibit Q hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.2;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to DR Partners and Gannett title to each parcel
of MediaNews Real Estate, the title for which is being conveyed to the
Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership, and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that the
14
<PAGE>
MediaNews Parties are persons or entities subject to withholding under
FIRPTA, with respect to the MediaNews Real Estate;
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
MediaNews Assets for which a certificate of title or origin is required in
order for title thereto to be transferred to the Partnership; and,
(viii) a printing agreement for USA TODAY and USA TODAY
BASEBALL WEEKLY, in the form of Exhibit U hereto, as executed by the
Partnership.
(b) At the Closing, DR Partners shall deliver (or cause the
delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by the
MediaNews Parties or Gannett to transfer the Donrey Assets to the Partnership
or evidence such transfer on the public records;
(ii) an executed counterpart of the Assumption
Agreement;
(iii) an executed counterpart of the Partnership
Agreement;
(iv) an opinion of counsel on behalf of Donrey in the
form appended as Exhibit R hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.1;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to the MediaNews Parties and Gannett title to
each parcel of Donrey Real Estate, the title for which is being conveyed to
the Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying DR Partners is a person or entity subject to
withholding under FIRPTA, with respect to the Donrey Real Estate;
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
Donrey Assets for which a certificate of title or origin is required in order
for title thereto to be transferred to the Partnership; and,
(viii) a printing agreement for USA TODAY and USA TODAY
BASEBALL WEEKLY, in the form of Exhibit U hereto, as executed by the
Partnership.
15
<PAGE>
(c) At the Closing, Gannett shall deliver (or cause the
delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by the
MediaNews Parties or DR Partners to transfer the Gannett Assets to the
Partnership or evidence such transfer on the public records;
(ii) an executed counterpart of the Assumption
Agreement;
(iii) an executed counterpart of the Partnership
Agreement;
(iv) an opinion of counsel on behalf of Gannett in the
form appended as Exhibit S hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.1;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to the MediaNews Parties and DR Partners title
to each parcel of Gannett Real Estate, the title for which is being conveyed
to the Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that Gannett is a person or entity subject to
withholding under FIRPTA, with respect to the Gannett Real Estate; and,
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
Gannett Assets for which a certificate of title or origin is required in
order for title thereto to be transferred to the Partnership.
16
<PAGE>
4.5 WORKING CAPITAL ADJUSTMENT.
(a) WORKING CAPITAL STATEMENT. One hundred eighty days
following the Closing pursuant to this Agreement, the Chief Financial Officer
of the Partnership shall prepare and deliver to the Partners working capital
statements of the businesses contributed to the Partnership by each of them
(the "WORKING CAPITAL STATEMENTS") based upon the books and records of the
Partnership as of the Closing Date, provided, that with respect to Accounts
Receivable, the value thereof shall be determined based upon the actual
collections received by each party or the Partnership with respect thereto
during the 180-day period commencing with the Closing Date. For purposes of
determining a party's collections, all sums received by such party or the
Partnership during the 180-day period shall be credited: (i) to such accounts
receivable, if any, as may be designated by the party submitting the payment,
(ii) in the absence of any such designation, on a first-in-first-out basis
relative to (i) the Accounts Receivable and (ii) such additional accounts
receivable as may be created by the Partnership subsequent to the Closing
Date with respect to any customers of the Partnership who may also be
Accounts Receivable debtors, PROVIDED HOWEVER, that with respect to specific
account balances (if any) which may be disputed by those debtors, no payments
shall be allocated to any such account unless specifically so
17
<PAGE>
designated by such debtor. Any uncollected receivable at the end of such 180
day period shall be returned by the Partnership to the Partner who
contributed such receivables to the Partnership. There also shall be paid to
the Partner contributing any receivable characterized as uncollectible on
that Partner's Working Capital Statement any sum collected by the Partnership
with respect to such account, promptly following the Partnership's collection
thereof. Subject to the provisions of Section 4.5(c) and the second to last
sentence hereof, the Working Capital Statements shall be prepared in
accordance with generally accepted accounting principles, but shall use the
special rules set forth in Section 4.5(c) and exclude therefrom all Excluded
Assets and all Excluded Liabilities of each of the parties, as hereinbefore
defined, and such other items as are described in Exhibit T as being excluded
items, and shall, subject to the special rules set forth in Section 4.5(c)
and such exclusions, fairly present the current assets and current
liabilities of the businesses being contributed by such party to the
Partnership as at the Closing Date. In the event that the combined final
working capital of the businesses contributed to the Partnership by a party,
as set forth on the Working Capital Statement of such party, is smaller in
proportion to the combined working capital of the businesses contributed to
the Partnership by all of the parties (as reflected on all of the parties
Working Capital Statements) than such party's Percentage Interest (as defined
in Section 3.1(a) of the Partnership Agreement), then such party shall be
required to pay to the other parties, cash in an amount which when added to
the amount of combined working capital of the business contributed to the
Partnership by such party would be sufficient to cause the combined sum
thereof to be equal to such Party's Percentage Interest in the combined
working capital of the businesses contributed to the Partnership by all of
the parties, as set forth in the orking Capital Statement of each of the
parties. The categories of items to be reflected in the calculation of
current assets and current liabilities on the Working Capital Statements are
as set forth by way of example only in Exhibit T. All payments due under
the preceding provisions of this Section 4.5(a) shall be made within 15 days
of the date of final determination of the amounts due hereunder and shall be
properly reflected on the books of the Partnership.
(b) DISPUTES. In the event of a dispute between West Coast
MediaNews, Donrey and/or Gannett as to any matter set forth in Section
4.5(a), the parties shall use reasonable efforts to resolve any such dispute,
but if a final resolution is not obtained within thirty (30) days after the
Working Capital Statements are delivered to each party, and the Partnership's
Chief Financial Officer has advised each of the parties in writing of the
amounts (if any) due and owing from each pursuant to Section 4.5(a) hereof
any remaining dispute shall be resolved by independent public accountants
selected by unanimous vote of the Management Committee. 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 by the Partnership.
18
<PAGE>
(c) VALUATION OF CERTAIN CURRENT ASSETS AND LIABILITIES. In
calculating working capital for the purposes of Section 4.5 (a): (i) there
shall be reflected as a current liability appropriate accruals for
advertising rebates and advertising agency commissions, (ii) all newsprint
inventories, exclusive of items of a quality not readily useable by the
Partnership, shall be valued at $525 per metric ton, (iii) the items included
and the methodologies used to value the assets and liabilities of the
business contributed by the respective parties shall be on a consistent and
comparable basis or an economic adjustment shall be made to achieve
comparability and (iv) all intercompany accounts shall be treated as
shareholder equity.
V. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE MEDIANEWS PARTIES
Subject to the understanding that, with respect to the following
representations and warranties, such representations and warranties as made
by GSN, Alameda, V & P and IMP relate solely to the MediaNews Newspapers
and/or MediaNews Assets and not to any other assets or publications of GSN,
Alameda, IMP or their affiliates, each of the MediaNews Parties, jointly and
severally, hereby represents, warrants and covenants to DR Partners and
Gannett:
5.1 ORGANIZATION OF THE MEDIANEWS PARTIES. Each of GSN, Alameda, V
& P and IMP is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, operate or lease its assets and
properties, to conduct its business as currently conducted and is duly
licensed, permitted or qualified to do business, and is in good standing, in
each jurisdiction in which the operation of its business makes such
licensing, permitting or qualification necessary.
5.2 AUTHORITY. Each of the MediaNews Parties has all requisite
power and authority to execute and deliver this Agreement and the other
documents contemplated hereby (the "ANCILLARY AGREEMENTS"), to carry out its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. Each has obtained all necessary corporate
and shareholder approvals for the execution and delivery of this Agreement
and the Ancillary Agreements, the performance of its obligations hereunder
and thereunder, and the consummation of the transactions contemplated hereby
and thereby. This Agreement has been, and upon their execution by such
MediaNews Party, each of the Ancillary Agreements to which it is a party will
be, duly executed and delivered by such party and (assuming due
authorization, execution and delivery by the other parties hereto and
thereto) constitute such party's legal, valid and binding obligation,
enforceable against it in accordance with its terms, except to the extent
that enforcement may be limited by or subject to any bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, or similar Laws now or
hereafter in effect relating to or limiting creditors' rights generally and
19
<PAGE>
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 NON-CONTRAVENTION. Except as set forth in Section 5.3 of the
MediaNews Newspapers Disclosure Schedule, none of the execution and delivery
of this Agreement or the Ancillary Agreements by the MediaNews Parties, the
performance of their obligations hereunder or thereunder, or the consummation
of the transactions contemplated hereby and thereby will conflict with the
charter, by-laws, or other organizational documents of such party or will,
with or without notice, the passage of time or both, constitute a breach or
violation of, be in conflict with, constitute or create a default under, or
result in the creation or imposition of any Liens under (a) any contract,
indenture, agreement, instrument, mortgage, lease or commitment to which any
MediaNews Party is a party or by which any of them is or any of their
properties is bound, or to which any of them is subject or (b) any law or
statute or any judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority relating to any MediaNews Party or to
the business and operations of the MediaNews Parties as currently conducted.
5.4 SOLVENCY. None of the MediaNews Parties is currently
insolvent, as such term is defined in Title 11 of the United States
Bankruptcy Code or any state statute relating to insolvency, and none of the
execution and delivery of this Agreement or the Ancillary Agreements by any
of the MediaNews Parties, the performance of its obligations hereunder or
thereunder, or the consummation by the MediaNews Parties of the transactions
contemplated hereby and thereby will render any such party insolvent.
5.5 FINANCIAL STATEMENTS. MediaNews Group, Inc. has delivered to
DR Partners and Gannett (i) balance sheets for Garden State and Alameda
relating to the MediaNews Newspapers and statements of income for Garden
State and Alameda relating to the MediaNews Newspapers, as of June 30, 1998
and for the fiscal year then ended and (ii) balance sheets and statements of
income for each of the MediaNews Parties as of January 31, 1999 and for the
seven month period ended January 31, 1999 relating to the MediaNews
Newspapers (collectively, the "MEDIANEWS FINANCIAL STATEMENTS"). The
MediaNews Financial Statements fairly present the financial condition and
results of operations of the MediaNews Newspapers as of the dates and for the
periods to which they relate, in accordance with generally accepted
accounting principles, consistently applied, except (x) to the extent that
certain year end adjustments, which are not individually or in the aggregate
material, may not be reflected on the January 31, 1999 financial statements,
(y) for information ordinarily contained in footnotes to audited financial
statements and (z) as may be set forth in Section 5.5 of the MediaNews
Newspapers Disclosure Schedule.
5.6 COMPLIANCE WITH LAWS. The MediaNews Parties have conducted and
continue to conduct, in all respects, the respective business and operations
of the MediaNews Newspapers in accordance with all laws, statutes, rules,
regulations, judgments, orders or decrees of any court or governmental or
regulatory authority applicable to any of the
20
<PAGE>
MediaNews Newspapers and/or MediaNews Assets, and none of the MediaNews
Parties is in relation to the MediaNews Newspapers and/or MediaNews Assets in
violation of any such laws, statutes, rules, regulations, judgments, orders
or decrees. Copies of all notices of violation of any of the foregoing which
any of the MediaNews Parties has received within the past 3 years are
attached to Section 5.6 of the MediaNews Newspapers Disclosure Schedule, and
all violations alleged in such notices have been corrected.
5.7 PERMITS. Each of the MediaNews Parties has all permits,
licenses, franchises, orders, certificates and approvals (collectively,
"PERMITS") of any federal, state or local regulatory or administrative
agency, authority or court relating to the MediaNews Newspapers, necessary to
the conduct of their respective business as currently conducted, or to the
use of the MediaNews Assets as currently utilized. Each of the MediaNews
Parties is in compliance with all MediaNews Permits.
5.8 LITIGATION, ETC. Except as set forth in Section 5.8 of the
MediaNews Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of the MediaNews Parties, threatened against any of the
MediaNews Newspapers, their respective business or the MediaNews Assets, or
which question the validity of this Agreement or challenge any of the
transactions contemplated hereby, or the use of the MediaNews Assets, or the
conduct of the MediaNews Newspapers, as currently conducted, after the
Closing Date by the Partnership.
5.9 EMPLOYEES.
(a) Except as set forth in Section 5.9 of the MediaNews
Newspapers Disclosure Schedule, none of the employees of any of the MediaNews
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the MediaNews Newspapers to form or enter into a
labor union or similar organization.
(b) Section 5.9 of the MediaNews Newspapers Disclosure
Schedule sets forth a true and complete list of all employee benefit plans
and all bonus, stock option, stock purchase, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other employee benefit plans, programs or arrangements, and all
material employment or compensation agreements (collectively, "PLANS"), in
each case for the benefit of, or relating to, current employees and former
employees of any of the MediaNews Newspapers, other than those which are
Excluded MediaNews Assets. The MediaNews Parties have made available to DR
Partners and Gannett with respect to each MediaNews Newspapers Plan, a copy
of the plan document, summary plan description the most recent annual report
and, if applicable, the most recent Internal Revenue Service determination
letter.
21
<PAGE>
(c) All employee benefit plans, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(the "EMPLOYEE BENEFIT PLANS"), maintained by any MediaNews Party or any
Affiliate of a MediaNews Party with respect to any employees of any of the
MediaNews Newspapers, as determined under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986 (the "CODE") ("ERISA AFFILIATE"), and which
provide benefit to employees of any of the MediaNews Newspapers comply in all
material respects with and are and have been operated in substantial
accordance with each applicable provision of ERISA, the Code (including,
without limitation, the requirements of Code Section 401(a) to the extent any
of such plans which is an employee pension benefit plan (within the meaning
of Section 3(a) of ERISA) is intended to conform to that section), other
Federal statutes, and the regulations and rules promulgated pursuant thereto
or in connection therewith.
(d) Each Employee Benefit 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) and
which provides benefits to employees of any of the MediaNews Newspapers
complies in all material respects with and has been and operated
substantially 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
the MediaNews Parties, threatened claims, suits or other proceedings by any
employee or former employee of any of the MediaNews Newspapers or by the
beneficiary, dependent or representative of any such person, involving the
failure of any group health plan ever maintained with respect to the
employees of any of the MediaNews Newspapers to comply with the health care
continuation requirements of COBRA.
(e) Neither any MediaNews Party or any Affiliate of a
MediaNews Party with respect to any employees of any of the MediaNews
Newspapers 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 pertaining to
employees of the Newspaper which is subject to Title IV of ERISA. There is
currently no active filing by any MediaNews Party or any ERISA Affiliate with
the PBGC (and no proceeding has been commenced by the PBGC) to terminate any
employee pension benefit plan pertaining to employees of any of the MediaNews
Newspapers which is subject to Title IV of ERISA, and which has been
maintained or funded, in whole or in part, by any MediaNews Party or any
ERISA Affiliate.
22
<PAGE>
5.10 OWNERSHIP AND TRANSFER OF MEDIANEWS ASSETS. Except as
described in Section 5.10 of the MediaNews Newspapers Disclosure Schedule,
the MediaNews Parties have good and marketable title to, or in the case of
leased or subleased MediaNews Assets so indicated therein, valid and
subsisting leasehold interests in, all of the MediaNews Assets, free and
clear of all Liens other than Permitted MediaNews Liens, and will as of the
Closing have, the unrestricted right to transfer, assign, convey and deliver
to the Partnership all right, title and interest in and to the MediaNews
Assets.
5.11 EQUIPMENT. All of the Equipment included in the MediaNews
Assets, including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
MediaNews Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the business of the MediaNews Newspapers as
currently conducted.
5.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the
MediaNews Assets and/or MediaNews Newspapers are in full force and binding
upon the MediaNews Parties (or their Affiliates, as applicable) which are
parties thereto. Except as set forth in Section 5.12 of the MediaNews
Newspapers Disclosure Schedule, (i) no default by any MediaNews Party has
occurred thereunder, (ii) to the knowledge of the MediaNews Parties, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of the MediaNews Parties, no event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, or the
happening of any further event or condition, would become a default by any
MediaNews Party thereunder, and (iv) to the knowledge of the MediaNews
Parties none of the other contracting parties has given notice of repudiation
of any of its obligations thereunder.
5.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 1998,
the business of the MediaNews Newspapers have been conducted only in the
ordinary course and consistent with past practices, in all material respects,
and, without limitation of the foregoing, except as may be necessary or
appropriate to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, or as set forth in Section 5.13 of
the MediaNews Newspapers Disclosure Schedule, none of the MediaNews Parties
has with respect to the MediaNews Newspapers and/or MediaNews Assets (except
with respect to the Excluded MediaNews Assets or the Excluded MediaNews
Liabilities), since October 31, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any Lien upon
any of its assets or properties;
23
<PAGE>
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any insurance policy pertaining to its
assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations incurred in the ordinary course of business pursuant
to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement with
or acquired an interest in any person, or acquired a substantial portion of
the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000;
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $200,000 annually;
(o) entered into any agreement to take any actions specified
in this Section 5.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.1 hereof; and,
24
<PAGE>
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the MediaNews Newspapers, or with respect to the paid
circulation of any of such newspapers, 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
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
5.14 TAXES. Except as set forth in Section 5.14 of the MediaNews
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements, (a) all returns
and reports in respect of taxes required to be filed with respect to the
MediaNews Newspapers and/or MediaNews Assets have been timely filed or will
be timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
any of the MediaNews Parties relating to any of the MediaNews Newspapers
and/or MediaNews Assets, (e) no adjustment relating to such returns has been
proposed formally or informally by any governmental or taxing authority and
no basis exists for any such adjustment, (f) there are no pending or, to the
knowledge of the MediaNews Parties, threatened actions or proceedings for the
assessment or collection of taxes against any of the MediaNews Parties with
respect to any of the MediaNews Newspapers or MediaNews Assets, (g) no tax
Lien has been filed on any of the MediaNews Assets and (h) none of the
MediaNews Parties has been included or is includible in any other
consolidated return for any taxable period for which the statute of
limitations has not expired. None of the MediaNews Parties has extended the
time for any governmental or taxing authority to assess any tax with respect
to any of the MediaNews Parties relating to any of the MediaNews Newspapers
and/or MediaNews Assets. On the MediaNews December 31, 1998 Balance Sheet,
reserves and allowances have been provided which are adequate to satisfy all
Liabilities for taxes relating to te MediaNews Assets and the MediaNews
Newspapers for the period covered thereby.
5.15 BROKERS, FINDERS, ETC. No MediaNews Party or any of its
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.
5.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by any MediaNews Party is false or misleading as to
any material fact, or omits
25
<PAGE>
to state a material fact required to make any of the statements made herein
not misleading in any material respect.
5.17. ENVIRONMENTAL.
(a) The MediaNews Assets and the MediaNews Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which
the MediaNews Parties have received in the past three years alleging any
violation of or liability or potential liability under any applicable
Environmental Law or Environmental Permit pertaining to the MediaNews Assets
and/or the MediaNews Newspapers have been corrected or otherwise addressed to
the satisfaction of regulatory authorities acting pursuant to Environmental
Laws. The MediaNews Parties possess all Environmental Permits which are
required for the operation of the MediaNews Newspapers as currently
conducted, and are in compliance with the provisions of all such
Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by the MediaNews Parties
at or from the MediaNews Real Estate or, to the knowledge of the MediaNews
Parties at any Facility to which the MediaNews Parties sent Hazardous
Materials relating to the MediaNews Newspapers, in a quantity reportable
under, or in violation of, or which may give rise to any obligation or the
incurrence of any damages under, any applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the MediaNews Real Estate or such other real property were removed and
disposed of in compliance with all applicable Environmental Laws.
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by the MediaNews Parties with
respect to any of the MediaNews Newspapers.
(e) No MediaNews Real Estate or Facility relating to any of
the MediaNews Newspapers which is to be owned or used by the Partnership is
listed on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by any of the
MediaNews Parties with respect to any of the MediaNews Newspapers or located
on the MediaNews Real Estate;
26
<PAGE>
(ii) no polychlorinated biphenyls are used or stored
on the MediaNews Real Estate; and,
(iii) there are no locations included within the
MediaNews Real Estate at which any Hazardous Material generated, used, owned
or controlled by any of the MediaNews Parties or the MediaNews Parties'
agents or affiliates have been disposed of or Released into the Environment.
5.18. MEDIANEWS REAL ESTATE.
(a) All real property currently owned or leased by the
MediaNews Parties and used or held for use in the business of the MediaNews
Newspapers (the "MEDIANEWS REAL ESTATE") is identified and described in
Section 5.18 of the MediaNews Newspapers Disclosure Schedule. Except as set
forth in Schedule 5.18 of the MediaNews Newspapers Disclosure Schedule, the
MediaNews Parties hold fee simple title to all of the MediaNews Real Estate,
subject only in the case of MediaNews Real Estate which is owned by any of
the MediaNews Parties to real estate taxes not delinquent and to covenants,
conditions, restrictions and easements of record which are set forth in such
Section 5.18. Except as set forth in such Section 5.18 the MediaNews Real
Estate which is owned by any of the MediaNews Parties is not subject to any
leases or tenancies. None of the improvements comprising the MediaNews Real
Estate, nor the business conducted by the MediaNews Parties thereon as
currently conducted, 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.
(b) Except as identified in Schedule 5.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the MediaNews Real Estate which is owned by any
of the MediaNews Parties, and no special arrangements or agreements exist
with any governmental authority with respect thereto.
(c) Except as identified in Schedule 5.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to the MediaNews Parties' knowledge, threatened with
respect to any portion of the MediaNews Real Estate owned by any of the
MediaNews Parties.
(d) Except as identified in Schedule 5.18, there are no
condemnation proceedings pending or, to the MediaNews Parties' knowledge,
threatened with respect to any portion of the MediaNews Real Estate owned by
any of the MediaNews Parties.
(e) All of the MediaNews Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
the MediaNews Parties' knowledge, none of the utility companies servicing any
such facility has threatened any MediaNews Party with any reduction in
service. All of said utilities are installed and operating and all
installation and connection charges have been paid in full.
27
<PAGE>
(f) The continued maintenance and operation of all of the
MediaNews Real Estate, as currently maintained and operated, is not dependent
on facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the MediaNews Real Estate; no building or other improvement not part
of such MediaNews Real Estate relies on any of the MediaNews Real Estate or
any interest therein to fulfill any governmental requirement; and no building
or other improvement on any of the MediaNews Real Estate relies on any
property not included within the MediaNews Real Estate to fulfill any
governmental requirement.
5.19. INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the MediaNews Newspapers and/or comprising
part of the MediaNews Assets are referred to herein collectively as the
"MEDIANEWS INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 5.19 of the MediaNews
Newspapers Disclosure Schedule, the MediaNews Parties are the owners of or
duly licensed to use all of the MediaNews Intellectual Property necessary for
the conduct of the Business as now conducted and operated; (ii) to the
MediaNews Parties' knowledge, no other 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 MediaNews Parties
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 MediaNews
Intellectual Property; (iv) the MediaNews Parties have no knowledge of any
claim and have no reason to believe that its use of any MediaNews
Intellectual Property infringes any right of any third party; (v) the
MediaNews Parties have no knowledge that any third party is infringing any of
its rights in any of the MediaNews Intellectual Property; (vi) other than as
set forth in Section 5.19 of the MediaNews Newspapers Disclosure Schedule,
the MediaNews Parties are under no obligation to pay any royalties or similar
payments in connection with any license of MediaNews Intellectual Property;
and (vii) except as set forth in Section 5.19 of the MediaNews Newspapers
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not result in the impairment of the Partnership's right
to use any of the MediaNews Intellectual Property necessary for the conduct
of the Business as now conducted and operated nor infringe upon the rights of
any third party.
28
<PAGE>
5.20 YEAR 2000 COMPLIANCE.
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the MediaNews
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage, retrieval, accessing,
comparison, sorting, manipulation, processing or other use of dates or
date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (iii) will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (i) through (iii) are referred to
herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the MediaNews Newspapers receives data from or
communicates with any component or system external to itself (whether or not
such external component or system is any MediaNews Parties' or any third
party's) that is not itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the
MediaNews Newspapers and/or MediaNews Assets permit the MediaNews Parties' or
a third party to make all modifications, bypasses, debugging, work-arounds,
repairs, replacements, conversions or corrections necessary to permit the
System to operate compatibly, in conformance with their respective
specifications, and to be Year 2000 Compliant; and,
(d) No MediaNews Party has incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the MediaNews
Assets and/or MediaNews Newspapers as a result of not being Year 2000
Compliant.
5.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 5.21(a) of the MediaNews Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports and (ii) the most recent publisher's
statements submitted to ABC for each of the
29
<PAGE>
MediaNews Newspapers which is audited by ABC. From the date of the latter of
the foregoing, the paid circulation of each such newspaper has not fallen,
after taking into account seasonal variations, below the circulation levels
reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by any MediaNews Party to the ABC with
respect to any of the MediaNews Newspapers for the periods covered by such
publisher's statements and audit reports have been true and complete in all
material respects.
(c) Since January 1, 1998, no MediaNews Party has taken any
action which was designed to result in a material reduction in circulation of
any MediaNews Newspapers.
(d) Since January 1, 1998, no MediaNews Party has made any
material change in its policies for the pricing of circulation for any
MediaNews Newspapers.
5.22 ADVERTISING. Except as set forth in Section 5.22 of the
MediaNews Newspapers Disclosure Schedule, since January 1, 1998, none of the
MediaNews Newspapers received any written notice of any cancellation,
non-renewal or material modification of any agreements or relationships with
any of its top 10 (by dollar amount) retail, preprint or classified
advertisers for the twelve months ended October 31, 1998, nor has any
MediaNews Newspapers made any material change in its policies for the pricing
of advertising and, no advertiser described above has provided written notice
of their intent to (A) cancel previously scheduled or contracted for
advertising for the period following the Closing, or (B) terminated or
modified significantly their relationship with any of the MediaNews
Newspapers.
5.23 INVENTORY. All of the Inventory of the MediaNews Newspapers is
in the physical possession and control of MediaNews Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
MediaNews Newspapers' business as currently conducted.
5.24 RELATIONSHIPS WITH AFFILIATES. Section 5.25 of the MediaNews
Newspapers Disclosure Schedule sets forth every business relationship (other
than normal employment relationships and other than as may pertain to the
MediaNews Excluded Assets) between any of the MediaNews Parties, on the one
hand, and any affiliates, officers or directors of any MediaNews Party, on
the other hand, which is related to any of the MediaNews Newspapers. None of
said parties (other than the MediaNews Parties) owns any assets which are
used in the business of the MediaNews Newspapers, as currently conducted,
except for MediaNews Excluded Assets, or as reflected in Section 5.25 of the
MediaNews Newspapers Disclosure Schedule.
30
<PAGE>
5.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the MediaNews Newspapers were true and correct in all material
respects at the time of their filing.
5.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of the
MediaNews Parties, the MediaNews Parties have disclosed to DR Partners and
Gannett all liabilities existing on the date hereof in excess of $100,000
relating to the MediaNews Newspapers or the MediaNews Assets.
VI. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF DR PARTNERS
Subject to the understanding that, with respect to the following
representations and warranties, DR Partners makes such representations and
warranties solely with respect to the Donrey Assets and Donrey Newspapers and
not to any other assets or publications of DR Partners or its affiliates, DR
Partners hereby represents, warrants and covenants to the MediaNews Parties
and Gannett:
6.1 ORGANIZATION OF DR PARTNERS. DR Partners is a partnership duly
organized, validly existing and in good standing under the laws of Nevada and
has all requisite power and authority to own, operate or lease its assets and
properties, to conduct its business as currently conducted and is duly
licensed, permitted or qualified to do business, and is in good standing, in
each jurisdiction in which the operation of its business makes such
licensing, permitting or qualification necessary.
6.2 AUTHORITY. DR Partners has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements, to carry out
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. DR Partners has obtained all necessary
approvals for the execution and delivery of this Agreement and the Ancillary
Agreements, the performance of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and thereby. This
Agreement has been, and upon their execution by DR Partners, each of the
Ancillary Agreements to which it is a party will be, duly executed and
delivered by DR Partners and (assuming due authorization, execution and
delivery by the other parties hereto and thereto) constitute DR Partners's
legal, valid and binding obligation, enforceable against it in accordance
with its terms, except to the extent that enforcement may be limited by or
subject to any bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, or similar Laws now or hereafter in effect relating to or
limiting creditors' rights generally and subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
31
<PAGE>
6.3 NON-CONTRAVENTION. Except as set forth in Section 6.3 of the
Donrey Newspapers Disclosure Schedule, none of the execution and delivery of
this Agreement or the Ancillary Agreements by DR Partners, the performance of
their obligations hereunder or thereunder, or the consummation of the
transactions contemplated hereby and thereby will conflict with the
partnership agreement or other organizational documents of such party or
will, with or without notice, the passage of time or both, constitute a
breach or violation of, be in conflict with, constitute or create a default
under, or result in the creation or imposition of any Liens under (a) any
contract, indenture, agreement, instrument, mortgage, lease or commitment to
which DR Partners is a party or by which it is or any of its properties is
bound, or to which any of them is subject or (b) any law or statute or any
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority relating to DR Partners or to the business and
operations of DR Partners as currently conducted.
6.4 SOLVENCY. DR Partners is not currently insolvent, as such term
is defined in Title 11 of the United States Bankruptcy Code or any state
statute relating to insolvency, and none of the execution and delivery of
this Agreement or the Ancillary Agreements by DR Partners, the performance of
its obligations hereunder or thereunder, or the consummation by DR Partners
of the transactions contemplated hereby and thereby will render DR Partners
insolvent.
6.5 FINANCIAL STATEMENTS. DR Partners has delivered to the
MediaNews Parties and Gannett balance sheets relating to the Donrey
Newspapers as of December 31, 1998, and statements of income relating to such
newspapers for the year then ended. DR Partners has also delivered to the
MediaNews Parties balance sheets relating to the Donrey Newspapers as of
January 31, 1999 and statements of income for such newspapers for the one
month period then ended (collectively, the "DONREY FINANCIAL STATEMENTS").
The Donrey Financial Statements fairly present the financial condition and
results of operations of the Donrey Newspapers as of the date and for the
periods to which they relate, in accordance with generally accepted
accounting principles, consistently applied, except (x) to the extent that
certain year end adjustments, which are not individually or in the aggregate
material, may not be reflected on the January 31, 1999 financial statements,
(y) for information ordinarily contained in footnotes to audited financial
statements and (z) as may be set forth in Section 6.5 of the Donrey
Newspapers Disclosure Schedule.
6.6 COMPLIANCE WITH LAWS. DR Partners has conducted and continues
to conduct, in all respects, the respective business and operations of the
Donrey Newspapers in accordance with all laws, statutes, rules, regulations,
judgments, orders or decrees of any court or governmental or regulatory
authority applicable to any of the Donrey Newspapers and/or Donrey Assets,
and DR Partners is not in relation to the Donrey Newspapers and/or Donrey
Assets in violation of any such laws, statutes, rules, regulations,
judgments, orders or decrees. Copies of all notices of violation of any of
the foregoing which DR Partners has received within the past 3 years are
attached to Section 6.6 of the Donrey Newspapers Disclosure Schedule, and all
violations alleged in such notices have been corrected.
32
<PAGE>
6.7 PERMITS. DR Partners has all Permits of any federal, state or
local regulatory or administrative agency, authority or court relating to the
Donrey Newspapers, necessary to the conduct of their respective business as
currently conducted or to the use of the Donrey Assets as currently utilized.
Donrey is in compliance with all Donrey Permits.
6.8 LITIGATION, ETC. Except as set forth in Section 6.8 of the
Donrey Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of DR Partners, threatened against any of the Donrey
Newspapers, their respective business or the Donrey Assets, or which question
the validity of this Agreement or challenge any of the transactions
contemplated hereby or the use of the Donrey Assets or the conduct of the
Donrey Newspapers, as currently conducted, after the Closing Date by the
Partnership.
6.9 EMPLOYEES.
(a) Except as set forth in Section 6.9 of the Donrey
Newspapers Disclosure Schedule, none of the employees of any of the Donrey
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the Donrey Newspapers to form or enter into a labor
union or similar organization.
(b) Section 6.9 of the Donrey Newspapers Disclosure Schedule
sets forth a true and complete list of all Plans, in each case for the
benefit of, or relating to, current employees and former employees of any of
the Donrey Newspapers, other than those which are Excluded Donrey Assets. DR
Partners has made available to the MediaNews Parties, with respect to each
Donrey Newspapers Plan, a copy of the plan document, summary plan description
and the most recent annual report and Internal Revenue Service determination
letter.
(c) All Employee Benefit Plans maintained by any DR Partners
or any Affiliate of Donrey Partners with respect to any employees of any
ERISA Affiliate, and which provide benefit to employees of any of the Donrey
Newspapers comply in all material respects with and are and have been
operated in substantial accordance with each applicable provision of ERISA,
the Code (including, without limitation, the requirements of Code Section
401(a) to the extent any of such plans which is an employee pension benefit
plan (within the meaning of Section 3(a) of ERISA) is intended to conform to
that section), other Federal statutes, and the regulations and rules
promulgated pursuant thereto or in connection therewith.
(d) Each Employee Benefit 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
33
<PAGE>
5000(b)(1) of the Code) and which provides benefits to employees of any of
the Donrey Newspapers complies in all material respects with and has been and
operated substantially in accordance with each of the requirements of COBRA.
There are no pending or, to the knowledge of the DR Partners, threatened
claims, suits or other proceedings by any employee or former employee of any
of the Donrey Newspapers or by the beneficiary, dependent or representative
of any such person, involving the failure of any group health plan ever
maintained with respect to the employees of any of the Donrey Newspapers to
comply with the health care continuation requirements of COBRA.
(e) Neither DR Partners nor any Affiliate of DR Partners
with respect to any employees of any of the Donrey Newspapers 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 pertaining to
employees of the Newspaper which is subject to Title IV of ERISA. There is
currently no active filing by DR Partners or any ERISA Affiliate with the
PBGC (and no proceeding has been commenced by the PBGC) to terminate any
employee pension benefit plan pertaining to employees of any of the Donrey
Newspapers which is subject to Title IV of ERISA, and which has been
maintained or funded, in whole or in part, by DR Partners or any ERISA
Affiliate.
6.10 OWNERSHIP AND TRANSFER OF DONREY ASSETS. Except as described
in Section 6.10 of the Donrey Newspapers Disclosure Schedule, DR Partners has
good and marketable title to, or in the case of leased or subleased Donrey
Assets so indicated therein, valid and subsisting leasehold interests in, all
of the Donrey Assets, free and clear of all Liens other than Permitted Donrey
Liens, and will as of the Closing have, the unrestricted right to transfer,
assign, convey and deliver to the Partnership all right, title and interest
in and to the Donrey Assets.
6.11 EQUIPMENT. All of the Equipment included in the Donrey Assets,
including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
Donrey Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the Donrey Newspapers.
6.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the Donrey
Assets and/or Donrey Newspapers are in full force and binding upon DR
Partners (or its Affiliates, as applicable). Except as set forth in Section
6.12 of the Donrey Newspapers Disclosure Schedule, (i) no default by DR
Partners has occurred thereunder, (ii) to the knowledge of DR Partners, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of DR Partners, no event,
34
<PAGE>
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, or the happening of any further event or condition, would
become a default by DR Partners thereunder, and (iv) to the knowledge of DR
Partners, none of the other contracting parties has given notice of
repudiation of any of its obligations thereunder.
6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 1998,
the business of DR Partners has been conducted only in the ordinary course
and consistent with past practices, in all material respects, and without
limitation of the foregoing, except as may be necessary or appropriate to the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements or as set forth in Schedule 6.13, DR Partners has
(except with respect to the Excluded Donrey Assets or the Excluded Donrey
Liabilities), since October 31, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any material
Lien upon any of its material assets or properties;
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any material insurance policy pertaining to
its assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations of such entity incurred in the ordinary course of
business pursuant to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement
with or acquired an interest in any person, or acquired a substantial portion
of the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000;
35
<PAGE>
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any material Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $100,000
annually;
(o) entered into any agreement to take any actions specified
in this Section 6.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.2 hereof; and,
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the Donrey Newspapers, or with respect to the paid
circulation of any of such newspapers, 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
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
6.14 TAXES. Except as set forth in Schedule 6.14 of the Donrey
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements: (a) all returns
and reports in respect of taxes required to be filed with respect to the
Donrey Newspapers and/or the Donrey Assets have been timely filed or will be
timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
DR Partners relating to any of the Donrey Newspapers and/or Donrey Assets,
(e) no adjustment relating to such returns has been proposed formally or
informally by any governmental or taxing authority and no basis exists for
any such adjustment, (f) there are no pending or, to the knowledge of DR
Partners, threatened actions or proceedings for the assessment or collection
of taxes against DR Partners with respect to
36
<PAGE>
any of the Donrey Newspapers or Donrey Assets, (g) no tax Lien has been filed
on any of the DR Assets, and (h) DR Partners has not been included or is
includible in any consolidated return for any taxable period for which the
statute of limitation has not expired. DR Partners has not extended the time
for any governmental or taxing authority to assess any tax with respect to DR
Partners relating to any of the Donrey Newspapers and/or Donrey Assets. On
the Donrey December 31, 1998 Balance Sheet, reserves and allowances have been
provided which are adequate to satisfy all Liabilities for taxes relating to
the Donrey Newspapers and the Donrey Assets for the period covered thereby.
6.15 BROKERS, FINDERS, ETC. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on
without the participation of any person or entity acting on behalf of DR
Partners in such manner as to give rise to any valid claim for any brokerage
or finder's fee, commission or similar compensation.
6.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by DR Partners is false or misleading as to any
material fact, or omits to state a material fact required to make any of the
statements made herein not misleading in any material respect.
6.17 ENVIRONMENTAL.
(a) The Donrey Assets and the Donrey Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which DR
Partners has received in the past three years alleging any violation of or
liability or potential liability under any applicable Environmental Law or
Environmental Permit pertaining to the Donrey Assets and/or the Donrey
Newspapers have been corrected or otherwise addressed to the satisfaction of
regulatory authorities acting pursuant to Environmental Laws. DR Partners
possesses all Environmental Permits which are required for the operation of
the Donrey Newspapers as currently conducted, and are in compliance with the
provisions of all such Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by DR Partners at or
from the Donrey Real Estate or, to the knowledge of DR Partners at any
Facility to which DR Partners sent Hazardous Materials relating to the Donrey
Newspapers, in a quantity reportable under, or in violation of, or which may
give rise to any obligation or the incurrence of any damages under, any
applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the Donrey Real Estate or such other real property were removed and disposed
of in compliance with all applicable Environmental Laws.
37
<PAGE>
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by DR Partners with respect to
any of the Donrey Newspapers.
(e) No Donrey Real Estate or Facility relating to any of the
Donrey Newspapers which is to be owned or used by the Partnership is listed
on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by DR Partners with
respect to any of the Donrey Newspapers or located on the Donrey Real Estate;
(ii) no polychlorinated biphenyls are used or stored
on the Donrey Real Estate; and,
(iii) there are no locations included within the Donrey
Real Estate at which any Hazardous Material generated, used, owned or
controlled by DR Partners or its or affiliates have been disposed of or
Released into the Environment.
6.18. DONREY REAL ESTATE.
(a) All real property currently owned or leased by the DR
Partners (the "DONREY REAL ESTATE") is identified and described in Section
6.18 of the Donrey Newspapers Disclosure Schedule. Except as set forth in
Schedule 6.18 of the Donrey Newspapers Disclosure Schedule, DR Partners holds
fee simple title to all of the Donrey Real Estate, subject only in the case
of Donrey Real Estate which is owned by DR Partners to real estate taxes not
delinquent and to covenants, conditions, restrictions and easements of record
which are set forth in such Section 6.18. Except as set forth in such
Section 6.18 the Donrey Real Estate which is owned by DR Partners is not
subject to any leases or tenancies. None of the improvements comprising the
Donrey Real Estate, nor the business conducted by DR Partners thereon as
currently conducted, 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.
(b) Except as identified in Schedule 6.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the Donrey Real Estate which is owned by DR
Partners, and no special arrangements or agreements exist with any
governmental authority with respect thereto.
38
<PAGE>
(c) Except as identified in Schedule 6.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to DR Partners' knowledge, threatened with respect to
any portion of the Donrey Real Estate owned by.
(d) Except as identified in Schedule 6.18, there are no
condemnation proceedings pending or, to DR Partners' knowledge, threatened
with respect to any portion of the Donrey Real Estate owned by DR Partners.
(e) All of the Donrey Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
DR Partners' knowledge, none of the utility companies servicing any such
facility has threatened DR Partners with any reduction in service. All of
said utilities are installed and operating and all installation and
connection charges have been paid in full.
(f) The continued maintenance and operation of all of the
Donrey Real Estate, as currently maintained and operated, is not dependent on
facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the Donrey Real Estate; no building or other improvement not part of
such Donrey Real Estate relies on any of the Donrey Real Estate or any
interest therein to fulfill any governmental requirement; and to DR Partners'
knowledge, no building or other improvement on any of the Donrey Real Estate
relies on any property not included within the Donrey Real Estate to fulfill
any governmental requirement.
6.19. DONREY INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the Donrey Newspapers and/or comprising
part of the Donrey Assets are referred to herein collectively as the "DONREY
INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 6.19 of the Donrey
Newspapers Disclosure Schedule, DR Partners is the owner of or duly licensed
to use all of the Donrey Intellectual Property necessary for the conduct of
the Business as now conducted and operated; (ii) to DR Partners' knowledge,
no other 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) DR Partners has no knowledge of any claim with respect to,
and has no reason to believe that any third party asserts ownership rights
in, any of the Donrey Intellectual Property; (iv) DR Partners has no
knowledge of any claim and has no reason to believe that
39
<PAGE>
its use of any Donrey Intellectual Property infringes any right of any third
party; (v) DR Partners has no knowledge that any third party is infringing
any of its rights in any of the Donrey Intellectual Property; (vi) other than
as set forth in Section 6.19 of the Donrey Newspapers Disclosure Schedule, DR
Partners is under no obligation to pay any royalties or similar payments in
connection with any license of Donrey Intellectual Property; and (vii) except
as set forth in Section 6.19 of the Donrey Newspapers Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not
result in the impairment of the Partnership's right to use any of the Donrey
Intellectual Property necessary for the conduct of the Business as now
conducted and operated nor infringe upon the rights of any third party.
6.20 YEAR 2000 COMPLIANCE. Except as described in Section 6.20 of
the Disclosure Schedule:
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the Donrey
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage, retrieval, accessing,
comparison, sorting, manipulation, processing or other use of dates or
date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (iii) will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (i) through (iii) are referred to
herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the Donrey Newspapers receives data from or communicates
with any component or system external to itself (whether or not such external
component or system is any DR Partners' or any third party's) that is not
itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the Donrey
Newspapers and/or Donrey Assets permit the DR Partners' or a third party to
make all modifications, bypasses, debugging, work-arounds, repairs,
replacements, conversions or corrections necessary to permit the System to
operate compatibly, in conformance with their respective specifications, and
to be Year 2000 Compliant; and,
40
<PAGE>
(d) DR Partners has not incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the Donrey Assets
and/or Donrey Newspapers as a result of not being Year 2000 Compliant.
6.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 6.21(a) of the Donrey Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports, (ii) the most recent publisher's
statements submitted to ABC for each of the Donrey Newspapers which is
audited by ABC, and (iii) the most recent internal Donrey circulation
reports. From the date of the latter of the foregoing, the paid circulation
of each such newspaper has not fallen, after taking into account seasonal
variations, below the circulation levels reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by DR Partners to the ABC with respect
to any of the Donrey Newspapers for the periods covered by such publisher's
statements and audit reports have been true and complete in all material
respects.
(c) Since January 1, 1998, DR Partners has not taken any
action which was designed to result in a material reduction in circulation of
any Donrey Newspapers.
(d) Except as set forth in Section 6.21(d) of the Donrey
Newspapers Disclosure Schedule, since January 1, 1998, DR Partners has not
made any material change in its policies for the pricing of circulation for
any Donrey Newspapers.
6.22 ADVERTISING. Except as set forth in Section 6.22 of the Donrey
Newspapers Disclosure Schedule, since January 1, 1998, none of the Donrey
Newspapers received any written notice of any cancellation, non-renewal or
material modification of any agreements or relationships with any of its top
10 (by dollar amount) retail, preprint or classified advertisers for the
twelve months ended October 31, 1998, nor has any Donrey Newspapers made any
material change in its policies for the pricing of advertising and, no
advertiser described above has provided written notice of their intent to (A)
cancel previously scheduled or contracted for advertising for the period
following the Closing, or (B) terminated or modified significantly their
relationship with any of the Donrey Newspapers.
6.23 INVENTORY. All of the Inventory of the Donrey Newspapers is in
the physical possession and control of the Donrey Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
Donrey Newspapers' business as currently conducted.
41
<PAGE>
6.24 RELATIONSHIP WITH AFFILIATES.
Section 6.24 of the Donrey Newspapers Disclosure Schedule sets
forth every business relationship (other than normal employment relationships
and other than as may pertain to the Donrey Excluded Assets) between the DR
Partners, on the one hand, and any affiliates, officers or directors of DR
Partners, on the other hand, which is related to any of the Donrey
Newspapers. None of said parties (other than DR Partners) owns any assets
which are used in the business of the Donrey Newspapers, as currently
conducted, except for Donrey Excluded Assets, or as reflected in Section 6.24
of the Donrey Newspapers Disclosure Schedule.
6.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the Donrey Newspapers were true and correct in all material
respects at the time of their filing.
6.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of DR
Partners, DR Partners has disclosed to the MediaNews Parties and Gannett all
liabilities existing on the date hereof in excess of $100,000 relating to the
Donrey Newspapers or the Donrey Assets.
VII. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF GANNETT
Subject to the understanding that, with respect to the following
representations and warranties, such representations and warranties as made
by Gannett relate solely to the Gannett Newspapers and/or Gannett Assets and
not to any other assets or publications of Gannett or its Affiliates, Gannett
hereby represents, warrants and covenants to DR Partners and the MediaNews
Parties:
7.1 ORGANIZATION OF MWSB AND SUN. Each of MWSB and Sun is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority to own, operate or lease its assets and properties, to conduct its
business as currently conducted and is duly licensed, permitted or qualified
to do business, and is in good standing, in each jurisdiction in which the
operation of its business makes such licensing, permitting or qualification
necessary.
7.2 AUTHORITY. Each of MWSB and Sun has all requisite power and
authority to execute and deliver this Agreement and the other documents
contemplated hereby (the "ANCILLARY AGREEMENTS"), to carry out its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. Each of MWSB and Sun has obtained all
necessary corporate and shareholder approvals for the execution and delivery
of this Agreement and the Ancillary Agreements, the performance of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby
42
<PAGE>
and thereby. This Agreement has been, and upon their execution by MWSB and
Sun, each of the Ancillary Agreements to which either is a party will be,
duly executed and delivered by MWSB and/or Sun and (assuming due
authorization, execution and delivery by the other parties hereto and
thereto) constitutes each of MWSB's and Sun's legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to
the extent that enforcement may be limited by or subject to any bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, or similar Laws
now or hereafter in effect relating to or limiting creditors' rights
generally and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
7.3 NON-CONTRAVENTION. Except as set forth in Section 7.3 of the
Gannett Newspapers Disclosure Schedule, none of the execution and delivery of
this Agreement or the Ancillary Agreements by MWSB or Sun, the performance of
its obligations hereunder or thereunder, or the consummation of the
transactions contemplated hereby and thereby will conflict with the charter,
by-laws, or other organizational documents of MWSB or Sun, will, with or
without notice, the passage of time or both, constitute a breach or violation
of, be in conflict with, constitute or create a default under, or result in
the creation or imposition of any Liens under (a) any contract, indenture,
agreement, instrument, mortgage, lease or commitment to which MWSB or Sun is
a party or by which either is or any of its properties is bound, or to which
either is subject or (b) any law or statute or any judgment, decree, order,
regulation or rule of any court or governmental or regulatory authority
relating to either or to the business and operations of either as currently
conducted.
7.4 SOLVENCY. Neither MWSB or Sun is currently insolvent, as such
term is defined in Title 11 of the United States Bankruptcy Code or any state
statute relating to insolvency, and none of the execution and delivery of
this Agreement or the Ancillary Agreements by MWSB or Sun, the performance of
its obligations hereunder or thereunder, or the consummation by it of the
transactions contemplated hereby and thereby will render either insolvent.
7.5 FINANCIAL STATEMENTS. Gannett has delivered to DR Partners and
the MediaNews Parties (i) a balance sheet for Gannett relating to the Gannett
Newspapers and a statement of income for Gannett relating to the Gannett
Newspapers, as of December 27, 1998 and for the fiscal year then ended and
(ii) a balance sheet and statement of income for Gannett relating to the
Gannett Newspapers as of January 31, 1999 and for the five week period then
ended relating to the Gannett Newspapers (collectively, the "GANNETT
FINANCIAL STATEMENTS"). The Gannett Financial Statements fairly present the
financial condition and results of operations of the Gannett Newspapers as of
the dates and for the periods to which they relate, in accordance with
generally accepted accounting principles, consistently applied, except (x) to
the extent that certain year end adjustments, which are not individually or
in the aggregate material, may not be reflected on the January 31, 1999
financial statements, (y) for information ordinarily contained in footnotes
to audited financial statements and (z) as may be set forth in Section 7.5 of
the Gannett Newspapers Disclosure Schedule.
43
<PAGE>
7.6 COMPLIANCE WITH LAWS. Each of MWSB and Sun has conducted and
continues to conduct, in all respects, the respective business and operations
of the Gannett Newspapers in accordance with all laws, statutes, rules,
regulations, judgments, orders or decrees of any court or governmental or
regulatory authority applicable to any of the Gannett Newspapers and/or each
of MWSB and Sun is not in relation to the Gannett Newspapers and/or Gannett
Assets in violation of any such laws, statutes, rules, regulations,
judgments, orders or decrees. Copies of all notices of violation of any of
the foregoing which either MWSB or Sun has received within the past 3 years
are attached to Section 7.6 of the Gannett Disclosure Schedule, and all
violations alleged in such notices have been corrected.
7.7 PERMITS. Each of MWSB and Sun has all permits, licenses,
franchises, orders, certificates and approvals (collectively, "PERMITS") of
any federal, state or local regulatory or administrative agency, authority or
court relating to the Gannett Newspapers, necessary to the conduct of its
respective business as currently conducted, or to the use of the Gannett
Assets as currently utilized. Each of MWSB and Sun is in compliance with all
Gannett Permits.
7.8 LITIGATION, ETC. Except as set forth in Section 7.8 of the
Gannett Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of MWSB or Sun, threatened against any of the Gannett
Newspapers, their respective businesses or the Gannett Assets, or which
question the validity of this Agreement or challenge any of the transactions
contemplated hereby, or the use of the Gannett Assets, or the conduct of the
Gannett Newspapers, as currently conducted, after the Closing Date by the
Partnership.
7.9 EMPLOYEES.
(a) Except as set forth in Section 7.9 of the Gannett
Newspapers Disclosure Schedule, none of the employees of any of the Gannett
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the Gannett Newspapers to form or enter into a labor
union or similar organization.
(b) Section 7.9 of the Gannett Newspapers Disclosure
Schedule sets forth a true and complete list of all employee benefit plans
and all bonus, stock option, stock purchase, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other employee benefit plans, programs or arrangements, and all
material employment or compensation agreements (collectively, "PLANS"), in
each case for the benefit of, or relating to, current employees and former
employees of any of the Gannett Newspapers, other than those which are
Excluded Gannett Assets. Gannett has made available to DR Partners and the
MediaNews Parties, with respect to each Gannett
44
<PAGE>
Newspapers Plan, a copy of the plan document, summary plan description and
the most recent annual report and Internal Revenue Service determination
letter.
(c) All employee benefit plans, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(the "EMPLOYEE BENEFIT PLANS"), maintained by MWSB or Sun or any Affiliate
with respect to any employees of any of the Gannett Newspapers, as determined
under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986
(the "CODE") ("ERISA AFFILIATE"), and which provide benefit to employees of
any of the Gannett Newspapers comply in all material respects with and are
and have been operated in substantial accordance with each applicable
provision of ERISA, the Code (including, without limitation, the requirements
of Code Section 401(a) to the extent any of such plans which is an employee
pension benefit plan (within the meaning of Section 3(a) of ERISA) is
intended to conform to that section), other Federal statutes, and the
regulations and rules promulgated pursuant thereto or in connection therewith.
(d) Each Employee Benefit 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) and
which provides benefits to employees of any of the Gannett Newspapers
complies in all material respects with and has been and operated
substantially 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
MWSB or Sun, threatened claims, suits or other proceedings by any employee or
former employee of any of the Gannett Newspapers or by the beneficiary,
dependent or representative of any such person, involving the failure of any
group health plan ever maintained with respect to the employees of any of the
Gannett Newspapers to comply with the health care continuation requirements
of COBRA.
(e) Neither MWSB or Sun or any Affiliate with respect to any
employees of any of the Gannett Newspapers 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 pertaining to employees of the Newspaper which is
subject to Title IV of ERISA. There is currently no active filing by MWSB,
Sun or any ERISA Affiliate with the PBGC (and no proceeding has been
commenced by the PBGC) to terminate any employee pension benefit plan
pertaining to employees of any of the Gannett Newspapers which is subject to
Title IV of ERISA, and which has been maintained or funded, in whole or in
part, by MWSB, Sun or any ERISA Affiliate.
45
<PAGE>
7.10 OWNERSHIP AND TRANSFER OF GANNETT ASSETS. Except as described
in Section 7.10 of the Gannett Newspapers Disclosure Schedule, MWSB and/or
Sun has good and marketable title to, or in the case of leased or subleased
Gannett Assets so indicated therein, valid and subsisting leasehold interests
in, all of the Gannett Assets, free and clear of all Liens other than
Permitted Gannett Liens, and will as of the Closing have, the unrestricted
right to transfer, assign, convey and deliver to the Partnership all right,
title and interest in and to the Gannett Assets.
7.11 EQUIPMENT. All of the Equipment included in the Gannett
Assets, including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
Gannett Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the business of the Gannett Newspapers as
currently conducted.
7.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the
Gannett Assets and/or Gannett Newspapers are in full force and binding upon
MWSB, Sun or any Affiliate which is party thereto. Except as set forth in
Section 7.12 of the Gannett Newspapers Disclosure Schedule, (i) no default by
MWSB or Sun has occurred thereunder, (ii) to the knowledge of either, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of either, no event, occurrence or condition exists which, with the
lapse of time, the giving of notice, or both, or the happening of any further
event or condition, would become a default by either thereunder, and (iv) to
the knowledge of either, none of the other contracting parties has given
notice of repudiation of any of its obligations thereunder.
7.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 27, 1998,
the business of the Gannett Newspapers has been conducted only in the
ordinary course and consistent with past practices, in all material respects,
and, without limitation of the foregoing, except as may be necessary or
appropriate to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, or as set forth in Section 7.13 of
the Gannett Newspapers Disclosure Schedule, neither MWSB or Sun has with
respect to the Gannett Newspapers and/or Gannet Assets (except with respect
to the Excluded Gannett Assets or the Excluded Gannett Liabilities), since
December 27, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any Lien upon
any of its assets or properties;
46
<PAGE>
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any insurance policy pertaining to its
assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations incurred in the ordinary course of business pursuant
to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement with
or acquired an interest in any person, or acquired a substantial portion of
the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000;
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $200,000 annually;
(o) entered into any agreement to take any actions specified
in this Section 7.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.3 hereof; and,
47
<PAGE>
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the Gannett Newspapers, or with respect to the paid
circulation of any of such newspapers, 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
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
7.14 TAXES. Except as set forth in Section 7.14 of the Gannett
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements, (a) all returns
and reports in respect of taxes required to be filed with respect to the
Gannett Newspapers and/or Gannett Assets have been timely filed or will be
timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
MWSB, Sun or any Affiliate relating to any of the Gannett Newspapers and/or
Gannett Assets, (e) no adjustment relating to such returns has been proposed
formally or informally by any governmental or taxing authority and no basis
exists for any such adjustment, (f) there are no pending or, to the knowledge
of MWSB or Sun, threatened actions or proceedings for the assessment or
collection of taxes against either with respect to any of the Gannet
Newspapers or Gannett Assets, (g) no tax Lien has been filed on any of the
Gannett Assets and (h) neither MWSB or Sun has been included or is includible
in any other consolidated return for any taxable period for which the statute
of limitations has not expired. Neither MWSB or Sun has extended the time
for any governmental or taxing authority to assess any tax with respect to
either relating to any of the Gannett Newspapers and/or Gannett Assets. On
the Gannett January 31, 1999 Balance Sheet, reserves and allowances have been
provided which are adequate to satisfy all Liabilities for taxes relating to
the Gannett Assets and the Gannett Newspapers for the period covered thereby.
7.15 BROKERS, FINDERS, ETC. Neither MWSB, Sun nor any Affiliate 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.
7.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by Gannett is false or misleading as to any material
fact, or omits to state a material fact required to make any of the
statements made herein not misleading in any material respect.
48
<PAGE>
7.17 ENVIRONMENTAL. Except as set forth in Section 7.17 of the
Gannet Newspapers Disclosure Schedule:
(a) The Gannett Assets and the Gannett Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which
MWSB or Sun has received in the past three years alleging any violation of or
liability or potential liability under any applicable Environmental Law or
Environmental Permit pertaining to the Gannett Assets and/or the Gannett
Newspapers have been corrected or otherwise addressed to the satisfaction of
regulatory authorities acting pursuant to Environmental Laws. MWSB and/or
Sun possesses all Environmental Permits which are required for the operation
of the Gannett Newspapers as currently conducted, and are in compliance with
the provisions of all such Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by MWSB or Sun at or
from the Gannett Real Estate or, to the knowledge of MWSB or Sun at any
Facility to which MWSB or Sun sent Hazardous Materials relating to the
Gannett Newspapers, in a quantity reportable under, or in violation of, or
which may give rise to any obligation or the incurrence of any damages under,
any applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the Gannett Real Estate or such other real property were removed and
disposed of in compliance with all applicable Environmental Laws.
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by MWSB or Sun with respect to
any of the Gannett Newspapers.
(e) No Gannett Real Estate or Facility relating to any of
the Gannett Newspapers which is to be owned or used by the Partnership is
listed on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by MWSB or Sun with
respect to any of the Gannett Newspapers or located on the Gannett Real
Estate;
(ii) no polychlorinated biphenyls are used or stored
on the Gannett Estate; and,
49
<PAGE>
(iii) there are no locations included within the
Gannett Real Estate at which any Hazardous Material generated, used, owned or
controlled by MWSB or Sun or its agents or affiliates have been disposed of
or Released into the Environment.
7.18. GANNETT REAL ESTATE.
(a) All real property currently owned or leased by the MWSB
or Sun (the "GANNETT REAL ESTATE") is identified and described in Section
7.18 of the Gannett Newspapers Disclosure Schedule. Except as set forth in
Schedule 7.18 of the Gannett Newspapers Disclosure Schedule, MWSB or Sun
holds fee simple title to all of the Gannett Real Estate, subject only in the
case of Gannett Real Estate which is owned by MWSB or Sun to real estate
taxes not delinquent and to covenants, conditions, restrictions and easements
of record which are set forth in such Section 7.18. Except as set forth in
such Section 7.18 the Gannett Real Estate which is owned by MWSB or Sun is
not subject to any leases or tenancies. None of the improvements comprising
the Gannett Real Estate, nor the business conducted by MWSB or Sun thereon as
currently conducted, 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.
(b) Except as identified in Schedule 7.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the Gannett Real Estate which is owned by MWSB
or Sun, and no special arrangements or agreements exist with any governmental
authority with respect thereto.
(c) Except as identified in Schedule 7.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to MWSB's or Sun's knowledge, threatened with respect
to any portion of the Gannett Real Estate owned by MWSB or Sun.
(d) Except as identified in Schedule 7.18, there are no
condemnation proceedings pending or, to MWSB's or Sun's knowledge, threatened
with respect to any portion of the Gannett Real Estate owned by MWSB or Sun.
(e) All of the Gannett Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
MWSB's or Sun's knowledge, none of the utility companies servicing any such
facility has threatened MWSB or Sun with any reduction in service. All of
said utilities are installed and operating and all installation and
connection charges have been paid in full.
(f) The continued maintenance and operation of all of the
Gannett Real Estate, as currently maintained and operated, is not dependent
on facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the Gannett Real Estate; no building or other improvement not part of
such Gannett Real Estate relies on any of the Gannett Real Estate or any
interest therein to fulfill any governmental requirement; and no building or
other
50
<PAGE>
improvement on any of the Gannett Real Estate relies on any property not
included within the Gannett Real Estate to fulfill any governmental
requirement.
7.19. GANNETT INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the Gannett Newspapers and/or comprising
part of the Gannett Assets are referred to herein collectively as the
"GANNETT INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 7.19 of the Gannett
Newspapers Disclosure Schedule, MWSB and/or Sun is the owner of or duly
licensed to use all of the Gannett Intellectual Property necessary for the
conduct of the Business as now conducted and operated; (ii) to MWSB's or
Sun's knowledge, no other 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) neither MWSB or Sun has knowledge of any claim
with respect to, and has no reason to believe that any third party asserts
ownership rights in, any of the Gannett Intellectual Property; (iv) neither
MWSB or Sun has knowledge of any claim and has no reason to believe that its
use of any Gannett Intellectual Property infringes any right of any third
party; (v) neither MWSB or Sun has any knowledge that any third party is
infringing any of its rights in any of the Gannett Intellectual Property;
(vi) other than as set forth in Section 7.19 of the Gannett Newspapers
Disclosure Schedule, neither MWSB or Sun is under no obligation to pay any
royalties or similar payments in connection with any license of Gannett
Intellectual Property; and (vii) except as set forth in Section 7.19 of the
Gannett Newspapers Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not result in the impairment of the
Partnership's right to use any of the Gannett Intellectual Property necessary
for the conduct of the Business as now conducted and operated nor infringe
upon the rights of any third party.
7.20 YEAR 2000 COMPLIANCE. Except as described in Section 7.20 of
the Disclosure Schedule:
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the Gannett
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage,
51
<PAGE>
retrieval, accessing, comparison, sorting, manipulation, processing or other
use of dates or date-based, date-dependent or date-related data, including
but not limited to century recognition, day-of-the-week recognition, leap
years, date values and interfaces of date functionalities, and (iii) will not
be adversely affected by the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century (collectively, items (i) through
(iii) are referred to herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the Gannett Newspapers receives data from or
communicates with any component or system external to itself (whether or not
such external component or system is MWSB's, Sun's or any third party's) that
is not itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the Gannett
Newspapers and/or Gannett Assets permit MWSB, Sun or a third party to make
all modifications, bypasses, debugging, work-arounds, repairs, replacements,
conversions or corrections necessary to permit the System to operate
compatibly, in conformance with their respective specifications, and to be
Year 2000 Compliant; and,
(d) Neither MWSB or Sun has incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the Gannett Assets
and/or Gannett Newspapers as a result of not being Year 2000 Compliant.
7.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 7.21(a) of the Gannett Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports and (ii) the most recent publisher's
statements submitted to ABC for each of the Gannett Newspapers which is
audited by ABC. From the date of the latter of the foregoing, the paid
circulation of each such newspaper has not fallen, after taking into account
seasonal variations, below the circulation levels reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by MWSB or Sun to the ABC with respect
to any of the Gannett Newspapers for the periods covered by such publisher's
statements and audit reports have been true and complete in all material
respects.
52
<PAGE>
(c) Since January 1, 1998, neither MWSB or Sun has taken any
action which was designed to result in a material reduction in circulation of
any Gannett Newspapers.
(d) Since January 1, 1998, neither MWSB nor Sun has made any
material change in its policies for the pricing of circulation for any
Gannett Newspapers.
7.22 ADVERTISING. Except as set forth in Section 7.22 of the
Gannett Newspapers Disclosure Schedule, since January 1, 1998, none of the
Gannett Newspapers received any written notice of any cancellation,
non-renewal or material modification of any agreements or relationships with
any of its top 10 (by dollar amount) retail, preprint or classified
advertisers for the twelve months ended December 27, 1998, nor has any
Gannett Newspapers made any material change in its policies for the pricing
of advertising and, no advertiser described above has provided written notice
of their intent to (A) cancel previously scheduled or contracted for
advertising for the period following the Closing, or (B) terminated or
modified significantly their relationship with any of the Gannett Newspapers.
7.23 INVENTORY. All of the Inventory of the Gannett Newspapers is
in the physical possession and control of Gannett Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
Gannett Newspapers' business as currently conducted.
7.24 RELATIONSHIPS WITH AFFILIATES. Section 7.25 of the Gannett
Newspapers Disclosure Schedule sets forth every business relationship (other
than normal employment relationships and other than as may pertain to the
Gannett Excluded Assets) between MWSB or Sun, on the one hand, and any
Affiliates, officers or directors of either, on the other hand, which is
related to any of the Gannett Newspapers. None of said parties (other than
MWSB or Sun) owns any assets which are used in the business of the Gannett
Newspapers, as currently conducted, except for Gannett Excluded Assets, or as
reflected in Section 7.25 of the Gannett Newspapers Disclosure Schedule.
7.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the Gannett Newspapers were true and correct in all material
respects at the time of their filing.
7.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of MWSB or
Sun, Gannett has disclosed to DR Partners and the MediaNews Parties all
liabilities existing on the date hereof in excess of $100,000 relating to the
Gannett Newspapers or the Gannett Assets.
53
<PAGE>
VIII. ADDITIONAL AGREEMENTS
8.1 CONDUCT OF THE BUSINESS OF THE MEDIANEWS PARTIES. The
MediaNews Parties covenant and agree that, between the date hereof and the
Closing Date, the MediaNews Parties shall conduct their business and
operations only in the ordinary course and consistent with past practices.
In addition, the MediaNews Parties shall take all reasonable measures as may
be necessary to ensure that each and every representation and warranty of the
MediaNews Parties set forth in Article V of this Agreement be true in all
material respects as if originally made as of the Closing Date, and that
neither they nor their Affiliates, without the prior written approval of DR
Partners, and Gannett, or except as may reasonably be required to effectuate
the various intentions of the parties set forth in this Agreement, or to
effectuate the transactions contemplated by this Agreement with respect to
the MediaNews Newspapers and/or the MediaNews Assets, will:
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the MediaNews Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or compromise any debts or claims other than
for fair value and in the ordinary course of business except for trade
receivables written off in the ordinary course of business and in accordance
with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill and
ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements;
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
54
<PAGE>
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000 without informing DR Partners and Gannett;
(m) make any express or deemed election or settles or
compromises any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract (other than for the acquisition
of newsprint) having a value in excess of $200,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the MediaNews Newspapers, or with respect to
the paid circulation of any of such newspapers, 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 such newspapers and any of their material customers
(including, without limitation, advertisers, subscribers and dealers),
suppliers or key employees); and,
(q) enter into any agreement to take any actions specified
in this Section 8.1.
8.2 CONDUCT OF THE BUSINESS OF DR PARTNERS. DR Partners covenants
and agrees that, between the date hereof and the Closing Date, DR Partners
shall conduct its business and operations only in the ordinary course and
consistent with past practices. In addition, DR Partners shall take all
reasonable measures as may be necessary to ensure that each and every
representation and warranty of DR Partners set forth in Article VI of this
Agreement be true in all material respects as if originally made as of the
Closing Date, and that neither it nor its Affiliates, without the prior
written approval of the MediaNews Parties and Gannett, or except as may
reasonably be required to effectuate the various intentions of the parties
set forth in this Agreement, or to effectuate the transactions contemplated
by this Agreement, with respect to the Donrey Newspapers and/or the Donrey
Assets, will:
55
<PAGE>
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the Donrey Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or. compromise any debts or claims other than
for fair value and in the ordinary course of business except for trade
receivables written off in the ordinary course of business and in accordance
with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of. its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill
and ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements; and
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000 without first notifying the MediaNews Parties and Gannett;
56
<PAGE>
(m) make any express or deemed election or settle or
compromise any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract for the acquisition of newsprint
or any other contract having a value in excess of $100,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the Donrey Newspapers, or with respect to
the paid circulation of any of such newspapers, 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 such newspapers and any of their material customers
(including, without limitation, advertisers, subscribers and dealers),
suppliers or key employees).
(q) enter into any agreement to take any actions specified
in this Section 8.2.
8.3 CONDUCT OF THE BUSINESS OF GANNETT. Gannett covenants and
agrees that, between the date hereof and the Closing Date, each of MWSB and
Sun shall conduct its business and operations only in the ordinary course and
consistent with past practices. In addition, Gannett shall take all
reasonable measures as may be necessary to ensure that each and every
representation and warranty of Gannett set forth in Article VII of this
Agreement be true in all material respects as if originally made as of the
Closing Date, and that neither MWSB or Sun, nor any of their Affiliates,
without the prior written approval of the MediaNews Parties and DR Partners,
or except as may reasonably be required to effectuate the various intentions
of the parties set forth in this Agreement, or to effectuate the transactions
contemplated by this Agreement, with respect to the Gannett Newspapers and/or
the Gannett Assets, will:
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the Gannett Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or compromise any debts or claims other than
for fair value and in the ordinary course of
57
<PAGE>
business except for trade receivables written off in the ordinary course of
business and in accordance with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of. its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill
and ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements;
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000 without first notifying the MediaNews Parties and DR Partners;
(m) make any express or deemed election or settle or
compromise any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract for the acquisition of newsprint
or any other contract having a value in excess of $100,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the Gannett Newspapers, or with respect to
the paid circulation of any of such newspapers, 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 such
58
<PAGE>
newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers), suppliers or key
employees); and,
(q) enter into any agreement to take any actions specified
in this Section 8.3.
8.4 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable
notice, each of the MediaNews Parties shall, and shall cause each of the
officers, employees, auditors and agents of the MediaNews Parties to, (i)
afford the officers employees and authorized agents and representatives of DR
Partners and Gannett reasonable access, during normal business hours, (i) to
the offices, personnel, properties, books and records of the MediaNews
Parties relating to the MediaNews Assets and (ii) furnish to the officers,
employees and authorized agents and representatives of DR Partners and
Gannett such additional financial and operating data and other information
regarding the assets, properties, goodwill and business of the MediaNews
Parties relating to the MediaNews Assets as DR Partners or Gannett may from
time to time reasonably request; PROVIDED, HOWEVER, that such investigation
shall not unreasonably interfere with any of the business or operations of
the MediaNews Parties.
(b) From the date hereof until the Closing, upon reasonable
notice, DR Partners shall, and shall cause each of the officers, employees,
auditors and agents of DR Partners to, (i) afford the officers, employees and
authorized agents and representatives of the MediaNews Parties and Gannett
reasonable access, during normal business hours, to the offices, personnel,
properties, books and records of DR Partners relating to the Donrey Assets
and (ii) furnish to the officers, employees and authorized agents and
representatives of the MediaNews Parties and Gannett such additional
financial and operating data and other information regarding the assets,
properties, goodwill and business of DR Partners relating to the Donrey
assets as the MediaNews Parties or Gannett may from time to time reasonably
request; PROVIDED, HOWEVER, that such investigation shall not unreasonably
interfere with any of the business or operations of DR Partners.
(c) From the date hereof until the Closing, upon reasonable
notice, Gannett shall, and shall cause each of the officers, employees,
auditors and agents of MWSB and Sun to, (i) afford the officers, employees
and authorized agents and representatives of the MediaNews Parties and DR
Partners reasonable access, during normal business hours, to the offices,
personnel, properties, books and records of MWSB and Sun relating to the
Gannett Assets and (ii) furnish to the officers, employees and authorized
agents and representatives of the MediaNews Parties and DR Partners such
additional financial and operating data and other information regarding the
assets, properties, goodwill and business of MWSB and Sun relating to the
Gannett assets as the MediaNews Parties or DR Partners may from time to time
reasonably request; PROVIDED, HOWEVER, that such investigation shall not
unreasonably interfere with any of the business or operations of MWSB or Sun.
59
<PAGE>
8.5 NOTICE OF DEVELOPMENTS.
(a) Prior to the Closing Date, the MediaNews Parties shall
promptly notify DR Partners and Gannett in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of the MediaNews Parties in this Agreement or which
could have the effect of making any representation or warranty of the
MediaNews Parties in this Agreement materially untrue or incorrect in any
respect and (ii) all other material developments affecting the assets,
Liabilities or obligations, business, financial condition, operations,
results of operations, customer or supplier relations, employee relations,
projections or prospects of the MediaNews Parties relating to the MediaNews
Assets.
(b) Prior to the Closing Date, DR Partners shall promptly
notify the MediaNews Parties and Gannett in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of DR Partners in this Agreement or which could have the
effect of making any representation or warranty of DR Partners in this
Agreement materially untrue or incorrect in any respect and (ii) all other
material developments affecting the assets, Liabilities or obligations,
business, financial condition, operations, results of operations, customer or
supplier relations, employee relations, projections or prospects of DR
Partners relating to the Donrey Assets.
(c) Prior to the Closing Date, Gannett shall promptly notify
the MediaNews Parties and DR Partners in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of Gannett in this Agreement or which could have the
effect of making any representation or warranty of Gannett in this Agreement
materially untrue or incorrect in any respect and (ii) all other material
developments affecting the assets, Liabilities or obligations, business,
financial condition, operations, results of operations, customer or supplier
relations, employee relations, projections or prospects of Gannet relating to
the Gannett Assets.
8.6 AUTHORIZATIONS AND CONSENTS.
(a) Each party hereto shall use its reasonable best efforts
to obtain all authorizations, consents, orders and approvals of all
governmental and regulatory authorities and officials and of all third
parties that may be or become necessary for the performance of its
obligations under this Agreement (including, without limitation, any
approvals required for the transfer to the Partnership of any of the
MediaNews Permits, the Donrey Permits, the Gannett Permits or any contract,
lease or other instrument included within the MediaNews Assets, Donrey Assets
or Gannett Assets) and will cooperate fully with the other parties in
promptly seeking to obtain all such authorizations, consents, orders and
approvals. The parties hereto will not take any action that will have the
effect of delaying, impairing or impeding the receipt of any required
authorizations, consents, orders or approvals.
60
<PAGE>
(b) Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign
any contract, lease, license or other agreement to which the MediaNews
Parties, DR Partners or Gannett is a party, or any claim or right or any
benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach or other contravention thereof. The MediaNews Parties, DR Partners and
Gannett will use reasonable efforts to obtain the consent of the other
parties to any such contract, lease, license or other agreement for the
assignment thereof to the Partnership. If such consent is not obtained prior
to the Closing, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of the Partnership thereunder so that the
Partnership would not in fact receive all such rights, the MediaNews Parties,
DR Partners and/or Gannett, as the case may be, and the Partnership will
cooperate to achieve a mutually agreeable arrangement under which the
Partnership would obtain the benefits and assume the obligations thereunder
from and after the Closing Date in accordance with this Agreement, including
subcontracting, sublicensing or subleasing to the Partnership, or under which
the MediaNews Parties, DR Partners and/or Gannett, as the case may be, would
enforce for the benefit of the Partnership, with the Partnership assuming the
MediaNews Parties, DR Partners and/or Gannett, as the case may be,
obligations thereunder and any and all rights of the MediaNews Parties, DR
Partners and/or Gannett, as the case may be, against a third party thereto.
The MediaNews Parties, DR Partners and/or Gannett, as the case may be, will
pay promptly to the Partnership when received all monies received by it after
the Closing Date under any such contract, lease, license or other agreement
or any claim or right of any benefit arising thereunder to the extent that
the Partnership would be entitled thereto pursunt hereto.
61
<PAGE>
8.7 EMPLOYEES.
(a) As of the Closing Date, the Partnership will offer
employment to all persons employed immediately prior to thereto at all of the
MediaNews Newspapers, at all of the Donrey Newspapers and at all of the
Gannett Newspapers, at substantially the same levels of compensation at which
such persons were previously employed by the MediaNews Parties, DR Partners
or Gannett. As promptly as is practical following the Closing Date, however,
it is contemplated that the Partnership's Management Committee will commence
a comprehensive review of the employee benefit and welfare plans in effect
with respect to the various newspapers then owned by the Partnership, with a
view to standardizing, to the maximum extent feasible and/or desirable, by
the first anniversary of the Closing Date, the employee benefits to be
provided subsequent to the Closing to all employees of the Partnership.
These standardized arrangements will include, but not be limited to, as soon
as the Partnership deems it practical to do so, the adoption of a Partnership
401(k) or functionally similar plan capable of receiving rollover deposits.
It is not contemplated that the Partnership will adopt a defined benefit or
any other form of pension plan. In connection with such employee benefit and
welfare plans as are adopted by the Partnership, all employees of the
MediaNews, Donrey and Gannett Newspapers employed by the Partnership
subsequent to the Closing will receive appropriate credit for prior service,
will not be subject to any pre-existing condition limitation regarding health
insurance benefits on their behalf and will be credited with such vacation
and sick leave benefits as were accrued as of the Closing Date (provided the
value thereof was not paid to such employees as part of the final payroll
payments described in subsection(b) hereof).
(b) Each of DR Partners, the MediaNews Parties and Gannett
shall cause to be paid, in a timely manner and consistent with past
practices, all accrued payroll (including any accrued commissions and benefit
plan contributions) and shall thereafter pay, file or deposit when due all
accrued payroll taxes and related tax returns attributable to work performed
prior to the Closing Date or resulting from termination prior to or as of the
Closing Date, with respect to all persons employed by each such party as of
or prior to the Closing Date. It is anticipated that payroll checks shall be
paid not later than five (5) days after the Closing Date.
8.8 SATISFACTION OF LIABILITIES. Except as otherwise expressly
provided herein, the MediaNews Parties shall pay, perform and discharge when
due all the Excluded MediaNews Liabilities and any Liabilities incurred by
the MediaNews Parties in connection with this Agreement. Except as otherwise
expressly provided herein, DR Partners shall pay, perform and discharge when
due all the Excluded Donrey Liabilities and any Liabilities incurred by DR
Partners in connection with this Agreement. Except as otherwise expressly
provided herein, Gannett shall pay, perform and discharge when due all of the
Excluded Gannett Liabilities and any Liabilities incurred by Gannett in
connection with this Agreement.
62
<PAGE>
8.9 CONFIDENTIALITY.
(a) Each of the MediaNews Parties shall, and shall cause its
agents, representatives, Affiliates, employees, officers and directors to:
(i),treat and hold as confidential (and not disclose, provide access to any
person to or use to the detriment of DR Partners, Gannett or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to DR Partners, Gannett or their
Affiliates (ii) in the event that any MediaNews Party or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide DR Partners and Gannett
with prompt written notice of such requirement so that DR Partners and/or
Gannett may seek a protective order or other remedy or waive compliance with
this Section 8.9, and (iii) in the event that such protective order or other
remedy is not obtained, or DR Partners and/or Gannett waives compliance with
this Section 8.9, furnish only that portion of such confidential information
which is legally required to be provided and exercise its best efforts to
obtain assurances that confidential treatment will be accorded such
information; PROVIDED, HOWEVER, that this sentence shall not apply to any
information that, at the time of disclosure, (i) is available publicly and
was not disclosed in breach of this Agreement by any of the MediaNews
Parties, their agents, representatives, Affiliates, employees, officers or
directors (ii) was already known to any party hereto when such information
was received from the other (iii) is subsequently disclosed by a third party
which has a right to make such disclosure or (iv) is required to be disclosed
by law.
(b) DR Partners shall, and shall cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat
and hold as confidential (and not disclose, provide access to any person to,
or use to the detriment of the MediaNews Parties, Gannett or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to the MediaNews Parties, (ii) in the
event that DR Partners or any such agent, representative, Affiliate,
employee, officer or director becomes legally compelled to disclose any such
information, provide the MediaNews Parties and Gannett with prompt written
notice of such requirement so that the MediaNews Parties and/or Gannett may
seek a protective order or other remedy or waive compliance with this Section
8.9, and (iii) in the event that such protective order or other remedy is not
obtained, or the MediaNews Parties and/or Gannett waive compliance with this
Section 8.9, furnish only that portion of such confidential information which
is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information;
PROVIDED, HOWEVER, that this sentence shall not apply to any information
that, at the time of disclosure, (i) is available publicly and was not
disclosed in breach of this Agreement by DR Partners, its agents,
representatives, Affiliates employees, officers or directors, (ii) was
already known to any party hereto when such information was received from the
other (iii) is subsequently disclosed by a third party which has a right to
make such disclosure or (iv) is required to be disclosed by law.
63
<PAGE>
(c) Gannett shall, and shall cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat
and hold as confidential (and not disclose, provide access to any person to,
or use to the detriment of the MediaNews Parties, DR Partners or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to the MediaNews Parties, DR Partners
or their Affiliates, (ii) in the event that MWSB, Sun or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide the MediaNews Parties and
DR Partners with prompt written notice of such requirement so that the
MediaNews Parties and/or DR Partners may seek a protective order or other
remedy or waive compliance with this Section 8.8, and (iii) in the event that
such protective order or other remedy is not obtained, or the MediaNews
Parties and/or DR Partners waive compliance with this Section 8.8, furnish
only that portion of such confidential information which is legally required
to be provided and exercise its best efforts to obtain assurances that
confidential treatment will be accorded such information; PROVIDED, HOWEVER,
that this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by Gannett, its agents, representatives, Affiliates employees,
officers or directors, (ii) was already known to any party hereto when such
information was received from the other (iii) is subsequently disclosed by a
third party which has a right to make such disclosure or (iv) is required to
be disclosed by law.
(d) Effective as of the date of execution of this Agreement,
the Confidentiality Agreement dated August 24, 1998 between DR Partners and
MediaNews Group, Inc. and the Confidentiality Agreement between DR Partners
and Gannett, Inc. dated September 17, 1998 shall be superseded in all
respects relating to matters occurring on or after such date by the
provisions of this Section 8.3(c).
8.10 CONTINUATION OF ARRANGEMENTS WITH AFFILIATES.
(a) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by a
MediaNews Party, Donrey and/or Gannett shall request that any of the
relationships described in Section 5.25 of the MediaNews Newspapers
Disclosure Schedule which benefited such newspaper prior to the Closing Date
be continued in effect, upon terms comparable to these applicable prior to
the Closing Date, the MediaNews Parties undertake to cause such request to be
honored, to the extent feasible, provided that the MediaNews Parties shall be
reimbursed the cost of those services. Any relationship listed in such
Section 5.25 that Donrey and/or Gannett reasonably requests be canceled shall
be canceled as soon as a commercially reasonable substitute can be put in
place. Any relationship as to which Donrey and/or Gannett does not
specifically request cancellation within 15 days of the date of this
Agreement may continue.
(b) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by DR
Partners, West Coast
64
<PAGE>
MediaNews and/or Gannett shall request that any relationship described in
Section 6.25 of the Donrey Newspapers Disclosure Schedule which benefited
such newspaper prior to the Closing Date be continued in effect, upon terms
comparable to these applicable prior to the Closing Date, DR Partners
undertakes to cause such request to be honored, to the extent feasible,
provided that DR Partners shall be reimbursed the cost of those services.
Any relationship listed in such Section 6.25 that the MediaNews Parties
and/or Gannett reasonably request be canceled shall be canceled as soon as a
commercially reasonable substitute can be put in place. Any relationship as
to which the MediaNews Parties and/or do not specifically request
cancellation within 15 days of the date of this Agreement may continue.
(c) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by
Gannett, West Coast MediaNews and/or DR Partners shall request that any
relationship described in Section 7.25 of the Gannett Newspapers Disclosure
Schedule which benefited such newspaper prior to the Closing Date be
continued in effect, upon terms comparable to these applicable prior to the
Closing Date, Gannett undertakes to cause such request to be honored, to the
extent feasible, provided that Gannett shall be reimbursed the cost of those
services. Any relationship listed in such Section 7.25 that the MediaNews
Parties and/or Gannett reasonably request be canceled shall be canceled as
soon as a commercially reasonable substitute can be put in place. Any
relationship as to which the MediaNews Parties and/or DR Parties do not
specifically request cancellation within 15 days of the date of this
Agreement may continue.
IX. CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF THE MEDIANEWS PARTIES. The
obligation of the MediaNews Parties to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of DR Partners and Gannett contained in this
Agreement shall be true and correct in all material respects as of the
Closing, with the same force and effect as if made as of the Closing and all
the covenants contained in this Agreement to be complied with by DR Partners
and Gannett on or before the Closing shall have been complied with in all
material respects, and the MediaNews Parties shall have received certificates
of DR Partners and Gannett to such effect signed by a general partner of DR
Partners and by a duly authorized officer of Gannett.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) (collectively, an "ORDER", which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any proceeding for any
such Order be pending or threatened)
65
<PAGE>
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, or by any third party,
pending or threatened, seeking money damages; PROVIDED that the rights
granted by this Section 9.1(b) shall not apply if any of the MediaNews
Parties shall have directly or indirectly solicited or encouraged any such
action.
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All
filings required to be made prior to the Closing with governmental and
regulatory authorities, and all, consents, approvals, permits and
authorizations required to be obtained prior to the Closing from governmental
and regulatory authorities in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been made or obtained, as the case may be.
(d) FORMATION OF DONREY. The MediaNews Parties and their
counsel shall be reasonably satisfied that Donrey shall have been properly
formed and organized and shall have all necessary power and authority to
consummate the transactions contemplated by this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY DR PARTNERS AND
GANNETT. DR Partners and Gannett shall have fully and faithfully discharged
its various obligations pursuant to Sections 4.4(b) and 4.4(c) of this
Agreement.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
9.2 CONDITIONS TO OBLIGATIONS OF DR PARTNERS. The obligation of DR
Partners to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of each of the MediaNews Parties and Gannett
contained in this Agreement shall be true and correct in all material
respects as of the Closing, with the same force and effect as if made as of
the Closing, and all the covenants contained in this Agreement to be complied
with by each of the MediaNews Parties and Gannett on or before the Closing
shall have been complied with in all material respects, and DR Partners shall
have received a certificate of each of the MediaNews Parties and Gannett to
such effect signed by a duly authorized officer of such party.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order, which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any Order be pending)
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, pending or threatened,
seeking money damages; PROVIDED that the rights granted by this Section
9.2(b) shall not apply if DR Partners shall have directly or indirectly
solicited or encouraged any such action.
66
<PAGE>
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Closing with governmental and regulatory
authorities, and all consents, approvals, permits and authorizations required
to be obtained prior to the Closing from governmental and regulatory
authorities in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, shall have been
made or obtained, as the case may be.
(d) FORMATION OF WEST COAST MEDIANEWS. DR Partners and
their counsel shall be reasonably satisfied that West Coast MediaNews shall
have been properly formed and organized and shall have all necessary power
and authority to consummate the transactions contemplated by this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY THE MEDIANEWS PARTIES
AND GANNETT. The MediaNews Parties and Gannett shall have fully and
faithfully discharged their various obligations pursuant to Sections 4.4(a)
and 4.4(c) of this Agreement.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF GANNETT. The obligation of
Gannett to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of each of the MediaNews Parties and DR
Partners contained in this Agreement shall be true and correct in all
material respects as of the Closing, with the same force and effect as if
made as of the Closing, and all the covenants contained in this Agreement to
be complied with by each of the MediaNews Parties and DR Partners on or
before the Closing shall have been complied with in all material respects,
and Gannett shall have received a certificate of each of the MediaNews
Parties and DR Partners to such effect signed by a duly authorized officer of
such party.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order, which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any Order be pending)
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, pending or threatened,
seeking money damages; PROVIDED that the rights granted by this Section
9.3(b) shall not apply if Gannett shall have directly or indirectly solicited
or encouraged any such action.
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Closing with governmental and regulatory
authorities, and all consents, approvals, permits and authorizations required
to be obtained prior to the Closing from governmental and regulatory
authorities in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (including any
67
<PAGE>
consent or other communications which Gannett may in its sole judgment
believe may be necessary or appropriate from the Justice Department or the
Federal Trade Commission prior to the consummation of such transactions),
shall have been made or obtained, as the case may be.
(d) FORMATION OF WEST COAST MEDIANEWS AND DONREY. Gannett
and its counsel shall be reasonably satisfied that West Coast MediaNews and
Donrey shall have been properly formed and organized and shall have all
necessary power and authority to consummate the transactions contemplated by
this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY THE MEDIANEWS PARTIES
AND DR PARTNERS. The MediaNews Parties and DR Partners shall have fully and
faithfully discharged their various obligations pursuant to Sections 4.4(a)
and 4.4(b) of this Agreement, including, but not limited to their obligations
with respect to the USA TODAY printing agreement in the form attached as
Exhibit V to this Agreement. In addition, the Partnership shall have
delivered to Gannett a commitment, in such form as may be mutually acceptable
to Gannett and the Partnership, to cause the continued use of USA WEEKEND at
all newspapers owned by the Partnership which currently use USA WEEKEND.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
X. TERMINATION OF AGREEMENT
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of DR Partners, the
MediaNews Parties and Gannett; or
(b) by any of DR Partners, the MediaNews Parties or Gannett,
if the Closing shall not have occurred on or prior to April 1, 1999;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 10.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Closing to occur on or prior to such
date; or
(c) by any of the MediaNews Parties, DR Partners or Gannett,
if it has become impossible for any condition to the terminating party's
obligation to consummate the transactions contemplated hereby to be
satisfied, PROVIDED that such condition has become impossible to satisfy
other than as a result of the failure of such party to perform its
obligations under this Agreement; or
(d) by the MediaNews Parties, if a material adverse change
shall have occurred relative to the assets, liabilities, operations or
business prospects of any of the
68
<PAGE>
Donrey Newspapers, or Gannett Newspapers, or relative to the Donrey Assets or
Gannett Assets considered as a whole, subsequent to the date of execution of
this Agreement; or
(e) by DR Partners, if a material adverse change shall have
occurred relative to the assets, liabilities, operations or business
prospects of any of the MediaNews Newspapers or Gannett Newspapers, or
relative to the MediaNews Assets or Gannett Assets considered as a whole,
subsequent to the date of execution of this Agreement; or
(f) by Gannett, if a material adverse change shall have
occurred relative to the assets, liabilities, operations or business
prospects of any of the MediaNews Newspapers or Donrey Newspapers, or
relative to the MediaNews Assets or Donrey Assets considered as a whole,
subsequent to the date of execution of this Agreement.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except
(i) as set forth in Section 11.2 hereof and (ii) nothing herein shall relieve
either party from Liability for any wilful breach hereof.
10.3 WAIVER. At any time prior to the Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein.
XI. INDEMNIFICATION
11.1 GENERAL. From and after the Closing, the parties shall
indemnify each other as provided in this Article XI. For the purposes of
this Article XI each of the parties 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, provided that any
representation or warranty which by its terms is made with respect to a
specific date will at Closing be understood to continue to be made with
respect to such specific date. 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, 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.
11.2 INDEMNIFICATION OBLIGATIONS. Notwithstanding any other
provision of this Agreement, each party (an "INDEMNIFYING PARTY") shall
defend, indemnify, save and keep harmless the other parties, the Partnership
and their respective successors and permitted
69
<PAGE>
assigns (collectively, the "INDEMNIFIED PARTIES") against and from any and
all Damages sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any breach of any representation or warranty made by the
Indemnifying Party in this Agreement or in any closing document delivered to
the Indemnified Parties in connection with this Agreement, except, in the
case of any breach of any representation or warranty made by Gannett in
Article VII hereof, to the extent such breach is effectively cured by the
delivery by Gannett to each of the other parties hereto of one or more
revisions to Section 7.3 through Section 7.25 of its Disclosure Schedule
within fifteen days of the date of the Closing, so long as any such Section
of Gannett's Disclosure Schedule, as so revised, does not, upon such
revision, contain exceptions or limitations which will have a proportionately
greater adverse financial impact upon the Partnership than the limitations or
exceptions disclosed in either of the comparable sections of the MediaNews
Parties or DR Partners Disclosure Schedules in the form delivered prior to
the Closing;
(b) any breach by the Indemnifying Party of, or failure by
the Indemnifying Party to comply with, any of its covenants or obligations
under this Agreement (including, without limitation, their obligations under
this Article XI);
(c) the failure to discharge when due any of the
Indemnifying Party's Excluded Liabilities, or any claim against the
Indemnified Parties with respect to any of the Indemnifying Party's Excluded
Liabilities, or
(d) any liability arising out of the Indemnifying Party's
ownership or operation of such party's Newspapers or Assets which are the
subject of this Agreement, other than those Liabilities which are reflected
on the Final Working Capital Statements described in Section 4.5(b) of this
Agreement.
In no event, however, shall: (a) the MediaNews Parties be obligated to
indemnify the Partnership with respect to any breaches of any representation
or warranty under Section 11.2(a) hereof (except for breach of
representations and warranties under Section 5.20 hereof) until the aggregate
amount of all Damages sustained or incurred by the Partnership for which the
MediaNews Parties would by virtue of the foregoing be responsible exceeds
$550,000, and then the MediaNews Parties' liability therefor shall be limited
only to the amount of such excess; (b) DR Partners be obligated to indemnify
the Partnership with respect to any breach of any representation or warranty
under Section 11.2(a) hereof (except for breaches of representations under
Section 6.20 hereof) until the aggregate amount of all Damages sustained or
incurred by the Partnership for which DR Partners would by virtue of the
foregoing be responsible exceeds $300,000, and then DR Partners' liability
therefor shall only be limited to the amount of such excess and (c) Gannett
be obligated to indemnify the Partnership with respect to any breach of any
representation or warranty under Section 11.2(a) hereof (except for breaches
of representations and warranties under Section 7.20 hereof) until the
aggregate amount of all Damages sustained or incurred by the Partnership for
which Gannett would by virtue of the foregoing be responsible exceeds
$150,000, and then Gannett's liability therefore shall be limited only to the
amount of such excess. In addition, no party shall be liable to indemnify
the other
70
<PAGE>
parties with respect to any breach of which such other party(ies) had actual
knowledge prior to the Closing.
Any indemnification obligation arising under this Article XI shall be
discharged by a capital contribution by the Partner owing such obligation to
the Partnership in the amount of the Damages relating thereto. From the
date of determination of such obligation (which shall be the date agreed by
the parties or the date of a final binding determination by a mediator or the
date of a final, non-appealable determination by a court of competent
jurisdiction, as applicable) to the date such capital contribution is made in
immediately available funds, the amount of such obligations shall accrue
interest at a rate of 9 percent per annum, which interest shall be charged to
the capital account of the Partner owing such obligation.
11.3 EXCLUSIVE REMEDY. The sole and exclusive remedy of Indemnified
Parties with respect to any and all claims relating to the subject matter of
this Agreement shall be pursuant to the indemnification provisions set forth
in this Article XI.
11.4 THIRD PARTY CLAIMS. Promptly following the receipt of notice
of any claim for Damages or for equitable relief which are asserted or
threatened by a party other than the parties hereto, their successors or
permitted assigns (a "THIRD PARTY CLAIM"), the party receiving the notice of
the Third Party Claim shall (a) notify the other parties in writing at the
address set forth in Section 12.6 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 giving rise to the claim. The Indemnified
Party shall tender the defense of a Third Party Claim to the Indemnifying
Party.
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. 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 with respect
to settling such matter which decision 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
71
<PAGE>
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 reasonably be expected to, result in or relate to
either a material nonmonetary obligation or restriction of any kind
whatsoever being imposed upon the Indemnified Party (whether with respect to
the conduct of the Indemnifying Party's Newspapers or otherwise) or Damages
other than Damages which are indemnifiable under this Article XI; 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 Partnership's Newspapers or the Indemnified
Parties, as the case may be, 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 XI
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 11.4, the Indemnifying Party shall lose its
right to contest, defend, litigate and settle such a Third Party Claim;
provided that the Indemnifying Party shall be entitled to participate, at its
expense, with counsel of its choice, and any settlement shall be approved by
the Indemnifying Party, such approval not to be unreasonably withheld, 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 subject to the preceding sentence may settle such Third Party
Claim, either before or after the initiation of litigation. If, pursuant to
this Section 11.4, 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 for the reasonable attorneys'
fees and other expenses of defending the Third Party Claim which is incurred
from time to time, forthwith following the presentation to the Indemnifying
Party of itemized bills for said attorneys' fees and other expenses.
11.5 OTHER INDEMNIFICATION CLAIMS. The Indemnified Party shall give
the Indemnifying Party prompt notice of any Indemnification Claim (other than
a Third Party Claim) 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 or otherwise respond to
the matter giving rise to the claim. In respect of any Indemnification Claim
other than a Third Party Claim, the Partnership shall provide the
Indemnifying Party with the opportunity and all appropriate access to the
applicable facilities, personnel, books and records to conduct (under the
Indemnifying Party's control) necessary to respond to such Indemnification
Claim.
72
<PAGE>
XII. GENERAL
12.1 LIABILITY FOR COVENANTS, REPRESENTATIONS AND WARRANTIES AFTER
CLOSING. Except as provided in Article XI of this Agreement, from and after
the Closing no party to this Agreement shall have any Liability whatsoever
for breach of the covenants, representations and warranties set forth in this
Agreement.
12.2 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. The
Partnership shall, however, reimburse the MediaNews Parties and DR Partners
and Gannett for all applicable sales, use and real estate transfer taxes, and
all title insurance and related real estate settlement costs incurred in
connection with the transfer of the MediaNews Assets, the Donrey Assets and
the Gannett Assets to the Partnership.
12.3 ENTIRE AGREEMENT. This Agreement, together with the Schedules
and Exhibits hereto and the Ancillary Agreements, contain the entire
understanding of the parties and supersede all prior agreements and
understandings relating to the subject matter hereof and this Agreement shall
not be amended except by a written instrument hereafter signed by all of the
parties hereto.
12.4 ASSIGNMENT; NO THIRD PARTY BENEFICIARY RIGHTS. None of the
parties hereto may assign its rights or delegate its obligations under this
Agreement without the written consent of the other parties hereto. This
Agreement and all of the provisions hereof shall be binding upon and inure
only to the benefit of the parties hereto and their respective heirs,
executors, personal representatives and successors, and no other person,
including, but not limited to, any employee or creditor of any party hereto
or any affiliate thereof, shall have any rights or obligations hereunder.
12.5 FURTHER ACTION. Each of the parties hereto shall use all
reasonable efforts to do, or cause to be done, all things necessary, proper
or advisable under applicable law to carry out the provisions of this
Agreement and shall execute and deliver such documents and other papers as
may be required to carry out the provisions of this Agreement.
12.6 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery -in
person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return
73
<PAGE>
receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to the MediaNews Parties:
c/o MediaNews Group, Inc
1560 Broadway, Suite 1450
Denver, Colorado 80202
Attn: Joseph J. Lodovic, IV
Telecopy: (303) 894-9340
with a copy to:
Verner Liipfert, Bernhard, McPherson & Hand, Chartered
901 15th Street, N.W.
Washington, D.C. 20005-2301
Attn: Howell Begle, Esq.
Telecopy: 202-371-6279
if to DR Partners
c/o Stephens Group, Inc.
111 Center Street, Suite 2500
Little Rock, Arkansas 72201-4430
Attn: Ray Gash and Jackson Farrow, Esq.
Telecopy: (501) 377-3453
if to Gannett
c/o Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Attn: Larry Miller, Executive Vice President
and Chief Financial Officer
Telecopy: (703) 558-3827
with a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22234
Attn: Thomas L. Chapple, Esq.
Telecopy: (703) 558-3897
12.7 GOVERNING LAW AND VENUE. The validity and construction of this
Agreement and all ancillary agreements shall be governed by the internal laws
(and not the principles
74
<PAGE>
of conflict of laws) of the State of Delaware. Subject to the provisions of
the Partnership Agreement with respect to the resolution by the parties
thereto of disputes thereunder pursuant to the mediation provisions therein
set forth, any legal action or proceeding with respect to this Agreement or
the Ancillary Agreements may be brought in the courts of the State of
Delaware and, by execution and delivery of this Agreement, each of the
MediaNews Parties, DR Partners and Gannett hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the MediaNews Parties, DR Partners and Gannett
hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement of this Agreement or any
ancillary agreement, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any ancillary agreement may not be enforced in or by
said courts or that its property is exempt or immune from execution, that the
suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or (provided that process
shall be served in any manner referred to in the following sentence) that
service of process upon such party is ineffective. Each of the MediaNews
Parties DR Partners and Gannett agrees that service of process in any such
action, suit or proceeding against it with respect to this Agreement may be
made upon it in any manner permitted by the laws of the State of Delaware or
the federal laws of the United States or as follows: (i) by personal service
or by certified or registered mail to the party's designated agent for such
service in such state, or (ii) by certified or registered mail to the party
at its address set frth above. Service of process in any manner referred to
in the preceding sentence shall be deemed, in every respect, effective
service of process upon such party.
12.8 MEDIATION. Each party agrees that, in the event of any dispute
among the parties regarding the interpretation or application of this
Agreement, it will follow the following procedures:
(a) it will give each other party written notice of the
matter in dispute;
(b) it will negotiate reasonably and in good faith with the
other parties in order to resolve such dispute for a period of not less than
fifteen (15) business days following receipt of the notice in (a);
(c) if the dispute has not been resolved by negotiation
pursuant to (b), it will cooperate with the other parties to submit the
dispute to an independent mediator (to be selected by the unanimous consent
of the parties, which shall only be withheld on the basis of good faith
concerns about the independence or adequacy of expertise of the proposed
mediator) who shall have ten (10) business days after the matter is fully
submitted to him or her to propose a settlement of the dispute; and,
(d) if any party refuses, in its sole and unreviewable
discretion to accept the proposed resolution of the mediator, it shall give
prompt written notice of such refusal to the other parties and, at any time
following receipt of any such notice, any party shall be free to pursue any
legal, equitable or other remedies available to it regarding the matter in
dispute.
75
<PAGE>
Notwithstanding the foregoing, no party shall be required to pursue the
notice, negotiation or mediation steps set forth above if it determines,
reasonably and in good faith, the delay involved in such procedure would
cause irreparable, material harm to it or its interests.
12.9 WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives
trial by jury in any action, proceeding or counterclaim brought by or against
it on any matters whatsoever, in contract or in tort, arising out of or in
any way connected with this Agreement.
12.10 SEVERABILITY. If any one or more of the provisions contained
in this Agreement or any document executed in connection herewith shall be
invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions
contained herein shall not (to the full extent permitted by law) in any way
be affected or impaired.
12.11 ATTORNEYS' FEES. In any action, proceeding or counterclaim
arising out of or in any way connected with this Agreement, the prevailing
parties shall be entitled to recover reasonable attorneys' fees and
disbursements incurred in connection therewith.
12.12 HEADINGS. The headings of Sections and Subsections are for
reference only and shall not limit or control the meaning thereof.
12.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.14 PUBLIC ANNOUNCEMENTS. No party hereto will (and each such
party will cause its Affiliates not to) issue any press release or otherwise
make any public statement with respect to the transactions contemplated
hereby without the prior written consent of the other parties, except as and
to the extent that such party or any of its Affiliates determines in good
faith that it is so obligated by applicable securities or other laws, in
which case such party shall give notice to the other parties in advance of
such party's or its Affiliate's intent to make such announcement or issue
such press release and the parties hereto shall use all reasonable efforts to
cause a mutually agreeable release or announcement to be issued.
12.15 COMPETITION. Each of the parties hereto or their Affiliates
may now or in the future compete with each other in areas other than the area
of operation of the Partnership. Nothing in this Agreement shall be deemed
to limit, nor shall limit, in any way such competition.
76
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound thereby,
GSN, Alameda, V & P, IMP, DR Partners MWSB and Sun have caused this Agreement
to be duly executed and delivered by their respective duly authorized
officers or general partners, as the case may be, as of the date and year
first above written.
GARDEN STATE NEWSPAPERS, INC. DR PARTNERS
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
ALAMEDA NEWSPAPERS, INC. MEDIA WEST - SBC, INC.
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
INTERNET MEDIA PUBLISHING, INC. THE SUN COMPANY OF
SAN BERNARDINO, CALIFORNIA
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
V & P PUBLISHING, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
77
<PAGE>
EXHIBIT A
DEFINED TERMS
"ABC" means the Audit Bureau of Circulations, Inc.
"Accounts Receivable" shall have the meaning specified in Section 1.1.
"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.
"ALTA" means American Land Title Association.
"Ancillary Agreement" shall have the meaning specified in Section 5.2
"Assignment Agreement" shall have the meaning specified in Section 4.4(i).
"Assumed Donrey Liabilities" shall have the meaning specified in Section 2.3.
"Assumed MediaNews Liabilities" shall have the meaning specified in Section 1.3.
"Assumption Agreement" shall have the meaning specified in Section 4.4(ii).
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 ET SEQ..
"Closing" shall have the meaning specified in Section 4.3.
"Closing Date" shall have the meaning specified in Section 4.3.
"COBRA" shall have the meaning specified in Section 5.9.
"Code" shall have the meaning specified in Section 5.9.
"Containers" means (a) underground storage tanks (as defined in RCRA) and
(b) above-ground storage tanks which have a capacity of 100 gallons or
more.
"Damages" shall have the meaning specified in Section 11.1.
"Disclosure Schedule" shall have the meaning set forth in Section 4.1.
"Donrey Assets" shall have the meaning set forth in Section 2.1.
<PAGE>
"Donrey Financial Statements" shall have the meaning specified in Section 6.5.
"Donrey Intellectual Property" shall have the meaning specified in Section 6.19.
"Donrey Newspapers LLC" shall have the meaning specified in Section 2.1
"Donrey Real Estate" shall have the meaning specified in Section 6.18.
"DR Partners' Records" shall have the meaning specified in Section 2.1.
"Employee Benefit Plans" shall have the meaning specified in Section 5.9(c).
"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 written government agency policies,
all court orders and decrees and arbitration awards, and the common law,
which pertain to environmental matters or contamination of any type
whatsoever. Environmental Laws include, without limitation, those
relating to: manufacture, processing, use, distribution, treatment,
storage, disposal, generation, transportation or cleanup of Hazardous
Materials; air, surface or ground water or noise pollution; Releases;
protection of wildlife, endangered species, wetlands, and natural
resources; Containers; health and safety of employees and other persons;
and notification requirements relating to the foregoing.
"Environmental Permits" means governmental licenses, permits, registrations,
approvals, agreements and consents which are required under or are issued
pursuant to Environmental Laws.
"Equipment" shall have the meaning specified in Section 1.1.
"ERISA" shall have the meaning specified in Section 5.9.
"ERISA Affiliate" shall have the meaning specified in Section 5.9.
"Excluded Donrey Assets" shall have the meaning specified in Section 2.2.
"Excluded Donrey Liabilities" shall have the meaning specified in Section 2.4.
"Excluded MediaNews Assets" shall have the meaning specified in section 1.2.
"Excluded MediaNews Liabilities" shall have the meaning specified in Section
1.4.
"Facility" means any facility as defined in CERCLA.
"FIRPTA" shall have the meaning specified in Section 4.4.
<PAGE>
"GAAP" shall mean generally accepted accounting principles in effect at the date
when applied, consistent with prior periods.
"Hazardous Materials" means petroleum, petroleum products, petroleum
distillates, pesticides, asbestos, polychlorinated biphenyls, radioactive
materials and substances, radon and any materials or substances which are
regulated under or defined as, or otherwise included in the definition,
of "hazardous materials", "hazardous substances", "solid wastes",
"recyclable materials", "hazardous wastes", "special wastes", "toxic
substances" or "toxic pollutants" in any applicable Environmental Law.
"Indemnification Claims" means Third Party Claims plus other claims for Damages
or for equitable relief which are asserted or threatened by the parties
hereto, their successors and permitted assigns, against any Indemnified
Party, or to which an Indemnified Party is subject.
"Indemnified Party" means a party entitled to indemnification under this
Agreement.
"Indemnifying Party" means a party from whom indemnification is sought under
this Agreement.
"Inventory" shall have the meaning specified in Section 1.1.
"Liabilities" shall have the meaning specified in Section 1.3.
"Liens" shall mean any lien, security interest, mortgage, restriction, pledge,
option, lease or sublease, claim, easement, encroachment or encumbrance.
"MediaNews Financial Statements" shall have the meaning specified in section 5.5
"MediaNews Intellectual Property" shall have the meaning specified in Section
5.19.
"MediaNews Assets" shall have the meaning specified in Section 1.1.
"MediaNews Newspapers" shall have the meaning specified in Section 1.1.
"MediaNews Parties" shall have the meaning specified in Section 1.1.
"MediaNews Parties' Records" shall have the meaning specified in Section 1.1.
"Media News Real Estate" shall have the meaning specified in Section 5.18.
"Multi-employer Plan" shall have the meaning assigned to such term in ERISA.
"Newspaper" shall have the meaning assigned to such term in the Recitals hereto.
"Partnership Agreement" shall have the meaning specified in Section 4.1(a).
"PBGC" shall have the meaning specified in Section 5.9.
<PAGE>
"Permits" shall have the meaning specified in Section 5.7.
"Permitted Donrey Liens" shall have the meaning specified in Section 2.1.
"Permitted MediaNews Lines" shall have the meaning specified in Section 1.1.
"Plans" shall have the meaning specified in Section 5.9(b).
"Prepaids" shall have the meaning specified in Section 1.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6902
ET SEQ.
"Release" means any spill, discharge, leak, emission, escape, injection,
dumping, disposal or other release or threatened release of any Hazardous
Materials into the environment, whether or not notification or reporting
to any governmental agency was or is required, including, without
limitation, any Release which is subject to CERCLA.
"System" shall have the meaning specified in Section 5.20.
"Tax" or "Taxes" shall mean all taxes and other charges imposed by any
governmental authority and accruing prior to the Closing, together with
any interest or any penalty related thereto.
"Tax Assets" shall mean all Taxes receivable from a governmental authority and
all Tax refunds receivable from a governmental authority (including
prepaid Taxes).
"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.
"Trademark" or "Trademarks" shall have the meaning specified in Section 5.9.
"West Coast Media News LLC" shall have the meaning specified in Section 1.1.
"Working Capital Statements" shall have the meaning specified in Section 4.5(a).
"Year 2000 Compliant" shall have the meaning specified in Section 5.20.
