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Registration No. 333-79665
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
Form S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
GARDEN STATE NEWSPAPERS, INC.
(Exact name of Registrant as specified in its Charter)
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<S> <C> <C>
Delaware 2711 22-675173
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(State or other jurisdiction (Primary Standard Industrial (IRS Employer
of incorporation or Classification Code Number) Identification No.)
organization)
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1560 Broadway, Suite 1450
Denver, Colorado 80202
(303) 837-0886
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
Copy to:
Joseph J. Lodovic, IV Howell E. Begle, Jr.
Garden State Newspapers, Inc. Verner, Liipfert, Bernhard, McPherson & Hand
1560 Broadway, Suite 1450 901 15th Street, N.W., Suite 700
Denver, Colorado 80202 Washington, D.C. 20005
(303) 837-0886 (202) 371-6000
(Name, address including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale of the securities
to the public: July 12, 1999.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box ________.
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
DATED JULY 12, 1999
OFFER TO EXCHANGE
ALL OUTSTANDING
Series A 8.625% Senior Subordinated Notes Due 2011
FOR
Series B 8.625% Senior Subordinated Notes Due 2011
OF
GARDEN STATE NEWSPAPERS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON
AUGUST 20, 1999, UNLESS EXTENDED
Garden State Newspapers, Inc., a wholly owned subsidiary of MediaNews
Group, Inc. (formerly known as Affiliated Newspapers Investments, Inc.),
hereby offers to exchange its unregistered 8.625% Senior Subordinated Notes
due 2011, of which $200,000,000 aggregate principal amount was issued on
March 16, 1999, for an equal face amount of registered 8.625% Senior
Subordinated Notes due 2011. The terms of the registered notes, also referred
to as exchange notes, are identical in all material respects to the
unregistered notes, except that the exchange notes have been registered under
the Securities Act of 1933, as amended, and therefore will not bear legends
restricting their transfer. The unregistered notes and the exchange notes
offered by this prospectus are sometimes collectively referred to as the
notes.
THE EXCHANGE NOTES
- The exchange notes will mature on July 1, 2011.
- Interest on the exchange notes is payable semi-annually on
January 1 and July 1 of each year.
- We will not be required to make any mandatory redemption or
sinking fund payment with respect to the exchange notes prior
to maturity.
- The exchange notes will be redeemable at our option, in whole
or in part, at any time on or after July 1, 2004.
- We may, on or before July 1, 2002, use the net proceeds from
one or more equity offerings to redeem up to 35% of the
aggregate principal amount of the exchange notes.
- We may be required to make an offer to repurchase the exchange
notes from you if we undergo a change of control.
- The exchange notes will be unsecured, will be senior in right
of payment to any future indebtedness which is made expressly
junior thereto and will be subordinated in right of payment to
all existing and future senior debt.
- The exchange notes will be equal in right of payment to our
existing senior subordinated notes of which $300.0 million
is outstanding. In addition, we have a $52.0 million
subordinated promissory note, which includes deferred
interest that will rank junior to the exchange notes. Also,
on June 30, 1999, we entered into an amended and restated
credit agreement allowing us to borrow up to $350.0 million
(of which approximately $265.0 million is outstanding)
which will be senior to the exchange notes.
WE REFER YOU TO "RISK FACTORS," WHICH BEGINS AT PAGE 20, FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PARTICIPANTS IN
THE EXCHANGE OFFER.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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The date of this Prospectus is July 12, 1999.
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You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from
that contained in this prospectus. We are offering to exchange unregistered
notes for exchange notes only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of exchange notes.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the Commission. You can inspect and copy these reports and other information
at the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and at 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such documents may
also be obtained from the Public Reference Room of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. We file our reports and other
information with the Commission electronically, and the Commission maintains
a web site located at http://www.sec.gov containing this information.
We have filed a registration statement on Form S-4, which includes all
amendments and exhibits to the S-4, with the Commission with respect to this
exchange offer. This prospectus does not contain all of the information
included in the registration statement. Certain parts of the registration
statement are omitted in accordance with the rules and regulations of the
Commission. The registration statement, including any amendments, schedules
and exhibits are available for inspection and copying as set forth above.
Statements contained in this prospectus as to the contents of any contract or
other document referred to in the prospectus include all material terms of
the contracts or other documents but are not necessarily complete, and in
each instance reference is made to the copy of the applicable contract or
other document filed as an exhibit to the registration statement, each
statement being qualified in all respects by such reference.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended. In the event
that the Company ceases to be subject to the informational requirements of
the Exchange Act, the Company has agreed that, so long as any notes remain
outstanding, it will file with the Commission and distribute to holders of
the notes copies of the financial information that would have been contained
in such annual reports and quarterly reports, including management's
discussion and analysis of financial condition and results of operations,
that would have been required to be filed with the Commission, pursuant to
the Exchange Act. We refer you to "Description of the Notes--Certain
Covenants--Reports to Securities and Exchange Commission."
CERTAIN INFORMATION INCORPORATED BY REFERENCE
The following documents filed with the Commission pursuant to the
Exchange Act are incorporated by reference into and delivered with this
prospectus:
1. Annual report on Form 10-K for the year ended June 30, 1998.
2. Current reports on Form 8-K dated March 31, 1999.
3. Form 10-Q for quarter ended September 30, 1998.
4. Form 10-Q for quarter ended December 31, 1998.
5. Form 10-Q for the quarter ended March 31, 1999.
6. Current report on Form 8-K/A dated June 14, 1999.
All documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and prior to the
effective time of the exchange offer will be deemed to be incorporated by
reference into this prospectus and to be a part hereof from the date of
filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus will be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus, or in any other subsequently filed document
that is or is deemed to be incorporated by reference herein, modifies or
supersedes such
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previous statement. Any statement so modified or superseded will not be
deemed to constitute a part of this prospectus except as so modified or
superseded.
We will provide without charge copies of all documents incorporated by
reference in this prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference into such
documents), to each person to whom a copy of this prospectus has been
delivered upon the written or oral request of such person.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL
STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THIS
PROSPECTUS, INCLUDING WITHOUT LIMITATION, CERTAIN STATEMENTS UNDER THE "THE
COMPANY," AND STATEMENTS LOCATED ELSEWHERE HEREIN REGARDING THE COMPANY'S
FINANCIAL POSITION AND OPERATING STRATEGY, MAY CONSTITUTE FORWARD-LOOKING
STATEMENTS. IN ADDITION, WHEN USED IN THIS PROSPECTUS, INCLUDING THE
DOCUMENTS INCORPORATED BY REFERENCE, THE WORDS "BELIEVES," "ANTICIPATES,"
"EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, WE CAN GIVE NO ASSURANCE THAT
SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE COMPANY'S
EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS,
INCLUDING UNDER "RISK FACTORS" AND ALSO INCLUDE THE FOLLOWING:
- COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION OF BUSINESSES
ACQUIRED BY THE COMPANY (INCLUDING CLUSTERING) MAY BE GREATER THAN EXPECTED;
- UNANTICIPATED INCREASES MAY OCCUR IN FINANCING AND OTHER COSTS,
SUCH AS NEWSPRINT OR LABOR COSTS;
- GENERAL ECONOMIC OR BUSINESS CONDITIONS, EITHER NATIONALLY OR IN
THE REGIONS IN WHICH THE COMPANY CONDUCTS BUSINESS, MAY BE LESS FAVORABLE
THAN EXPECTED; AND
- COMPETITION, INCLUDING FROM OTHER NEWSPAPERS, OTHER TRADITIONAL
FORMS OF ADVERTISING AND NEWER FORMS MADE POSSIBLE BY THE INTERNET AND
OTHERWISE.
ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE
TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY QUALIFIED IN
THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. WE DO NOT UNDERTAKE ANY
RESPONSIBILITY TO RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING
STATEMENTS TO TAKE INTO ACCOUNT EVENTS OR CIRCUMSTANCES THAT OCCUR AFTER THE
DATE OF THIS PROSPECTUS.
NOTICE TO INVESTORS
The unregistered notes were sold on March 16, 1999, in a transaction not
registered under the Securities Act in reliance upon an exemption from the
registration requirements thereof. In general, the unregistered notes may not
be offered or sold unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act. The exchange notes are being offered hereby in order to
satisfy obligations of Garden State contained in a registration rights
agreement, a copy of which has been filed as an exhibit to the registration
statement. Based on interpretations by the staff of the Commission set forth
in no-action letters issued to third parties, Garden State believes that the
exchange notes issued pursuant to the exchange offer in exchange for the
unregistered notes may be offered for resale, resold or otherwise transferred
by any holder thereof, other than any such holder that is an "affiliate" of
Garden State within the meaning of Rule 405 promulgated under the Securities
Act, without compliance with the registration and prospectus delivery
provisions of the Securities Act, PROVIDED that such exchange notes are
acquired in the ordinary course of such holder's business, such holder has no
arrangement with any person to participate in the
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distribution of such exchange notes and neither such holder nor any such
other person is engaging in or intends to engage in a distribution of such
exchange notes. However, Garden State has not sought, and does not intend to
seek, its own no-action letter, and there can be no assurance that the staff
of the Commission would make a similar determination with respect to the
exchange offer. Notwithstanding the foregoing, each broker-dealer that
receives exchange notes for its own account pursuant to the exchange offer
must acknowledge that they will deliver a prospectus in connection with any
resale of such exchange notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with any resale of
exchange notes received in exchange for the unregistered notes where
unregistered notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, other than unregistered
Notes acquired directly from Garden State. Garden State has agreed that, for
a period not to exceed 180 days after consummation of the exchange offer
(subject to extension in certain events), we will make this prospectus
available to any broker-dealer for use in connection with any such resale. We
refer you to "Plan of Distribution."
Except as described herein, the exchange notes initially will be in the
form of one or more registered global book-entry notes without interest
coupons, referred to in this prospectus collectively as the "global exchange
notes," and will be deposited with the Trustee as custodian for The
Depository Trust Company, New York, New York ("DTC"), and registered in the
name of DTC or its nominee. We refer you to "Book-Entry, Delivery and Form."
Garden State does not intend to list the exchange notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There has not previously been any public market for the
exchange notes and there can be no assurance that an active market for the
exchange notes will develop. Moreover, to the extent that the unregistered
notes are tendered and accepted in the exchange offer, the trading market, if
any, for untendered unregistered notes could be adversely affected.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of unregistered notes being tendered for exchange. The date
of acceptance and exchange of the unregistered notes, referred to as the
"exchange date," will be the fourth business day following the expiration
date, as defined herein. The unregistered notes tendered pursuant to the
exchange offer may be withdrawn at any time prior to the expiration date.
Garden State will not receive any proceeds from the exchange offer. Garden
State will pay all of the expenses incident to the exchange offer.
SUMMARY
THE FOLLOWING SUMMARY CONTAINS BASIC INFORMATION ABOUT GARDEN STATE
NEWSPAPERS, INC. AND ITS SUBSIDIARIES AND OTHER INFORMATION CONTAINED
ELSEWHERE IN THIS PROSPECTUS. IT MAY NOT CONTAIN ALL THE INFORMATION THAT MAY
BE IMPORTANT TO YOU. YOU SHOULD READ THIS ENTIRE PROSPECTUS, INCLUDING THE
"RISK FACTORS" AND THE FINANCIAL DATA AND RELATED NOTES, THE INCORPORATED
DOCUMENTS AND THE OTHER DOCUMENTS TO WHICH WE HAVE REFERRED YOU BEFORE MAKING
AN INVESTMENT DECISION. ALL REFERENCES IN THIS PROSPECTUS TO "WE," "OUR,"
"US," "COMPANY" AND "GARDEN STATE" MEAN GARDEN STATE NEWSPAPERS, INC. AND ITS
DIRECT AND INDIRECT SUBSIDIARIES, INCLUDING THE CALIFORNIA NEWSPAPERS
PARTNERSHIP (THE "SUBSIDIARIES"), UNLESS THE CONTEXT OTHERWISE REQUIRES.
THE COMPANY
GENERAL
Garden State, a wholly owned subsidiary of MediaNews Group (formerly
known as Affiliated Newspapers Investments, Inc.), is one of the largest
privately held newspaper publishing companies in the United States. Garden
State was founded in March 1985 by William Dean Singleton and Richard B.
Scudder. Including the California Newspapers Partnership, as of June 30,
1999, we own and operate 41 market dominant daily and 90 non-daily newspapers
in nine states (including suburban markets in close proximity to the San
Francisco Bay area, Los Angeles, Philadelphia, Omaha and Boston). Our
principal sources of revenue are print advertising and circulation sales.
Other sources of revenue include commercial printing and electronic
advertising. Our newspapers had a combined daily and Sunday average paid
circulation of approximately 1,410,000 and 1,422,000, respectively, as of
September 30, 1998, including the newspapers added in California Newspapers
Partnership.
From fiscal 1994 to fiscal 1998, we increased revenues and EBITDA,
through acquisitions and internal growth, from $196.7 million and $37.3
million to $435.4 million and $98.1 million, respectively, while reducing our
leverage ratio from approximately 6.0x to
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4.7x. We had revenues and EBITDA of $398.9 million and $88.8 million,
respectively, for the nine months ended March 31, 1999, compared to $309.3
million and $69.3 million, respectively, for the nine months ended March 31,
1998. Fiscal year 1999 results included the August 21, 1998 and October 31,
1998 acquisition of the Charleston, West Virginia DAILY NEWS and Farmington,
New Mexico DAILY TIMES, respectively since the date of acquisition. In
addition, we contributed certain of our California newspapers to the
California Newspapers Partnership, as discussed in more detail below,
effective April 1, 1999.
We have grown significantly by making strategic acquisitions in markets,
which we believe, have above average growth potential and to a lesser extent
through internal growth. Our main acquisition focus is on newspaper markets
contiguous to our own, allowing us to realize certain operating synergies. We
refer to this acquisition strategy as clustering. A majority of our
newspapers are located in regional clusters, allowing them to achieve higher
operating margins through efficient use of labor and equipment and by
providing opportunities to sell advertising into other Garden State
newspapers located nearby. We occasionally divest newspaper properties that
no longer fit our cluster strategy and when we believe the value to us of
such newspaper properties has been maximized. This strategy has enabled us to
reinvest sale proceeds in newspaper properties that can be clustered,
allowing us to achieve greater revenue and EBITDA growth in the future than
we otherwise would have. This strategy has proven successful over the past
four years as our EBITDA has grown at a compounded annual growth rate of
27.3%, while our leverage ratio has decreased, as described above.
Our newspapers are geographically diverse and generally positioned in
markets with limited direct competition for local newspaper advertising. We
believe our newspaper markets, taken as a whole, have above average
population and sales growth potential. Most suburban and small city daily
newspapers, such as the newspapers we own, have leading or sole distribution
in the market areas served by the newspaper. Only a few cities in the United
States contain more than one primary daily newspaper, the majority of which
are in major metropolitan markets. Additionally, start-ups of new daily
newspapers in suburban markets with pre-existing local newspapers are rare.
Suburban newspapers address the specific needs of the community by publishing
a broad spectrum of local news as well as advertiser-specific editions, which
television, because of its broader geographic coverage, is unwilling or
unable to provide. Thus, in many communities the local newspaper provides a
unique combination of social and economic services, making it attractive for
both readers and advertisers.
Sizable weekly newspapers are generally found in and around metropolitan
areas in addition to smaller towns and cities. Suburban weeklies, such as the
weekly newspapers operated by our divisions, NJN Publishing, Alameda
Newspaper Group and Los Angeles Newspaper Group, have several advantages over
metropolitan dailies, including (1) a lower cost structure, (2) the ability
to publish only on their most profitable days, such as one midweek and one
weekend day, and (3) the ability to more effectively exploit zoned
advertising and avoid expensive investments in wire services and syndicated
feature material. Zoned advertising permits small merchants, individual
classified, and other advertisers to advertise solely in their own local
areas at a cost lower than that of a full-run metropolitan daily newspaper.
Thus, the typical suburban weekly newspaper has a broader advertiser base and
does not rely to the same degree as a metropolitan daily on major retailers
for advertising revenues.
On March 31, 1999, we formed a partnership, referred to in this
prospectus as the "California Newspapers Partnership," with Donrey Newspapers
LLC and Gannett Company Inc., to which we contributed our Alameda Newspaper
Group, comprised of six daily newspapers we publish in the San Francisco Bay
area; San Gabriel Valley Newspaper Group, 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 contributed ten daily newspapers
and two non-daily newspapers, located in California, most of which are
located in close proximity to certain Garden State newspaper publications.
Gannett contributed the San Bernardino County Sun, in southern California.
The California Newspapers Partnership publishes twenty-one daily newspapers
with average paid daily circulation of about 607,000 and Sunday circulation
of about 573,000 at September 30, 1998. We have a 58.8% partnership interest
in the California Newspapers Partnership and appoint a majority of its
management committee. MediaNews Services, Inc., referred to in this prospectus
as "MNS," (we refer you to "Business--MediaNews Services, Inc.'s Management of
Newspaper Operations") entered into a management agreement with the
California Newspapers Partnership, providing MNS a management fee of 1.25% of
revenues and thereby reducing the MNS management fee charged to us, on a net
basis, by $1.25 million and $0.9 million on a pro forma for the year ended
June 30, 1998 and the nine months ended March 31, 1999, respectively.
$1.6 million annually on a net basis. In addition, we entered into certain
other agreements in connection with the California Newspapers Partnership,
such as rights of first offer, put rights and other rights.
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RECENT DEVELOPMENTS
NEW CREDIT AGREEMENT. On June 30, 1999, Garden State entered into an
amended and restated credit agreement with The Bank of New York, as
administrative agent, certain lenders party thereto, MediaNews Group and the
subsidiaries of Garden State. In this prospectus, we refer to this amended
and restated senior credit facility as the "new credit facility". The
obligations of Garden State under the new credit facility are guaranteed by
MediaNews Group and the subsidiaries of Garden State and are secured by a
pledge of shares of capital stock of Garden State and its subsidiaries. The
new credit facility permits Garden State, upon compliance with the terms of
the credit agreement, to borrow up to $350.0 million. As of June 30, 1999, we
have borrowed $265.0 million under the new credit facility including
approximately $98.6 million borrowed by MediaNews Group which was contributed
to Garden State on July 1, 1999 in conjunction with the contribution by
MediaNews Group of its interest in Denver Newspapers. These borrowings were
used also in part, to refinance and serve as a substitute for our existing
credit facility and, together with the proceeds from the unregistered notes, to
fund the transactions described in the following three paragraphs. The new
credit facility matures on June 30, 2006.
REDEMPTION OF GARDEN STATE 12% NOTES. On May 12, 1999, we redeemed all
of the $57.7 million principal amount outstanding under our existing 12%
Senior Subordinated Secured Notes due 2004. The cost of redeeming these notes
was $62.4 million, including prepayment premium and accrued interest to the
redemption date. Garden State will recognize a pre-tax extraordinary loss of
approximately $2.3 million in its fourth fiscal quarter ending June 30, 1999
for this redemption.
REDEMPTION OF MEDIANEWS GROUP NOTES. On May 12, 1999, we paid a dividend
of $150.0 million to MediaNews Group which was used to redeem all of the
$141.6 million principal amount then outstanding under MediaNews Group's
existing Senior Discount Debentures due 2006.
ACQUISITION OF ADDITIONAL 20% OF DENVER NEWSPAPERS STOCK BY MEDIANEWS
GROUP. On June 30, 1999, MediaNews Group acquired an additional 20% of the
outstanding common stock of Denver Newspapers, Inc. bringing its total
ownership interest in Denver Newspapers to 80%. In addition, MediaNews Group
entered into certain other agreements in connection with the Denver
Newspapers transaction including, among others, rights of first offer,
registration rights and put and call rights. Denver Newspapers also redeemed
its outstanding preferred stock which was scheduled to be redeemed June 30,
1999. MediaNews Group funded the acquisition of Denver Newspapers common
stock, the redemption of Denver Newspapers preferred stock and the repayment
of certain debt of Denver Newspapers for a total of approximately $98.6
million. MediaNews Group used borrowings under the new credit facility in
order to fund this amount. On June 30, 1999, Denver Newspapers merged with its
wholly owned subsidiary, The Denver Post Corporation, with Denver Newspapers
being in the surviving corporation but changing its name to The Denver Post
Corporation. On July 1, 1999, MediaNews Group contributed its 80% ownership
interest in The Denver Post Corporation to us, whereupon it became a
consolidated subsidiary of Garden State. Related contract rights and
obligations were also contributed to us. At that time, we became responsible
for the previously discussed MediaNews Group debt under the new credit
facility and debt of The Denver Post Corporation amounting to approximately
$102.0 million. The inclusion of Denver Newspapers has a positive impact to
our leverage ratio as of July 1, 1999.
PLANNED CORPORATE REORGANIZATION. In order to eliminate inefficiencies
in our organizational structure, we and our parent company intend to undergo
a corporate reorganization. We expect that this reorganization will result in
a single holding company controlling our operating subsidiaries and better
alignment of our operations. Presently, there are three entities serving as
holding companies for our operations (1) Garden State, (2) our parent company
MediaNews Group and (3) our subsidiary Garden State Investments, Inc.
In anticipation of the reorganization, our parent company changed its
name from Affiliated Newspapers Investments, Inc. to MediaNews Group, Inc.
effective June 17, 1999. Also, following its acquisition of an additional 20%
of Denver Newspapers' outstanding common stock described above, MediaNews
Group contributed its 80% ownership interest in The Denver Post Corporation
to us on July 1, 1999. The Denver Post Corporation is now a consolidated
subsidiary of Garden State. At this time, MediaNews Group has no material
assets or liabilities other than its investment in us.
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The planned corporate reorganization contemplates the merger of our
wholly owned subsidiary Garden State Investments with and into Garden State,
with Garden State as the surviving corporation. Thereafter, MediaNews Group
and Garden State will merge forming a single holding company for our
operations. Assets and contractual rights and obligations of MNS associated
with its provision of management services will be transferred to us.
Thereafter, we will no longer pay management fees to MNS, but will incur such
expenses directly. In addition, management fees paid by the California
Newspapers Partnership and The Denver Post Corporation to MNS will thereafter
be paid directly to us. These transactions are expected to be completed prior
to December 31, 1999.
OPERATING STRATEGY
Our strategy is to increase revenues and cash flows through geographic
clustering and internal growth. The key components of our internal growth
strategy are, targeted marketing programs, local news leadership, high
quality editorial content and presentation, circulation growth, cost control,
and strategic technological investments. These strategies are more fully
described below.
GEOGRAPHIC CLUSTERING. We have acquired and assembled newspapers, and
may continue to acquire newspapers, in contiguous markets. We refer to this
strategy as "clustering." Clustering enables us to realize operating
efficiencies and economic synergies, such as the sharing of management,
accounting and production functions. In addition, we seek to increase
operating cash flows at acquired newspapers by reducing labor costs and the
width of the newspaper, as well as overall improved cost management.
Clustering also enables management to maximize revenues by selling
advertising into newspapers owned by us in contiguous markets. As a result of
clustering, we believe that our newspapers are able to obtain higher
operating margins than they would otherwise be able to achieve on a
stand-alone basis. The formation of the California Newspapers Partnership is
an extension of this strategy.
TARGETED MARKETING PROGRAMS. Through a strong local presence and active
community relations, we are able to develop programs to maximize our
advertising revenues. We utilize research, demographic studies and zoning
(marketing directed to a particular sub-segment of a local area) to develop
marketing programs that meet the unique needs of specific advertisers.
LOCAL NEWS LEADERSHIP. Our newspapers generally have the largest local
news gathering resources in their markets. As a result of emphasizing local
news, our newspapers generally are able to generate reader loyalty and create
franchise value. Because our provision of local news is a unique product in
our markets, our newspapers satisfy the demands of both our readers and
advertisers.
HIGH QUALITY EDITORIAL CONTENT AND PRESENTATION. Our newspapers are
committed to editorial excellence, by providing the proper mix of local and
national news to effectively serve the needs of the local markets. Our
newspapers often receive awards for excellence in various editorial
categories in their respective regions and circulation categories. In
addition, our newspapers are generally produced on modern offset presses and
are designed to attract readers through attractive layouts and color
enhancements.
CIRCULATION GROWTH. We believe that circulation growth is essential to
the creation of long-term franchise value at our newspapers. Accordingly, we
have and will continue to invest heavily in telemarketing and promotional
campaigns to increase circulation and readership. We have also established
management incentive programs, which reward our publishers for circulation
growth at each of their daily newspapers. As a result of our commitment to
circulation growth, we are one of the few newspaper groups which has
consistently grown circulation over the last several years, excluding the
effects of acquisitions.
COST CONTROL. We emphasize cost control with a particular focus on
managing staffing requirements. At newspapers with collective bargaining
units, management strives to enter into long-term agreements with minimal
annual increases. In addition, we further control labor costs through
investments in state-of-the-art production equipment that improves
production, quality and increases efficiency. We are equally focused on
newsprint cost control. Each of our newspapers benefits from discounted
newsprint costs through its relationship with MNS as the seventh largest
newspaper group in the United States in terms of circulation as of September
30, 1998. We purchase newsprint from several suppliers under arrangements
covering MNS affiliates, resulting in what we believe are some of the most
favorable long- term newsprint prices in the industry. Through MNS and
MediaNews Group, we have available fixed price newsprint contracts and
newsprint swaps expiring over the next twelve months to ten years, as well as
newsprint purchasing arrangements with certain of our other suppliers which
delay the adverse effect of newsprint price increases. Based on expected
newsprint utilization at Garden State, including the two daily newspapers we
acquired in fiscal 1999 and the
7
<PAGE>
California Newspapers Partnership, 50% of our annual newsprint consumption
for fiscal 2000 will be covered by fixed price contracts, and/or newsprint
contracts.
To further control newsprint costs while improving customer
satisfaction, beginning in October of 1995, we began converting all of our
newspapers to a 50-inch web width, which reduced the width of a single
newspaper page to 12.5 inches, from either 13.5 inch or 13.75 inch page
widths. These conversions have permanently reduced our newsprint consumption
in excess of 8% over levels prior to conversion. At March 31, 1999, all of
our newspapers, excluding the Gannett and Donrey newspapers contributed to
the California Newspapers Partnership, were printed using a 50-inch web width.
STRATEGIC TECHNOLOGICAL INVESTMENTS. To take advantage of the increasing
use of the world wide web and its advertising growth opportunities, MNS
established MediaNews Technologies, referred to in this prospectus as "MNT,"
to develop and maintain websites for each of our daily newspapers. MNT has
developed websites to provide an online editorial presence and full online
classified services for each of our daily newspapers. Although we believe
that providing an online product is important to broaden the reach of our
newspapers and ultimately increase our revenues through value added services,
we believe that almost all of our customers prefer the newspaper in a printed
form. By being the leading, and in certain instances the sole, provider of
local news in most of our markets, we believe that our newspapers are well
positioned to respond to and benefit from any changes in the way in which
news and information are delivered in the future. Our online newspapers can
be found at www.newschoice.com.
In January 1999, Garden State, the Hearst Corporation, E.W. Scripps,
Donrey Media Group and Advance Publications each acquired a 20.0% interest in
AdOne LLC, which was formed to acquire the assets of AdOne Classified
Network, Inc., or "AdOne," and its consumer website, classifiedwarehouse.com,
a fully searchable classified advertising database. After the acquisition of
AdOne and the addition of the newspapers owned by the Hearst Corporation,
E.W. Scripps, Donrey Media Group and Advance Publications, AdOne will have
classified listings from approximately 530 newspapers, which includes
newspapers in 38 of the top 50 markets in the United States. AdOne's
classifiedwarehouse.com is also the classified content provider for the
portal/web search site, Lycos. With its new ownership, AdOne is solidly
positioned to play a leading role in the rapidly expanding online classified
market place.
We may, from time to time, make strategic or targeted newspaper
acquisitions and dispositions. We continually review newspaper acquisition
candidates that we believe are underperforming in terms of operating cash
flows but have an established history of strong readership, advertiser
loyalty and are available at attractive prices. Acquisitions will only be
made in circumstances in which we believe that the acquisition will
contribute to our overall growth strategy.
MANAGEMENT
Garden State is managed by MNS, an affiliate of the Company, which is
wholly owned by Messrs. Singleton and Scudder. MNS provides management and
related services to Garden State and The Denver Post, as well as other
newspapers owned by Messrs. Singleton and Scudder and their families. Messrs.
Singleton and Scudder have spent their entire careers in the newspaper
publishing industry. MNS provides Garden State with cost-effective corporate
resources and newsprint buying power generally only available to larger
corporations. In conjunction with our planned reorganization, substantially
all of the services previously performed by MNS will be performed by MediaNews
Group. The change will not impact our consolidatd EBITDA as the management fees
previously charged by MNS will be included in our Selling, General &
Administrative expenses.
The Singleton and Scudder family members and their family trusts own
92.5% of the outstanding capital stock of MediaNews Group. Because the
Singleton and Scudder families control MediaNews Group, they also control the
common stock of Garden State. The executive officers of MNS are and will
continue to be executive officers of Garden State and MediaNews Group. We
refer you to "Recent Developments."
------------------
We are a Delaware corporation with our principal management office at
1560 Broadway, Suite 1450, Denver, Colorado 80202. Our telephone number is
(303) 837-0886.
8
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
The Exchange Offer................ We are offering to exchange $1,000 principal
amount of our registered Series B 8.625%
Senior Subordinated Notes due 2011 (the
"Exchange Notes") for each $1,000 principal
amount of our unregistered Series A 8.625%
Senior Subordinated Notes due 2011 (the
"Original Notes" and together with the
Exchange Notes, the "Notes") that are
properly tendered and accepted, referred to
in this prospectus as the "Exchange Offer."
Currently, $200,000,000 aggregate principal
amount of Original Notes is outstanding. We
will issue Exchange Notes on or promptly
after the Expiration Date, as defined below.
We refer you to "The Exchange Offer."
Resale of the Exchange Notes...... Based upon interpretations by the staff of
the Commission set forth in certain
no-action letters issued to third parties,
we believe that the Exchange Notes issued in
the Exchange Offer in exchange for Original
Notes may be offered for resale, resold and
otherwise transferred by a holder without
compliance with the registration and
prospectus delivery provisions of the
Securities Act; PROVIDED you (1) exchange
the Original Notes for the Exchange Notes in
the ordinary course of business and you do
not participate, intend to participate, and
have an arrangement with any other person to
participate, in the distribution of the
Exchange Notes, (2) are not a broker-dealer
who purchases such Exchange Notes directly
from the Company to resell pursuant to Rule
144A or any other available exemption under
the Securities Act, or (3) are not an
"affiliate" of the Company within the
meaning of Rule 405 under the Securities
Act.
Each broker-dealer that receives Exchange
Notes for its own account in exchange for
Original Notes, where Original Notes were
acquired by that broker-dealer as a result
of market-making activities or other
trading activities, must acknowledge that
it will deliver a prospectus in connection
with any resale of such Exchange Notes.
This Prospectus, as it may be amended or
supplemented from time to time, may be used
by a broker-dealer in connection with such
resales of Exchange Notes.
If, however, you acquire the Exchange Notes
in the Exchange Offer for the purposes of
distributing or participating in the
distribution of the Exchange Notes, you
cannot rely on the position of the staff of
the Commission enumerated above and must
comply with the registration and prospectus
delivery requirements of the Securities Act
in connection with any resale transaction,
unless an exemption from registration is
otherwise available.
Registration Rights Agreement..... The Original Notes were sold by the Company
on March 16, 1999, to the initial purchasers
pursuant to a Purchase Agreement dated as of
March 10, 1999, by and among the Company and
the initial purchasers (the "Purchase
Agreement"). Pursuant to the Purchase
Agreement, the Company and the initial
purchasers entered into a Registration
Rights Agreement dated as of March 16, 1999
(the "Registration Rights Agreement"), which
grants the holders of the Original Notes
certain exchange and registration rights. We
refer you to "The Exchange Offer--Termination
of Certain Rights." This Exchange Offer
is intended to satisfy these rights,
which terminate upon the consummation of
the Exchange Offer. The holders of the
Exchange Notes are not entitled to any
exchange or registration rights with
respect to the Exchange Notes.
Expiration Date................... The Exchange Offer will expire at 5:00 p.m.,
New York City time, on August 20, 1999,
unless the Exchange Offer is extended by the
Company, in its sole discretion, in which
case the term "Expiration Date" shall mean
the latest date and time to which the
Exchange Offer is extended.
9
<PAGE>
Accrued Interest on the
Exchange Notes and
Original Notes.................... The Exchange Notes will bear interest from
and including July 1, 1999. Holders whose
Original Notes are accepted for exchange
will be deemed to have waived the right
to receive any interest accrued on the
Original Notes.
Conditions to the Exchange Offer.. The Exchange Offer
is subject to certain customary conditions,
which may be waived by the Company. We
refer you to "The Exchange Offer--Certain
Conditions to the Exchange Offer." The
Exchange Offer is not conditioned upon any
minimum aggregate principal amount of
Original Notes being tendered for exchange.
Special Procedures for Beneficial
Owners............................ Any beneficial owner whose Original Notes
are registered in the name of a broker,
dealer, commercial bank, trust company or
other nominee and who wishes to tender such
Original Notes in the Exchange Offer should
contact such registered holder promptly and
instruct such registered holder to tender on
such beneficial owner's behalf. We refer you
to "The Exchange Offer--Procedures for
Tendering." If such beneficial owner wishes
to tender on such owner's behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering such
owner's Original Notes, either make
appropriate arrangements to register
ownership of the Original Notes in such
owner's name or obtain a properly completed
bond power from the registered holder. The
transfer of registered ownership may take
considerable time and may not be able to be
completed prior to the Expiration Date.
Procedures for Tendering Notes.... If you wish to accept the Exchange Offer you
must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in
accordance with the instructions contained
in it and in this prospectus, and mail or
otherwise deliver such Letter of
Transmittal, or such facsimile, together
with such Original Notes you wish to
exchange and any other required
documentation to The Bank of New York, as
exchange agent (the "Exchange Agent"), at
the address set forth in the Letter of
Transmittal. By executing the Letter of
Transmittal, each holder will represent to
the Company that, among other things,
- the Exchange Notes to be acquired
by you in connection with the
Exchange Offer are being acquired
by you in the ordinary course of
business,
- you have no arrangement or
understanding with any person to
participate in the distribution of
Exchange Notes,
- you are not an "affiliate," as
defined in Rule 405 under the
Securities Act, of the Company,
- if you are not a broker-dealer,
that you are not engaged in and do
not intend to engage in, the
distribution of Exchange Notes,
- if you are a broker-dealer (a
"Participating Broker-Dealer") that
will receive Exchange Notes for its
own account in exchange for Notes
that were acquired as a result of
market-making or other trading
activities, that you will deliver a
prospectus in connection with any
resale of such Exchange Notes;
provided that by so acknowledging
and delivering a prospectus, the
Participating Broker-Dealer will
not be deemed to admit it is an
"underwriter" within the meaning of
the Securities Act, and
10
<PAGE>
- that you are not acting on behalf
of any persons or entities who
could not truthfully make the
foregoing representations. We refer
you to "The Exchange
Offer--Procedures for Tendering."
Guaranteed Delivery Procedures.... If you wish to tender your Original Notes
and your Original Notes are not immediately
available or you cannot deliver your
Original Notes, the Letter of Transmittal or
any other document required by the Letter of
Transmittal to the Exchange Agent prior to
the Expiration Date, then you must tender
your Original Notes according to the
guaranteed delivery procedures set forth in
"The Exchange Offer-Guaranteed Delivery
Procedures."
Acceptance of the Original
Notes and Delivery of the
Exchange Notes.................... Subject to the satisfaction or waiver of
the conditions to the Exchange Offer, we
will accept for exchange any and all
Original Notes that are properly tendered
in the Exchange Offer prior to the
Expiration Date. The Exchange Notes issued
pursuant to the Exchange Offer will be
delivered on the earliest practicable date
following the Expiration Date. We refer you
to "The Exchange Offer--Terms of the
Exchange Offer."
Withdrawal Rights................. Tenders of Original Notes may be withdrawn
at any time prior to the Expiration Date.
We refer you to "The Exchange Offer--
Withdrawal of Tenders."
Certain Federal Income Tax
Considerations.................... For a discussion of certain federal income
tax considerations relating to the exchange
of the Original Notes for the Exchange
Notes, we refer you to "Certain U.S. Federal
Income Tax Considerations."
Exchange Agent.................... The Bank of New York is serving as the
Exchange Agent in connection with the
Exchange Offer. The Bank of New York also
serves as Trustee under the Indenture
governing the Exchange Notes (the
"Indenture").
Consequences of Failure to
Exchange.......................... The Original Notes that are not exchanged
pursuant to the Exchange Offer will remain
restricted securities. Accordingly, such
Notes may be resold only (1) to us, (2)
pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to some other
exemption under the Securities Act, (3)
outside the United States to a non United
States person pursuant to the requirements
of Rule 904 under the Securities Act, or (4)
pursuant to an effective registration
statement under the Securities Act. We refer
you to "The Exchange Offer--Consequences of
Failure to Exchange."
</TABLE>
11
<PAGE>
THE EXCHANGE NOTES
<TABLE>
<S> <C>
Issuer............................ Garden State Newspapers, Inc.
Notes Offered..................... $200.0 million aggregate principal amount of
8 5/8% Senior Subordinated Notes due July 1,
2011. We may, in the future, offer up to
$100.0 million of additional Notes under the
Indenture governing the Notes (the
"Indenture").
Maturity.......................... July 1, 2011.
Offering Price.................... 99.047%.
Interest.......................... Annual rate 8 5/8%.
Interest Payment Dates............ Payment frequency: every six months on
January 1 and July 1.
Sinking Fund...................... None.
Ranking........................... The Exchange Notes will rank junior to all
of our existing and future senior
indebtedness and will rank senior in right
of payment to all of our future indebtedness
that is expressly subordinated to the Notes.
The Notes will be equal in right of payment
with the existing Senior Subordinated Notes
due 2009. As of June 30, 1999 we have
outstanding, approximately:
1. $265.0 million under our new credit
facility (This amount includes
approximately $98.6 million
borrowed by MediaNews Group
which we became responsible for on
July 1, 1999.);
2. $300.3 million of indebtedness that
ranks equal to the Exchange Notes;
and
3. a $52.0 million subordinated
promissory note, including deferred
interest, that ranks junior to the
Exchange Notes.
Optional Redemption............... We may redeem some or all of the Exchange
Notes at our option at any time on or after
July 1, 2004 at the redemption prices listed
in "Description of Exchange Notes--Optional
Redemption."
In addition, on or before July 1, 2002,
we may, at our option, use the net
proceeds from one or more equity
offerings to redeem up to 35% of the
aggregate principal amount of the Notes
originally issued at the price listed in
"Description of Exchange Notes--Optional
Redemption."
Mandatory Offer to Repurchase..... If we experience specific kinds of changes
of control or certain types of asset sales,
we must offer to repurchase the Exchange
Notes at the prices listed in "Description
of Exchange Notes--Certain Covenants--Change
of Control" and "Description of Exchange
Notes--Certain Covenants--Limitation on
Sales of Assets."
Basic Covenants of Indenture...... We will issue Exchange Notes under the
Indenture with The Bank of New York as
Trustee. The Indenture will limit our
ability and/or the ability of certain of our
subsidiaries to:
- incur more debt;
- pay dividends, redeem stock or
make other distributions;
- issue capital stock;
- make certain investments;
- use assets as security in other
transactions;
- enter into transactions with
affiliates;
- enter into sale and leaseback
transactions;
- merge or consolidate; and
- transfer or sell assets.
These covenants are subject to a number of
important qualifications and limitations. We
refer you to "Description of Exchange
Notes-Certain Covenants." Garden State's new
credit facility also contains restrictive
covenants.
Risk Factors..................... Investing in the Exchange Notes involves
substantial risks. We refer you to "Risk
Factors" on page 20 for a description of
some of the risks you should consider before
investing in the Exchange Notes.
</TABLE>
12
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
The selected historical consolidated financial data for fiscal 1994
through 1998 were derived from the Consolidated Financial Statements of
Garden State and should be read in conjunction with such financial statements
and the related notes included in this prospectus. The selected historical
consolidated financial data for the nine months ended March 31, 1998 and 1999
were derived from the unaudited consolidated financial statements of Garden
State and, in the opinion of management, include all adjustments (all of
which are of normal, recurring nature) necessary for a fair presentation of
such data. The results of operations for the nine months ended March 31, 1999
are not necessarily indicative of the results that may be expected for any
other interim period or for the entire fiscal year. The selected historical
consolidated financial data of Garden State is qualified by reference to, and
should be read together with, the Consolidated Financial Statements of Garden
State and related notes thereto included in this prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1998 1999
- ----------------------------------------------------------------------------------------------------- -------------------------
FISCAL YEARS ENDED JUNE 30, NINE MONTHS ENDED
--------------------------------------------------------------- MARCH 31,
-------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (a):
Revenues
Advertising................. $159,653 $179,268 $197,954 $243,023 $331,999 $234,333 $306,797
Circulation................. 35,259 42,589 53,513 64,890 89,039 64,308 80,629
Other....................... 1,792 3,260 7,546 11,428 14,383 10,632 11,479
--------- --------- --------- --------- --------- --------- ---------
Total Revenues.................. 196,704 225,117 259,013 319,341 435,421 309,273 398,905
Cost of Sales................... 68,531 79,002 99,535 108,070 145,412 103,185 131,454
Selling, General and
Administrative.................. 89,278 101,015 112,747 140,477 189,137 134,790 176,366
Management Fees................. 1,552 1,666 2,008 2,205 2,757 2,002 2,279
Depreciation and Amortization... 19,900 18,710 21,841 24,689 38,857 26,229 31,756
Interest Expense................ 24,623 25,806 27,414 31,903 45,311 32,203 40,463
Gain on Sale of Newspaper
Property.................... 6,536 4,153 8,291 30,575 31,829 31,829 --
Income (Loss) Before Income Taxes
and Extraordinary Loss...... (15,253) 684 (752) 34,577 34,392 33,537 8,666
Net Income...................... 18,716 1,048 1,260 24,739 29,600 28,007 2,982
OTHER FINANCIAL DATA:
EBITDA (b)...................... $37,343 $43,434 $44,723 $68,589 $98,115 $69,296 $88,806
Capital Expenditures............ 3,380 4,284 8,079 8,836 9,683 6,621 8,154
Cash Flow from:
Operating Activities........ 7,039 22,876 8,658 31,438 55,350 36,475 38,801
Investing Activities........ (9,840) 1,255 6,900 (148,657) (207,026) (184,398) (64,571)
Financing Activities........ 3,105 (15,742) (28,226) 121,748 143,731 142,402 104,858
Ratio of Earnings to Fixed
Changes (c)................. -- 1.0x -- 1.9x 1.6x 1.9x 1.2x
BALANCE SHEET DATA:
Intangible Assets (Net)......... $143,190 $134,409 $118,396 $230,938 $365,718 $381,665 $399,636
Total Assets.................... 252,561 250,500 240,759 414,431 639,643 644,445 773,094
Long-Term Debt and Capital
Leases...................... 235,147 223,847 210,589 350,822 517,330 513,173 657,573
Other Long-Term Liabilities and
Obligations................. 3,852 5,042 8,101 5,488 6,963 6,617 7,102
Total Shareholder's Equity
(Deficit)....................... (23,100) (22,052) (20,792) 3,947 33,547 31,954 23,943
</TABLE>
- ------------
(FOOTNOTES ON THE FOLLOWING PAGE)
13
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(a) Revenues and operating expenses are affected by the following
acquisition and disposition transactions. The revenue numbers provided
below are from the actual fiscal year results of operations of the
respective newspapers since the date of acquisition or prior to their
disposition.
(1) On May 31, 1994, the Company purchased the assets of THE
EXPRESS TIMES, which contributed $1.5 million to fiscal 1994
revenues of the Company.
(2) On June 27, 1994, the Company closed the YPSILANTI PRESS, a
daily newspaper published in Ypsilanti, Michigan, and sold its
circulation list for $9.0 million. The sale resulted in a
pre-tax gain of approximately $6.5 million. This newspaper
contributed approximately $4.3 million in fiscal 1993 and $4.1
million of revenues in fiscal 1994 prior to its disposition.
(3) On August 1, 1994, the Company sold substantially all the
assets used in the publication of the BRISTOL PRESS and three
weekly newspapers distributed in and around Bristol,
Connecticut, for $14.5 million. The sale resulted in a pre-tax
gain of approximately $4.2 million. This newspaper contributed
approximately $6.2 million of revenue in fiscal 1994 and $0.5
million of revenue prior to its sale in fiscal 1995.
(4) On November 18, 1994, the Company acquired substantially all
the assets used in the publication of the GLOUCESTER COUNTY
TIMES and TODAY'S SUNBEAM, daily newspapers located in
Woodbury and Salem, New Jersey, respectively, for $10.9
million. These newspapers contributed approximately $8.4
million of revenues to the Company in fiscal 1995.
(5) On August 31, 1995, the Company acquired substantially all the
assets used in the publication of THE BERKSHIRE EAGLE,
BENNINGTON BANNER and BRATTLEBORO REFORMER, daily newspapers
published in Pittsfield, Massachusetts; Bennington and
Brattleboro, Vermont, respectively, for approximately $34.6
million. These newspapers contributed approximately $21.6
million of revenues in fiscal year 1996.
(6) On March 10, 1996, the Company acquired substantially all the
assets used in the publication of the SAN MATEO COUNTY TIMES,
a daily newspaper, and five weekly newspapers published in San
Mateo County, California, for approximately $15.0 million.
These newspapers contributed approximately $4.0 million of
revenue to the Company in fiscal 1996.
(7) On May 1, 1996, the Company sold the common stock of the
Johnstown Tribune Publishing Company, which publishes The
Tribune-Democrat and two weekly newspapers, distributed in and
around Johnstown, Pennsylvania, for $50.6 million. The sale
resulted in a pre-tax gain of approximately $8.3 million.
These newspapers contributed approximately $14.9 million of
revenues in fiscal 1996 prior to its sale and approximately
$17.4 million in fiscal 1995. In connection with the sale of
the Johnstown Tribune Publishing Company described above, the
Company acquired the NORTH ADAMS TRANSCRIPT and the BRIDGETON
NEWS, daily newspapers published in North Adams,
Massachusetts, and Bridgeton, New Jersey, respectively. These
newspapers contributed revenue of approximately $1.2 million
in fiscal 1996.
(8) On October 31, 1996, the Company acquired substantially all
the assets used in the publication of the PASADENA STAR-NEWS,
SAN GABRIEL VALLEY TRIBUNE, WHITTIER DAILY NEWS,
TIMES-STANDARD and THE EVENING SUN, daily newspapers
distributed primarily in Pasadena, West Covina, Whittier and
Eureka, California, and Hanover, Pennsylvania, respectively,
and seven weekly newspapers distributed in and around these
same cities, for a total of approximately $130.0 million.
These newspapers contributed $45.9 million of revenue to the
Company in fiscal year 1997.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
14
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(9) On February 13, 1997, the Company sold substantially all the
assets used in the publication of the POTOMAC NEWS and two
weekly publications for $47.7 million in cash plus an
adjustment for working capital. The Company recognized a
pre-tax gain on the sale of approximately $30.6 million, net
of selling expenses, in its third fiscal quarter. These
newspapers contributed approximately $7.5 million of revenues
in fiscal year 1997 prior to their sale and approximately
$12.0 million in fiscal year 1996.
(10) On February 28, 1997, the Company acquired substantially all
the assets used in the publication of the SENTINEL &
ENTERPRISE, LEBANON DAILY NEWS and THE DAILY NONPAREIL, daily
newspapers located in Fitchburg and Leominster, Massachusetts;
Lebanon, Pennsylvania; and Council Bluffs, Iowa, respectively,
and five weekly newspapers distributed in and around the same
cities, for a total of approximately $51.2 million in cash.
These newspapers combined contributed approximately $7.9
million of revenue to the Company in fiscal year 1997.
(11) On July 31, 1997, the Company acquired substantially all the
assets used in the publication of THE SUN, an evening
newspaper published in Lowell, Massachusetts. The assets were
purchased for approximately $60.8 million. THE SUN contributed
$22.3 million of revenue in fiscal 1998.
(12) On December 5, 1997, the Company sold substantially all the
assets used in the publication of the NORTH JERSEY HERALD &
NEWS and sixteen weekly publications for $43.0 million in cash
plus an adjustment for working capital. The Company recognized
a pre-tax gain on the sale of approximately $31.8 million, net
of selling expenses. These newspapers contributed $16.2
million of revenues prior to the sale and $36.2 million in
fiscal year 1997.
(13) On December 16, 1997, the Company acquired substantially all
the assets used in the publication of the PRESS-TELEGRAM, a
daily newspaper published in Long Beach, California, for
approximately $38.2 million in cash. Proceeds from the sale of
the NORTH JERSEY HERALD & NEWS were used to fund the
acquisition. This newspaper contributed approximately $22.7
million of revenue in fiscal year 1998.
(14) On January 29, 1998, the Company acquired substantially all
the assets used in the publication of the DAILY NEWS, a daily
newspaper published in the San Fernando Valley of Los Angeles,
California, for approximately $130.0 million. This newspaper
contributed approximately $36.9 million of revenue to the
Company in fiscal year 1998.
(15) On May 1, 1998, the Company acquired substantially all the
assets used in the publication of the VALLEY NEWS TODAY, a
morning newspaper published five times a week in Shenandoah,
Iowa, and seven weekly publications distributed primarily in
Shenandoah and Dennison, Iowa. These assets were purchased for
approximately $5.1 million in cash, plus covenants not to
compete with a discounted value of $0.6 million. These
newspapers contributed approximately $0.3 million of revenue
to the Company in fiscal year 1998.
(16) On May 11, 1998 the Company acquired substantially all the
assets used in the publication of THE TRI-CITY WEEKLY, a
weekly newspaper published in Eureka, California for
approximately $2.6 million in cash, plus a covenant not to
compete with a discounted value of $0.5 million. This
newspaper contributed approximately $0.2 million of revenue to
the Company in fiscal year 1998.
(17) On August 22, 1998, the Company acquired, for approximately
$47.0 million, a 50% interest in Charleston Newspapers, a
joint venture, which publishes the CHARLESTON GAZETTE
(morning) and CHARLESTON DAILY MAIL (evening) six days a week
and the SUNDAY GAZETTE-MAIL, under the terms of a Joint
Operating Agreement. This newspaper contributed approximately
$6.8 million of revenue to the Company in the six-month period
ended December 31, 1998.
(FOOTNOTES CONTINUED ON FOLLOWING PAGE)
15
<PAGE>
(FOOTNOTES CONTINUED FROM PRECEDING PAGE)
(18) Effective October 1, 1998, the Company acquired substantially
all the assets used in the publication of THE DAILY TIMES, a
morning newspaper published in Farmington, New Mexico, for
$5.0 million in cash and discounted notes with the prior
owners. This newspaper contributed approximately $1.7 million
of revenue to the Company in the six-month period ended
December 31, 1998.
(b) EBITDA represents total revenues less cost of sales, selling,
general and administrative expenses and management fees
charged by MNS. Where any subsidiary is not wholly owned,
revenues, cost of sales, management fees and selling,
general and administrative expenses are included only to the
extent of Garden State's common equity ownership on a
fully diluted basis. Although EBITDA is not a measure of
performance calculated in accordance with GAAP, the Company
believes that EBITDA is an indicator and measurement of its
leverage capacity and debt service ability. EBITDA should not
be considered as a measure of profitability or liquidity or
as an alternative to net income, cash flows generated by
operating, investing or financing activities or other
financial statement data presented in the Company's
Consolidated Financial Statements or any other GAAP measure
as an indicator of the Company's performance.
(c) For purposes of calculating the ratio of earnings to fixed
charges, earnings means pre-tax income from continuing
operations for such period plus fixed charges for such period
except any interest capitalized for such period. Fixed
charges means the sum of (i) interest, whether expensed or
capitalized, (ii) amortization of debt expense and discount
or premium and (iii) that portion of rental expense that is
representative of interest. In fiscal years 1994 and 1996,
earnings were not sufficient to cover fixed charges by
$15.3 million and $0.8 million, respectively. The
deficiencies reflect non-cash charges related to depreciation
and amortization aggregating $19.9 million and $21.8 million
in fiscal years 1994 and 1996, respectively.
16
<PAGE>
UNAUDITED PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
OPERATING RESULTS
The following unaudited pro forma summary consolidated financial data of
Garden State is based upon the historical Consolidated Financial Statements
of Garden State incorporated by reference in this prospectus and have been
prepared to illustrate the effects of the California Newspapers Partnership.
The unaudited fiscal year ended June 30, 1998 and the nine months ended March
31, 1999 for the pro forma summary consolidated financial data gives effect
to the California Newspapers Partnership as if it had occurred as of July 1,
1997 and 1998 respectively, for purposes of the income statement data. The
unaudited pro forma summary consolidated financial data is not necessarily
indicative of either the future results of operations or the results that
might have occurred if the California Newspapers Partnership had been
consummated on July 1, 1997 and 1998.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30, 1998 NINE MONTHS ENDED MARCH 31, 1999
--------------------------------------------- -----------------------------------------
CALIFORNIA CALIFORNIA
NEWSPAPERS NEWSPAPERS
HISTORICAL PARTNERSHIP (a) PRO FORMA HISTORICAL PARTNERSHIP (a) PRO FORMA
---------- --------------- ----------- ---------- --------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Operating Revenues.............. $ 435,421 $ 121,581 $ 557,002 $ 398,905 $ 98,923 $ 497,828
---------- --------------- ----------- ---------- --------------- -----------
Cost of Sales................... 145,412 36,581 181,993 131,454 30,348 161,802
Selling, General and
Administrative................ 191,894 54,252 246,146 178,645 44,275 222,920
Depreciation and
Amortization.................. 38,857 7,385 46,242 31,756 5,538 37,294
Interest Expense................ 45,311 -- 45,311 40,463 -- 40,463
Gain on Sale of Assets.......... (31,829) -- (31,829) -- -- --
Other........................... 11,384 -- 11,384 7,921 -- 7,921
---------- --------------- ----------- ---------- --------------- -----------
401,029 98,218 499,247 390,239 80,161 470,400
Minority Interest............... -- 19,985 19,985 -- 17,268 17,268
Income Before Income Taxes
and Extraordinary Loss........ 34,392 3,378 37,770 8,666 1,494 10,160
Income Tax Benefit
(Provision)................... (4,792) (471) (5,263) (3,530) (354) (3,884)
Extraordinary Loss.............. -- -- -- (2,154) -- (2,154)
---------- --------------- ----------- ---------- --------------- -----------
Net Income...................... $ 29,600 $ 2,907 $ 32,307 $ 2,982 $ 1,140 $ 4,122
---------- --------------- ----------- ---------- --------------- -----------
---------- --------------- ----------- ---------- --------------- -----------
</TABLE>
- ---------------
(FOOTNOTES ON PAGE 21)
17
<PAGE>
UNAUDITED PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
BALANCE SHEET DATA
The following unaudited pro forma summary balance sheet data of Garden
State is based upon the historical Consolidated Financial Statements of
Garden State incorporated by reference in this prospectus and has been prepared
to illustrate the effects of the California Newspapers Partnership. The pro
forma balance sheet gives effect to the California Newspapers Partnership as
if it had occurred as of March 31, 1999.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
------------------------------------------------------
HISTORICAL ADJUSTMENTS (b) PRO FORMA
-------------- ------------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents................ $ 80,087 $ -- $ 80,087
Receivables, Net......................... 57,641 9,864 (i) 67,505
Inventories of Newsprint and Supplies.... 9,297 1,874 (i) 11,171
Other Current Assets..................... 4,292 290 (i) 4,582
------------- ------------- ------------
Total Current Assets................... 151,317 12,028 163,345
Net Property, Plant and Equipment........ 191,318 77,930 (ii) 269,248
Other Assets............................. 430,459 32,080 (ii) 462,539
------------- ------------- ------------
Total Assets........................... $ 773,094 $ 122,038 $ 895,132
------------- ------------- ------------
------------- ------------- ------------
LIABILITIES AND SHAREHOLDERS'S EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable and Accrued Liabilities... $ 52,202 $ 4,480 (iii) $ 56,682
Other Current Liabilities.................. 15,985 3,245 (iii) 19,230
Current Portion of Long-Term Debt.......... 6,184 -- 6,184
------------- ------------- ------------
Total Current Liabilities.................. 74,371 7,725 82,096
Long-Term Debt and Obligations Under
Capital Leases............................ 651,389 -- 651,389
Other Liabilities.......................... 7,102 -- 7,102
Deferred Income Taxes...................... 16,289 -- 16,289
Minority Interest.......................... -- 114,313 (iv) 114,313
Shareholder's Equity (Deficit):
Common Stock............................. 1 -- 1
Additional Paid-In Capital............... 65,984 -- 65,984
Deficit.................................. (42,042) -- (42,042)
------------- ------------- ------------
Total Shareholder's Equity (Deficit)....... 23,943 -- 23,943
------------- ------------- ------------
Total Liabilities and Shareholder's
Equity (Deficit).......................... $ 773,094 $ 122,038 $ 895,132
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
- ---------------
(FOOTNOTES ON PAGE 21)
18
<PAGE>
NOTES TO UNAUDITED PRO FORMA SUMMARY CONSOLIDATED FINANCIAL DATA
(a) UNAUDITED PRO FORMA ADJUSTMENTS, OPERATING RESULTS
The California Newspaper Partnership reflects the combined
operations of The Sun Company of San Bernardino and Donrey
California for the nine months ended March 31, 1999 and the
fiscal year ended June 30, 1998, adjusted for the items described
below:
(i) Cost of goods sold was decreased to reflect the market price of
newsprint and supplements.
(ii) Selling, general and administrative expenses were decreased to
eliminate corporate charges from the parent companies of The Sun
Company of San Bernardino and Donrey California.
(iii) Depreciation and amortization expense was decreased to reflect
the fair market value of the assets contributed to the California
Newspapers Partnership and the useful lives assigned to the
assets.
(iv) Minority interest in the California Newspapers Partnership
related to Gannett's and Donrey's ownership interest was
recorded.
(v) Adjust income tax expense to reflect the increase in income
associated with consolidating the operations of the California
Newspapers Partnership with the Company.
(b) UNAUDITED PRO FORMA ADJUSTMENTS, BALANCE SHEET DATA
The following are pro forma adjustments required to consolidate
the assets and liabilities contributed by Gannett and Donrey as
of March 31, 1999.
(i) Reflects the current assets contributed to the California
Newspapers Partnership by The Sun Company of San Bernardino and
Donrey California as of March 31, 1999.
(ii) Reflects the estimated fair market value of property, plant and
equipment and subscriber lists contributed to the California
Newspapers Partnership by The Sun Company of San Bernardino and
Donrey California.
(iii) Reflects the current liabilities contributed to the California
Newspapers Partnership by The Sun Company of San Bernardino and
Donrey California as of March 31, 1999.
(iv) Minority interest liability assumed in conjunction with the
California Newspapers Partnership.
19
<PAGE>
RISK FACTORS
BEFORE DECIDING TO SURRENDER YOUR ORIGINAL NOTES FOR THE EXCHANGE NOTES
PURSUANT TO THE EXCHANGE OFFER YOU SHOULD BE AWARE THAT OUR ABILITY TO MAKE
PAYMENTS OF INTEREST AND PRINCIPAL AND THE VALUE OF THE EXCHANGE NOTES IN THE
SECONDARY MARKET ARE SUBJECT TO VARIOUS RISKS, INCLUDING THOSE DESCRIBED
BELOW. YOU SHOULD CONSIDER CAREFULLY THESE RISK FACTORS TOGETHER WITH ALL OF
THE OTHER INFORMATION INCLUDED IN THIS PROSPECTUS BEFORE YOU DECIDE TO
EXCHANGE YOUR ORIGINAL NOTES FOR THE EXCHANGE NOTES PURSUANT TO THIS EXCHANGE
OFFER.
HOLDING COMPANY STRUCTURE-OUR ABILITY TO MAKE PAYMENTS ON THE EXCHANGE NOTES
DEPENDS ON OUR ABILITY TO RECEIVE DIVIDENDS OR OTHER DISTRIBUTIONS FROM OUR
SUBSIDIARIES, INCLUDING FROM OUR NEWLY-FORMED JOINT VENTURE/PARTNERSHIP.
Our ability to meet our obligations, including with respect to the
Exchange Notes, will be dependent upon dividends and other
distributions or payments from our subsidiaries, including the
California Newspapers Partnership. The ability of our subsidiaries to
dividend or distribute or make other payments to Garden State depends
upon the availability of cash flow from operations, proceeds from the
sale of assets and/or borrowings. In the event of bankruptcy
proceedings affecting a subsidiary, to the extent we are recognized as
a creditor of that subsidiary, our claim would still be subordinate to
any security interest in or other lien on any assets of that subsidiary
and to any of its debt and other obligations that are senior to the
payment of the Exchange Notes. On May 12, 1999, we repurchased all the
remaining outstanding Senior Subordinated Secured Notes due 2004.
Under its partnership agreement, the California Newspapers Partnership
is expected to distribute on a monthly basis its earnings or other
funds that are available for distribution, less amounts to be retained
for working capital and capital expenditures, to the partners. We
cannot be certain of the availability of distributions from the
California Newspapers Partnership and the lack of any such
distributions may adversely affect our ability to pay interest and
principal on the Exchange Notes or meet our other obligations.
Under agreements with the other shareholder of The Denver Post
Corporation, available cash flow of The Denver Post Corporation will
be used to service and pay down debt attributable to The Denver Post
Corporation, including approximately $61.0 million of the debt incurred
under the new credit facility in conjunction with the Denver
Newspapers transactions previously discussed.
SUBORDINATION-YOUR RIGHT TO RECEIVE PAYMENTS ON THE EXCHANGE NOTES IS JUNIOR TO
OUR BANK AND OTHER UNSUBORDINATED INDEBTEDNESS AND POSSIBLY ALL OF OUR FUTURE
BORROWINGS.
Payments on the Exchange Notes are subordinated to all of our existing
and future indebtedness including amounts under our new credit
facility, other than trade payables and future indebtedness that
expressly provides that it is equal to or subordinated in right of
payment to the Exchange Notes. As a result, upon any distribution to
our creditors in a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or our property, the holders of our senior
debt will be entitled to be paid in full before any payment may be made
with respect to the Exchange Notes.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us, holders of the Exchange Notes will
participate on a PARI PASSU (or equal) basis with trade creditors and
all other holders of our senior subordinated indebtedness. However,
because the Indenture requires that amounts otherwise payable to
holders of the Exchange Notes in a bankruptcy or similar proceeding be
paid instead to holders of senior debt until they are paid in full,
holders of the Exchange Notes may receive less, ratably, than holders
of trade payables and other senior subordinated debt in any such
proceeding. In addition, any acceleration of the indebtedness under our
new credit facility will, and acceleration of our other indebtedness
may, constitute an event of default under the Indenture. If an event of
default exists under our new credit facility or certain other senior
indebtedness, the Indenture may restrict payments on the Exchange Notes
until holders of such other indebtedness are paid in full or such
default is cured or waived or has otherwise ceased to exist. In any of
these cases, we may not have sufficient funds to pay all of our
creditors and holders of the Exchange Notes may receive less, ratably,
than the holders of trade payables and other senior subordinated debt.
20
<PAGE>
SUBSTANTIAL LEVERAGE-OUR SUBSTANTIAL INDEBTEDNESS COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS
UNDER THE EXCHANGE NOTES.
We have, a significant amount of indebtedness. In addition, subject to
the restrictions contained in our indebtedness agreements, we expect to
incur additional indebtedness from time to time to finance
acquisitions, for capital expenditures, to fund working capital and for
general business purposes.
The following chart presents certain important credit information
assuming that the Company had borrowed approximately $265.0 million
under our amended and restated credit agreement as of March 31, 1999.
<TABLE>
<CAPTION>
AT MARCH 31, 1999
PRO FORMA
---------
(DOLLARS IN MILLIONS)
<S> <C>
Total indebtedness.............................. $864.3
</TABLE>
Our substantial indebtedness could have important consequences to
you. For example, it could:
- make it more difficult for us to satisfy or refinance
our obligations with respect to the Exchange Notes
and our other indebtedness;
- require us to dedicate a substantial portion of our
cash flow from operations to payments on our
indebtedness, thereby reducing the availability of
our cash flow to fund working capital, capital
expenditures, acquisitions or other general corporate
purposes;
- impair our ability to obtain additional financing
for, among other things, working capital, capital
expenditures, acquisitions or other general corporate
purposes, or prevent us from obtaining financing to
repurchase the Exchange Notes from you upon a change
of control;
- make us less attractive to prospective or existing
customers or less attractive to potential acquisition
targets; and
- limit our flexibility to adjust to changing business
and market conditions, and make us more vulnerable to
a downturn in general economic conditions as compared
to our competitors that have less debt.
In addition, our failure to comply with the financial and other
restrictive covenants contained in our indebtedness agreements could
result in an event of default under such indebtedness, which if not
cured or waived, could have a material adverse effect on us. If we
cannot meet or refinance our obligations when they are due, we may have
to sell assets, reduce capital expenditures or take other actions,
which could have a material adverse effect on us.
We cannot assure you that our businesses will generate sufficient cash
flow from operations or that future borrowings will be available to us
under our new credit facility or otherwise in an amount sufficient to
enable us to pay our indebtedness, including the Exchange Notes, or to
fund our other liquidity needs. In addition, we may need to refinance
all or a portion of our indebtedness, including the Exchange Notes, on
or before maturity. We cannot assure you that we will be able to
refinance any of our indebtedness, including our new credit facility
and the Exchange Notes, on commercially reasonable terms or at all.
CHANGE OF CONTROL OFFER-WE MAY NOT BE PERMITTED TO PURCHASE THE EXCHANGE NOTES
UPON A CHANGE OF CONTROL AS REQUIRED BY THE INDENTURE.
Upon the occurrence of certain specific change of control events, we
will be required to offer to purchase all outstanding Exchange Notes
from you. However, a change of control may also constitute an event of
default under our new credit facility that would permit the lenders to
accelerate the debt thereunder. In addition, our new credit facility
restricts our ability to purchase the Exchange Notes upon a change of
control. Therefore, prior to purchasing the Exchange Notes upon a
change of control, we must either repay the indebtedness under our new
credit facility or obtain the consent of the lenders thereunder. If we
do not repay our new credit facility or obtain such consent, we will be
prohibited from offering to purchase the Exchange Notes.
21
<PAGE>
The source of funds for any purchase of the Exchange Notes would be our
available cash or cash generated from other sources, including
borrowings, sales of assets, sales of equity or funds provided by an
existing or new controlling person. We cannot assure you that any of
these sources will be available. Upon the occurrence of a change of
control event, we may seek to refinance the indebtedness outstanding
under our new credit facility and the Exchange Notes. However, it is
possible that we will not be able to complete such refinancing on
commercially reasonable terms or at all. In such event, we may not have
the funds necessary to finance the required change of control offer. We
refer you to "Description of Exchange Notes-Certain Covenants-Change of
Control."
FRAUDULENT CONVEYANCE-THE APPLICATION OF FRAUDULENT CONVEYANCE LAWS COULD AFFECT
THE ENFORCEABILITY OF THE EXCHANGE NOTES OR RESULT IN THEIR SUBORDINATION.
A portion of the proceeds from the sale of the Original Notes were used
to pay dividends to our sole shareholder, who in turn used such
proceeds to repurchase, the MediaNews Group Senior Discount Debenture
due 2006.
If a court voided the dividend as a result of a fraudulent conveyance
or because the court deemed the dividend unlawful, the court could
disallow the obligations represented by the Exchange Notes or
subordinate the obligations represented by the Exchange Notes to the
claims of other creditors of Garden State.
Although laws differ among various jurisdictions, in general, the
obligations represented by the Exchange Notes could be found to be a
fraudulent conveyance if:
- the dividend was paid with actual intent to hinder, delay or
defraud creditors; or
- Garden State did not receive fair consideration or reasonably
equivalent value for the note offering (because the proceeds
of the note offering were used to pay a dividend) and Garden
State was any of the following:
1. insolvent or was rendered insolvent because of
issuance of the Exchange Notes and the dividend;
2. engaged in a business or transaction for which its
remaining assets constituted unreasonably small
capital; or
3. intended to incur, or believed that it would incur,
debts beyond its ability to pay at maturity.
THE CALIFORNIA NEWSPAPERS PARTNERSHIP PUT OPTIONS-WE MAY BE REQUIRED TO PURCHASE
THE EQUITY INTEREST OF THE OTHER PARTNERS COMMENCING AFTER JANUARY 1, 2003.
Donrey and Gannett have the right to require Garden State to effect the
purchase of their interests in the California Newspapers Partnership,
in the case of Donrey at any time on or after January 1, 2005 and in
the case of Gannett at any time on or after January 1, 2003, at the
then appraised fair market value. We would be required to consummate
the purchases of such interests for cash within two years of the
determination of such value. We cannot be sure that we will have
sufficient cash on hand to fund any such purchase or that third party
financing would be available or available on acceptable terms. Even if
we have sufficient cash on hand to fund the purchase or can obtain
acceptable financing, the actual funding of any such purchase could
have a material adverse effect on us.
THE DENVER POST CORPORATION PUT OPTION-WE MAY BE REQUIRED TO PURCHASE THE
EQUITY INTERESTS OF THE OTHER SHAREHOLDERS OF THE DENVER POST CORPORATION
COMMENCING AFTER JUNE 30, 2001.
The other shareholders of The Denver Post Corporation have the right
to require us to purchase their shares at any time between June 30,
2001 and July 1, 2004, at the then appraised fair market value. We
would be required to consummate the purchase of such interests for
cash within one year of the determination of such value. We cannot
be sure that we will have sufficient cash on hand to fund any such
purchase or that third party financing would be available or
available on acceptable terms. Even if we have sufficient cash on
hand to fund the purchase or can obtain acceptable financing, the
actual funding of any such purchase could have a material adverse
effect on us.
22
<PAGE>
CYCLICALITY-OUR REVENUES ARE CYCLICAL.
Our advertising revenues, as well as those of the newspaper industry in
general, are cyclical and dependent upon general economic conditions.
Historically, advertising revenues have increased with the beginning of
an economic recovery, principally with increases in classified
advertising for employment, housing and automobiles. Decreases in
advertising revenues have historically corresponded with general
economic downturns and recessionary regional and local conditions. We
believe, however, that the diversity of our geographical operations
mitigates, to some degree, the effects of an economic downturn to the
extent such downturn is regional. We refer you to "Business-Industry
Background."
NEWSPRINT COSTS-FLUCTUATIONS IN NEWSPRINT COSTS MAY AFFECT OUR FINANCIAL
RESULTS.
The steady decline in newsprint prices continues as North American
newsprint supplies continue to exceed demand. The price declines began
in November of 1998, and since that time, the average price has dropped
approximately $60 per metric ton for 30 pound newsprint. While North
American newsprint is currently averaging $520 per metric ton, the
Company has been able to purchase newsprint from Europe and Asia at
prices under $500 per metric ton. Newsprint prices may continue to
decline as newsprint producer's inventories are expected to grow in the
near term.
To minimize the influence of newsprint price fluctuations, Garden
State, through MediaNews Group and MNS, has entered into fixed price
newsprint contracts and newsprint swap agreements, which expire over
the next twelve months to ten years. The weighted average price for
newsprint under both the fixed price newsprint contracts and the
newsprint swap, for fiscal 1999 is $552 per metric ton and for
fiscal 2000 is $566 per metric ton. About 50% of Garden State's
fiscal year 2000 consumption is expected to be purchased under these
price contracts. In addition, Garden State has a contract that
allows it to purchase 36,000 metric tons per year at a price equal
to the lowest price at which newsprint is sold to large North
America newsprint purchasers, subject to quarterly adjustment.
COMPETITION-COMPETITION COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
Our revenue generation depends primarily upon the sale of advertising
and paid circulation. Our competitors for advertising and circulation
include local and regional newspapers, radio and television broadcast,
cable television, direct mail, electronic media, including the
"Internet," and other communications and advertising media which
operate in our markets. Some of our competitors are larger and have
greater financial resources than we do. The extent and nature of our
competition in any particular newspaper market is in large part
determined by the location and demographics of the market and the
number of media alternatives in that market.
Currently, our newspapers do not compete directly with other daily
newspapers covering local news in the core of any of our markets.
Although there can be no assurance that a competitor will not enter one
or more of our markets and become successful, we believe that entry by
a direct competitor in our daily newspaper markets is unlikely for the
foreseeable future.
FULL IMPLEMENTATION OF OPERATING STRATEGY; FUTURE ACQUISITIONS AND/OR JOINT
VENTURES-FAILURE TO IMPLEMENT OUR OPERATING STRATEGY COULD HAVE A MATERIAL
ADVERSE EFFECT ON US; FUTURE ACQUISITIONS AND/OR JOINT VENTURES MAY MATERIALLY
CHANGE OUR CORPORATE STRUCTURE AND ACCESS TO CASH FLOW FROM OUR OPERATING UNITS.
Our operating strategy includes acquiring newspaper assets in markets
contiguous to existing newspaper markets or in markets where we believe
opportunities for clustering exist. The clustering strategy includes
implementing certain operating improvements and adopting new
advertising strategies to capitalize on perceived synergies. We may not
be able to fully implement our strategy with respect to any recent or
future acquisitions or to realize the anticipated results of our
clustering strategy, including the reduction of certain operating
expenses.
CONTROL OF GARDEN STATE-WE ARE EFFECTIVELY CONTROLLED BY TWO SHAREHOLDER GROUPS.
The Singleton shareholder group and the Scudder shareholder group,
own 92.5% of the MediaNews Group Common Stock and each in effect is
entitled to elect one-half of all of the members of our board of
directors and of our parent
23
<PAGE>
corporation, and to otherwise control us and our parent corporation,
including with respect to mergers, liquidations and asset
acquisitions and dispositions. There are no independent directors on
our board of directors or our parent corporation's board of directors
and neither we nor our parent corporation are under any obligation,
and do not plan, to name one or more independent directors at this
time.
YEAR 2000 RISK-YEAR 2000 ISSUES COULD HAVE A MATERIAL ADVERSE EFFECT ON US.
As has been widely reported, many computer systems process dates based
on two digits for the year of transaction and may be unable to process
dates in the year 2000 and beyond. There are many risks associated with
the year 2000 compliance issue, including but not limited to the
possible failure of our systems and hardware with embedded
applications. Any such failure could result in (1) our inability to
obtain raw materials; (2) the malfunctioning of our printing,
distribution or service processes, (3) our inability to properly
bill and collect payments from our customers and/or (4) errors or
omissions in accounting and financial data, any of which could have
a material adverse effect on our results of operations and financial
condition. In addition, there can be no guarantee that the systems
of other companies, including our vendors, utilities and customers,
will be converted in a timely manner, or that a failure to convert
by another company, or a conversion that is incompatible with our
systems, would not have a material adverse effect on us.
ABSENCE OF PUBLIC MARKET FOR THE EXCHANGE NOTES-AN ACTIVE TRADING MARKET MAY NOT
DEVELOP FOR THE EXCHANGE NOTES
The Exchange Notes constitute a new class of securities for which there
is no established trading market. The Company does not intend to list
the Exchange Notes on any national securities exchange or to seek
approval for quotation through any automated quotation system.
Accordingly, we can not assure you that an active public or other
market will develop for the Exchange Notes or as to the liquidity of
the trading market for the Exchange Notes. If a trading market does not
develop or is not maintained, it would have a material adverse effect
on the market price and liquidity of the Exchange Notes and you may
experience difficulty in reselling the Exchange Notes or may be unable
to sell them at all.
If a market for the Exchange Notes does develop, future trading prices
of such securities will depend on many factors, including, among other
things, prevailing interest rates, the Company's results of operations
and the market for similar securities. Depending on these factors, the
Exchange Notes may trade at prices that may be higher or lower than
their principal amount. Declines in the liquidity and market price of
the Exchange Notes may also occur independently of our financial
performance or prospects. Any market for the Exchange Notes that does
develop is subject volatility or disruptions or may be discontinued at
any time.
CONSEQUENCES OF FAILURE TO EXCHANGE ORIGINAL NOTES
IF YOU WISH TO EXCHANGE YOUR ORIGINAL NOTES FOR EXCHANGE NOTES, YOU
MUST COMPLY WITH THE EXCHANGE OFFER PROCEDURES. The Exchange Notes will
be issued in exchange for Original Notes only after timely receipt by
the Exchange Agent of such Original Notes, a properly completed and
duly executed Letter of Transmittal and all other required documents.
Therefore, holders of Original Notes desiring to tender such Original
Notes in exchange for Exchange Notes should allow sufficient time to
ensure timely delivery. Neither the Exchange Agent nor the Company is
under any duty to give notification of defects or irregularities with
respect to tenders of Original Notes for exchange.
ORIGINAL NOTES THAT ARE NOT TENDERED OR ARE TENDERED BUT NOT ACCEPTED
WILL, FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, CONTINUE TO BE
SUBJECT TO THE EXISTING RESTRICTIONS UPON TRANSFER THEREOF. If you do
not exchange your Original Notes for Exchange Notes pursuant to the
Exchange Offer or your tender for exchange is not accepted, you will
continue to be subject to the restrictions on transfer of your Original
Notes as set forth in the legend on the Original Notes. Because the
Original Notes were issued pursuant to exemptions from the registration
requirements of the Securities Act and applicable state securities
laws, the Original Notes may not be offered or sold unless registered
under the Securities Act and applicable state securities laws, or
pursuant to an exemption therefrom, or in a transaction not subject
thereto. We do not intend to register the Original Notes under the
Securities Act and, after consummation of the Exchange Offer, will not
be obligated to do so except under limited circumstances. We refer you
to "The Exchange Offer--Purpose of the Exchange Offer." Based on an
interpretation by the staff of the
24
<PAGE>
Commission set forth in no-action letters issued to third parties,
we believe that the Exchange Notes issued pursuant to the Exchange
Offer in exchange for Original Notes may be offered for resale,
resold or otherwise transferred by holders thereof, other than any
such holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act, without compliance
with the registration and prospectus delivery provisions of the
Securities Act, PROVIDED that such Exchange Notes are acquired in
the ordinary course of your business, you do have no arrangement
with any person to participate in the distribution of such Exchange
Notes and neither you or any other person is engaging in or intends
to engage in a distribution of such Exchange Notes. However, the
Commission has not considered the Exchange Offer in the context of a
no-action letter and there can be no assurance that the staff of the
Commission would make a similar determination with respect to the
Exchange Offer. If you tender your Original Notes in the Exchange
Offer for the purpose of participating in a distribution of the
Exchange Notes you may be deemed to have received restricted
securities and, if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. A broker-dealer that
received Exchange Notes for its own account in exchange for Original
Notes, where such Original Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities,
must acknowledge that they will deliver a prospectus in connection
with any resale of such Exchange Notes. We refer you to "Plan of
Distribution."
THE AMOUNT OF THE ORIGINAL NOTES TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER WILL AFFECT THE MARKET FOR THE ORIGINAL NOTES AND THE EXCHANGE
NOTES. To the extent that a significant amount of the Original Notes
are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Original Notes could be
adversely affected. For the same reason, to the extent that a large
amount of Original Notes is not tendered or is tendered and not
accepted in the Exchange Offer, the trading market for the Exchange
Notes could be adversely affected. We refer you to "The Exchange
Offer."
USE OF PROCEEDS
There will be no proceeds to Garden State from the exchange of the
Original Notes pursuant to the Exchange Offer. We used the proceeds from the
offering of the Original Notes to repay all the borrowings under our then
existing credit facility, to repurchase our 12% Senior Subordinated Secured
Notes, to pay a dividend to MediaNews Group, which then repurchased a portion
of its Senior Discount Debentures due 2006, and for our general corporate
purposes.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the Original Notes on March 16, 1999 to the initial purchasers
pursuant to the Purchase Agreement. The initial purchasers subsequently sold
the Original Notes to (a) qualified institutional buyers, as defined in Rule
144A under the Securities Act, in reliance on Rule 144A, and to (b) persons
in offshore transactions in reliance on Regulation S under the Securities
Act. As a condition to the initial sale of the Original Notes, the Company
and the initial purchasers entered into the Registration Rights Agreement on
March 16, 1999. Pursuant to the Registration Rights Agreement, we agreed to
(1) file with the Commission within 75 days after the issue date of the
Original Notes a registration statement under the Securities Act with respect
to the Exchange Notes and (2) use our reasonable best efforts to cause such
Registration Statement to become effective under the Securities Act within
120 days after the issue date of the Original Notes. We agreed to issue and
exchange the Exchange Notes for all Original Notes validly tendered and not
withdrawn before the expiration of the Exchange Offer. A copy of the
Registration Rights Agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. The registration
statement is intended to satisfy certain of our obligations under the
Registration Rights Agreement and the Purchase Agreement.
RESALE OF THE EXCHANGE NOTES
With respect to the Exchange Notes, based upon interpretations by the
staff of the Commission set forth in certain no-action letters issued to
third parties, we believe that if you, assuming you are not (1) a
broker-dealer who purchases such Exchange Notes directly from the Company to
resell pursuant to Rule 144A or any other available exemption under the
Securities Act, or (2) you are not "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act, exchange the Original Notes for
the Exchange Notes in the ordinary course of business and you do not
participate, intend to participate, or have an arrangement with any other
person to participate, in the distribution of the Exchange Notes, you will be
allowed to resell the Exchange Notes to the public
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<PAGE>
without further registration under the Securities Act and without delivering
to the purchasers of the Exchange Notes a prospectus that satisfies the
requirements of Section 10 of the Securities Act. However, if you acquire the
Exchange Notes in the Exchange Offer for the purposes of distributing or
participating in the distribution of the Exchange Notes or are a
broker-dealer, you cannot rely on the position of the staff of the Commission
enumerated in these no-action letters issued to third parties and must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction, unless an exemption from
registration is otherwise available. Further, the Commission has not
considered the Exchange Offer in the context of a no-action letter and there
can be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer. Each broker-dealer that
receives Exchange Notes for its own account in exchange for Original Notes,
where such Original Notes were acquired by such broker-dealer as a result of
market-making activities or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Original Notes if the
Original Notes were acquired by the broker-dealer as a result of
market-making or other trading activities.
Pursuant to the Registration Rights Agreement, we have agreed to make
this prospectus, as it may be amended or supplemented from time to time,
available to any broker-dealer subject to the prospectus delivery
requirements of the Securities Act for use in connection with any resale for
a period of up to 180 days after the Expiration Date. We refer you to "Plan
of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions in this prospectus and in
the Letter of Transmittal, we will accept any and all Original Notes validly
tendered and not withdrawn prior to the Expiration Date. We will issue $1,000
principal amount of Exchange Notes in exchange for each $1,000 principal
amount of outstanding Original Notes surrendered pursuant to the Exchange
Offer. Original Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and
terms of the Original Notes except that (1) the exchange will be registered
under the Securities Act and hence the Exchange Notes will not bear legends
restricting their transfer and (2) as a holder of the Exchange Notes you will
not be entitled to the certain rights of holders of Original Notes under the
Registration Rights Agreement, which rights will terminate upon the
consummation of the Exchange Offer. The Exchange Notes will evidence the same
debt as the Original Notes (which they replace) and will be issued under, and
be entitled to the benefits of, the Indenture, which also authorized the
issuance of the Original Notes, such that all outstanding Notes will be
treated as a single class of debt securities under the Indenture.
As a holder of the Original Notes you do not have any appraisal or
dissenter's rights under the Indenture in connection with the Exchange Offer.
We intend to conduct the Exchange Offer in accordance with the provisions of
the Registration Rights Agreement and the applicable requirements of the
Securities Act, the Exchange Act and the rules and regulations of the
Commission thereunder.
We will be deemed to have accepted validly tendered Original Notes when,
as and if we give oral or written notice thereof to the Exchange Agent. The
Exchange Agent will act as agent for the tendering holders of Original Notes
for the purposes of receiving the Exchange Notes from us.
If you tender Original Notes in the Exchange Offer you will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Exchange Notes for Original Notes pursuant to the Exchange Offer. We will pay
all charges and expenses, other than certain applicable taxes described
below, in connection with the Exchange Offer. We refer you to "--Fees and
Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
August 20, 1999, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the
latest date and time to which the Exchange Offer is extended.
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<PAGE>
If we elect to extend the Exchange Offer, we (1) will notify the
Exchange Agent of any extension by oral or written notice, (2) mail to the
registered holders of Original Notes an announcement thereof, and (3) issue a
press release or other public announcement which shall include disclosure of
the approximate number of Original Notes deposited to date, each prior to
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which we choose to
make a public announcement of any delay, extension, amendment or termination
of the Exchange Offer, we will have no obligation to publish, advertise or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
We reserve the right, in our sole discretion, (1) to delay accepting any
Original Notes, (2) to extend the Exchange Offer, or (3) if any conditions
set forth below under "--Certain Conditions to the Exchange Offer" have not
been satisfied, to terminate the Exchange Offer by giving oral or written
notice of such delay, extension or termination to the Exchange Agent. Any
such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders. If the Exchange Offer is amended in a manner determined
by us, which constitutes a material change, we will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders of Original Notes, and we will extend the Exchange Offer
for a period of five to ten business days, depending upon the significance of
the amendment and the manner of disclosure to such registered holders, if the
Exchange Offer would otherwise expire during such five to ten business day
period.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes bear interest at a rate equal to 8.625% per annum.
Interest on the Exchange Notes is payable semiannually on each January 1 and
July 1, commencing on the first such date following their date of issuance.
Record holders of the Exchange Notes on December 15, 1999 will receive
interest on January 1, 2000 for the semiannual period ended December 31,
1999. Holders of Original Notes that are accepted for exchange will be deemed
to have waived the right to receive any interest accrued on the Original
Notes.
PROCEDURES FOR TENDERING
Only a registered holder of Original Notes may tender such Original
Notes in the Exchange Offer. To tender in the Exchange Offer, you must
complete, sign and date the Letter of Transmittal or facsimile thereof, have
the signatures thereon guaranteed if required by the Letter of Transmittal,
and mail or otherwise deliver such Letter of Transmittal or such facsimile to
the Exchange Agent at the address set forth below under "--Exchange Agent"
for receipt prior to the Expiration Date. In addition, either (1)
certificates for such Original Notes must be received by the Exchange Agent
along with the Letter of Transmittal, or (2) a timely confirmation of a
book-entry transfer, referred to as a "Book-Entry Confirmation," of such
Original Notes, if such procedure is available, into the Exchange Agent's
account at DTC pursuant to the procedures for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date,
or (3) the holder must comply with the guaranteed delivery procedures
described below.
If you do not withdraw your tender of the Original Notes prior to the
Expiration Date it will constitute an agreement between you and Garden State
in accordance with the terms and subject to the conditions set forth herein
and in the Letter of Transmittal.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION
AND RISK. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT YOU USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT
TO US. YOU MAY REQUEST YOUR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.
If you are a beneficial owner of the Original Notes and your Original
Notes are held through a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender your Original Notes, you should contact
such intermediary promptly and instruct such intermediary to tender the
Original Notes on your behalf.
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<PAGE>
Signatures on a Letter of Transmittal or a notice of withdrawal, as
described below under "--Withdrawal of Tenders," as the case may be, must be
guaranteed by an Eligible Institution (as defined below) unless the Original
Notes tendered pursuant thereto are tendered (1) by a registered holder who
has not completed the section entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (2) for the
account of an Eligible Institution. In the event that signatures on a Letter
of Transmittal or a notice of withdrawal, as the case may be, are required to
be guaranteed, such guarantee must be made by a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act which is a member
of one of the recognized signature guarantee programs, each an "Eligible
Institution".
If you sign the Letter of Transmittal even though you are not the
registered holder of any Original Notes listed in the Letter of Transmittal,
such Original Notes must be endorsed or accompanied by a properly completed
bond power, signed by such registered holder as such registered holder's name
appears on such Original Notes.
If you sign the Letter of Transmittal or any Original Notes or bond
powers in your capacity as trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, you should so indicate when signing, and unless
waived by the Company, evidence satisfactory to the Company of their
authority to so act must be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Original Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. We reserve the absolute right to reject any and all
Original Notes not properly tendered or any Original Notes our acceptance of
which would, in the opinion of our counsel, be unlawful. We also reserve the
right to waive any defects, irregularities or conditions of tender as to
particular Notes. Our interpretation of the terms and conditions of the
Exchange Offer, including the instructions in the Letter of Transmittal, will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Original Notes must be cured
within such time as we shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of
Original Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Original Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.
While we have no present plan to acquire any Original Notes which are
not tendered in the Exchange Offer or to file a registration statement to
permit resales of any Original Notes which are not tendered pursuant to the
Exchange Offer, we reserve the right in our sole discretion to purchase or
make offers for any Original Notes that remain outstanding subsequent to the
Expiration Date or, as set forth below under "--Certain Conditions to the
Exchange Offer," to terminate the Exchange Offer and, to the extent permitted
by applicable law, purchase Original Notes in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or
offers could differ from the terms of the Exchange Offer.
By tendering, each holder will represent to us that, among other things,
(1) the Exchange Notes you acquired in connection with the Exchange Offer are
being acquired by you in the ordinary course of business; (2) you have no
arrangement or understanding with any person to participate in the
distribution of Exchange Notes; (3) you are not an "affiliate," as defined in
Rule 405 of the Securities Act, of the Company; (4) if you are not a
broker-dealer, that you are not engaged in and do not intend to engage in,
the distribution of Exchange Notes; (5) if you are a broker-dealer, referred
to as a "Participating Broker-Dealer," that will receive Exchange Notes for
its own account in exchange for Original Notes that were acquired as a result
of market-making or other trading activities, that you will deliver a
prospectus in connection with any resale of such Exchange Notes, provided
that by so acknowledging and by delivering a prospectus, the Participating
Broker-Dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act; and (6) that you are not acting on behalf
of any persons or entities who could not truthfully make the foregoing
representations.
RETURN OF NOTES
If any tendered Original Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Original Notes are
withdrawn or are submitted for a greater principal amount than you desire to
exchange, such unaccepted, withdrawn or non-exchanged Original Notes will be
returned to you without any expense to you as promptly as practicable. Under
these circumstances, in the case of Original Notes tendered by book-entry
transfer into the Exchange Agent's account at DTC
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<PAGE>
pursuant to the book-entry transfer procedures described below, such Original
Notes will be credited to an account maintained with the Depositary.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your Original Notes and (1) your Original Notes
are not immediately available or (2) you cannot deliver your Original Notes,
the Letter of Transmittal or any other required documents to the Exchange
Agent prior to the Expiration Date, you may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery substantially in the
form provided by the Company, by facsimile transmission, mail
or hand delivery, setting forth the name and address of the
holder, the certificate number(s) of such Original Notes and
the principal amount of Original Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within
three New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal, or a facsimile
thereof, together with the certificate(s) representing the
Original Notes in proper form for transfer or a Book-Entry
Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) Such properly executed Letter of Transmittal, or facsimile
thereof, as well as the certificate(s) representing all
tendered Original Notes in proper form for transfer and all
other documents required by the Letter of Transmittal are
received by the Exchange Agent within three New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to you in order for you to tender your Original Notes according to
the guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to the Expiration Date.
To withdraw a tender of Original Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date.
Any such notice of withdrawal must (1) specify the name of the person having
deposited the Original Notes to be withdrawn, known as the "Depositor," (2)
identify the Original Notes to be withdrawn, including the certificate number
or numbers and principal amount of such Original Notes, and (3) be signed by
the holder in the same manner as the original signature on the Letter of
Transmittal by which such Original Notes were tendered, including any
required signature guarantees. All questions as to the validity, form and
eligibility, including time of receipt of such notices will be determined by
the Company in its sole discretion, whose determination shall be final and
binding on all parties. Any Original Notes so withdrawn will be deemed not to
have been validly tendered for purposes of the Exchange Offer and no Exchange
Notes will be issued with respect thereto unless the Original Notes so
withdrawn are validly retendered. Properly withdrawn Original Notes may be
retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, we will not be
required to accept for exchange, or exchange the Exchange Notes for, any
Original Notes not theretofore accepted for exchange, and may terminate or
amend the Exchange Offer as provided herein before the acceptance of such
Original Notes, if any of the following conditions exist: (a) the Exchange
Offer violates applicable law or any applicable interpretation of the staff
of the SEC, (b) an action or proceeding shall have been instituted or
threatened in any court or by any governmental agency which might materially
impair our ability to proceed with the Exchange Offer and any material
adverse development shall have occurred in any existing action or proceeding
with respect to the Company, and (c)
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<PAGE>
all governmental approvals have not been obtained, which approvals we deem
necessary for the consummation of the Exchange Offer.
If we determine in our sole discretion that any of these conditions are
not satisfied, we may (1) refuse to accept any Original Notes and return all
tendered Original Notes to the tendering holders, (2) extend the Exchange
Offer and retain all Original Notes tendered prior to the expiration of the
Exchange Offer, subject, however, to the rights of holders to withdraw such
Original Notes as provided above under "--Withdrawal of Tenders," or (3)
waive such unsatisfied conditions with respect to the Exchange Offer and
accept all properly tendered Original Notes which have not been withdrawn. If
such waiver constitutes a material change to the Exchange Offer, we will
promptly disclose such waiver by means of a prospectus supplement that will
be distributed to the registered holders of the Original Notes, and we will
extend the Exchange Offer for a period of five to ten business days,
depending upon the significance of the waiver and the manner of disclosure to
the registered holders, if the Exchange Offer would otherwise expire during
such five to ten business day period.
You may have certain rights and remedies against us under the
Registration Rights Agreement should we fail to consummate the Exchange
Offer, notwithstanding a failure of the conditions stated above. Such
conditions are not intended to modify those rights or remedies in any respect.
The foregoing conditions are for our benefit only and we may assert them
regardless of the circumstances giving rise to such condition or we may waive
them in whole or in part at any time and from time to time in at our sole
discretion. Our failure at any time to exercise the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed
an ongoing right, which may be asserted at any time and from time to time.
TERMINATION OF CERTAIN RIGHTS
All rights under the Registration Rights Agreement, including
registration rights, of holders of the Original Notes eligible to participate
in this Exchange Offer will terminate upon consummation of the Exchange Offer
except with respect to our continuing obligations (1) to indemnify you
(including any broker-dealers) and certain parties related to you against
certain liabilities, including liabilities under the Securities Act, (2) to
provide, upon your request, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of your Original Notes pursuant
to Rule 144A, (3) to use our best efforts to keep the Registration Statement
effective to the extent necessary to ensure that it is available for resales
of transfer-restricted Notes by broker-dealers for a period of 180 days from
the date on which the registration statement is declared effective, and (4)
to provide copies of the latest version of the prospectus to all persons
subject to the prospectus delivery requirements of the Securities Act upon
their request for a period of 180 days from the date on which the
registration statement is declared effective.
LIQUIDATED DAMAGES
The following description of the Registration Rights Agreement is
qualified in its entirety by the provisions of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement
of which the Prospectus is a part. In the event of a failure to file, or to
become effective, one or more registration statements as provided by the
Registration Rights Agreement, we have agreed to pay, as liquidated damages,
additional interest on Original Notes ("Additional Interest") under the
circumstances and to the extent set forth below (each of which is given
independent effect):
(1) if (A) neither the Registration Statement of which this
Prospectus is a part (the "Exchange Offer Registration
Statement") nor Shelf Registration Statement, as defined in
the Registration Rights Agreement, is filed with the
Commission on or prior to the Filing Date or (B)
notwithstanding that we have consummated or will consummate an
Exchange Offer, we are required to file a Shelf Registration
Statement and such Shelf Registration Statement is not filed
on or prior to the date required by the Registration Rights
Agreement, then commencing on the day after either such
required filing date, Additional Interest shall accrue on the
principal amount of the Notes at a rate of 0.25% per annum for
the first 90 days immediately following each such filing date,
such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day
period; or
(2) if (A) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the
Commission on or prior to 120 days after the applicable filing
date or (B) notwithstanding that
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<PAGE>
we have consummated or will consummate an Exchange Offer,
we are required to file a Shelf Registration Statement and
such Shelf Registration Statement is not declared effective
by the Commission on or prior to the 150th day following
the date such Shelf Registration Statement was filed, then,
commencing on the day after the 150th day following the
applicable filing date, Additional Interest shall accrue on
the principal amount of the Notes at a rate of 0.25% per
annum for the first 90 days immediately following such
date, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each
subsequent 90-day period; or
(3) if (A) we have not exchanged Exchange Notes for all Original
Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to the 45th day after the date on
which the Exchange Offer Registration Statement was declared
effective or (B) if applicable, the Shelf Registration
Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time
prior to the second anniversary of issue date of the Original
Notes (other than after such time as all Original Notes have
been disposed of thereunder), then Additional Interest shall
accrue on the principal amount of the Notes at a rate of 0.25%
per annum for the first 90 days commencing on (x) the 46th day
after such effective date, in the case of (A) above, or (y)
the day such Shelf Registration statement ceases to be
effective in the case of (B) above, such Additional Interest
rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period;
provided, however, that the Additional Interest rate on the
Notes may not exceed in the aggregate 1.0% per annum;
provided, further, however, that (x) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration
Statement (in the case of clause (1) above), (y) upon the
effectiveness of the Exchange Offer Registration Statement or
a Shelf Registration Statement (in the case of clause (2)
above), or (z) upon the exchange of Exchange Notes for all
Original Notes tendered (in the case of clause (3)(A) above),
or upon the effectiveness of the Shelf Registration Statement
which had ceased to remain effective (in the case of clause
(3)(B) above), Additional Interest on the Original Notes as a
result of such clause (or the relevant subclause thereof), as
the case may be, shall cease to accrue.
Any amounts of Additional Interest due pursuant to clause (1), (2) or
(3) above will be payable in accordance with the terms of the Registration
Rights Agreement.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent of the
Exchange Offer. Questions and requests for assistance, requests for
additional copies of this prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:
<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL BY HAND OR OVERNIGHT DELIVERY
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Window-Ground Level
Attn: Reorganization Section New York, New York 10286
By Facsimile: (212) 815-6339
(Eligible Institutions Only)
</TABLE>
FEES AND EXPENSES
All fees and expenses incident to compliance with the Registration
Rights Agreement regarding this Exchange Offer shall be paid by us whether or
not the Exchange Offer or a Shelf Registration becomes effective.
We have not retained any dealer-manager in connection with the Exchange
Offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. We will, however, pay the Exchange Agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection therewith.
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The cash expenses to be incurred in connection with the Exchange Offer
will be paid by us and are estimated in the aggregate to be approximately
$125,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent and Trustee, accounting and legal fees and printing costs,
among others.
We will pay all transfer taxes, if any, applicable to the exchange of
Notes pursuant to the Exchange Offer. If, however, a transfer tax is imposed
for any reason other than the exchange of the Original Notes pursuant to the
Exchange Offer, then the amount of any such transfer taxes, whether imposed
on the registered holder or any other persons, will be payable by the
tendering holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such tendering
holder.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. You are urged to
consult their financial and tax advisors in making your decision on what
action to take.
The Original Notes which are not exchanged for the Exchange Notes
pursuant to the Exchange Offer will remain restricted securities.
Accordingly, such Notes may be resold only (1) to a person whom the seller
reasonably believes is a qualified institutional buyer in a transaction
meeting the requirements of Rule 144A, (2) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (3) outside the United
States to a non United States person in a transaction meeting the
requirements of Rule 904 under the Securities Act, (4) in accordance with
another exemption from the registration requirements of the Securities Act,
and subject to an opinion of counsel satisfactory to us if we so request, (5)
to the Company, or (6) pursuant to an effective registration statement and,
in each case, in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.
ACCOUNTING TREATMENT
For accounting purposes, we will recognize no gain or loss as a result
of the Exchange Offer. The expenses of the Exchange Offer have been expensed in
our fourth fiscal quarter.
The Original Notes were issued, and the Exchange Notes are issuable,
under the Indenture dated as of March 16, 1999, a copy of the form of which
is filed with the SEC as an exhibit to our registration statement on Form
S-4. The form and terms of the Exchange Notes will be identical in all
material respects to the form and terms of the Original Notes, except that
the Exchange Notes will have been registered under the Securities Act and,
therefore, will not bear legends restricting transfer thereof. The Exchange
Notes and the Original Notes are deemed the same class of notes under the
Indenture and are both entitled to the benefits thereof. The following
summary of certain provisions of the Indenture is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Indenture, including the definitions of certain terms therein and those terms
made a part thereof by the Trust Indenture Act of 1939, as amended. Whenever
particular Sections or defined terms of the Indenture not otherwise defined
herein are referred to, such Sections or defined terms are incorporated
herein by reference.
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DESCRIPTION OF EXCHANGE NOTES
The Original Notes have been, and the Exchange Notes offered by this
prospectus will be issued under an Indenture dated as of March 16, 1999 (the
"Indenture") between Garden State and The Bank of New York, as trustee (the
"Trustee"). The following is a summary of certain provisions of the Indenture
and is subject to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by the Trust Indenture Act of 1939, as amended. Wherever particular
sections or defined terms of the Indenture are referred to, such sections or
defined terms are incorporated herein by reference. The definitions of
certain capitalized terms used in the following summary are set forth under
"--Definitions."
GENERAL
The Notes will mature on July 1, 2011, will be limited to $300.0 million
aggregate principal amount, of which $200.0 million are outstanding and are
general unsecured obligations of Garden State. Additional amounts may be
issued in one or more series from time to time, subject to the limitations
set forth under "--Certain Covenants-Limitation on Additional Debt."
The Exchange Notes will be payable both as to principal and interest at
the office or agency of Garden State maintained for such purpose within the
City and State of New York, or, at the option of Garden State, payment of
interest may be made by check mailed to the holders of the Exchange Notes at
their respective addresses set forth in the Note holder register. Unless
otherwise designated by Garden State, Garden State's office or agency in New
York will be the office of the Trustee, maintained for such purpose. Interest
on the Exchange Notes will be computed on the basis of a 360-day year of
twelve 30-day months. Notes will be transferable and exchangeable at the
offices of the Trustee. The Notes will be issued in fully registered form,
without coupons, in principal amounts of $1,000 and any integral multiple
thereof.
Interest on the Exchange Notes will accrue at the rate per annum stated
on the front cover page, and will be payable semiannually in arrears on July
1 and January 1 of each year, to the persons who are registered holders
thereof at the close of business on June 15 or December 15 preceding the
applicable interest payment date. Interest on the Exchange Notes will accrue
from the most recent date on which interest has been paid or, if no interest
has been paid, from the date of original issuance.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the
Exchange Notes will be subordinated in right of payment, to the extent set
forth in the Indenture, to the prior payment in full in cash of all existing
and future Senior Debt of Garden State, including the Garden State Credit
Facility. The Exchange Notes will be general unsecured obligations of the
Company ranking PARI PASSU in right of payment with the existing Senior
Subordinated Notes and all other future senior subordinated indebtedness of
the Company and senior in right of payment to all existing and future
subordinated indebtedness of the Company which is made expressly junior
thereto.
Upon any payment or distribution of assets to creditors of Garden State
upon any dissolution or winding up or total or partial liquidation or
reorganization of Garden State, whether voluntary or involuntary, or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to Garden State or its property, in an assignment for the benefit of
creditors or any marshaling of Garden State's assets and liabilities, the
holders of Senior Debt of Garden State will first be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest accruing after or which would accrue but for the
occurrence of the commencement of any such proceeding, at the rate specified
in the applicable Senior Debt whether or not such interest is an allowable
claim in any such proceeding) before any payment or distribution is made on
account of any Obligations on the Notes, or for the acquisition of any of the
Notes for cash or property or otherwise and, until all Obligations with
respect to Senior Debt of Garden State have been paid in full in cash, any
distribution to which the holders of the Notes otherwise would be entitled
shall be made to the holders of Senior Debt (except that holders of the Notes
may receive securities that are subordinated at least to the same extent as
the Notes to Senior Debt and to any securities issued in exchange for Senior
Debt).
Garden State also may not make any payment upon or distribution in
respect of the Exchange Notes or acquire any of the Exchange Notes for cash
or property or otherwise (except in or for such subordinated securities) if
(i) a default in the payment of the principal of, premium, if any, or
interest on Senior Debt occurs and is continuing beyond any applicable period
of grace (whether upon maturity, at a date fixed for prepayment, as a result
of acceleration or otherwise) (a "payment default") or (ii) any other default
occurs
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and is continuing (or if such an event of default would occur upon any
payment with respect to the Exchange Notes) with respect to any Designated
Senior Debt as to which the holders of such Designated Senior Debt would have
the right to accelerate its maturity (a "nonpayment default"), as a result of
such default, and, in either case, the Trustee receives a notice of such
default (a "Payment Blockage Notice") from the holders, or from the trustee,
agent or other representative of the holders, of any such Designated Senior
Debt. Payment on the Exchange Notes may and shall be resumed (i) in the case
of a payment default, upon the date on which such default is cured or waived
and (ii) in case of a nonpayment default, upon the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date
on which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated. No new period of
payment blockage in respect of any nonpayment default may be commenced within
360 days after receipt by the Trustee of any prior Payment Blockage Notice.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be made the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured
or waived for a period of not less than 180 days. The Indenture will further
require that Garden State promptly notify holders of Senior Debt if payment
of the Notes is accelerated because of an Event of Default.
MANDATORY REDEMPTION
Except as set forth under "--Certain Covenants-Change of Control," and
"--Certain Covenants-Limitation on Sales of Assets," Garden State will not be
required to make mandatory redemption or sinking fund payments with respect
to the Exchange Notes.
OPTIONAL REDEMPTION
The Exchange Notes will not be redeemable at Garden State's option prior
to July 1, 2004. On and after such date, the Exchange Notes will be subject
to redemption at Garden State's option, in whole or in part, in amounts of
$1,000 or integral multiples thereof, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest, if any, to the
applicable redemption date, if redeemed during the twelve month period
commencing on July 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2004............................................................... 104.312%
2005............................................................... 102.875%
2006............................................................... 101.438%
2007 and thereafter................................................ 100.000%
</TABLE>
In addition, at any time, or from time to time, on or prior to July 1,
2002, Garden State may, at its option, use the net cash proceeds of one or
more Equity Offerings (as defined below) to redeem up to 35% of the principal
amount of Exchange Notes originally issued at a redemption price equal to
108.625% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, to the date of such redemption, PROVIDED that at least
$130.0 million aggregate principal amount of Exchange Notes originally issued
remains outstanding immediately after any such redemption. In order to effect
the foregoing redemption with the proceeds of any Equity Offering, Garden
State shall make such redemption not more than 120 days after the
consummation of any such Equity Offering.
As used herein, "Equity Offering" means the issuance and sale of
Qualified Capital Stock of the Company.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
LIMITATION ON ADDITIONAL DEBT. The Indenture provides that Garden State
and its Restricted Subsidiaries may not, directly or indirectly, Issue
(including through any merger or consolidation to which Garden State or such
Restricted Subsidiary is a party) any Debt, except that Garden State and/or
its Restricted Subsidiaries may Issue Debt if (i) no Default or Event of
Default shall have occurred and be continuing at such time or shall occur as
a result of such issuance and (ii) at the time such Debt is so Issued and
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after giving effect thereto and to the application of the net proceeds
therefrom, the Leverage Ratio of Garden State shall not be greater than 6.75
to 1, if such Debt is Issued on or prior to December 31, 1999, 6.25 to 1, if
such Debt is Issued after December 31, 1999, but on or prior to December 31,
2001, and 6.0 to 1, if such Debt is Issued after December 31, 2001.
The limitations set forth in the immediately preceding paragraph will
not apply to: (i) the Notes; (ii) Existing Debt; (iii) Debt under the Garden
State Credit Facility, PROVIDED that the aggregate amount of such Debt does
not, at any time, exceed $350.0 million, less any prepayments or scheduled
payments actually made thereunder (to the extent, in the case of prepayments
on revolving credit indebtedness, that the corresponding commitments have
been permanently reduced); (iv) Debt owing from or to Garden State and its
Restricted Subsidiaries, PROVIDED that any Debt owing from Garden State to
its Restricted Subsidiaries is subordinated to the Notes; (v) other Debt
issued hereafter not to exceed in the aggregate $50.0 million at any one time
outstanding; (vi) Debt in respect of Capitalized Lease Obligations not to
exceed in the aggregate $25.0 million at any one time outstanding (including
those outstanding on the Issue Date); (vii) Acquired Debt; and (viii) any
extension, renewal or replacement of the Debt described in clauses (i) and
(ii) above, PROVIDED that (a) the aggregate principal amount of Debt so
issued (or, if such Debt is issued at a price less than the principal amount
thereof, the original issue price) shall not exceed the aggregate principal
amount of the Debt being extended, renewed or replaced, (b) any Debt so
issued shall not mature prior to the stated maturity of the Debt being
extended, renewed or replaced, and (c) the Debt so issued shall not have an
Average Life less than the remaining Average Life of the Debt to be extended,
renewed or replaced.
LIMITATION ON SENIOR SUBORDINATED DEBT. The Indenture provides that
Garden State will not, directly or indirectly, become liable, contingently or
otherwise, with respect to any Debt that is subordinated or junior in right
of payment to any Senior Debt of Garden State and senior in right of payment
to the Notes.
LIMITATION ON LIENS SECURING CERTAIN DEBTS. The Indenture provides that
Garden State will not, and will not permit any of its Restricted Subsidiaries
to, create, incur, assume or suffer to exist any Liens to secure any Debt of
Garden State which is PARI PASSU with or subordinate in right of payment to
the Exchange Notes, other than Liens existing on the date of the Indenture
with respect to the Senior Subordinated Secured Notes, unless the Exchange
Notes are secured equally and ratably with such Debt (but on a senior basis
if such other Debt is subordinate to the Exchange Notes) as long as such Debt
is so secured.
LIMITATION ON RESTRICTED PAYMENTS. The Indenture provides that Garden
State will not, and will not permit any of its Restricted Subsidiaries to,
make, directly or indirectly, any Restricted Payment; PROVIDED, however, that
Garden State and its Restricted Subsidiaries may make Restricted Payments so
long as at the time of the making of such Restricted Payment and after giving
effect thereto:
(a) no Default or Event of Default shall have occurred or be
continuing as a consequence thereof;
(b) immediately after giving effect to such Restricted Payment,
Garden State would have been permitted to incur $1.00 of
additional Debt pursuant to the terms of the first paragraph
under the "--Limitation on Additional Debt" covenant; and
(c) the aggregate amount expended by Garden State and its
Restricted Subsidiaries in connection with all Restricted
Payments made subsequent to October 1, 1997 shall not exceed
the sum of (i) Garden State's Cumulative Credit (or, in the
event such aggregate Cumulative Credit shall be a deficit,
minus 100% of such deficit) for the period (taken as one
accounting period) from the Issue Date; (ii) 100% of the Net
Cash Proceeds received by Garden State from any Person (other
than a Subsidiary of Garden State) from the issuance and sale
subsequent to October 1, 1997 of Qualified Capital Stock of
Garden State (excluding (A) Qualified Capital Stock made as a
distribution on any Capital Stock or as interest on any Debt
and (B) any such Net Cash Proceeds from issuances and sales of
Qualified Capital Stock, where the purchase is financed
directly or indirectly using funds borrowed from Garden State
or any Subsidiary of Garden State); (iii) 100% of the Net Cash
Proceeds received by Garden State from the exercise of options
or warrants on Qualified Capital Stock of Garden State since
October 1, 1997 (other than from a Subsidiary of Garden
State); (iv) 100% of the Net Cash Proceeds received by Garden
State from the conversion into Qualified Capital Stock of
convertible Debt or convertible Preferred Stock issued and
sold since October 1, 1997 (other than from a Subsidiary of
Garden State); (v) 100% of the aggregate net proceeds of any
(a) sale or other disposition of Restricted Investments (which
Investment was made after October 1, 1997) made by the Company
or a Restricted Subsidiary of the Company, (b)
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dividends, whether liquidating or otherwise, from, or the
sale of capital stock of, an Unrestricted Subsidiary, or (c)
dividends, whether liquidating or otherwise, from
Restricted Investments; and (vi) $40.0 million.
Notwithstanding the foregoing, this restriction will not prevent (A) the
payment of any dividend within 60 days after the date of declaration if the
dividend would have been permitted on the date of declaration; (B) so long as
no Default or Event of Default shall have occurred or be continuing or shall
occur as a consequence thereof, the acquisition of Capital Stock of Garden
State which is funded either by the exchange of shares of Qualified Capital
Stock of Garden State or from the Net Cash Proceeds of the substantially
concurrent sale for cash of shares of Qualified Capital Stock of Garden State
(other than to a Subsidiary of Garden State) which amount shall not then be
included in (c)(ii) of the immediately preceding paragraph; (C) so long as no
Default or Event of Default shall have occurred or be continuing or shall
occur as a consequence thereof, the purchase for value of shares of Capital
Stock or warrants, options or other rights to acquire Capital Stock held by
directors, officers or employees of Garden State upon death, disability,
retirement or termination of employment in an aggregate amount not to exceed
$3.0 million in any twelve-month period; and (D) so long as no Default or
Event of Default shall have occurred or be continuing or shall occur as a
consequence thereof, and immediately after giving effect to such Restricted
Payment, Garden State would have been permitted to incur at least $1.00 of
additional Debt pursuant to the terms of the first paragraph under the
"--Limitation on Additional Debt" covenant, the redemption, purchase or
retirement by Garden State of the ANI Senior Discount Debentures or the
payment of dividends to ANI in an amount sufficient to allow ANI to redeem,
repurchase, or retire the ANI Senior Discount Debentures, PROVIDED, in each
such case, the proceeds are forthwith so used.
LIMITATION ON SALES OF ASSETS. The Indenture provides that Garden State
and its Restricted Subsidiaries may not, directly or indirectly, consummate
any Asset Sale unless: (a) at least 85% of the consideration therefor
received by Garden State or such Restricted Subsidiary shall be in the form
of cash or Cash Equivalents, PROVIDED, that the amount of (i) any liabilities
(as shown on Garden State's or such Restricted Subsidiary's most recent
balance sheet or in the notes thereto) of Garden State or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets shall be excluded from such calculation and (ii) any notes or
other obligations received by Garden State or any such Restricted Subsidiary
from such transferee that are immediately converted by Garden State or such
Restricted Subsidiary into cash (to the extent of the cash received) shall be
deemed, to the extent of cash so received, to be cash for purposes of this
provision; (b) Garden State or such Restricted Subsidiary shall have received
consideration in such Asset Sale at least equal to the fair market value of
the assets sold in such Asset Sale (as determined in good faith by the Board
of Directors of Garden State); and (c) such Asset Sale is approved in writing
by the Board of Directors of Garden State; PROVIDED, HOWEVER, that clause (a)
shall not apply to the extent an Asset Sale consists of the exchange of one
or more newspapers for another newspaper or other Permitted Investments.
Garden State will, and will cause each such Restricted Subsidiary to,
commit to apply the Net Cash Proceeds from any such Asset Sale within 270
days of receipt thereof, and will, and will cause such Restricted Subsidiary
to, apply such Net Cash Proceeds within 360 days of receipt thereof to (i)
reinvestment by Garden State or such Restricted Subsidiary in property or
assets to be employed in a Permitted Business, (ii) the permanent repayment
of Debt (including premium) of Garden State or its Restricted Subsidiaries
that is held by a person other than a Restricted Subsidiary or Affiliate of
Garden State, or (iii) the repurchase of Notes tendered as described in the
immediately succeeding paragraph. Any Net Cash Proceeds from Asset Sales that
are not applied as provided in clause (i) or (ii) of the preceding sentence
shall constitute excess proceeds ("Excess Proceeds").
In the event Garden State or any Restricted Subsidiary shall have
received any Excess Proceeds, Garden State will make an offer to all holders
of the Notes to purchase the maximum principal amount of Notes that may be
purchased out of such Excess Proceeds, at an offer price, in cash in an
amount equal to 100% of the outstanding principal amount thereof, plus the
accrued and unpaid interest thereon, if any, to the date fixed for the
closing of such offer, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate principal amount of Notes
tendered pursuant to an offer to purchase is less than the Excess Proceeds,
Garden State may use such excess for general corporate purposes. If the
aggregate principal amount of Notes surrendered by holders thereof exceeds
the amount of Excess Proceeds, the Trustee shall select the Notes to be
purchased on a pro rata basis. Notwithstanding the foregoing, if after
applying any Net Cash Proceeds received from Asset Sales in accordance with
clauses (i) and (ii) of the immediately preceding paragraph, Excess Proceeds
are less than $10.0 million, the application of such Excess Proceeds to
repurchase the Notes may be deferred until such time as such Excess Proceeds
are at least equal to $10.0 million, at which time Garden State or such
Restricted Subsidiary shall apply all such Excess Proceeds to repurchase the
Notes.
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In the event the repurchase of the Notes with Excess Proceeds
constitutes a "tender offer" for purposes of Rule 14e-1 under the Exchange
Act at the time it is required, Garden State will be required to comply with
Rule 14e-1 as then in effect with respect to such repurchase.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Indenture provides that
Garden State will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, enter into or permit to exist any transaction (or
series of related transactions) (each a "Transaction") with any Affiliate of
Garden State or any Unrestricted Subsidiary of Garden State, including,
without limitation, any sale, purchase, lease or loan or any other direct or
indirect payment, transfer or other disposition of assets, property or
services, unless (a) such Transaction is on terms no less favorable to Garden
State or such Restricted Subsidiary, as the case may be, than those that
could be obtained in a comparable arm's-length transaction with an
independent third party (the "Fairness Condition") and (b) prior to effecting
such Transaction, Garden State shall deliver to the Trustee (i) with respect
to any Transaction involving aggregate consideration in excess of $1.0
million, an officers' certificate certifying that a majority of the
disinterested members of the Board of Directors of Garden State has approved
such Transaction and has determined that the terms of such Transaction
satisfy the Fairness Condition and (ii) in addition, with respect to any
Transaction involving (x) aggregate consideration in excess of $1.0 million
in which there are no disinterested directors or (y) aggregate consideration
in excess of $10.0 million, a written opinion from a nationally recognized
investment banking firm stating that the terms of such Transaction satisfy
the Fairness Condition or are fair to Garden State or such Restricted
Subsidiary from a financial point of view. Clause (b)(ii)(y) shall not apply
to purchases of newsprint in the ordinary course of business by Garden State
and its Restricted Subsidiaries from Affiliates of Garden State or of its
Restricted Subsidiaries. Notwithstanding the foregoing, this provision will
not apply to (A) any Transaction between Garden State and a Restricted
Subsidiary of Garden State, or between Restricted Subsidiaries of Garden
State (PROVIDED that in the case of any Restricted Subsidiary that is not a
Wholly Owned Subsidiary, no affiliate of Garden State is a direct or indirect
investor in such Subsidiary other than through Garden State), and any
transaction, in the ordinary course of business, between Garden State and its
Restricted Subsidiaries, on the one hand, and Denver Newspapers or its wholly
owned subsidiaries (as long as Denver Newspapers is a Subsidiary of ANI), on
the other hand, (B) the making of Permitted Investments, (C) the making of
Restricted Payments in accordance with the "--Limitation on Restricted
Payments" covenant, and (D) the making of Permitted Intercompany Payments. In
connection with this covenant, any determination regarding whether a director
is "disinterested" will be made on the basis of whether such director has,
among other things, a personal stake in the business or transactions
requiring any such determination to be made.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES. The Indenture provides that Garden State will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of Garden State to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Debt owed to Garden State or a
Restricted Subsidiary of Garden State, (ii) make loans or advances to Garden
State or a Restricted Subsidiary of Garden State or (iii) transfer any of its
properties or assets to Garden State, except for encumbrances or restrictions
existing under or by reason of (A) applicable law or provisions in effect on
the Issue Date, (B) the Indenture, (C) agreements existing on the Issue Date,
(D) the Garden State Credit Facility, the Senior Subordinated Secured Notes
or the Notes, (E) customary non-assignment provisions of any lease governing
a leasehold interest of Garden State or a Restricted Subsidiary of Garden
State, (F) any instrument governing or evidencing Acquired Debt of a Person
at the time of such acquisition, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other
than the Person so acquired, PROVIDED that such Debt, and such encumbrance or
restriction, is not incurred in connection with, or in contemplation of, such
acquisition, (G) any encumbrances or restrictions contained in any Debt
governing any refinancings of the Debt described in clause (C), PROVIDED that
the encumbrances and restrictions contained in any such refinancing agreement
or amendment, supplement or other modification are not materially less
favorable to the Noteholders than encumbrances and restrictions contained in
such agreements or (H) customary restrictions on such loans, advances or
transfers contained in agreements governing Permitted Investments.
INVESTMENT COMPANY ACT. The Indenture provides that Garden State will
not take any action that would require it or any of its Restricted
Subsidiaries to register as an investment company under the Investment
Company Act of 1940.
REPORTS TO THE SECURITIES AND EXCHANGE COMMISSION. The Indenture
provides that Garden State shall file with the Trustee and mail to each
holder of Notes, within 15 days after filing with the Commission, copies of
the annual, quarterly and current reports (or copies of such portions of any
of the foregoing as the Commission may by rules and regulations prescribe)
which it is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. Notwithstanding that Garden State is not required
by law to remain subject to the periodic reporting requirements of the
Exchange Act, it will nonetheless continue to file with the Commission and
deliver to the Trustee, and to each holder of Notes such annual, quarterly
and current reports which are specified in
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Section 13 or 15(d) of the Exchange Act. In addition, Garden State shall, at
its cost, deliver to each holder of the Notes quarterly and annual reports
substantially equivalent to those which would be required under the Exchange
Act.
LIMITATION ON BUSINESS. The Indenture provides that Garden State will
not, and will not permit any of its Restricted Subsidiaries to, engage in any
business other than the Permitted Business.
LIMITATION ON RESTRICTED AND UNRESTRICTED SUBSIDIARIES. The Indenture
provides that the Board of Directors of the Company may, if no Default or
Event of Default shall have occurred and be continuing or would result
therefrom, designate any Restricted Subsidiary to be an Unrestricted
Subsidiary if such designation is at that time permitted under "--Limitation
on Restricted Payments" above. The Indenture also provides that the Board of
Directors of the Company may, if no Default or Event of Default shall have
occurred and be continuing or would result therefrom, designate an
Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED, HOWEVER,
that (i) any such redesignation shall be deemed to be an incurrence as of the
date of such redesignation by the Company and the Restricted Subsidiaries of
Debt, if any, of such redesignated Subsidiary for purposes of "--Limitation
of Additional Debt" above; and (ii) unless such redesignated Restricted
Subsidiary shall not have any Debt outstanding (other than Debt which would
be permitted under "--Limitation on Additional Debt" above), no such
designation shall be permitted if immediately after giving effect to such
redesignation and the Incurrence of any such Debt, the Company could not
incur $1.00 of additional Debt pursuant to the first paragraph described
under "--Limitation on Additional Debt" above. Any such designation by the
Board of Directors of the Company shall be evidenced to the Trustee by the
filing with the Trustee of a certified copy of the Board Resolution of the
Company's Board of Directors giving effect to such designation or
redesignation and an Officers' Certificate certifying that such designation
or redesignation complied with the foregoing conditions and setting forth in
reasonable detail the underlying calculations.
The Indenture provides that Subsidiaries that are not designated by the
Board of Directors as Restricted or Unrestricted Subsidiaries will be deemed
to be Restricted Subsidiaries. The designation of a Restricted Subsidiary as
an Unrestricted Subsidiary shall be deemed to include a designation of all of
the subsidiaries of such Unrestricted Subsidiary as Unrestricted
Subsidiaries. As of the date of the Indenture, there are no Unrestricted
Subsidiaries.
CHANGE OF CONTROL. The Indenture will provide that upon the occurrence
of a Change of Control, each holder will have the right to require Garden
State to repurchase all or a portion of such holder's Exchange Notes pursuant
to the offer described below (the "Change of Control Offer"), at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of repurchase.
Within ten (10) Business Days following the date upon which the Change
of Control occurred, Garden State will send, by first class mail, a notice to
each holder of the Notes, with a copy to the Trustee, which notice shall
govern the terms of the Change of Control Offer. Such notice shall state,
among other things, the purchase date, which must be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than as may
be required by law (the "Change of Control Payment Date"). Holders electing
to have an Exchange Note purchased pursuant to a Change of Control Offer will
be required to surrender the Exchange Note with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Exchange Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the business day immediately prior to the Change of Control
Payment Date.
None of the provisions relating to a repurchase upon a Change of Control
are waivable by the Board of Directors of Garden State. Garden State could,
in the future, enter into certain transactions, including certain
recapitalizations of Garden State, that would not constitute a Change of
Control with respect to the Change of Control repurchase feature of the
Indenture, but would increase the amount of Debt outstanding at such time. If
a Change of Control were to occur, there can be no assurance that Garden
State would have sufficient funds to purchase all of the Notes that it is
required to repurchase. In the event that Garden State were required to
purchase outstanding Notes pursuant to a Change of Control Offer, Garden
State expects that it would need to seek third party financing to the extent
it does not have available funds to meet its purchase obligations. However,
there can be no assurance that Garden State would be able to obtain such
financing. Accordingly, the obligation of Garden State to offer to repurchase
the Exchange Notes may be of limited value if Garden State cannot obtain
sufficient funding to repay all Debt then becoming due. A Change of Control
may constitute an Event of Default under the Garden State Credit Facility,
and permit the holders of the Debt thereunder to declare all amounts
outstanding thereunder to be immediately due and payable.
Restrictions in the Indenture described herein on the ability of Garden
State and its Restricted Subsidiaries to incur additional Debt, to grant
Liens on its property, to make Restricted Payments and to make Asset Sales
may also make more difficult or
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discourage a takeover of Garden State, whether favored or opposed by current
management of Garden State. Such restrictions and the restrictions on
transactions with Affiliates may, in certain circumstances, make more
difficult or discourage a leveraged buyout of Garden State. While such
restrictions cover a wide variety of arrangements which have traditionally
been used to effect highly leveraged transactions, the Indenture may not
afford the holders protection in all circumstances from the adverse aspect of
a highly leveraged transaction, reorganization, restructuring, merger or
similar transaction. For example, the Company could in the future enter into
certain transactions including acquisitions, refinancings or other
recapitalizations that would not constitute a Change of Control under the
Indenture, but that could increase the amount of indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit
ratings.
Garden State will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Exchange Notes pursuant to a Change of Control Offer.
MERGER OR CONSOLIDATION
The Indenture provides that Garden State will not, in a single
transaction or a series of related transactions, consolidate with or merge
with or into another Person or adopt any plan of liquidation or sell all or
substantially all of its assets, unless (i) either (x) Garden State shall be
the surviving corporation or (y) the surviving Person (the "Survivor"), if
other than Garden State, shall be a corporation, partnership or trust,
organized and existing under the laws of the United States of America, one of
the states thereof or the District of Columbia, (ii) the Survivor assumes by
supplemental indenture all of the obligations of Garden State under the
Indenture and the Notes, (iii) immediately after giving effect to such
transaction (including any Debt incurred or anticipated to be incurred in
connection with such transaction), (x) no Default or Event of Default shall
have occurred and be continuing, (y) the Consolidated Net Worth of the
Survivor is equal to or greater than that of Garden State immediately prior
to the transaction, and (z) on a pro forma basis as if such transaction and
the incurrence of any such Debt had occurred at the beginning of the
four-quarter period immediately preceding such transaction, the Survivor or
Garden State, as the case may be, would have been permitted to incur $1.00 of
additional Debt under the first paragraph of the "--Limitation on Additional
Debt" covenant and (iv) Garden State shall have delivered to the Trustee
certain officers' certificates and opinions of counsel demonstrating
compliance with each of the foregoing.
EVENTS OF DEFAULT
An Event of Default is defined in the Indenture to mean, among other
things, (i) the failure by Garden State to pay interest on any Note when the
same becomes due and payable and the continuance of any such failure for 30
days; (ii) the failure by Garden State to pay the principal of, or premium,
if any, on any Note when and as the same shall become due and payable, at
maturity, upon acceleration, redemption or otherwise, including as a result
of a Change of Control Offer or an Asset Sale; (iii) the failure by Garden
State to comply with any of its agreements or covenants described under the
heading "--Merger or Consolidation" above; (iv) the failure by Garden State
to comply (A) with any of its agreements or covenants described under the
"--Limitation on Restricted Payments" covenant, the "--Limitation on
Additional Debt" covenant, the "--Limitation on Senior Subordinated Debt"
covenant, the "--Limitation on Liens Securing Certain Debt" covenant or the
"--Limitation on Sales of Assets" covenant described above, and the
continuance of such failure for 30 days after written notice is given to
Garden State by the Trustee or to Garden State and the Trustee by the holders
of 25% in aggregate principal amount of the Notes then outstanding or (B)
with any other agreements or covenants in the Notes or the Indenture and the
continuance of such failure for 45 days after written notice is given to
Garden State by the Trustee or to Garden State and the Trustee by the holders
of 25% in aggregate principal amount of the Notes then outstanding; (v)
failure to pay at final maturity (after any stated grace period) the
principal of and interest on one or more classes of Debt of Garden State or
any of its Restricted Subsidiaries, whether such Debt is outstanding on the
Issue Date or thereafter incurred having, individually or in the aggregate,
an outstanding principal amount exceeding $10.0 million or more or any Debt
having, individually or in the aggregate, an outstanding principal amount
exceeding $10.0 million is declared due and payable prior to the stated
maturity; (vi) certain final judgments, orders or decrees for the payment of
money in excess of $10.0 million are entered against ANI or any of its
Significant Subsidiaries and such judgments remain undischarged or unstayed
for a period of 60 days after such judgment or judgments become final and
nonappealable and after the notice specified below; and (vii) certain events
of bankruptcy, insolvency, foreclosure or reorganization of Garden State or
any Significant Subsidiary. The Indenture provides that the Trustee must,
within 90 days after the occurrence of a Default, give to the holders of the
Notes notice of all uncured Events of Default known to it; PROVIDED that,
except in the case of a Default relating to the payment of principal or
interest in respect of such Notes, the Trustee will be protected in
withholding such notice if a committee of its Trust Officers in good faith
determines that the withholding of such notice is in the interest
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of the holders of the Notes. The Indenture provides that Garden State is
required to furnish annually to the Trustee a certificate as to its
compliance with the terms of the Indenture.
RIGHTS UPON DEFAULT
Upon the happening of any Event of Default specified in the Indenture,
the Trustee may, and the Trustee upon the request of 25% in principal amount
of the then outstanding Notes shall or the holders of at least 25% in
aggregate principal amount of the then outstanding Notes may declare the
principal of and accrued but unpaid interest, if any, on all the Notes to be
due and payable by notice in writing to Garden State and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration," and the same (i) shall become immediately due and payable
(other than an Event of Default resulting from the bankruptcy, insolvency or
reorganization of Garden State, which shall result in automatic acceleration
without the giving of any such notice) or (ii) if there are any amounts
outstanding under the Garden State Credit Facility will become due and
payable upon the first to occur of either (x) an acceleration, or a failure
to pay at final maturity, under the Garden State Credit Facility, or (y) five
Business Days after the notice of acceleration has been sent to Garden State
and each of the representatives under the Garden State Credit Facility (if it
is then outstanding) unless no Events of Default shall be then continuing.
The holders of not less than a majority in aggregate principal amount of
Notes outstanding are authorized to rescind any Declaration if all Events of
Default then continuing (other than any Events of Default with respect to the
nonpayment of principal of, or interest on, any Note which has become due
solely as a result of such Declaration) have been cured, and to waive any
default other than a default with respect to a covenant or provision that
cannot be modified or amended without the consent of the holder of each
outstanding Note affected. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request,
order or direction of any of the holders of the Notes issued thereunder,
unless the holders of such Notes have offered to the Trustee indemnity
satisfactory to it. Subject to all provisions of the Indenture and applicable
law, the holders of a majority in aggregate principal amount of the Notes
then outstanding have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee.
TRANSFER AND EXCHANGE
Upon any transfer of an Exchange Note, the Registrar may require a
holder, among other things, to furnish appropriate endorsements and transfer
documents, and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar is not required to transfer or exchange any Exchange
Notes selected for redemption nor is the Registrar required to transfer or
exchange any Exchange Notes for a period of 15 days before a selection of
Exchange Notes to be redeemed. The registered holder of an Exchange Note will
be treated as the owner of it for all purposes.
THE TRUSTEE
The Bank of New York is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with respect to the
Exchange Notes.
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest (as
defined in the Trust Indenture Act), it must eliminate such conflict or
resign.
The Indenture provides that in case an Event of Default shall occur
(which shall not be cured), the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his
own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any of the holders of the Notes issued thereunder, unless they
shall have offered to the Trustee security and indemnity satisfactory to it.
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by Garden
State and the Trustee with the consent of the holders of a majority of the
aggregate principal amount of the outstanding Notes, PROVIDED that no such
modification, amendment or
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instruction may, without the consent of the holder of each outstanding Note
affected thereby: (i) change the stated maturity of the principal of, or any
installment of interest on, any Note or reduce the principal amount thereof,
the rate of interest thereon or any premium payable upon the redemption
thereof, or change the coin or currency in which any Note or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment after the stated maturity thereof (or, in
the case of redemption, on or after the redemption date); (ii) reduce the
percentage in principal amount of the outstanding Notes, the consent of the
holders of which is required for any such supplemental indenture or the
consent of such holders is required for any waiver of compliance with certain
provisions of the Indenture or certain Defaults thereunder and their
consequences provided for in the Indenture; (iii) modify any of the
provisions relating to supplemental indentures requiring the consent of
holders or relating to the waiver of past defaults or relating to the waiver
of certain covenants, except to increase any such percentage of outstanding
Notes required for such actions or to provide that certain other provisions
of the Indenture cannot be modified or waived without the consent of the
holder of each Note affected thereby; or (iv) amend, modify or change the
obligation of Garden State to make or consummate a Change of Control Offer or
to offer to purchase Notes using Excess Proceeds or waive any default in the
performance thereof or modify any of the provisions or definitions in respect
thereof.
The holders of a majority of the aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
The Indenture will provide that Garden State at any time may terminate
all of its obligations under the Notes and the Indenture ("legal
defeasance"), except for certain obligations, including those with respect to
the transfer or exchange of the Notes, to replace mutilated, destroyed, lost
or stolen Notes and to maintain a registrar and paying agent in respect of
the Notes. If Garden State exercises its legal defeasance option, payment of
the Notes may not be accelerated despite an Event of Default with respect
thereto. Subject to the conditions described below, Garden State at any time
may terminate its obligations under the covenants described under "--Certain
Covenants," "--Change of Control" and "--Limitation on Sales of Assets"
("covenant defeasance") above. Garden State may exercise its legal defeasance
option notwithstanding its prior exercise of its covenant defeasance option.
In order to exercise either defeasance option (i) Garden State must have
irrevocably deposited in trust (the "defeasance trust") with the Trustee,
money, U.S. Government Obligations, or any combination thereof, sufficient to
pay the principal of, premium, if any, and interest on the Notes to maturity
or redemption, as the case may be; (ii) Garden State shall have delivered to
the Trustee a certificate from a nationally recognized firm of independent
accountants expressing the opinion that the payment of principal and interest
when due and without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without reinvestment will provide cash
at such times and in such amounts as will be sufficient to pay principal and
interest when due on all the Notes to maturity or redemption, as the case may
be; (iii) Garden State shall have delivered to the Trustee an opinion of
counsel to the effect that the trust funds will not be subject to any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as Events
of Default from bankruptcy or insolvency events are concerned, at any time in
the period ending on the 91st day after the date of deposit; (v) such
defeasance or covenant defeasance shall not result in a breach or violation
of or constitute a default under the Indenture, or any other agreement or
instrument to which Garden State is a party or by which Garden State is
bound; (vi) Garden State shall have delivered to the Trustee an opinion of
counsel to the effect that the trust resulting from the deposit is not
required to register as an investment company under the Investment Company
Act of 1940, as amended; (vii) Garden State shall have delivered to the
Trustee an opinion of counsel to the effect that the holder of Notes shall
have a perfected security interest under applicable law in the U.S.
Government Obligations so deposited; (viii) in the case of legal defeasance,
Garden State shall have delivered to the Trustee an opinion of counsel
reasonably acceptable to the Trustee confirming that (a) Garden State has
received from, or there has been published by, the Internal Revenue Service a
ruling or (b) since the date of the Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and
based thereon such opinion of counsel shall confirm that, the holder of the
Notes will not recognize income, gain or loss for federal income tax purposes
as a result of such legal defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the same times as would
have been the case if such legal defeasance had not occurred; (ix) in the
case of covenant defeasance, Garden State shall have delivered to the Trustee
an opinion of counsel reasonably acceptable to the Trustee confirming that
the holders of the Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had
not occurred; and (x) Garden State shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to either the legal defeasance or
the covenant defeasance, as the case may be, have been complied with.
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GOVERNING LAW
The Indenture and the Notes are governed by, and construed in accordance
with, the laws of the State of New York.
DEFINITIONS
"ACQUIRED DEBT" with respect to any Person, means (i) Debt of an
entity, which entity is acquired by Garden State or any of its Subsidiaries
after the date of the Indenture, (ii) Debt assumed which is secured by assets
acquired by Garden State or any of its Subsidiaries, PROVIDED that the Debt
in clauses (i) and (ii) is outstanding at the time of the acquisition of such
entity or such assets, is not created in contemplation of such acquisition
and, in the case of the acquisition of an entity, is not, directly or
indirectly, recourse (including by way of set-off) to Garden State or its
Restricted Subsidiaries or any of their respective assets, other than to the
entity and its Subsidiaries so acquired and the assets of the entity and its
Subsidiaries so acquired, or (iii) Refinancings of Debt described in clauses
(i) and (ii), PROVIDED that in the case of Debt described in clause (i), the
recourse with respect to such Refinancing Debt is limited to the same extent
as the Debt so Refinanced.
"ADJUSTED CONSOLIDATED OPERATING CASH FLOW" of a Person means the
Consolidated Operating Cash Flow of such Person as determined on a
consolidated basis in accordance with GAAP, consistently applied, after
giving effect to the following: (i) if, during the period in which
Consolidated Operating Cash Flow is being calculated, such Person or any of
its Subsidiaries completed an Asset Sale, Consolidated Operating Cash Flow
for such period shall be reduced by an amount equal to the pro forma
Consolidated Operating Cash Flow (if positive) directly attributable to the
assets which are the subject of such Asset Sale for the period or increased
by an amount equal to the pro forma Consolidated Operating Cash Flow (if
negative) directly attributable thereto for such period; and (ii) if, during
the period in which Consolidated Operating Cash Flow is being calculated,
such Person or any of its Subsidiaries completes an acquisition of any Person
or business which immediately after such acquisition is a Subsidiary of such
Person or whose assets are held directly by such Person or a Subsidiary of
such Person, pro forma Consolidated Operating Cash Flow shall be computed so
as to give pro forma effect to the acquisition of such Person or business.
Any such pro forma calculation may include (a) any adjustments that would, in
the reasonable determination of the Company, set forth in an Officers'
Certificate, satisfy the requirements of Rule 11-02(a) of Regulation S-X as
if included in a registration statement filed with the Commission, and (b)
any other operating expense reductions reasonably expected to result from any
acquisition of assets, if such expected reductions are (i) set forth in
reasonable detail in an operating plan, and (ii) limited to operating
expenses specified in such plan (and, if any such reductions are set forth as
a range, the lowest amount of such range) that would otherwise have resulted
in the payment of cash within twelve months after the date of consummation of
such transaction, net of any operating expenses (other than extraordinary
items, non-recurring or temporary charges and other similar one-time
expenses) reasonably expected to be incurred to implement such plan or to
obtain goods or services (including without limitation personnel, occupancy
and newsprint expenses) in replacement of goods and services that are being
curtailed or eliminated to result in such expected reductions, and that are
to be paid in cash during such twelve-month period, and such Officers'
Certificate so states.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" having meanings correlative to the
foregoing. A lender to such Person or any of its Subsidiaries shall not, as a
result of such loan and any credit or similar agreement entered into in
connection therewith, be deemed an Affiliate of such Person.
"ANI" means Affiliated Newspapers Investments, Inc., a Delaware
corporation, and its successors (now known as MediaNews Group, Inc.).
"ANI SENIOR DISCOUNT DEBENTURES" means ANI's 13 1/4% Senior Discount
Debentures due 2006. These notes were repurchased on May 12, 1999.
"ASSET SALE" means the sale, transfer, lease, assignment, conveyance
or other disposition (other than sales of inventory in the ordinary course of
business consistent with past practice) by Garden State or its Restricted
Subsidiaries of any assets of Garden State other than capital stock of an
Unrestricted Subsidiary, whether owned or outstanding on the date of the
Indenture or acquired thereafter, in one or more related transactions, in
each case having an aggregate fair market value in excess of $5.0 million.
Asset Sale shall include the disposition of (i) any capital stock of any
Restricted Subsidiary of Garden State or (ii) all or substantially all of
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the properties or assets relating to any newspaper or groups of newspapers
owned by Garden State or any of its Restricted Subsidiaries, in either case
having an aggregate fair market value in excess of $5.0 million.
"AVERAGE LIFE" means, as of the date of any determination, with
respect to any Debt, the quotient obtained by dividing (i) the sum of the
products of (a) the number of years from the date of the transaction or event
giving rise to the need to calculate the Average Life of such Debt to the
date, or dates, of each successive scheduled principal payment of such Debt
multiplied by (b) the amount of each such principal payment by (ii) the sum
of all such principal payments.
"CAPITALIZED LEASE OBLIGATION" means any rental obligation that, in
accordance with GAAP, is required to be classified and accounted for as a
capitalized lease and the amount of Debt represented by such obligation shall
be the capitalized amount of such obligation determined in accordance with
GAAP; and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due in respect of such obligation.
"CAPITAL STOCK" of any Person means any and all shares, interests
(including partnership interests), warrants, rights, options or other
interests, participations or other equivalents of or interests in (however
designated) the equity of such Person, including common stock or preferred
stock, whether now outstanding or issued after the date of the Indenture, but
excluding any debt securities convertible into or exchangeable for such
equity.
"CASH EQUIVALENTS" means (i) readily marketable obligations of or
obligations guaranteed by the United States of America or issued by any
agency thereof and backed by the full faith and credit of the United States
of America, (ii) readily marketable direct obligations issued by any state of
the United States of America or any political subdivision having a rating in
one of the two highest rating categories obtainable from either Moody's
Investors Service, Inc. or Standard & Poor's Corporation, (iii) commercial
paper having a rating in one of the two highest rating categories of Moody's
Investors Service, Inc., or Standard & Poor's Corporation, (iv) certificates
of deposit issued by, bankers' acceptances and deposit accounts of, and time
deposits with, commercial banks of recognized standing chartered in the
United States of America with capital, surplus and undivided profits
aggregating in excess of $500.0 million, (v) agreements to sell or repurchase
securities of the kind described in clauses (i) and (ii) above, and (vi)
shares of money market funds that invest solely in Permitted Investments of
the kind described in clauses (i) through (v) above.
"CHANGE OF CONTROL" means the earlier to occur of (i) the Permitted
Holders' failure, individually or as a group, to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, in the aggregate, of a majority of the outstanding shares of
Common Stock or Voting Stock of Garden State, on a fully diluted basis, and
(ii) William Dean Singleton ceasing to be the chief executive officer of
Garden State and not being replaced within 90 days by a media executive of
comparable experience.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act, or if at any time
after the execution of the Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"COMMON STOCK" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of such Person's
common stock whether now outstanding or issued after the date of the
Indenture.
"CONSOLIDATED INTEREST EXPENSE" means, with respect to any Person
for any period, the aggregate of all cash and non-cash interest expense
(including any original issue discount attributable to the issuance of any
debt security as part of or with any other security) with respect to all
outstanding Debt of such Person and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, the interest
component of Capitalized Lease Obligations, all capitalized interest, and the
interest portion of any deferred payment obligations for such period;
PROVIDED that if any such Subsidiary is not a Wholly Owned Subsidiary of such
Person, interest expense of such Subsidiary and its Subsidiaries shall be
included only to the extent of such Person's consolidated common equity
ownership on a fully diluted basis therein.
"CONSOLIDATED NET WORTH" of any Person means, at any date, all
amounts that would, in conformity with GAAP, be included under shareholders'
equity on a consolidated balance sheet of such Person as at such date less
any amounts attributable to Disqualified Stock.
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"CONSOLIDATED OPERATING CASH FLOW" with respect to Garden State for
any period means (A) revenues less (B) the sum of (i) cost of sales, (ii)
management fees and (iii) selling, general and administrative expenses, in
each case, of Garden State and its Restricted Subsidiaries, for such period,
determined on a consolidated basis and in accordance with GAAP PLUS (C) the
lesser of (i) dividends received from Investments in a Permitted Business not
qualifying as a Subsidiary hereunder for such period and (ii) Garden State's
and its Restricted Subsidiaries' percentage interest in the net income of
such Permitted Business; PROVIDED that, (x) if any such Restricted Subsidiary
is not a Wholly Owned Subsidiary of Garden State, revenues, cost of sales,
management fees and selling, general and administrative expenses of such
Restricted Subsidiary and its Restricted Subsidiaries shall be included only
to the extent of Garden State's common equity ownership on a fully diluted
basis therein and (y) operating cash flow of any Subsidiary shall be excluded
if and to the extent that, the declaration of dividends or distribution by
that Subsidiary of such operating cash flow is not, at the time, permitted
directly or indirectly, by the terms of its charter, or any agreement,
instrument, judgment, decree, order, statute, rule or government regulation
applicable to that Subsidiary.
"CUMULATIVE CREDIT" means (x) Consolidated Operating Cash Flow of
Garden State and its Restricted Subsidiaries from and after the first day of
the first full fiscal quarter after the Issue Date to the end of the fiscal
quarter immediately preceding the date of the proposed Restricted Payment,
or, if such Consolidated Operating Cash Flow for such period is negative,
minus the amount by which such Consolidated Operating Cash Flow is negative
less (y) 150% of the cumulative Consolidated Interest Expense of Garden State
for such period.
"DEBT" of any Person means, without duplication, (i) the principal
in respect of (A) indebtedness of such Person for money borrowed (whether or
not the recourse of the lender is to the whole of the assets of such Person
or only to a portion thereof) and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable (other than those payable to government
agencies to defer the payment of workers' compensation liabilities, taxes,
assessments or other obligations, and provided in the ordinary course of
business of such Person); (ii) all Capitalized Lease Obligations of such
Person; (iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention agreement
(but excluding trade accounts payable and other accrued current liabilities
arising in the ordinary course of business and consistent with past
practice); (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, other than letters of credit entered into in the ordinary course
of business that either are not drawn upon or, if and to the extent drawn
upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit); (v) the amount of all Disqualified Stock of
such Person (but excluding any accrued dividends thereon); (vi) all
obligations of the type referred to in clauses (i) through (v) of other
Persons and all dividends of other Persons for the payment of which, in
either case, such Person is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise, including guarantees of such obligations and
dividends; and (vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property, asset or
Capital Stock of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of
the value of such property or assets or the amount of the obligation so
secured.
"DEFAULT" means any event, which is, or after notice or passage of
time or both would be, an Event of Default.
"DESIGNATED SENIOR DEBT" means all obligations of Garden State under
the Garden State Credit Facility and any other Senior Debt permitted under
the Indenture the principal amount of which is $25.0 million or more that has
been designated by Garden State as Designated Senior Debt.
"DISQUALIFIED STOCK" means, with respect to any Person, any Capital
Stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, (ii) is subject to a mandatory offer to purchase,
(iii) is convertible or exchangeable for Debt or Disqualified Stock or (iv)
is redeemable at the option of the holder thereof, in whole or in part; in
each case on or prior to the first anniversary of the stated maturity of the
Notes.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"EXISTING DEBT" means Debt of Garden State and its Restricted
Subsidiaries (other than the Garden State Credit Facility) outstanding on the
date of the Indenture.
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"GARDEN STATE CREDIT FACILITY" means the Credit Agreement among
Garden State, the financial institutions named therein and The Bank of New
York, as agent thereunder, as amended, substituted, refinanced (including
successive refinancings), extended or renewed without restriction as to the
new terms contained therein, except as to the total amount outstanding
provided under "--Limitation on Additional Debt" and as provided in
"--Limitation on Liens Securing Certain Debts."
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" means generally
accepted accounting principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board as they are in effect on the date of the Indenture.
"GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or
other obligation, contingent or otherwise, of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation of
such other Person (whether arising by virtue of participation arrangements,
by agreement to keep well, to purchase assets, goods, securities or services,
to take-or-pay, or to maintain financial statement conditions or otherwise)
or (ii) entered into for the purpose of assuring the obligee of such Debt or
other obligation in any other manner of the payment thereof or to protect
such obligee against loss in respect thereof (in whole or in part), PROVIDED
that the term "guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"INTEREST PAYMENT DATE" means the Stated Maturity of an installment
of interest on the Notes.
"INVESTMENT" means any direct or indirect advance, loan (other than
advances or loans to customers in the ordinary course of business, which are
recorded at the time made as accounts receivable on the balance sheet of the
Person making such advance or loan), guarantee or other extension of credit
or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition of Capital Stock, bonds,
notes, debentures or other securities issued by, any other Person.
"ISSUE" means issue, assume, Guarantee, incur or otherwise become
liable for; PROVIDED, HOWEVER, that any Debt or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary of another Person
(whether by merger, consolidation, acquisition or otherwise) shall be deemed
to be issued by such Subsidiary at the time it becomes a Subsidiary of such
other Person.
"ISSUE DATE" means the date on which any Note is originally issued
and with respect to any Note issued in transfer, exchange or replacement,
means the date of issue of the Note to which such transfer, exchange or
replacement Note relates.
"LEVERAGE RATIO" means, as of any date, the ratio of (A) total Debt
of Garden State and its Restricted Subsidiaries on a consolidated basis as of
such date to (B) Trailing Adjusted Consolidated Operating Cash Flow of Garden
State as of such date; PROVIDED, HOWEVER, that the Debt of any Restricted
Subsidiary (and its Restricted Subsidiaries) that is not a Wholly Owned
Subsidiary, on a fully diluted basis, of Garden State shall be included
pro-rata only to the extent of Garden State's common equity ownership
interest therein, on a fully diluted basis.
"LIEN" means any lien, mortgage, charge, pledge, security interest,
or other encumbrance of any kind (including any conditional sale or other
title retention agreement and any lease in the nature thereof), whether or
not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the
nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statute) of any
jurisdiction.)
"MANAGEMENT AGREEMENT" means the Management Agreement, dated July 1,
1988, between ANI and MediaNews, as the same may be amended, modified or
supplemented in accordance with its terms.
"MEDIANEWS" or "MNS" means MediaNews Services, Inc., a Delaware
corporation and its successors (formerly known as MediaNews Group, Inc.).
"MEDIANEWS TECHNOLOGIES" or "MNT" means MediaNews Technologies, a
division of MNS which operates and manages ANI's and its Affiliates'
electronic media business.
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"NET CASH PROCEEDS" from an Asset Sale or issuance of Capital Stock
means cash payments received by way of conversion into cash or Cash
Equivalents of any note or other obligation received in connection with such
Asset Sale or issuance or by way of deferred payment of principal pursuant
to, or liquidation of, any note or installment receivable or otherwise (but
only as and when received therefrom), in each case net of all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all income taxes required to be accrued as a liability under GAAP, as a
consequence of such Asset Sale or issuance of Capital Stock.
"OBLIGATIONS" means all obligations for principal, premium, interest
(including post-petition interest), penalties, fees, indemnification,
reimbursements, damages and other liabilities payable under the documentation
governing any Debt.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chief Executive Officer, the President or any Vice
President and the Chief Financial Officer or any Treasurer of such Person
that shall comply with applicable provisions of the Indenture.
"PERMITTED BUSINESS" means the (i) ownership and operation of
regional, local and other newspapers and (ii) other businesses directly
related to the Company's newspaper operations, including broadcast,
electronic media, and other businesses deriving a majority of its revenue
from advertising.
"PERMITTED HOLDERS" means each of William Dean Singleton and Richard
B. Scudder, members of their families and trusts for the benefit of such
Persons.
"PERMITTED INTER-COMPANY PAYMENTS" means (i) payments by the Company
to MNS in respect of management fees for services actually rendered to Garden
State and determined in a manner consistent with that described in this
Offering Memorandum not to exceed $4.0 million for fiscal 1999, and
increasing 10% per annum in each fiscal year thereafter and (ii) payment by
the Company to MNT in respect of its allocated share of electronic media
related expenses.
"PERMITTED INVESTMENTS" means (i) Investments by a Restricted
Subsidiary of Garden State in Garden State or a Restricted Subsidiary of
Garden State or Investments by Garden State in a Restricted Subsidiary of
Garden State, (ii) Investments in cash or Cash Equivalents, (iii) Investments
by Garden State or by any of its Restricted Subsidiaries in a Permitted
Business, including, but not limited to, joint ventures or other business
alliances in the ordinary course of business, PROVIDED that the other
investors in such joint venture or business alliance are not Affiliates of
ANI, (iv) Investments of Garden State and its Restricted Subsidiaries arising
as a result of any Asset Sale otherwise complying with the terms of the
Indenture and (v) Other Investments (other than Investments specified in
clauses (i) through (iv) above) in an aggregate amount, as valued at the time
each such Investment is made, not exceeding $25.0 million.
"PERSON" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock company,
trust, unincorporated organization or government or other agency or political
subdivision thereof or other entity of any kind.
"PREFERRED STOCK," as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution
of assets upon any voluntary or involuntary liquidation or dissolution of
such corporation, over shares of Capital Stock of any other class of such
corporation. Preferred Stock of any Person shall include Disqualified Stock
of such Person.
"QUALIFIED CAPITAL STOCK" shall mean any Capital Stock which is not
Disqualified Stock.
"REFINANCE" means, in respect of any Debt, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue Debt in
exchange or replacement for, such Debt. "Refinanced" and "Refinancing" shall
have correlative meanings.
"RESTRICTED INVESTMENT" means any Investment other than a Permitted
Investment.
"RESTRICTED PAYMENT" means (i) any dividend or distribution on or in
respect of any shares of Capital Stock of Garden State to the direct or
indirect holders (in their capacities as such) of Capital Stock of Garden
State; (ii) the redemption, repurchase, retirement or other acquisition for
value of any Capital Stock of Garden State; (iii) any designation of a
Restricted Subsidiary as an
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Unrestricted Subsidiary on the basis of the Investment by the Company
therein, (iv) any Restricted Investment by Garden State or any Restricted
Subsidiary of Garden State, PROVIDED that Restricted Payments shall not
include (a) any dividend or distribution declared or paid by any Restricted
Subsidiary of Garden State to Garden State or any of its Restricted
Subsidiaries, or (b) the redemption, purchase, retirement or other
acquisition for value by Garden State or any of its Restricted Subsidiaries
of any Capital Stock of Garden State held by Garden State or its Restricted
Subsidiaries. For purposes of determining the amount expended for Restricted
Payments, cash distributed or invested shall be valued at the face amount
thereof and property other than cash shall be valued at its fair market value.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company other than
an Unrestricted Subsidiary and includes all of the Subsidiaries of the
Company existing as of the Issue Date. The Board of Directors of the Company
may designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to
such action (and treating any Acquired Debt as having been incurred at the
time of such action), the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
"--Limitation on Additional Indebtedness" covenant.
"SENIOR DEBT" means all Obligations of Garden State with respect to
any Debt, whether outstanding on the date of the Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular Debt, the
instrument creating or evidencing the same or pursuant to which the same is
outstanding expressly provides that such Debt shall not be senior in right of
payment to the Notes. Notwithstanding the foregoing, Senior Debt shall not
include: (i) any Debt of Garden State to any Subsidiary of Garden State; (ii)
any Debt to, or guaranteed on behalf of, any Affiliate, director, officer or
employee of Garden State or any Restricted Subsidiary (including, without
limitation, amounts owed for compensation); (iii) Debt and other amounts
incurred in connection with obtaining goods, materials or services owing to
trade creditors; (iv) Disqualified Stock; (v) any liability for federal,
state, local or other taxes owed or owing by Garden State; (vi) Debt incurred
in violation of the Indenture provisions set forth under "--Certain
Covenants-Limitation on Additional Debt"; and (vii) Debt which is, by its
express terms, junior in right of payment to the Notes.
"SENIOR SUBORDINATED SECURED NOTES" means the Company's $100,000,000
12% Senior Subordinated Secured Notes due 2004, which were repurchased in
full on May 12, 1999.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary of Garden
State which at the time of determination either (A) had assets which, as of
the date of Garden State's most recent quarterly consolidated balance sheet,
constituted at least 5% of Garden State's total assets on a consolidated
basis as of such date, in each case determined in accordance with GAAP, or
(B) had revenues for the twelve-month period ending on the date of Garden
State's most recent quarterly consolidated statement of income which
constituted at least 5% of Garden State's total revenues on a consolidated
basis for such period.
"STATED MATURITY," when used with respect to any Note or any
installment of interest thereon, means the date specified in such Note as the
fixed date on which the principal of such Note or such installment of
interest is due and payable, and, when used with respect to any other Debt,
means the date specified in the instrument governing such Debt as the fixed
date on which the principal of such Debt or any installment of interest is
due and payable.
"SUBSIDIARY" means, with respect to any Person, (i) a corporation
the majority of whose Voting Stock is at the time, directly or indirectly,
owned by such Person, by one or more Subsidiaries of such Person or by such
Person and one or more Subsidiaries thereof, (ii) a partnership, joint
venture or limited liability company, with respect to which such Person under
the applicable partnership agreement, joint venture agreement or limited
liability company operating agreement owns a majority of the equity interests
therein and either has the power to appoint a majority of the board of
managers thereof, or otherwise has the power to direct the policies,
management and affairs thereof through a management agreement or otherwise or
(iii) any Person (other than a corporation, partnership, joint venture or
limited liability company) in which such Person, one or more Subsidiaries
thereof, or such Person and one or more Subsidiaries thereof, directly or
indirectly at the date of determination thereof has at least a majority
ownership interest and the power to direct the policies, management and
affairs thereof. For purposes of this definition, any director's qualifying
shares or investments by foreign nationals mandated by applicable law shall
be disregarded in determining the ownership of a Subsidiary.
"TRAILING" means, at or in respect of any date, the twelve-month
period ending on the last day of the month immediately preceding such date
for which financial statements are available.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
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"UNRESTRICTED SUBSIDIARY" means any Subsidiary (including its
subsidiaries) so designated by a Board Resolution adopted by the Board of
Directors of the Company in accordance with "--Certain Covenants-Limitation
on Restricted and Unrestricted Subsidiaries" above. Notwithstanding the
foregoing, an Unrestricted Subsidiary shall be deemed to be re-designated a
Restricted Subsidiary at any time if (a) the Company or any Restricted
Subsidiary (i) provides credit support for, or a guarantee of, any Debt of
such Unrestricted Subsidiary or any of its Subsidiaries (including any
undertaking, agreement or instrument evidencing such Debt) or (ii) is
directly or indirectly liable for any Debt of such Unrestricted Subsidiary or
any of its Subsidiaries, (b) a default with respect to any Debt of such
Unrestricted Subsidiary or any of its Subsidiaries (including any right which
the holders thereof may have to take enforcement action against any of them)
would permit (upon notice, lapse of time or both) any holder of any other
Debt of the Company or any Restricted Subsidiary to declare a default on such
other Debt or cause the payment thereof to be accelerated or payable prior to
its final scheduled maturity or (c) such Unrestricted Subsidiary or any of
its subsidiaries incurs Debt pursuant to which the lender has recourse to any
of the assets of Garden State or any of its Restricted Subsidiaries.
"U.S. GOVERNMENT OBLIGATIONS" means money or direct non-callable
obligations of, and obligations guaranteed by, the United States of America
for the payment of which the full faith and credit of the United States is
pledged.
"VOTING STOCK" of a corporation means all classes of Capital Stock
of such corporation then outstanding and normally entitled to vote in the
election of directors.
"WHOLLY OWNED SUBSIDIARY" means any Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares) is owned by
the applicable corporation or another Wholly Owned Subsidiary of the
applicable corporation.
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BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Exchange Notes initially
will be represented by one or more permanent global certificates in
definitive, fully registered form (the "Global Notes"). The Global Notes will
be deposited on the Issue Date with, or on behalf of, DTC, New York, New
York, and registered in the name of a nominee of DTC.
THE GLOBAL NOTES. We expect that pursuant to procedures established by
DTC (i) upon the issuance of the Global Notes, DTC or its custodian will
credit, on its internal system, the principal amount of the individual
beneficial interests represented by such Global Notes to the respective
accounts of persons who have accounts with such depositary and (ii) ownership
of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained
by DTC or its nominee (with respect to interests of participants) and the
records of participants (with respect to interests of persons other than
participants). Such accounts initially will be designated by or on behalf of
the holders tendering Notes in the Exchange Offer and ownership of beneficial
interests in the Global Notes will be limited to persons who have accounts
with DTC ("participants") or persons who hold interests through participants.
So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all
purposes under the Indenture. No beneficial owner of an interest in any of
the Global Notes will be able to transfer that interest except in accordance
with DTC's procedures, in addition to those provided for under the Indenture
with respect to the Notes. Interests in the Global Notes will also be subject
to certain restrictions on transfers as set forth in the Indenture.
Payments of the principal of, premium (if any) and interest (including
Additional Interest) on the Global Notes will be made to DTC or its nominee,
as the case may be, as the registered owner thereof. None of the Company, the
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interest.
We expect that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Additional Interest) in
respect of the Global Notes, will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of the Global Notes as shown on the records of DTC or its
nominee. We also expect that payments by participants to owners of beneficial
interests in the Global Notes held through such participants will be governed
by standing instructions and customary practice, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.
Transfers between participants in DTC will be effected in the ordinary
way through DTC's same-day funds system in accordance with DTC rules and will
be settled in same day funds. If a holder requires physical delivery of a
Certificated Note ("Certificated Note") for any reason, including to sell
Notes to persons in states which require physical delivery of the Notes, or
to pledge such securities, such holder must transfer its interest in a Global
Note, in accordance with the normal procedures of DTC and with the procedures
set forth in the Indenture.
DTC has advised us that it will take any action permitted to be taken by
a holder of Notes (including the presentation of Notes for exchange) only at
the direction of one or more participants to whose account the DTC interests
in the Global Notes are credited and only in respect of such portion of the
aggregate principal amount of Notes as to which such participant or
participants has or have given such direction. However, if there is an Event
of Default under the Indenture, DTC will exchange the Global Notes for
Certificated Notes, which it will distribute to its participants.
DTC has advised as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to hold securities for
its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly
("indirect participants").
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Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Global Notes among participants of
DTC, it is under no obligation to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under
the rules and procedures governing their operations.
CERTIFICATED NOTES. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Notes and a successor depositary is
not appointed by the Company within 90 days, Certificated Notes will be
issued in exchange for the Global Notes.
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DESCRIPTION OF OTHER INDEBTEDNESS
The following outlines certain terms of the indebtedness and other
obligations of MediaNews Group and the subsidiaries of Garden State after
giving effect to the offerings. For further information on indebtedness and
other obligations of the Company, we refer you to the Consolidated Financial
Statements of Garden State and the notes thereto appearing elsewhere herein.
NEW CREDIT AGREEMENT
As of June 30, 1999, we have available to us, for borrowings, $350.0
million under an amended and restated credit agreement, of which
approximately $265.0 million was outstanding on that date (including
approximately $98.6 million borrowed by MediaNews Group, which was
contributed to Garden State on July 1, 1999). Borrowings of approximately
$175.3 million under our amended and restated credit agreement were used to
refinance and be a substitute for our previously existing credit facility
with the remaining amount used to fund the Denver Newspapers transactions. The
following summary is qualified in its entirety by reference to the terms of
our amended and restated credit agreement.
The amended and restated credit agreement matures on June 30, 2006. The
commitment under the new credit facility reduces quarterly beginning
September 30, 2003.
Our obligations under the new credit facility are guaranteed by certain
of our direct and indirect subsidiaries and secured by a pledge of all of our
and our subsidiaries' capital stock.
The loans under the new credit facility bear interest, at our option, at
either (1) an "alternate base rate" equal to the greater of BNY's Prime Rate
or the sum of 0.5% plus the federal funds rate or (2) the "LIBOR rate," in
either case, plus an applicable margin. LIBOR margins range from 1.0% to
2.125% per annum, and base rate margins range from 0% to .875% per annum,
based on the Company's leverage.
The new credit facility contains a number of covenants that, among other
things, restrict our ability and our subsidiaries' ability to dispose of
assets, incur additional indebtedness, incur guaranty obligations, pay
dividends or make capital contributions, create liens on assets, make
investments, make acquisitions, engage in mergers or consolidations, engage
in certain transactions with subsidiaries and affiliates and otherwise
restrict corporate activities. In addition, the new credit facility requires
compliance with certain financial covenants, including requiring us and our
subsidiaries to maintain a maximum ratio of total debt to operating cash
flow, a maximum ratio of senior debt to operating cash flow, a minimum ratio
of operating cash flow to pro forma debt service and a minimum ratio of
operating cash flow to fixed charges.
The new credit facility contains customary events of default, including
the failure to pay principal when due, the failure of any representation or
warranty made by us to be correct in any material respect on or as of the
date made, a default in the performance of any negative covenants or a
default in the performance of certain other agreements, a default in certain
other indebtedness, certain insolvency events and certain change of control
events. In addition, a default under the Indenture will result in a default
under the new credit facility.
SENIOR SUBORDINATED NOTES DUE 2009
In October 1997 and February 1998, Garden State issued in the aggregate
$300.3 million of Senior Subordinated Notes pursuant to an indenture between
Garden State, as issuer, and The Bank of New York, as trustee. These notes
bear interest at 8 3/4% payable semi-annually, in arrears, on April 1 and
October 1. These notes are redeemable at the option of Garden State, in whole
or in part, on and after October 1, 2002, at declining redemption prices.
Upon the occurrence of a Change in Control, Garden State must offer to
repurchase these notes at a purchase price of 101% of the principal amount
thereof plus accrued and unpaid interest thereon.
The indenture governing these notes contains customary covenants with
respect to, among other things, limitation on the incurrence of additional
liens and indebtedness by Garden State and its subsidiaries, and restrictions
on Garden State's ability to pay dividends or make certain other restricted
payments, and customary events of default.
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SENIOR SUBORDINATED SECURED NOTES
In May 1994, Garden State issued $100.0 million of Senior Subordinated
Secured Notes due 2004 pursuant to an indenture between Garden State, as
issuer, and The Bank of New York, as trustee. These notes were issued at par
and bear interest at 12% payable semi-annually, in arrears, on January 1 and
July 1. These notes are redeemable at the option of Garden State, in whole or
in part, on and after July 1, 1999, at declining redemption prices. Upon the
occurrence of certain changes in control, Garden State must offer to
repurchase the Senior Subordinated Secured Notes due 2004 at a purchase price
of 101% of the principal amount thereof plus accrued and unpaid interest
thereon. As of December 31, 1998, $63.2 million of the Senior Subordinated
Secured Notes remained outstanding. As of the date of this prospectus, these
Senior Subordinated Secured Notes have been repaid in full.
SUBORDINATED PROMISSORY NOTE DUE 2010
The Company entered into a subordinated note purchase agreement pursuant
to which the Company issued a $47.6 million, 9.0% Subordinated Promissory
Note (the "Promissory Note") due January 31, 2010. Interest accruing on the
Promissory Note is payable quarterly, provided that on each interest payment
date occurring on or prior to December 31, 2002, the Company may elect to
defer payment of any or all accrued and unpaid interest. However, in calendar
years 2000, 2001 and 2002, the Company must pay the lesser of $3.0 million or
all accrued and unpaid interest due in such year. The Promissory Note is
subordinated and junior in right of payment to the Company's senior debt and
senior subordinated debt, including the Exchange Notes issued in this
offering. No scheduled principal payments are required until January 31,
2010, at which time the outstanding principal amount is due and payable.
MediaNews Group has guaranteed the Promissory Note. Within 90 days after the
Company has repaid its Senior Subordinated Secured Notes due 2004, the
Company is required to transfer the DAILY NEWS and related assets to a
newly-formed subsidiary, which shall also become a co-obligor on the
Promissory Note.
CAPITAL LEASE OBLIGATIONS
As of March 31, 1999, $7.5 million was outstanding under Garden State's
capital lease agreements, principally related to a production facility.
OTHER OBLIGATIONS
In connection with various acquisitions, Garden State and its
subsidiaries have issued notes payable to prior owners and assumed certain
debt obligations, with an aggregate discounted value as of March 31, 1999, of
$31.4 million. The notes payable and other debt obligations bear interest at
rates ranging from 0% to 6%. The notes bearing interest at below market rates
were discounted at rates ranging from 9% to 12.0%. These notes and other debt
obligations are not secured and contain no restrictions on payment of
dividends.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Original Notes for Exchange Notes should not constitute
a recognition event for United States federal income tax purposes.
Consequently, no gain or loss should be recognized by holders upon receipt of
the Exchange Notes. For purposes of determining gain or loss upon the
subsequent sale or exchange of Exchange Notes, a holder's basis in Exchange
Notes should be the same as such holder's basis in the Original Notes
exchanged therefor. Holders should be considered to have held the Exchange
Notes from the time of their original acquisition of the Original Notes.
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF ORIGINAL NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR
SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER
TAXING JURISDICTIONS.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it acquired the Original
Notes for its own account as a result of market-making activities or other
trading activities and it will deliver a prospectus in connection with any
resale of such Exchange Notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes received in exchange for Original Notes where
such Original Notes were acquired as a result of market-making activities or
other trading activities. The Company has agreed that for a period of up to
180 days after the consummation of the Exchange Offer, subject to extension
in certain events, it will make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sales of the Exchange
Notes by broker-dealers. Exchange Notes received by broker-dealers for their
own account pursuant to the Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Notes or a
combination of such methods at resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to the purchaser or
to or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers
of any such Exchange Notes. Any broker-dealer that resells the Exchange Notes
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such Exchange
Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of up to 180 days after the consummation of the Exchange
Offer, the Company will promptly send additional copies of this prospectus
and any amendment or supplement to this prospectus to any person subject to
the prospectus delivery requirements of the Securities Act that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer, other than commissions and
concessions of any brokers or dealers, and will indemnify the holders of the
Original Notes, including any broker-dealers, against certain liabilities,
including liabilities under the Securities Act.
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EXPERTS
The consolidated financial statements of Garden State Newspapers, Inc.
and Garden State Investments, Inc., appearing in the Garden State Newspapers,
Inc.'s. Annual Report on Form 10-K for the year ended June 30, 1998, have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference
in reliance upon such reports given on the authority of such firm as experts
in accounting and auditing.
The combined financial statements on Donrey California as of and for the
year ended December 31, 1998, included in Garden State Newspapers, Inc.'s
current report on Form 8-K/A, have been audited by Arthur Andersen LLP,
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such combined financial statements are
incorporated herein by reference in reliance on such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of The Sun Company of San Bernardino, California
and Subsidiary as of December 27, 1998 and for the 52 week period then ended
incorporated by reference in this Prospectus has been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
LEGAL MATTERS
The legality of the issuance and sale of the Exchange Notes will be
passed upon for Garden State by Verner, Liipfert, Bernhard, McPherson and
Hand, Chartered, Washington, D.C. Howell E. Begle, Jr., an officer of and
Counsel to MediaNews Group, Garden State and the subsidiaries of Garden
State, a director of Garden State and the subsidiaries of Garden State, and
trustee with respect to various trusts holding MediaNews Group common stock,
is Of Counsel to such firm.
54
<PAGE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from
that contained in this prospectus. We are offering to exchange unregistered
notes for exchange notes only in jurisdictions where offers and sales are
permitted. The information contained in this prospectus is accurate only as
of the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of exchange notes.
Each broker-dealer who holds Original Notes acquired for its own account
as a result of market-making or other trading activities and who receives
Exchange Notes for its own account in the Exchange Offer must deliver a copy
of this prospectus in connection with any resale of such Exchange Notes.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information.................................... 5
Certain Information Incorporated by Reference.......................... 5
Disclosure Regarding Forward-Looking Statements........................ 6
Notice to Investors.................................................... 7
Summary................................................................ 8
Selected Historical Consolidated Financial Data........................ 22
Risk Factors........................................................... 28
Use of Proceeds........................................................ 35
The Exchange Offer..................................................... 35
Description of Exchange Notes.......................................... 45
Book-Entry; Delivery and Form.......................................... 66
Certain Federal Income Tax Considerations.............................. 67
Description of Other Indebtedness...................................... 69
Plan Of Distribution................................................... 71
Experts................................................................ 72
Legal Matters.......................................................... 72
</TABLE>
<PAGE>
$200,000,000
- ------------
PROSPECTUS
- ------------
GARDEN STATE NEWSPAPERS, INC.
OFFER TO EXCHANGE ALL OF ITS OUTSTANDING
SERIES A 8-5/8% SENIOR SUBORDINATED NOTES
DUE 2011
FOR ITS SERIES B 8-5/8%
SENIOR SUBORDINATED NOTES
DUE 2011
JULY 12, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS/INFORMATION STATEMENT
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation formed under the laws of the State of Delaware may
indemnify any director, officer, employee or agent of the corporation who was
or is a party or is threatened to be made a party to (1) any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of
the corporation) or (2) any threatened, pending or completed action suit in,
by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was such director, officer, employee or
agent of the corporation, or is or was serving as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or enterprise at the request of the corporation. Indemnification in the case
of actions, suits and proceedings under (i) above shall be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceedings and in the case of actions and suits listed under (2) above
shall be against expenses (including attorney's fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suits. The indemnified person shall have acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. Any
indemnification provided under Section145 of the DGCL is permitted to be made
by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section145. Such determination shall be made
by (a) the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or if such
a quorum is not obtainable, or, even if obtainable (b) a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (c) by the stockholders. Article VII of the Registrant's
Certificate of Incorporation provides for indemnification of the
aforementioned parties to the fullest extent permitted under the DGCL.
Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director of the corporation shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (1) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (2) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (3) under Section 174
of the DGCL, or (4) for any transaction from which the director derived an
improper personal benefit. As permitted by Section 102(b)(7) of the DGCL,
Article VII of the Registrant's Certificate of Incorporation, as amended and
restated, includes a provision that limits a director's personal liability to
such Issuer or its stockholders for monetary damages for breaches of his or
her fiduciary duty as a director in accordance with the provisions of Section
102(b)(7).
The Registrant maintains insurance policies under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against expenses in connection with the defense of actions,
suits or proceedings, and certain liabilities that might be imposed as a
result of such actions, suits or proceedings, to which they are parties by
reason of being or having been directors or officers of the Registrant.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Index to Exhibits.
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
<PAGE>
shall be deemed to be the initial bona fide offering thereof.
(2) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
(3) That every prospectus (i) that is filed pursuant to paragraph
(2), or (ii) purports to meet the requirements of section 10(a)(3) of the Act
and is used in connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration statement and
will not be used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions described under Item 20
above, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
(5) The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
Prospectus pursuant to Item 4, 10(b), 11 or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the request.
(6) The undersigned Registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a transaction, and
the company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on July 12, 1999.
GARDEN STATE NEWSPAPERS, INC.
By: /s/ Joseph J. Lodovic, IV
--------------------------------
Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on
behalf of the registrant in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------- ---------------------------------------------
<S> <C>
* Vice Chairman, President,
- ------------------------------------------ Chief Executive Officer and Director (Chief
(William Dean Singleton) Executive Officer)
* Executive Vice President and Chief Financial
- ------------------------------------------ Officer (Chief Financial Officer)
(Joseph J. Lodovic, IV)
* Director
- ------------------------------------------
(Richard B. Scudder)
* Director
- ------------------------------------------
(Jean L. Scudder)
* Director, Counsel and
- ------------------------------------------ Assistant Secretary
(Howell E. Begle, Jr.)
* Vice President Finance and
- ------------------------------------------ Controller (Principal Accounting Officer)
(Ronald A. Mayo)
</TABLE>
*By: /s/ Joseph J. Lodovic, IV
--------------------------------
Joseph J. Lodovic, IV
Attorney-in-Fact
Dated: July 12, 1999
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ------------------
<S> <C>
3.1* -Fourth Restated and amended Certificate of Incorporation
3.2* -Second restated bylaws of Garden State Newspapers, Inc.
4.1** -Form of Indenture dated as of March 16, 1999 (the
"Indenture") between Garden State Newspapers, Inc., as Issuer,
and The Bank of New York, as Trustee
4.2** -Registration Rights Agreement dated as of March 16, 1999,
among Garden State Newspapers, Inc. as Issuer and Goldman,
Sachs & Co., BNY Capital Markets, Inc., Nationsbanc Montgomery
Securities LLC and First Union Capital Markets Corp., as
Initial Purchasers
4.3** -Form of Garden State Newspapers, Inc.'s 8-5/8% Senior
Subordinated Notes due 2011, Series A (contained in the
Indenture filed as Exhibit 4.1)
4.4** -Form of Garden State Newspapers, Inc.'s 8-5/8% Senior
Subordinated Notes due 2011, Series B, the "Exchange Note"
(contained in the Indenture filed as Exhibit 4.1)
5.0** -Opinion of Verner, Liipfert, Bernhard, McPherson & Hand
10.1 -$350.0 million amended and restated credit agreement dated
as of June 30, 1999 among Garden State Newspapers, Inc.,
the Banks listed therein, the Guarantors listed therein and
the various agents listed therein and which is herein
referred to as the new credit agreement
10.2* -Management Agreement dated July 1, 1988, between MediaNews
Services, Inc. and the Registrant
10.3* -Employment Agreement dated April 26, 1985, between Garden
State Newspapers, Inc. and William Dean Singleton, with April
30, 1986, October 1, 1988, and February 10, 1993, January 15,
1996,Amendments
10.4* -Joint Operating Agreement dated January 13, 1989, among York
Daily Record, Inc., York Newspapers, Inc., and The York
Newspapers Company
10.5* -Form of Tax Sharing Agreement by and between Garden State
Newspapers, Inc. and MediaNews Group, Inc. (formerly known
as Affiliated Newspapers Investments, Inc.)
10.6* -Consulting Agreement dated November 16, 1993, between J.
Allan Meath and Garden State Newspapers, Inc.
10.7* -Asset Purchase Agreement dated July 31, 1995, by and among
EPC Holding, Inc., The Eagle Publishing Company, Reformer
Publishing Corporation, Middletown Press Publishing
Corporation, and Eagle Street Realty Trust, as Sellers, and
New England Newspapers, Inc., Brattleboro Publishing Company,
Connecticut Newspapers, Inc. and Pittsfield Publications,
Inc., as Purchasers
10.8* -Asset Purchase Agreement dated July 31, 1995, by and among
Banner Publishing Corporation and Eagle Street Realty Trust,
as Sellers, and New England Newspapers, Inc. and North Eastern
Publishing Company, as Purchasers
10.9* -$240,000,000 Credit Agreement Dated as of August 31, 1995, as
Amended and Restated as of October 31, 1996, among Garden
State Newspapers, Inc., the Banks listed in the signature
pages hereof (including Bankers Trust Company, as
Documentation Agent and The Bank of New York) (including in
its capacity as Administrative and Syndication Agent), as
Agent. This agreement was repaid in full and terminated on May
12, 1999
10.10** -Asset Purchase Agreement by and among Lowell Sun Publishing
Company and Lowell Sun Realty Company (Sellers), Garden State
Newspapers, Inc. (Purchaser), and John H. Costello, Jr.,
Alexander S. Costello, Thomas F. Costello, Andrew G. Costello,
Charlotte E. LaPierre and Dana Biadi (Guarantors), Relating to
the Acquisition of THE SUN and THE SUNDAY SUN dated July 31,
1997
10.11** -Asset Purchase and Sale Agreement by and between Tower Media,
Inc., as Seller; Jack Kent Cooke Incorporated, as Guarantor;
and Garden State Newspapers, Inc., as Purchaser, dated as of
December 1, 1997
10.12** -Indenture dated as of October 1, 1997, between Garden State
Newspapers, Inc. and The Bank of New York, as Trustee, for the
issuance of up to $300,000,000 of Series A & B 8-3/4% Senior
Subordinated Notes due 2009
10.13** -Subordinated Note Purchase Agreement between Garden State
Newspapers, Inc. and Greenco, Inc. dated as of January 30,
1998
10.14** -Note Purchase Agreement dated February 6, 1998, by and among
Garden State Newspapers, Inc. and the Initial Purchasers of
$50,000,000 of 8-3/4% Notes due 2009
<PAGE>
INDEX TO EXHIBITS (CONTINUED)
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ----------- ------------------
<S> <C>
10.15** -Purchase Agreement dated March 10, 1999, by and among Garden
State Newspapers, Inc. and the Initial Purchasers of
$200,000,000 of 8-5/8% Notes due 2011
10.16** -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. dated March 31,
1999.
10.17** -Contribution Agreement dated March 3, 1999 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.
10.18 -Third Amended and Restated Shareholders' Agreement dated
as of June 30, 1999 among the shareholders of Denver
Newspapers, Inc.
10.19 -Tax Agreement dated as of June 30, 1999 among the
shareholders of Denver Newspapers, Inc. (now known as The
Denver Post Corporation)
12.1** -Computation of Ratio Earnings to Fixed Charges
21.1** -Subsidiaries of Registrant
23.1 -Consent of Independent Auditors of the Registrant
23.2** -Consent of Verner, Liipfert, Bernhard, McPherson & Hand
(contained in their opinion filed as Exhibit 5)
23.3 -Consent of Independent Auditors of Donrey California
23.4 -Consent of Independent Auditors of The Sun Company of San
Bernardino California and Subsidiary.
24** -Power of Attorney (included on signature page to this
registration statement)
25** -Form T-1 Statement of Eligibility Under the Trust Indenture
Act of 1939 of The Bank of New York
99.1** -Form of Letter of Transmittal
99.2** -Form of Notice of Guaranteed Delivery
99.3** -Form of Letter to Brokers, Dealers
99.4** -Form of Letter to Clients
</TABLE>
- ---------------
* Previously filed as exhibits to registration statement on Form S-1
(No. 33-75156) and amendments thereto.
** Previously filed.
<PAGE>
EXECUTION COPY
================================================================================
$350,000,000
CREDIT AGREEMENT
Dated as of May 12, 1999
As Amended and Restated as of June 30, 1999
Among
GARDEN STATE NEWSPAPERS, INC.,
(to be known as MEDIANEWS GROUP, INC. upon consummation of the ANI Merger
referred to herein)
THE GUARANTORS LISTED ON THE SIGNATURE PAGES HEREOF,
THE BANKS LISTED ON THE SIGNATURE PAGES HEREOF,
BANK OF AMERICA NT&SA, as Syndication Agent,
FIRST UNION NATIONAL BANK, as Documentation Agent,
FLEET NATIONAL BANK, as Co-Documentation Agent
and
THE BANK OF NEW YORK,
as Administrative Agent
Lead Arrangers and Book Managers:
BNY Capital Markets, Inc.
and
NationsBanc Montgomery Securities LLC
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1
CREDIT FACILITY ...............................................................1
Section 1.01 Commitment to Lend. ............................................1
Section 1.02 Manner of Borrowing. ...........................................3
Section 1.03 Letters of Credit. .............................................4
Section 1.04 Interest. ......................................................8
Section 1.05 Repayment. .....................................................9
Section 1.06 Prepayments. ..................................................10
Section 1.07 Limitation on Types of Loans. .................................10
Section 1.08 Reduction and Termination of Commitments. .....................10
Section 1.09 Fees. .........................................................12
Section 1.10 Computation of Interest and Fees. .............................12
Section 1.11 Evidence of Indebtedness. .....................................12
Section 1.12 Payments by the Borrower. .....................................13
Section 1.13 Distribution of Payments by the Administrative Agent. .........14
Section 1.14 Taxes on Payments. ............................................14
Section 1.15 Pro Rata Treatment. ...........................................16
ARTICLE 2
<PAGE>
CONDITIONS TO EFFECTIVENESS; CONDITIONS TO LOANS AND LETTERS OF CREDIT .......17
Section 2.01 Conditions to Effectiveness. ..................................17
Section 2.02 Conditions to Each Loan and Letter of Credit. .................19
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES .......................................20
Section 3.01 Organization; Power; Qualification. ...........................20
Section 3.02 Subsidiaries. .................................................20
Section 3.03 Authorization; Enforceability; Required Consents;
Absence of Conflicts. .........................................20
Section 3.04 Taxes. ........................................................21
Section 3.05 Litigation. ...................................................21
Section 3.06 Burdensome Provisions. ........................................21
Section 3.07 No Adverse Change or Event. ...................................21
Section 3.08 Additional Adverse Facts. .....................................22
Section 3.09 Investment Company Act. .......................................22
Section 3.10 Substance Release and Disposal. ...............................22
Section 3.11 Senior Obligations. ...........................................22
Section 3.12 Year 2000. ....................................................22
ARTICLE 4
CERTAIN COVENANTS ............................................................23
<PAGE>
Section 4.01 Contribution. Consummate the Contribution on or before the
third day following the Restated Agreement Date................23
Section 4.02 (a) Preservation of Existence and Properties, Scope
of Business, Compliance with Law, Payment of Taxes and
Claims, Preservation of Enforceability. .......................23
Section 4.03 Insurance. ....................................................24
Section 4.04 Additional Subsidiaries. ......................................24
Section 4.05 Use of Proceeds. ..............................................24
Section 4.06 Indebtedness. .................................................25
Section 4.07 Guaranties. ...................................................25
Section 4.08 Liens. ........................................................25
Section 4.09 Restricted Payments. ..........................................26
Section 4.10 Merger or Consolidation, Acquisitions. ........................26
Section 4.11 Disposition of Assets. ........................................27
Section 4.12 Investments. ..................................................28
Section 4.13 Taxes of Other Persons. .......................................28
Section 4.14 Benefit Plans. ................................................29
Section 4.15 Transactions with Affiliates. .................................29
Section 4.16 Limitation on Restrictive Covenants. ..........................29
Section 4.17 Issuance or Disposition of Capital Securities. ................29
Section 4.18 Substance Storage and Disposal. ...............................30
Section 4.19 Tax Sharing Agreement and DNI Tax Sharing Agreement. ..........30
Section 4.20 Certain Restrictions with Respect to Other Indebtedness. ......30
<PAGE>
Section 4.21 Year 2000. ....................................................30
Section 4.22 Ratio of Consolidated Debt to Operating Cash Flow. ............31
Section 4.23 Ratio of Consolidated Senior Debt to Operating Cash Flow. .....31
Section 4.24 Pro Forma Interest Coverage. ..................................31
Section 4.25 Pro Forma Debt Service Coverage. ..............................31
Section 4.26 Fixed Charge Coverage. ........................................31
Section 4.27 Certain Activities of the California Partnership. .............32
Section 4.28 Certain Activities of DNI; Denver Acquisition Documents. ......32
Section 4.29 Indebtedness of ANI. ..........................................32
Section 4.30 Master Intercompany Note. .....................................32
ARTICLE 5
INFORMATION ..................................................................33
Section 5.01 Information to Be Furnished. ..................................33
(a) Quarterly Financial Statements. ..........................33
(b) Monthly Reports. .........................................33
(c) Year-End Financial Statements; Accountants'
Certificate. .............................................33
Section 5.02 Accuracy of Financial Statements and Information. .............35
Section 5.03 Additional Covenants Relating to Disclosure. ..................36
Section 5.04 Authorization of Third Parties to Deliver Information
and Discuss Affairs. ..........................................37
<PAGE>
ARTICLE 6
DEFAULT ......................................................................37
Section 6.01 Events of Default. ............................................37
Section 6.02 Remedies Upon Event of Default. ...............................40
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS ........................................41
Section 7.01 Mandatory Suspension and Conversion of Eurodollar
Rate Loans. ...................................................41
Section 7.02 Regulatory Changes. ...........................................42
Section 7.03 Funding Losses. ...............................................42
Section 7.04 Certain Determinations. .......................................43
Section 7.05 Change of Lending Office. .....................................43
ARTICLE 8
THE AGENTS ...................................................................43
Section 8.01 Appointment and Powers. .......................................43
Section 8.02 Limitation on Administrative Agent's Liability. ...............44
Section 8.03 Defaults. .....................................................44
Section 8.04 Rights as a Bank. .............................................45
Section 8.05 Indemnification. ..............................................45
Section 8.06 Non-Reliance on Administrative Agent and Other Banks. .........45
<PAGE>
Section 8.07 Execution and Amendment of Loan Documents on Behalf
of the Banks. .................................................46
Section 8.08 Resignation of the Administrative Agent. ......................46
ARTICLE 9
MISCELLANEOUS ................................................................46
Section 9.01 Notices and Deliveries. .......................................46
Section 9.02 Expenses; Indemnification. ....................................50
Section 9.03 Amounts Payable Due Upon Request for Payment. .................51
Section 9.04 Remedies of the Essence. ......................................51
Section 9.05 Rights Cumulative. ............................................51
Section 9.06 Confidentiality. ..............................................51
Section 9.07 Amendments; Waivers. ..........................................51
Section 9.08 Set-Off; Suspension of Payment and Performance. ...............52
Section 9.09 Sharing of Recoveries. ........................................53
Section 9.10 Assignments and Participations. ...............................53
Section 9.11 Governing Law. ................................................55
Section 9.12 Judicial Proceedings; Waiver of Jury Trial. ...................55
Section 9.13 LIMITATION OF LIABILITY. ......................................56
Section 9.14 Severability of Provisions. ...................................56
Section 9.15 Counterparts. .................................................56
Section 9.16 Survival of Obligations. ......................................56
<PAGE>
Section 9.17 Entire Agreement. .............................................56
Section 9.18 Successors and Assigns. .......................................57
Section 9.19 Cash Collateral. ..............................................57
Section 9.20 Existing Pledge Agreements. ...................................57
ARTICLE 10
GUARANTY .....................................................................57
Section 10.01 Guaranty of Payment and Performance. ..........................57
Section 10.02 Limitation on Guaranty. .......................................57
Section 10.03 Continuance and Acceleration of Guaranteed Obligations
upon Certain Events. ..........................................58
Section 10.04 Recovered Payments. ...........................................58
Section 10.05 Binding Nature of Certain Adjudications. ......................59
Section 10.06 Nature of Guarantor's Obligations. ............................59
Section 10.07 No Release of Guarantor. ......................................59
Section 10.08 Certain Waivers. ..............................................60
Section 10.09 Independent Credit Evaluation. ................................61
Section 10.10 Subordination of Rights Against the Borrower, Other
<PAGE>
Guarantors and Collateral. ....................................61
Section 10.11 Economic Benefits; Solvency. ..................................61
ARTICLE 11
INTERPRETATION ...............................................................62
Section 11.01 Defined Terms. ................................................62
Section 11.02 Other Interpretive Provisions. ................................86
Section 11.03 Accounting Matters. ...........................................87
Section 11.04 Representations and Warranties. ...............................87
Section 11.05 Captions. .....................................................87
Section 11.06 Interpretation of Related Documents. ..........................87
<PAGE>
Banks, Lending Offices, Notice Addresses
Annex A and Commitments
Annex B Guarantors And Notices Addresses
Schedule 1.02 Notice of Borrowing or Issuance of Letter of
Credit
Schedule 1.04(c)(iv) Notice of Conversion or Continuation
Schedule 1.06(a) Notice of Prepayment
Schedule 2.01(a)(i) Loan Party Certificate as to Resolutions, etc.
Annex A Resolutions of Board of Directors
Schedule 2.01(a)(iv) Opinions of Counsel For The Loan Parties
Schedule 2.01(a)(v) Opinion of Counsel For the Administrative Agent
Schedule 3.02 Schedule of Subsidiaries
Schedule 3.03 Schedule of Required Consents and
Governmental Approvals
Schedule 3.05 Schedule of Material Litigation
Schedule 3.08 Schedule of Additional Material Adverse Facts
Schedule 3.10 Schedule of Environmental Liabilities
Schedule 4.01 Reorganization Memorandum
Schedule 4.06 Schedule of Existing Debt
Schedule 4.07 Schedule of Existing Guaranties
Schedule 4.08 Schedule of Existing Liens
Schedule 4.12 Schedule of Existing Investments
Schedule 4.14 Schedule of Existing Benefit Plans
Schedule 4.16 Schedule of Permitted Restrictive Covenants
Schedule 5.01(d) Certificate as to Financial Statements and
Defaults
Schedule 5.02(a) Schedule of Historical Financial Information
Schedule 9.10(a) Notice of Assignment
Exhibit A-1 Note
Exhibit A-2 Swing Note
Exhibit A-3 Master Intercompany Note
Exhibit B Subsidiary Guaranty Supplement
Exhibit C Pledge Agreement
<PAGE>
CREDIT AGREEMENT
Dated as of May 12, 1999
As Amended and Restated as of June 30, 1999
GARDEN STATE NEWSPAPERS, INC. (to be known as MediaNews Group, Inc. upon
consummation of the ANI Merger hereinafter referred to), a Delaware corporation,
the GUARANTORS listed on the signature pages hereof, the BANKS listed on the
signature pages hereof, BANK OF AMERICA NT&SA, as Syndication Agent, FIRST UNION
NATIONAL BANK, as Documentation Agent, FLEET NATIONAL BANK, as Co-Documentation
Agent, and THE BANK OF NEW YORK, as Administrative Agent, agree that the Credit
Agreement among them dated as of May 12, 1999 shall be amended and restated,
effective, subject to the conditions to effectiveness set forth in Section 2.01,
as of the Restated Agreement Date, to read in its entirety as follows (with
certain terms used herein being defined in Article 11):
ARTICLE 1
CREDIT FACILITY
Section 1.01 Commitment to Lend.
(a) Loans. Upon the terms and subject to the conditions of this Agreement,
each Bank agrees to make, from time to time during the period from the Restated
Agreement Date to but excluding the Maturity Date, one or more Loans to the
Borrower in an aggregate unpaid principal amount not exceeding at any time such
Bank's Commitment at such time minus the sum of (A) the aggregate amount of such
Bank's Letter of Credit Participations and Special ANI Loan at such time and (B)
such Bank's Swing Loan Percentage of the aggregate principal amount of the Swing
Loans outstanding at such time. The aggregate amount of the Commitments on the
Restated Agreement Date is $350,000,000.
(b) Swing Loans. (i) Upon the terms and subject to the conditions of
this Agreement, the Swing Loan Lender agrees to make, from time to time from the
Restated Agreement Date to but excluding the Maturity Date, one or more Swing
Loans to the Borrower in an aggregate unpaid principal amount not exceeding at
any time the lesser of (A) the aggregate amount of the Commitments at such time
minus the sum of the aggregate unpaid principal amount of all Loans and Swing
Loans outstanding at such time and the aggregate amount of the Letter of Credit
Participations outstanding at such time and (B) $10,000,000. All Swing Loans
shall be in an amount not less than $100,000 and shall be in an integral
multiple of $50,000 and shall be made and maintained as Base Rate Loans. All
Swing Loans shall be disbursed by the Swing Loan Lender in Dollars in funds
immediately available to the Borrower by credit to an account of the Borrower at
the Swing Loan Lender's Domestic Lending Office, or in such other manner as may
have been specified in the applicable notice of borrowing and as shall be
acceptable to the Swing Loan Lender, on the day requested, if such request is
received not later than 2:00 p.m. (New York time) on such day, and if received
thereafter on any Business Day, on
<PAGE>
the next Business Day. Each request by the Borrower for the making of Swing
Loans shall constitute a Representation and Warranty by the Borrower as of the
time of the making of such Swing Loans that the conditions specified in Sections
2.02(b) and (c) have been fulfilled at such time.
(ii) Upon demand made to all of the Banks by the Swing Loan
Lender,which demand may be made before or after a Default, but subject to
the provisions of Section 1.01(b)(iii), each Bank (other than the Swing
Loan Lender) shall irrevocably and unconditionally purchase from the Swing
Loan Lender, without recourse or warranty, an undivided interest and
participation in the Swing Loans then outstanding, by paying to the Swing
Loan Lender, without reduction or deduction of any kind, including but not
limited to reductions or deductions for set-off, recoupment or
counterclaim, in Dollars immediately available to the Swing Loan Lender at
the Swing Loan Lender's Domestic Lending Office, an amount equal to such
Bank's Swing Loan Percentage of the principal amount of all Swing Loans
then outstanding, and thereafter, except as otherwise provided in the
second succeeding sentence, the Banks' respective interests in such Swing
Loans, and the remaining interest of the Swing Loan Lender in such Swing
Loans, shall in all respects be treated as Loans under this Agreement, but
such Swing Loans shall continue to be evidenced by the Swing Note, and
shall continue to be due and payable by the Borrower in accordance with
Section 1.05. If any Bank does not pay any amount which it is required to
pay after giving effect to the provisions of Section 1.01(b)(iii)
forthwith upon the Swing Loan Lender's demand therefor, the Swing Loan
Lender shall be entitled to recover such amount on demand from such Bank,
together with interest thereon, at the Federal Funds Rate for the first
three Business Days, and thereafter at the Base Rate, for each day from
the date of such demand, if made prior to 2:00 p.m. (New York time) on any
Business Day, and if made thereafter on any Business Day, or made on any
day that is not a Business Day, from the next Business Day following the
date of such demand, until the date such amount is paid to the Swing Loan
Lender by such Bank. If such Bank does not pay such amount forthwith upon
the Swing Loan Lender's demand therefor, and until such time as such Bank
makes the required payment, the Swing Loan Lender's remaining interest in
the applicable Swing Loan shall continue to include the amount of such
unpaid participation obligation.
(iii) No Bank shall be obligated to purchase a participation
in any Swing Loan unless (A) the Swing Loan Lender believed in good faith
that the conditions specified in Sections 2.02(b) and (c) were satisfied
at the time such Swing Loan was made or (B) such Bank had actual
knowledge, by receipt of information furnished to it pursuant to Section
5.01(f) hereof, or otherwise, that any such condition had not been
satisfied and failed to notify the Swing Loan Lender in a writing received
by the Swing Loan Lender one Business Day prior to the time that it made
such Swing Loan that the Swing Loan Lender was not authorized to make such
Swing Loan or (C) the satisfaction of such condition that was not
satisfied had been waived in accordance with the provisions of this
Agreement.
(c) Special ANI Loan. Upon the terms and subject to the conditions
of this
<PAGE>
Agreement, each Bank agrees to make to ANI on the Restated Agreement Date, for
the purposes set forth in Section 4.05(c), a Special ANI Loan. The aggregate
amount of the Special ANI Loans shall not exceed $105,000,000. Prior to the
consummation of the Contribution, the Borrower shall have no liability with
respect to the Special ANI Loans, including with respect to interest thereon .
Upon the consummation of the Contribution, the Special ANI Loans shall be deemed
to be Loans made to the Borrower, and the Borrower hereby assumes all
obligations in respect thereof upon (and subject to) such consummation.
(d) Type of Loans. Subject to Section 1.07 and the other terms and
conditions of this Agreement, the Loans may, at the option of the Borrower, be
made as, and from time to time continued as or converted into, Base Rate or
Eurodollar Rate Loans of any permitted Type, or any combination thereof.
Section 1.02 Manner of Borrowing.
(a) The Borrower shall give the Administrative Agent notice (which
shall be irrevocable) no later than 10:00 a.m. (New York time) on, in the case
of Base Rate Loans (other than Swing Loans), the Business Day before the
requested date for the making of such Loans and, in the case of Eurodollar Rate
Loans, the third Eurodollar Business Day before the requested date for the
making of such Loans. Each such notice shall be in the form of Schedule 1.02 and
shall specify (i) the requested date for the making of the requested Loans,
which shall be, in the case of Base Rate Loans, a Business Day and, in the case
of Eurodollar Rate Loans, a Eurodollar Business Day, (ii) the Type or Types of
Loans requested and (iii) the amount of each such Type of Loan, which amount
shall be not less than, in the case of Base Rate Loans, $500,000 or an integral
multiple of $100,000 in excess thereof and, in the case of Eurodollar Rate
Loans, $1,000,000 or an integral multiple of $250,000 in excess thereof, or the
aggregate amount of the applicable unused Commitments, as the case may be. Upon
receipt of any such notice, the Administrative Agent shall promptly notify each
Bank of the contents thereof and of the amount and Type of each Loan to be made
by such Bank on the requested date specified therein.
(b) Not later than 11:00 a.m. (New York time) on each requested date
for the making of Loans (other than Swing Loans), each Bank shall make available
to the Administrative Agent, in Dollars in funds immediately available to the
Administrative Agent at the Administrative Agent's Office, the Loans to be made
by such Bank on such date. Any Bank's failure to make any Loan to be made by it
on the requested date therefor shall not relieve any other Bank of its
obligation to make any Loan to be made by such other Bank on such date, but such
other Bank shall not be liable for such failure.
(c) Unless the Administrative Agent shall have received notice from
a Bank prior to 10:00 a.m. (New York time) on the requested date for the making
of any Loans that such Bank will not make available to the Administrative Agent
the Loans requested to be made by such Bank on such date, the Administrative
Agent may assume that such Bank has made such Loans available to the
Administrative Agent on such date in accordance with Section 1.02(b) and the
Administrative Agent in its sole discretion may, in reliance upon such
assumption, make available to the Borrower on such date a corresponding amount
on behalf of such Bank. If and to
<PAGE>
the extent such Bank shall not have so made available to the Administrative
Agent the Loans requested to be made by such Bank on such date and the
Administrative Agent shall have so made available to the Borrower a
corresponding amount on behalf of such Bank, such Bank shall, on demand, pay to
the Administrative Agent such corresponding amount together with interest
thereon, for each day from the date such amount shall have been so made
available by the Administrative Agent to the Borrower until the date such amount
shall have been repaid to the Administrative Agent, at the Federal Funds Rate
until (and including) the third Business Day after demand is made and thereafter
at the Base Rate. If such Bank does not pay such corresponding amount promptly
upon the Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Borrower and such Borrower shall immediately repay such
corresponding amount to the Administrative Agent together with accrued interest
thereon at the applicable rate or rates provided in Section 1.04(a).
(d) All Loans made available to the Administrative Agent in
accordance with Section 1.02(b) or Section 1.02(c) shall be disbursed by the
Administrative Agent not later than 1:00 p.m. (New York time) on the requested
date therefor in Dollars in funds immediately available to the Borrower by
credit to an account of the Borrower at the Administrative Agent's Office or in
such other manner as may have been specified in the applicable notice and as
shall be acceptable to the Administrative Agent.
Section 1.03 Letters of Credit.
(a) Upon the terms and subject to the conditions of this Agreement,
the Issuing Bank shall, from time to time during the period from the Restated
Agreement Date through the tenth Business Day preceding the Maturity Date, issue
one or more Letters of Credit for the account of the Borrower; provided, that
the aggregate principal amount of all Letter of Credit Participations shall not
exceed at any time the lesser of (A) the aggregate amount of the Commitments at
such time minus the aggregate unpaid principal amount of all Loans and Swing
Loans outstanding at such time and (B) $15,000,000. Each Letter of Credit shall
be in a form and shall contain such terms as shall be reasonably satisfactory to
the Issuing Bank. Upon the effectiveness of the amendment and restatement of
this Agreement as of the Restated Agreement Date, all outstanding Letters of
Credit (as defined in this Agreement prior to such amendment and restatement)
shall be deemed to be Letters of Credit issued hereunder.
(b) Each Letter of Credit shall be denominated only in Dollars and
shall expire on or before the first anniversary of the issuance thereof
(provided, that, any Letter of Credit may include terms that provide for the
automatic renewal thereof for successive one-year periods so long as such terms
include a provision whereby the Issuing Bank shall be entitled to elect that any
such renewal shall not occur if the conditions set forth in Section 2.02(b) and
(c) could not be fulfilled at such time, and the Issuing Bank shall give notice
of such election to the beneficiary thereof) and in any event not later than the
Business Day preceding the Maturity Date. Any extension of the expiry date, or
automatic renewal, of a Letter of Credit to a date beyond the first anniversary
of the issuance thereof shall constitute an "issuance" of such Letter of Credit
for all purposes hereof on, in the case of any such extension, the date on which
such extension shall have been granted and, in the case of any such automatic
renewal, on the tenth Business Day
<PAGE>
preceding the last day on which the Issuing Bank is entitled to give notice of
its election that any such renewal shall not occur.
(c) Letters of Credit shall be issued only on a Business Day, and
shall be used for the corporate purposes of the Borrower or the Subsidiaries.
(d) The Borrower shall request the issuance of a Letter of Credit by
furnishing to the Administrative Agent and the Issuing Bank, at least five
Business Days before the requested date of such issuance, notice thereof in the
form of Schedule 1.02 or such other notice as shall be reasonably satisfactory
to the Issuing Bank (and, in the case of any such notice, the Borrower shall be
deemed to have made the Representation and Warranty with respect to such
issuance provided for in the final paragraph of the form of notice set forth in
Schedule 1.02).
(e) Upon the date of issuance of a Letter of Credit, the Issuing
Bank shall be deemed to have granted to each Participating Bank (other than the
Issuing Bank), and each Participating Bank (other than the Issuing Bank) shall
be deemed to have acquired from the Issuing Bank without further action by any
party hereto, a participation in such Letter of Credit and any Drawings that may
at any time be made thereunder, to the extent of such Bank's Participating Bank
Percentage thereof.
(f) The Issuing Bank shall promptly notify the Borrower of its
receipt of each Drawing request with respect to a Letter of Credit, stating the
date and amount of the Drawing requested thereby and the date and amount of each
Drawing disbursed pursuant to such request. The failure of the Issuing Bank to
give, or delay in giving, any such notice shall not release or diminish the
obligations of the Borrower hereunder in respect of such Drawing.
(g) The Borrower shall, on the day it receives notice of each
Drawing from the Issuing Bank, if such notice is received prior to 10:00 a.m.
(New York time) on such day, and on the Business Day following the day it
receives such notice from the Issuing Bank, if such notice is received after
10:00 a.m. (New York time) on such day, reimburse such Drawing by paying to the
Issuing Bank in immediately available funds the amount of the payment made by
the Issuing Bank with respect to such Drawing, together (but only if such
Drawing is not reimbursed on the day notice is received) with interest thereon
at a rate per annum equal to the Base Rate as in effect from time to time plus
the applicable Base Rate Margin until the day such reimbursement is made. In the
event that the Borrower shall fail to make any such payment when due and for so
long as such failure shall be continuing, the Issuing Bank may give notice of
such failure to the Administrative Agent and each Participating Bank, which
notice shall include, in the case of a Participating Bank, the amount of such
Participating Bank's Participating Bank Percentage of such Drawing, whereupon
each such Participating Bank (other than the Issuing Bank) shall promptly remit
such amount to the Administrative Agent for the account of the Issuing Bank as
provided in Section 1.03(h).
(h) Each Participating Bank (other than the Issuing Bank) shall, in
the event it receives the notice from the Issuing Bank pursuant to Section
1.03(g) at or before 12:00 noon (New York time) on any Business Day, fund its
participation in any unreimbursed Drawing by
<PAGE>
remitting to the Administrative Agent, no later than 2:00 p.m. (New York time)
on such day, in immediately available funds, its Participating Bank Percentage
of the reimbursement obligation in respect of each Drawing. The Administrative
Agent shall, in the event it receives such funds from such Participating Bank at
or before 2:00 p.m. (New York time) on any day, no later than 4:00 p.m. (New
York time) on such day, make available the amount thereof to the Issuing Bank,
in immediately available funds. Any amount payable by any Participating Bank to
the Administrative Agent for the account of the Issuing Bank under this Section
1.03(h), and any amount payable by the Administrative Agent to the Issuing Bank
under this Section 1.03(h), shall bear interest for each day from the date due
(and including such day if paid after 2:00 p.m. (New York time), in the case of
any such payment by a Participating Bank to the Administrative Agent, or 4:00
p.m. (New York time), in the case of any such payment by the Administrative
Agent to the Issuing Bank, on such day) in accordance with this Section 1.03(h)
until the date it is received by the Issuing Bank at a rate equal to the Federal
Funds Rate until (and including) the third Business Day after the date due and
thereafter at the Base Rate. Each Participating Bank shall, upon the demand of
the Issuing Bank, reimburse the Issuing Bank, to the extent the Issuing Bank has
not been reimbursed by the Borrower after demand therefor, for the reasonable
costs and expenses (including reasonable legal fees) incurred by it (other than
as a result of its willful misconduct or gross negligence) in connection with
the collection of amounts due under, the administration of, and the preservation
and enforcement of any rights conferred by, the Letters of Credit or the
performance of the Issuing Bank's obligations under this Agreement in respect
thereof (other than its obligation to make Loans in its capacity as a Bank or
Swing Loans in its capacity as the Swing Loan Lender), to the extent of such
Participating Bank's Participating Bank Percentage (as of the time such costs
and expenses are incurred) of the amount of such costs and expenses. The Issuing
Bank shall refund any costs and expenses reimbursed by such Participating Bank
that are subsequently recovered from the Borrower in an amount equal to such
Participating Bank's Participating Bank Percentage thereof.
(i) The obligation of each Participating Bank to make available to
the Issuing Bank the amounts set forth in this Section 1.03 shall be absolute,
unconditional and irrevocable under any and all circumstances without reduction
for any set-off or counterclaim of any nature whatsoever, and may not be
terminated, suspended or delayed for any reason whatsoever, shall not be subject
to any qualification or exception and shall be made in accordance with the terms
and conditions of this Agreement under all circumstances, including, without
limitation, any of the following circumstances:
(i) any lack of validity or enforceability of this Agreement
or any of the other Loan Documents;
(ii) the existence of any claim, set-off, defense or other
right which the Borrower or any Subsidiary may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, the Issuing Bank, any Participating Bank or any
other Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated transactions
(including any underlying transaction between the Borrower or any
Subsidiary and the beneficiary
<PAGE>
named in any such Letter of Credit);
(iii) any draft, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent or invalid in
any respect or any statement therein being untrue or inaccurate in any
respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(v) the occurrence of any Default.
(j) (i) Without affecting any rights the Participating Banks may
have under Applicable Law, the Borrower agrees that none of the Participating
Banks, the Issuing Bank, the Administrative Agent or their respective officers
or directors shall be liable or responsible for, and the obligations of the
Borrower to the Participating Banks, the Issuing Bank and the Administrative
Agent hereunder shall not in any manner be affected by: (A) the use that may be
made of any Letter of Credit or the proceeds thereof by the beneficiary thereof
or any other Person or any acts or omissions of such beneficiary or any other
Person; (B) the validity or genuineness of documents presented in connection
with any Drawing, or of any endorsements thereon, even if such documents should,
in fact, prove to be in any or all respects, invalid, fraudulent or forged; or
(C) any other circumstances whatsoever in making or failing to make payment
under any Letter of Credit or any other action taken or omitted to be taken by
any Person under or in connection with any Letter of Credit, except that the
Borrower shall have a claim against the Issuing Bank and the Issuing Bank shall
be liable to the Borrower, in each case to the extent and only to the extent of
any damages suffered by the Borrower that are caused by (1) the Issuing Bank's
willful misconduct or gross negligence (as determined by a court of competent
jurisdiction) in determining whether documents presented under any Letter of
Credit issued by the Issuing Bank complied with the terms of such Letter of
Credit or (2) the Issuing Bank's willful failure (as determined by a court of
competent jurisdiction) to pay under such Letter of Credit after the
presentation to it of documents strictly complying with the terms and conditions
of such Letter of Credit. In furtherance and not in limitation of the foregoing,
in determining whether to pay under any Letter of Credit, the Issuing Bank shall
not have any obligation relative to the other Banks other than to determine that
any documents required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to comply on their face with the
requirements of such Letter of Credit, regardless of any notice or information
to the contrary. Any action taken or omitted to be taken by the Issuing Bank
under or in connection with any Letter of Credit, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for the
Issuing Bank any resulting liability to any Bank.
(ii) In addition to any other amounts payable under this
Agreement, the Borrower agrees to protect, indemnify, pay and hold the
Issuing Bank harmless from and against any and all claims, costs, charges
and reasonable expenses (including reasonable attorneys' fees) which the
Issuing Bank may incur or be subject to as a consequence, direct or
indirect, of the issuance of, or payment of any Drawing under, any Letter
of Credit, other than as a result of the gross negligence or willful
misconduct of the Issuing
<PAGE>
Bank as determined by a court of competent jurisdiction.
(iii) The Issuing Bank shall not be responsible for:
(A) the validity, accuracy, genuineness or legal effect
of any document submitted by any party in connection with the
issuance of Letters of Credit,
(B) the validity of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or
the rights or benefits thereunder or proceeds thereof in whole or in
part,
(C) errors, omissions, interruptions or delays in
transmissions or delivery of any messages, by mail, cable, telecopy,
telex or otherwise,
(D) the misapplication by the beneficiary of any Letter
of Credit of the proceeds of any drawing under such Letter of
Credit, and
(E) any consequence arising from causes beyond the
control of the Issuing Bank, including, without limitation, any
governmental acts.
(k) If any Bank Nonparticipation occurs with respect to any Bank,
(A) the Administrative Agent and such Bank agree, if requested by the Borrower,
to attempt to locate a bank or other financial institution that desires to
accept the assignment of the Loans, Letter of Credit Participations, Commitments
and other rights and obligations hereunder of such Bank and (B) if such bank or
other financial institution acceptable to the Borrower is located, such Bank
agrees to assign its interest in its Loans, Letter of Credit Participations,
Commitments and other rights and obligations hereunder to such bank or other
financial institution in accordance with Section 9.10(a)(ii).
Section 1.04 Interest.
(a) Rates. Unless an Event of Default is continuing, (i) each Loan
shall bear interest on the outstanding principal amount thereof at a rate per
annum equal to (A) so long as it is a Base Rate Loan, the Base Rate as in effect
from time to time plus the applicable Base Rate Margin and (B) so long as it is
a Eurodollar Rate Loan, the applicable Adjusted Eurodollar Rate plus the
applicable Eurodollar Rate Margin and (ii) each other amount due and payable
under the Loan Documents shall, to the maximum extent permitted by Applicable
Law, bear interest at a rate per annum equal to the Base Rate as in effect from
time to time plus the applicable Base Rate Margin. During an Event of Default
(and whether before or after judgment), upon notice from the Administrative
Agent to the Borrower given at the direction of the Required Banks, each Loan
(whether or not due) and, to the maximum extent permitted by Applicable Law,
each other amount due and payable under the Loan Documents shall bear interest
at a rate per annum equal to the applicable Post-Default Rate.
(b) Payment. Interest shall be payable, (i) in the case of Base Rate
Loans,
<PAGE>
quarterly in arrears on each Interest Payment Date, (ii) in the case of
Eurodollar Rate Loans, on the last day of each applicable Interest Period (and,
if an Interest Period is longer than three months, at intervals of three months
after the first day of such Interest Period), (iii) in the case of any Loan,
when such Loan shall be due (whether at maturity, by reason of notice of
prepayment or acceleration or otherwise) or converted, but only to the extent
then accrued on the amount then so due or converted, and (iv) in the case of all
other amounts due and payable under the Loan Documents, on demand. Interest at
the Post-Default Rate shall be payable on demand.
(c) Conversion and Continuation. (i) All or any part of the
principal amount of Loans of any Type may, on any Business Day, be converted
into any other Type or Types of Loans, except that (A) Eurodollar Rate Loans may
be converted only on the last day of an applicable Interest Period, (B) Base
Rate Loans may be converted into Eurodollar Rate Loans only on a Eurodollar
Business Day and (C) Swing Loans shall be maintained as Base Rate Loans at all
times.
(ii) Base Rate Loans shall continue as Base Rate Loans unless
and until such Loans are converted into Loans of another Type. Eurodollar
Rate Loans of any Type shall continue as Loans of such Type until the end
of the then current Interest Period therefor, at which time they shall be
automatically converted into Base Rate Loans unless the Borrower shall
have given the Administrative Agent notice in accordance with Section
1.04(c)(iv) requesting either that such Loans continue as Loans of such
Type for another Interest Period or that such Loans be converted into
Loans of another Type at the end of such Interest Period.
(iii) Notwithstanding anything to the contrary contained in
Section 1.04(c)(i) or (ii), during a Default, the Administrative Agent
may, and upon the direction of the Required Banks shall, notify the
Borrower that Loans may only be converted into or continued as Loans of
certain specified Types and, thereafter, until no Default shall continue
to exist, Loans may not be converted into or continued as Loans of any
Type other than one or more of such specified Types, provided that,
notwithstanding the foregoing, Loans may continue as or be converted into
Base Rate Loans.
(iv) The Borrower shall give the Administrative Agent notice
(which shall be irrevocable) of each conversion of Loans or continuation
of Eurodollar Rate Loans no later than 10:00 a.m. (New York time) on, in
the case of a conversion into Base Rate Loans, the Business Day before the
requested date of such conversion, and, in the case of a conversion into
or continuation of Eurodollar Rate Loans, the third Eurodollar Business
Day before the requested date of such conversion or continuation. Each
notice of conversion or continuation shall be in the form of Schedule
1.04(c)(iv) and shall specify (A) the requested date of such conversion or
continuation, (B) the amount and Type and, in the case of Eurodollar Rate
Loans, the last day of the applicable Interest Period of the Loans to be
converted or continued and (C) the amount and Type or Types of Loans into
which such Loans are to be converted or as which such Loans are to be
continued. Upon receipt of any such notice, the Administrative Agent shall
promptly notify each Bank of (x) the contents thereof, (y) the amount and
Type and, in the case of Eurodollar Rate
<PAGE>
Loans, the last day of the applicable Interest Period of each Loan to be
converted or continued by such Bank and (z) the amount and Type or Types
of Loans into which such Loans are to be converted or as which such Loans
are to be continued.
(d) Maximum Interest Rate. Nothing contained in the Loan Documents
shall require the Borrower at any time to pay interest at a rate exceeding the
Maximum Permissible Rate. If interest payable by the Borrower on any date would
exceed the maximum amount permitted by the Maximum Permissible Rate, such
interest payment shall automatically be reduced to such maximum permitted
amount, and interest for any subsequent period, to the extent less than the
maximum amount permitted for such period by the Maximum Permissible Rate, shall
be increased by the unpaid amount of such reduction. Any interest actually
received for any period in excess of such maximum amount permitted for such
period shall be deemed to have been applied as a prepayment of the Loans or, if
no Loans are outstanding, such excess shall be refunded to the Borrower.
Section 1.05 Repayment.
(a) Loans. Each of the Loans shall mature and become due and payable, and
shall be repaid by the Borrower, on the Maturity Date.
(b) Drawings. The Borrower shall reimburse the Issuing Bank for each
Drawing under a Letter of Credit on the date determined with respect to such
Drawing in the manner set forth in Section 1.03(g).
Section 1.06 Prepayments.
(a) Optional Prepayments. The Borrower may, at any time and from time to
time, prepay the Loans in whole or in part, without premium or penalty (but
subject to Section 7.03), except that any partial prepayment under this Section
(other than a prepayment of Swing Loans) shall be in an aggregate principal
amount of at least, in the case of Base Rate Loans, $500,000 or any integral
multiple of $100,000 in excess thereof and, in the case of Eurodollar Rate
Loans, $1,000,000 or an integral multiple of $250,000 in excess thereof, and any
prepayment of Eurodollar Rate Loans made on a day other than the last day of an
applicable Interest Period shall be accompanied by the amount, if any, required
to be paid in respect thereof pursuant to Section 7.03 hereof. The Borrower
shall give the Administrative Agent notice of each prepayment pursuant to this
Section 1.06(a) no later than 10:00 a.m. (New York time) on, in the case of a
prepayment of Base Rate Loans (other than Swing Loans), the first Business Day,
and, in the case of a prepayment of Eurodollar Rate Loans, the third Eurodollar
Business Day, before the date of such prepayment and, in the case of a
prepayment of Swing Loans, the day of such prepayment. Each such notice of
prepayment shall be in the form of Schedule 1.06(a) and shall specify (i) the
date such prepayment is to be made and (ii) the amount and Type and, in the case
of Eurodollar Rate Loans, the last day of the applicable Interest Period of the
Loans to be prepaid. Upon receipt of any such notice, the Administrative Agent
shall promptly notify each Bank of the contents thereof and the amount and Type
and, in the case of Eurodollar Rate Loans, the last day of the applicable
Interest Period of each Loan of such Bank to be prepaid. Amounts
<PAGE>
to be prepaid pursuant to this Section 1.06(a) shall irrevocably be due and
payable on the date specified in the applicable notice of prepayment, together
with interest thereon as provided in Section 1.04(b).
(b) Mandatory Prepayments. The Borrower shall, on each date that a
reduction in the aggregate amount of the Commitments causes the sum of the
aggregate outstanding principal amount of the Loans and the aggregate amount of
Letter of Credit Participations to exceed the aggregate amount of the
Commitments, prepay the Loans and the Contingent Reimbursement Obligations, in
an aggregate amount not less than the amount of such excess, together with
interest thereon as provided in Section 1.04(b), on the date of such reduction.
(c) Reborrowing. Amounts of Loans prepaid prior to the Maturity Date
may, subject to the terms and conditions hereof (including, but not limited to,
Sections 1.01 and 1.08(b)), be reborrowed.
Section 1.07 Limitation on Types of Loans.
Notwithstanding anything to the contrary contained in this
Agreement, the Borrower shall borrow, prepay, convert and continue Loans in a
manner such that (a) the aggregate principal amount of Eurodollar Rate Loans of
the same Type and having the same Interest Period shall at all times be not less
than $1,000,000 (b) there shall not be, at any one time, more than five Interest
Periods in effect with respect to Eurodollar Rate Loans of all Types and (c) no
payment of Eurodollar Rate Loans will have to be made prior to the last day of
an applicable Interest Period in order to repay the Loans in the amounts and
(subject to Section 1.12(d)) on the dates specified in Section 1.05 or
determined pursuant to Section 1.06(b).
Section 1.08 Reduction and Termination of Commitments.
(a) Optional Reduction of Commitments. The Borrower may terminate or
reduce the aggregate amount of the Commitments by giving the Administrative
Agent notice (which shall be irrevocable) thereof no later than 10:00 a.m. (New
York time) on the third Business Day before the requested date of such
reduction, except that (i) each partial reduction of the aggregate amount of the
Commitments shall be in an aggregate amount equal to $1,000,000 or any integral
multiple of $500,000 in excess thereof and (ii) no reduction may reduce the
aggregate amount of the Commitments to an amount less than the sum of the
aggregate principal amount of all Loans and the amount of all Letter of Credit
Participations outstanding on such date. Upon receipt of any such notice, the
Administrative Agent shall promptly notify each Bank of the contents thereof and
the amount to which such Bank's Commitment is to be reduced.
(b) Mandatory Reduction of Commitments. (i) The aggregate
Commitments shall be automatically and permanently reduced by (A) $75,000,000
(subject to reduction as provided in Section 1.08(c)) on September 30, 2003, and
(B) $25,000,000 (subject to reduction as provided in Section 1.08(c)) on the
last day of each calendar quarter, commencing December 31, 2003.
(ii) In the event that the Borrower or any Restricted
Subsidiary shall receive
<PAGE>
Net Proceeds from the sale or disposition of any assets (including any
loss or damage to, or condemnation of, such assets), the aggregate
Commitments shall be automatically and permanently reduced (A) on the
fifth day following the end of the Reinvestment Contract Period with
respect to such sale or disposition, in an amount equal to the Net
Proceeds of such sale or disposition less the Reinvested Amount with
respect thereto and (B) on the fifth day following the end of the
Reinvestment Period with respect to such sale or disposition, in an amount
equal to the portion, if any, of such Reinvested Amount that would have
been paid pursuant to Reinvestment Contracts that shall have terminated,
or with respect to which the closing of the transaction provided for
therein shall not have occurred, within such Reinvestment Period.
(iii) In the event that the Borrower or any Restricted
Subsidiary shall issue or otherwise incur Indebtedness (other than the (A)
Indebtedness under the Loan Documents, (B) Existing Debt, (C) Intercompany
Debt, (D) Indebtedness of DNI evidenced by the Master Intercompany Note,
(E) Indebtedness of DNI, any of its Subsidiaries or the California
Partnership incurred from and owed to the Borrower or any Restricted
Subsidiary or (F) any increase of the aggregate principal amount of the
1999 Subordinated Notes up to $300,000,000), the net proceeds of which,
together with the aggregate net proceeds of all other such issuances and
incurrences after the Restated Agreement Date, are in excess of
$100,000,000 ("Excess Net Proceeds"), the aggregate Commitments shall be
automatically and permanently reduced on the fifth day following the day
on which the Borrower shall have received such net proceeds in an amount
equal to the portion of such net proceeds constituting Excess Net
Proceeds.
(c) Application to Scheduled Reductions. (i) Each reduction of the
Commitments pursuant to Section 1.08(a) shall be applied to the remaining
reductions thereof scheduled to be made pursuant to Section 1.08(b)(i) in the
inverse order in which they are scheduled to occur.
(ii) Each reduction of the Commitments pursuant to Section
1.08(b)(ii) or 1.08(b)(iii) shall be applied to the remaining reductions
thereof scheduled to be made pursuant to Section 1.08(b)(i) (as such
amounts may have been previously reduced by the operation of this Section
1.08(c)) pro rata in accordance with the relative amounts thereof.
Section 1.09 Fees.
(a) Commitment Fees. The Borrower shall pay to the Administrative Agent
for the account of each Bank a commitment fee on the daily unused aggregate
amount of such Bank's Commitment for each day from the Restated Agreement Date
through the Maturity Date, at a rate per annum of (i) so long as the ratio of
Consolidated Debt to Operating Cash Flow is equal to or greater than 5.50 to
1.00, 0.500%, (ii) so long as the ratio of Consolidated Debt to Operating Cash
Flow is equal to or greater than 4.00 to 1.00, but less than 5.50 to 1.00,
0.375% and (iii) at all other times, 0.250%, payable quarterly in arrears on
successive Interest Payment Dates, on the Maturity Date and on the date of any
reduction of the Commitment (to the extent accrued and unpaid on the amount of
such reduction). For this purpose, Swing Loans shall not constitute a
utilization of any Bank's Commitment.
<PAGE>
(b) Letter of Credit Fees. (i) The Borrower shall pay to the
Administrative Agent for the account of each Participating Bank a letter of
credit fee on the daily aggregate amount of the Contingent Reimbursement
Obligations under each Letter of Credit at a rate per annum equal to the
Eurodollar Rate Margin in effect at such time. Such fees shall be payable in
arrears on successive Interest Payment Dates and on the date of expiration or
termination of each Letter of Credit.
(ii) The Borrower shall pay to the Agent for the account of
the Issuing Bank a letter of credit issuance fee on the daily aggregate
face amount of all Letters of Credit issued hereunder at a rate per annum
of 0.125%. Such fees shall be payable in arrears on successive Interest
Payment Dates and on the date of expiration or termination of each Letter
of Credit; provided, that no such quarterly payment shall in any event be
less than $125.00.
Section 1.10 Computation of Interest and Fees.
Interest and the commitment and letter of credit fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed. Interest, commitment fees and letter of credit fees for any period
shall be calculated from and including the first day thereof to but excluding
the last day thereof.
Section 1.11 Evidence of Indebtedness.
Each Bank's Loans and the Borrower's obligation to repay such Loans
with interest in accordance with the terms of this Agreement shall be evidenced
by this Agreement, the records of such Banks and a single Note payable to the
order of such Bank. The Swing Loans and the Borrower's obligation to repay the
Swing Loans with interest in accordance with the terms of this Agreement shall
be evidenced by this Agreement, the records of the Swing Loan Lender, and a
single Swing Loan Note payable to the order of the Swing Loan Lender. Each
Bank's Letter of Credit Participations shall be evidenced by this Agreement, the
records of such Bank and the Letters of Credit. The records of each Bank and the
Swing Loan Lender shall be prima facie evidence of such Bank's Loans and Letter
of Credit Participations, of the Swing Loan Lender's Swing Loans and, in each
case, of accrued interest thereon and of all payments made in respect thereof.
If requested by any Bank, ANI shall execute and deliver to such Bank a Note
payable to the order of such Bank evidencing such Bank's Special ANI Loan and
the obligation of ANI to repay such Loan with interest in accordance with the
terms of this Agreement.
Section 1.12 Payments by the Borrower.
(a) Time, Place and Manner. All payments due to the Administrative Agent,
the Swing Loan Lender or the Issuing Bank under the Loan Documents shall be made
to the Administrative Agent at the Administrative Agent's Office or to such
other Person or at such other address as the Administrative Agent, the Swing
Loan Lender or the Issuing Bank, respectively, may designate by notice to the
Borrower. All payments due to any Bank under the Loan Documents
<PAGE>
shall, in the case of payments on account of principal of or interest on the
Loans or fees, be made to the Administrative Agent at the Administrative Agent's
Office and, in the case of all other payments, be made directly to such Bank at
its Domestic Lending Office or at such other address as such Bank may designate
by notice to the Borrower. All payments due to any Bank under the Loan
Documents, whether made to the Administrative Agent or directly to such Bank,
shall be made for the account of, in the case of payments in respect of
Eurodollar Rate Loans, such Bank's Eurodollar Lending Office and, in the case of
all other payments, such Bank's Domestic Lending Office. A payment shall not be
deemed to have been made on any day unless such payment has been received by the
required Person, at the required place of payment, in Dollars in funds
immediately available to such Person at such place, no later than 12:00 noon
(New York time) on such day.
(b) No Reductions. All payments due to the Administrative Agent, the
Issuing Bank, the Swing Loan Lender or any Bank under the Loan Documents, and
all other terms, conditions, covenants and agreements to be observed and
performed by the Borrower thereunder, shall be made, observed or performed by
the Borrower without any reduction or deduction whatsoever, including any
reduction or deduction for any set-off, recoupment, counterclaim (whether
sounding in tort, contract or otherwise) or Tax except for any Tax required to
be withheld or deducted in accordance with Section 1.14.
(c) Authorization to Charge Accounts. The Borrower hereby authorizes
the Administrative Agent, the Issuing Bank, the Swing Loan Lender and each Bank,
if and to the extent any amount payable by the Borrower under the Loan Documents
(whether payable to such Person or to any other Person that is the
Administrative Agent, the Issuing Bank, the Swing Loan Lender or a Bank) is not
otherwise paid when due, to charge such amount against any or all of the
accounts of such Borrower or any Wholly Owned Subsidiary that is a Restricted
Subsidiary with the Administrative Agent, the Issuing Bank, the Swing Loan
Lender or any such Bank or any of its Affiliates (whether maintained at a branch
or office located within or without the United States), with the Borrower
remaining liable for any deficiency.
(d) Extension of Payment Dates. Whenever any payment to the
Administrative Agent, the Issuing Bank, the Swing Loan Lender or any Bank under
the Loan Documents would otherwise be due (except by reason of acceleration) on
a day that is not a Business Day, or, in the case of payments of the principal
of Eurodollar Rate Loans, a Eurodollar Business Day, such payment shall instead
be due on the next succeeding Business or Eurodollar Business Day, as the case
may be, unless, in the case of a payment of the principal of Eurodollar Rate
Loans, such extension would cause payment to be due in the next succeeding
calendar month, in which case such due date shall be advanced to the next
preceding Eurodollar Business Day. If the date any payment under the Loan
Documents is due is extended (whether by operation of any Loan Document,
Applicable Law or otherwise), such payment shall bear interest for such extended
time at the rate of interest applicable hereunder.
Section 1.13 Distribution of Payments by the Administrative Agent.
(a) The Administrative Agent shall promptly distribute to the
Issuing Bank, the
<PAGE>
Swing Loan Lender and each Bank its ratable share of each payment received by
the Administrative Agent under the Loan Documents for the account of the Issuing
Bank, the Swing Loan Lender and the Banks by credit to an account of the Issuing
Bank, the Swing Loan Lender or such Bank at the Administrative Agent's Office or
by wire transfer to an account of the Issuing Bank, the Swing Loan Lender or
such Bank at an office of any other commercial bank located in the United
States.
(b) Unless the Administrative Agent shall have received notice from
the applicable Loan Party prior to the date on which any payment is due to the
Banks under the Loan Documents that such Loan Party will not make such payment
in full, the Administrative Agent may assume that such Loan Party has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent in its sole discretion may, in reliance upon such assumption, cause to be
distributed to the Issuing Bank, the Swing Loan Lender and each Bank on such due
date a corresponding amount with respect to the amount then due the Issuing
Bank, the Swing Loan Lender and such Bank. If and to the extent such Loan Party
shall not have so made such payment in full to the Administrative Agent and the
Administrative Agent shall have so distributed to the Issuing Bank, the Swing
Loan Lender or any Bank a corresponding amount, the Issuing Bank, the Swing Loan
Lender or such Bank shall, on demand, repay to the Administrative Agent the
amount so distributed together with interest thereon, for each day from the date
such amount is distributed to the Issuing Bank, the Swing Loan Lender or such
Bank until the date the Issuing Bank, the Swing Loan Lender or such Bank repays
such amount to the Administrative Agent, at the Federal Funds Rate until (and
including) the third Business Day after demand is made and thereafter at the
Base Rate.
Section 1.14 Taxes on Payments
(a) Taxes Payable by the Borrower. If any Tax is required to be
withheld or deducted from, or is otherwise payable by the Borrower in connection
with, any payment due to any Bank or any Administrative Agent appointed in
accordance with Section 8.08 that is not a "United States person" (as such term
is defined in Section 7701(a)(30) of the Code) hereunder, the Borrower (i)
shall, if required, withhold or deduct the amount of such Tax from such payment
and, in any case, pay such Tax to the appropriate taxing authority in accordance
with Applicable Law and (ii) except in the case of any Bank Tax, shall pay to
such Bank or Administrative Agent such additional amounts as may be necessary so
that the net amount received by such Bank or Administrative Agent with respect
to such payment, after withholding or deducting all Taxes required to be
withheld or deducted, is equal to the full amount payable hereunder. If any Tax
is withheld or deducted from, or is otherwise payable by the Borrower in
connection with, any payment due to any such Bank or Administrative Agent
hereunder, the Borrower shall furnish to such Bank or Administrative Agent the
original or a certified copy of a receipt for such Tax from the applicable
taxing authority within 30 days after the date of such payment (or, if such
receipt shall not have been made available by such taxing authority within such
time, the Borrower shall use reasonable efforts to promptly obtain and furnish
such receipt). If the Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fails to remit to any such Bank or
Administrative Agent the required receipts, the Borrower shall indemnify such
Bank or Administrative Agent for any Taxes, interest, penalties or additions to
Tax that may become
<PAGE>
payable by such Bank or Administrative Agent as a result of any such failure.
(b) Taxes Payable by any Bank or Administrative Agent. The Borrower
shall, promptly upon request by any Bank or Administrative Agent that is not a
United States person, pay to any such Bank or Administrative Agent an amount
equal to (i) all Taxes (other than Bank Taxes and without duplication of amounts
paid pursuant to Section 1.14(a)) payable by such Bank or Administrative Agent
with respect to any payment due to such Bank or Administrative Agent hereunder
and (ii) all Taxes (other than Bank Taxes) payable by such Bank or
Administrative Agent as a result of payments made by the Borrower (whether made
to a taxing authority or to such Bank or Administrative Agent) pursuant to
Section 1.14(a) or this Section 1.14(b).
(c) Exemption from U.S. Withholding Taxes. (i) Each Bank that is not
a United States person shall submit to the Borrower and the Administrative
Agent, on or before the fifth day prior to the first Interest Payment Date
occurring after the Restated Agreement Date (or, in the case of a Person that is
not a United States person and that became a Bank by assignment, promptly upon
such assignment), two duly completed and signed copies of either (A) (1) Form
1001 of the United States Internal Revenue Service entitling such Bank to a
complete exemption from withholding on all amounts to be received by such Bank
pursuant to this Agreement and the Loans or (2) Form 4224 of the United States
Internal Revenue Service relating to all amounts to be received by such Bank
pursuant to this Agreement and the Loans and Form W-9 of the United States
Internal Revenue Service or (B) in the case of any Bank (or Person that becomes
a Bank by assignment) that is exempt from United States Federal withholding tax
pursuant to Sections 871(b) or 881(c) of the Code, Form W-8 of the United States
Internal Revenue Service. Each such Bank shall, from time to time after
submitting any such form, submit to the Borrower and the Administrative Agent
such additional duly completed and signed copies of one or another such forms
(or any successor forms as shall be adopted from time to time by the relevant
United States taxing authorities) as may be (A) requested in writing by the
Borrower or the Administrative Agent and (B) appropriate under the circumstances
and under then current United States law or regulations to avoid or reduce
United States withholding taxes on payments in respect of all amounts to be
received by such Bank pursuant to this Agreement or the Loans. Upon the request
of the Borrower or the Administrative Agent, each Bank that is a United States
person shall submit to the Borrower and the Administrative Agent a certificate
to the effect that it is a United States person.
(ii) If any Bank determines that it is unable to submit to the
Borrower or the Administrative Agent any form or certificate that such
Bank is obligated to submit pursuant to the preceding paragraph, or that
it is required to withdraw or cancel any such form or certificate, or that
any such form or certificate previously submitted has otherwise become
ineffective or inaccurate, such Bank shall promptly notify the Borrower
and the Administrative Agent of such fact.
(iii) Notwithstanding anything to the contrary contained
herein, the Borrower shall not be required to pay any additional amount in
respect of United States withholding taxes pursuant to Section 1.14(a) or
Section 7.02 to any Bank that (A) is not,
<PAGE>
on the Restated Agreement Date (or, in the case of a Person that became a
Bank by assignment, on the date of such assignment), either (x) entitled
to submit Form W-8 or Form 1001 of the United States Internal Revenue
Service entitling such Bank to a complete exemption from withholding on
all amounts to be received by such Bank pursuant to this Agreement and the
Loans or Form 4224 of the United States Internal Revenue Service relating
to all amounts to be received by such Bank pursuant to this Agreement and
the Loans and Form W-9 of the United States Internal Revenue Service or
(y) a United States person, (B) is no longer entitled, or in the case of a
Bank that is no longer a United States person, is not entitled, to submit
either such form (or any successor form as shall be adopted from time to
time by the relevant United States taxing authorities) as a result of any
change in circumstances or other event other than a Regulatory Change or
(C) with respect to any affected interest payments, fails to fulfill its
requirements set forth in Section 1.14(c)(i). If, as a result of a
Regulatory Change, a Bank is no longer entitled to submit Form W-8, Form
W-9, Form 1001 or Form 4224 of the United States Internal Revenue service
(or any successor form), such Bank shall, if requested by the Borrower,
use reasonable efforts to designate another Lending Office or Offices the
designation of which will reduce or eliminate payments under this Section
1.14, provided that such designation would not, in the sole and absolute
discretion of such Bank, be disadvantageous to such Bank in any manner or
contrary to such Bank's policies. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Bank in connection with any
such designation.
(d) Notification and Contest. If a taxing authority imposes or seeks
to impose upon the Administrative Agent or any Bank any Taxes with respect to
which the Borrower would be required to make a payment under this Section 1.14,
the Administrative Agent or such Bank shall promptly notify the Borrower of such
imposition.
(e) Credits and Deductions. If the Administrative Agent or a Bank
receives a refund or otherwise realizes a reduction of, or credit against, its
Tax liabilities in any taxable year in connection with a Tax indemnified by the
Borrower under this Section 1.14, it shall pay to the Borrower an amount equal
to the net after-tax value to the Administrative Agent or such Bank, in its sole
opinion, of such part of such refund or other reduction as it considers to be
allocable to such payment by the Borrower, having regard to all of the
Administrative Agent's or such Bank's dealings giving rise to similar refunds or
other reductions in relation to the same tax period and to the cost of obtaining
the same; provided, however, that if the Administrative Agent or any Bank has
made a payment to the Borrower pursuant to this Section 1.14(e) and the
applicable refund or other reduction in Tax is subsequently disallowed, the
Borrower shall, promptly upon request by the Administrative Agent or such Bank,
refund to the Administrative Agent or such Bank that portion of such payment
determined by the Administrative Agent or such Bank, in its sole opinion,
relating to such disallowance; and provided, further that (i) the Administrative
Agent or such Bank, as the case may be, shall not be obligated to disclose to
the Borrower any information regarding its Tax affairs or computations and (ii)
nothing in this Section 1.14(e) shall interfere with the right of the
Administrative Agent or any Bank to arrange its Tax affairs as it deems
appropriate.
<PAGE>
Section 1.15 Pro Rata Treatment.
Except to the extent otherwise provided herein, (a) Loans (other
than Swing Loans) shall be made by the Banks pro rata in accordance with their
respective Commitments, (b) Loans of the Banks shall be converted and continued
pro rata in accordance with their respective amounts of Loans of the Type and,
in the case of Eurodollar Rate Loans, having the Interest Period being so
converted or continued, (c) each reduction in the Commitments shall be made pro
rata in accordance with the respective amounts thereof and (d) each payment of
the principal of or interest on the Loans, reimbursement of Drawings under
Letters of Credit or of commitment or letter of credit fees shall be made for
the account of the Banks and, if applicable, the Issuing Bank or the Swing Loan
Lender pro rata in accordance with their respective amounts thereof then due and
payable.
ARTICLE 2
CONDITIONS TO EFFECTIVENESS;
CONDITIONS TO LOANS AND LETTERS OF CREDIT
Section 2.01 Conditions to Effectiveness.
This Agreement, as amended and restated as of the Restated Agreement
Date, and the rights and obligations of the parties hereunder, shall become
effective upon the determination by each Bank, in its sole and absolute
discretion, that each of the following conditions has been fulfilled:
(a) the Administrative Agent shall have received each of the
following, in form and substance and, in the case of the materials referred to
in clauses (i), (ii), (vi), (x) and (xiii) certified in a manner satisfactory to
the Administrative Agent:
(i) a certificate of the Secretary or an Assistant Secretary
of each Loan Party, dated the Restated Agreement Date, substantially in
the form of Schedule 2.01(a)(i), to which shall be attached copies of the
resolutions and by-laws referred to in such certificate;
(ii) a copy of the certificate of incorporation of each Loan
Party, certified, as of a recent date, by the Secretary of State or other
appropriate official of such Person's jurisdiction of incorporation;
(iii) a good standing certificate with respect to each Loan
Party and each Consolidated Subsidiary, issued as of a recent date by the
Secretary of State or other appropriate official of such Person's
jurisdiction of incorporation;
(iv) an opinion of counsel for each Loan Party, dated the
Restated Agreement Date, in the form of Schedule 2.01(a)(iv), with such
changes as the Administrative Agent shall approve;
<PAGE>
(v) an opinion of Winthrop, Stimson, Putnam & Roberts, special
counsel for the Administrative Agent, dated the Restated Agreement Date,
in the form of Schedule 2.01(a)(v);
(vi) a copy of each Governmental Approval and other consent or
approval listed on Schedule 3.03;
(vii) a duly executed Note for each Bank;
(viii) a duly executed Swing Note for the Swing Loan Lender;
(ix) a duly executed copy of each of the Pledge Agreements;
(x) a copy of the Tax Sharing Agreement, the DNI Tax Sharing
Agreement, and the Management Agreement;
(xi) either (A) such duly executed UCC-1 financing statements
and other documents as the Administrative Agent may request, the filing or
recordation of which is necessary or appropriate in the Administrative
Agent's determination to create or perfect a security interest in the
Collateral under Applicable Law, or (B) evidence of the filing or
recordation of the same in such offices as the Administrative Agent shall
have specified;
(xii) such instruments and other documents as the
Administrative Agent may request, the execution, delivery, filing or
possession of which is necessary or appropriate in the Administrative
Agent's determination to create or perfect a security interest in the
Collateral under Applicable Law, including but not limited to (A) share
certificates and stock powers executed in blank with respect to the
Capital Securities subject to the Security Interest and (B) the Master
Intercompany Note; and
(xiii) a copy of each of the Denver Acquisition Documents.
(b) the Administrative Agent shall be satisfied that, concurrently
with the disbursement of the Special ANI Loans on the Restated Agreement Date,
(i) all Indebtedness and other amounts payable under the DNI Loan Agreement will
be paid in full, and the commitments to lend thereunder terminated, (ii) all
Liens securing amounts payable under the DNI Loan Agreement (if any) and any
related arrangements will be terminated, and (iii) there will be delivered to
DNI such duly executed UCC-3 termination statements, notices, releases and other
signed documents as are necessary or appropriate to effect or reflect the
termination of all such Liens and any related arrangements;
(c) the Administrative Agent shall have received evidence
satisfactory to it that the 9% Cumulative Preferred Stock of DNI held by Media
General will be redeemed or purchased and retired on the Restated Agreement Date
pursuant to arrangements reasonably satisfactory to the Administrative Agent;
<PAGE>
(d) the Administrative Agent shall have received evidence reasonably
satisfactory to it that the other transactions contemplated by the Denver
Acquisition Documents to occur on the Restated Agreement Date shall have
occurred in accordance with the terms of the Denver Acquisition Documents; and
(e) all fees payable on or prior to the Restated Agreement Date
pursuant to Section 1.09, all fees accrued and unpaid prior to the Restated
Agreement Date pursuant to Section 1.09 of this Agreement as in effect prior to
amendment and restatement hereof as of the Restated Agreement Date, and all
amounts payable pursuant to Section 9.02 for which invoices have been delivered
to the Borrower on or prior to the Restated Agreement Date, shall have been paid
in full or arrangements satisfactory to the Administrative Agent shall have been
made to cause them to be paid in full on the Restated Agreement Date.
Section 2.02 Conditions to Each Loan and Letter of Credit.
The obligation of each Bank to make each Loan requested to be made
by it, and the obligation of the Issuing Bank to issue each Letter of Credit
requested to be issued by it (including any request to extend the expiry date of
any Letter of Credit to the date beyond the first anniversary of the original
issuance thereof or any automatic renewal thereof), is subject to the
fulfillment of each of the following conditions:
(a) the Administrative Agent, or in the case of a Swing Loan, the
Swing Loan Lender, shall have received a notice of borrowing with respect to
such Loan complying with the requirements of Section 1.02 or, in the case of a
Swing Loan, a notice of borrowing complying with the requirements of Section
1.01(b)(i) or, a notice of issuance with respect to such Letter of Credit
complying with the requirements of Section 1.03;
(b) each Loan Document Representation and Warranty shall be true and
correct at and as of the time such Loan is to be made or such Letter of Credit
is to be issued, both with and without giving effect to such Loan or Letter of
Credit and all other Loans or Letters of Credit to be made or issued at such
time and to the application of the proceeds thereof;
(c) no Default shall have occurred and be continuing at the time
such Loan is to be made or such Letter of Credit is to be issued or would result
from the making of such Loan or the issuance of such Letter of Credit and all
other Loans and Letters of Credit to be made or issued at such time or from the
application of the proceeds thereof;
(d) in the case of any such Loan, such Loan will not contravene any
Applicable Law applicable to such Bank, including Regulation U; and
(e) in the case of any such Letter of Credit, the Issuing Bank shall
have received such other instruments and agreements related thereto as the
Issuing Bank shall have requested.
Except to the extent that the Borrower shall have disclosed in the notice
of borrowing or notice of issuance, or in a subsequent notice given to the Banks
or the Issuing Bank, as the case
<PAGE>
may be, prior to 5:00 p.m. (New York time) on the Business Day before the
requested date for the making of the requested Loans or the issuance of the
requested Letter of Credit, that a condition specified in clause (b) or (c)
above will not be fulfilled as of the requested time for the making of such
Loans or the issuance of such Letter of Credit, the Borrower shall be deemed to
have made a Representation and Warranty as of the time of the making of such
Loans that the conditions specified in such clauses have been fulfilled as of
such time. No such disclosure by the Borrower that a condition specified in
clause (b) or (c) above will not be fulfilled as of the requested time for the
making of the requested Loans shall affect the right of each Bank or the Issuing
Bank, as the case may be, to not make the Loans requested to be made by it or to
not issue the Letter of Credit requested to be issued by it if, in such Bank's
or the Issuing Bank's determination, such condition has not been fulfilled at
such time.
ARTICLE 3
CERTAIN REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, each Bank, the Swing
Loan Lender and the Issuing Bank to make each Loan requested to be made by it or
issue each Letter of Credit, the Borrower and, with respect to itself and the
Special ANI Loan, ANI represents and warrants as follows:
Section 3.01 Organization; Power; Qualification.
The Borrower, ANI and each Restricted Subsidiary are corporations
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation, have the corporate power and
authority to own their respective properties and to carry on their respective
businesses as now being and hereafter proposed to be conducted and are duly
qualified and in good standing as foreign corporations, and are authorized to do
business, in all jurisdictions in which the character of their respective
properties or the nature of their respective businesses requires such
qualification or authorization, except for qualifications and authorizations the
lack of which, singly or in the aggregate, has not had and will not have a
Materially Adverse Effect on (a) the Borrower and the Restricted Subsidiaries
taken as a whole, (b) any Loan Document or (c) the Collateral.
Section 3.02 Subsidiaries.
Schedule 3.02 sets forth, as of the Restated Agreement Date, all of
the Subsidiaries, their jurisdictions of incorporation and the percentages of
the various classes of their Capital Securities owned by the Borrower or another
Restricted Subsidiary. As of the Restated Agreement Date, all such Subsidiaries
are Restricted Subsidiaries. The Borrower or another Restricted Subsidiary, as
the case may be, has the unrestricted right to vote (except as may be provided
in the Pledge Agreements and the Denver Acquisition Documents), and (subject to
limitations imposed by Applicable Law and except as provided in the Denver
Acquisition Documents) to receive dividends and distributions on, all Capital
Securities indicated on Schedule 3.02 as owned by the Borrower or such
Restricted Subsidiary. All such Capital
<PAGE>
Securities have been duly authorized and issued and are fully paid and
nonassessable.
Section 3.03 Authorization; Enforceability; Required Consents; Absence of
Conflicts.
The Borrower, ANI and each Restricted Subsidiary has the power,
and has taken all necessary action (including, if a corporation, any
necessary stockholder action) to authorize it, to execute, deliver and
perform in accordance with their respective terms the Loan Documents to which
it is a party and, in the case of the Borrower, to borrow hereunder in the
unused amount of the Commitments. This Agreement has been, and each of the
other Loan Documents to which the Borrower, ANI or any Restricted Subsidiary
is a party when delivered to the Administrative Agent will have been, duly
executed and delivered by the Borrower, ANI and each Restricted Subsidiary
that is a party thereto and is, or when so delivered will be, a legal, valid
and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
equitable principles regardless of whether considered in a proceeding in
equity or at law. The execution, delivery and performance in accordance with
their respective terms by the Borrower, ANI and the Restricted Subsidiaries
of the Loan Documents to which they are parties, and each borrowing
hereunder, whether or not in the amount of the unused Commitments, do not and
(absent any change in any Applicable Law or applicable Contract) will not (a)
require any Governmental Approval or any other consent or approval, including
any consent or approval of the stockholders of the Borrower, ANI or any
Restricted Subsidiary, other than Governmental Approvals and other consents
and approvals that have been obtained, are final and not subject to review on
appeal or to collateral attack, are in full force and effect and, in the case
of any such Governmental Approval or other consent or approval required under
any Applicable Law or Contract as in effect on the Restated Agreement Date,
are listed on Schedule 3.03, or (b) violate, conflict with, result in a
breach of, constitute a default under, or result in or require the creation
of any Lien (other than the Security Interest) upon any assets of the
Borrower or any Restricted Subsidiary under, (i) any Contract to which ANI,
the Borrower or any Restricted Subsidiary is a party or by which ANI, the
Borrower or any Restricted Subsidiary or any of their respective properties
may be bound or (ii) any Applicable Law.
Section 3.04 Taxes.
The Borrower and each Restricted Subsidiary have (a) filed all
material Tax returns required to have been filed by it under Applicable Law, (b)
paid all Taxes that are due and payable by it or have been assessed against it
except for Taxes the failure to have paid which does not contravene Section 4.02
and such Taxes as are being contested in good faith by appropriate proceedings
and (c) to the extent required by generally accepted accounting principles,
reserved against all Taxes that are payable by it but are not yet due or that
are due and payable by it or have been assessed against it but have not yet been
paid. Other than the Tax Sharing Agreement and the DNI Tax Sharing Agreement,
there is in effect no tax sharing, tax allocation or similar agreement to which
the Borrower or any of its Restricted Subsidiaries is a signatory providing for
the manner in which tax payments owing by members of the affiliated group of
which the Borrower is the "common parent" (within the meaning of Section 1504 of
the Code) (whether in respect of Federal or state income or other taxes) are
allocated among the
<PAGE>
members of such group.
Section 3.05 Litigation.
Except as set forth on Schedule 3.05, there are not, in any court or
before any arbitrator of any kind or before or by any governmental or
non-governmental body, any actions, suits or proceedings pending or threatened
(nor, to the knowledge of the Borrower and its Restricted Subsidiaries, is there
any basis therefor) against or in any other way relating to or affecting (a) the
Borrower or any Restricted Subsidiary or any of their respective businesses or
properties, (b) any Loan Document or (c) the Collateral, that, if adversely
determined, would, singly or in the aggregate, have a Materially Adverse Effect
on (x) the Borrower and the Restricted Subsidiaries taken as a whole, (y) any
Loan Document or (z) the Collateral.
Section 3.06 Burdensome Provisions.
Neither the Borrower nor any Restricted Subsidiary is a party to or
bound by any Contract or Applicable Law, compliance with which would be
reasonably likely to have a Materially Adverse Effect on (a) the Borrower and
the Restricted Subsidiaries taken as a whole, (b) any Loan Document or (c) the
Collateral.
Section 3.07 No Adverse Change or Event.
Since June 30, 1998, no change in the business, assets, Liabilities,
financial condition, results of operations or business prospects of the Borrower
or any Restricted Subsidiary has occurred, and no event has occurred or failed
to occur, that has had or would be reasonably likely to have, either alone or in
conjunction with all other such changes, events and failures, a Materially
Adverse Effect on (a) the Borrower and the Restricted Subsidiaries taken as a
whole, (b) any Loan Document or (c) the Collateral. Such an adverse change may
have occurred, and such an event may have occurred or failed to occur, at any
particular time notwithstanding the fact that at such time no Default shall have
occurred and be continuing.
Section 3.08 Additional Adverse Facts.
Except for facts and circumstances disclosed on Schedule 3.05 or
Schedule 3.08 or in the notes to the financial statements referred to in Section
5.02(a), no fact or circumstance is known to the Borrower and its Restricted
Subsidiaries, as of the Restated Agreement Date, that, either alone or in
conjunction with all other such facts and circumstances, has had or would be
reasonably likely to have (so far as the Borrower and its Restricted
Subsidiaries can foresee) a Materially Adverse Effect on (a) the Borrower and
the Restricted Subsidiaries taken as a whole, (b) any Loan Document or (c) the
Collateral. If a fact or circumstance disclosed on such Schedules or in such
notes should in the future have a Materially Adverse Effect on (x) the Borrower
and the Restricted Subsidiaries taken as a whole, (y) any Loan Document or (z)
the Collateral, such Materially Adverse Effect shall be a change or event
subject to Section 3.07 notwithstanding such disclosure.
Section 3.09 Investment Company Act.
<PAGE>
Neither the Borrower nor any Restricted Subsidiary is an "investment
company" or a Person "controlled" by an "investment company", within the meaning
of the Investment Company Act of 1940.
Section 3.10 Substance Release and Disposal.
Except as disclosed on Schedule 3.10, to the best of the Borrower's
knowledge, (a) there have been no releases or disposals of hazardous wastes,
environmental contaminants or other substances in quantities or locations that,
singly or in the aggregate, would be reasonably likely to result in the
incurrence by the Borrower or any of its Restricted Subsidiaries of remedial
obligations under Applicable Law that would be reasonably likely to have a
Materially Adverse Effect on the Borrower and its Restricted Subsidiaries taken
as a whole, and (b) neither the Borrower nor any of its Restricted Subsidiaries
has received any notice or order advising it that it has or may have any
remedial obligation with respect to any such releases or disposals or that it is
or may be responsible for the costs of any remedial action taken or to be taken
by any other Persons with respect to any such releases or disposals, which
obligation or cost, if fully payable, would, singly or in the aggregate, be
reasonably likely to have a Materially Adverse Effect on the Borrower and its
Restricted Subsidiaries taken as a whole.
Section 3.11 Senior Obligations.
The obligations of the Borrower under the Loan Documents constitute
"Senior Debt" and "Designated Senior Debt" (and are hereby designated as such),
within the meaning and pursuant to the terms of the 1997 Indenture and the 1999
Indenture.
Section 3.12 Year 2000.
The Borrower and its Restricted Subsidiaries have reviewed the
effect of the Year 2000 Issue on the computer software, hardware and firmware
systems and equipment containing embedded microchips owned or operated by or for
the Borrower and its Restricted Subsidiaries or used or relied upon in the
conduct of their business (including systems and equipment supplied by others or
with which such computer systems of the Borrower and its Restricted Subsidiaries
interface). The costs to the Borrower and its Restricted Subsidiaries of any
reprogramming required as a result of the Year 2000 Issue to permit the proper
functioning of such systems and equipment and the proper processing of data, and
the testing of such reprogramming, and of the reasonably foreseeable
consequences of the Year 2000 Issue to the Borrower or any of its Restricted
Subsidiaries (including reprogramming errors and the failure of systems or
equipment supplied by others) are not reasonably expected to result in a Default
or Event of Default or to have a Materially Adverse Effect on the Borrower and
its Restricted Subsidiaries taken as a whole or the Collateral.
ARTICLE 4
CERTAIN COVENANTS
<PAGE>
From the Restated Agreement Date and until the Repayment Date,
A. The Borrower shall and shall cause each Restricted Subsidiary to:
Section 4.01 Contribution. Consummate the Contribution on or before the
third day following the Restated Agreement Date.
Section 4.02 (a) Preservation of Existence and Properties, Scope of
Business, Compliance with Law, Payment of Taxes and Claims, Preservation of
Enforceability.
(i) Except as permitted by Section 4.10, preserve and maintain its
corporate existence (other than as contemplated in the Reorganization) and all
of its other franchises, licenses, rights and privileges, (ii) preserve, protect
and obtain all Intellectual Property, and preserve and maintain in good repair,
working order and condition all other properties, required for the conduct of
its business, (iii) engage only in businesses in substantially the same fields
as the businesses conducted on the Agreement Date, or in other businesses
directly related thereto, (iv) comply with Applicable Law, (v) pay or discharge
when due all Taxes and all Liabilities that might become a Lien on any of its
properties and (vi) take all action and obtain all consents and Governmental
Approvals required so that its obligations under the Loan Documents will at all
times be legal, valid and binding and enforceable in accordance with their
respective terms, except that this Section 4.02 (other than clause (i), in so
far as it requires any Loan Party to preserve its corporate existence, (iii) and
(vi)) shall not apply in any circumstance where noncompliance, together with all
other noncompliances with this Section 4.02, will not have a Materially Adverse
Effect on (A) the Borrower and the Consolidated Subsidiaries taken as a whole,
(B) any Loan Document or (C) the Collateral.
(b) Subsidiary Matters. (i) Ensure that no payment is made or
required to be made by the Borrower or a Restricted Subsidiary to a creditor of
an Unrestricted Subsidiary in respect of any Indebtedness or other Liability of
such Unrestricted Subsidiary, and ensure that no action is taken by it, and that
its affairs are not conducted in a manner, which is reasonably likely to result
in the corporate existence of any Unrestricted Subsidiary that is a direct
Subsidiary of the Borrower or any Restricted Subsidiary being ignored in a
material respect, or in the assets or Liabilities of the Borrower or any
Restricted Subsidiary being substantively consolidated with those of any
Unrestricted Subsidiary in a bankruptcy, reorganization or other insolvency
proceeding.
(ii) If an Unrestricted Subsidiary will file a consolidated
tax return with the Borrower, deliver to the Administrative Agent, on or
prior to the date on which such Unrestricted Subsidiary shall have been
designated as an Unrestricted Subsidiary pursuant to the definition of
"Restricted Subsidiary" herein, and maintain in full force and effect a
tax sharing agreement, in form and substance reasonably satisfactory to
the Administrative Agent and duly executed by such Unrestricted Subsidiary
and the Borrower.
Section 4.03 Insurance.
<PAGE>
Maintain insurance with responsible insurance companies against at least
such risks and in at least such amounts as is customarily maintained by similar
businesses, or as may be required by Applicable Law or reasonably requested by
the Required Banks.
B. The Borrower (or, in the case of Section 4.05(c), ANI) shall:
Section 4.04 Additional Subsidiaries.
On or prior to the date it forms or acquires any new Restricted
Subsidiary, deliver to the Administrative Agent (i) certificates representing
all of the issued and outstanding shares of capital stock of such new Subsidiary
held by the Borrower and its Subsidiaries, together with appropriate stock
powers, duly endorsed in blank, (ii) unless otherwise agreed by the Required
Banks, a Subsidiary Guaranty Supplement in the form of Exhibit B and a Pledge
Agreement in the form of Exhibit C, each duly executed by such new Subsidiary,
provided that the foregoing shall not apply to the California Partnership, which
shall not become a Guarantor hereunder until such time as it becomes a Wholly
Owned Subsidiary of the Borrower, and (iii) such certificates, resolutions,
legal opinions, copies of filings and notices, and other materials, relating to
such new Subsidiary, the documents referred to above and the actions required
thereunder, as the Administrative Agent may reasonably request.
Section 4.05 Use of Proceeds.
(a) Use the proceeds of the Loans (other than the Special ANI Loan)
to (i) refinance Indebtedness, and (ii) to fund the purchase price of
acquisitions not prohibited hereby, (iii) to fund working capital requirements,
(iv) to pay transaction costs in connection herewith and (v) for other general
corporate purposes, (b) use the Letters of Credit only for the purpose specified
in Section 1.03(c), and (c) use the proceeds of the Special ANI Loan (i) to make
a loan to DNI (which shall be evidenced by the Master Intercompany Note), the
proceeds of which shall be used by DNI to (A) refinance Indebtedness of DNI in
an aggregate principal amount not in excess of $11,000,000, (B) to redeem or
repurchase and retire the 9% Cumulative Preferred Stock of DNI held by Media
General in an aggregate amount not in excess of $53,175,000 and (C) to pay
reasonable transaction fees and expenses arising out of, or in otherwise
connection with, the Denver Acquisition Documents, the Master Intercompany Note
and the transactions contemplated thereby in an aggregate amount not in excess
of $1,825,000 (including fees and expenses attributable to this Agreement), and
(ii) to purchase from Media General on the Restated Agreement Date, 20 shares of
Class A Common Stock in DNI, representing a 20% interest in DNI for an aggregate
purchase price not in excess of $39,000,000. None of the proceeds of any of the
Loans and none of the Letters of Credit shall be used to purchase or carry, or
to reduce or retire or refinance any credit incurred to purchase or carry, any
margin stock (within the meaning of Regulations U and X of the Board of
Governors of the Federal Reserve System) or to extend credit to others for the
purpose of purchasing or carrying any margin stock. If requested by any Bank,
the Borrower shall complete and sign Part I of a copy of Federal Reserve Form
U-1 referred to in Regulation U and deliver such copy to such Bank.
<PAGE>
C. The Borrower shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly:
Section 4.06 Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except
that this Section 4.06 shall not apply to (a) Indebtedness under the Loan
Documents, (b) the Greenco Subordinated Debt (so long as any Guaranty by the
Borrower or any Restricted Subsidiary of any such Indebtedness of Newco shall be
subordinated on terms and conditions substantially equivalent to the terms and
conditions (including subordination provisions, covenants, events of default,
remedies and other relevant provisions) of the Greenco Note and the Greenco Note
Purchase Agreement, as determined by the Administrative Agent), the 1997
Subordinated Notes and the 1999 Subordinated Notes, (c) Existing Debt, (d)
Intercompany Debt, (e) other Indebtedness in an outstanding aggregate amount not
in excess of $33,000,000 consisting of obligations as lessee under capital
leases, (f) other Indebtedness in an outstanding aggregate amount not in excess
of $50,000,000 and (g) other unsecured Indebtedness of the Borrower so long as
(x) no Default or Event of Default shall have occurred and be continuing at the
time of the incurrence of such Indebtedness, or would result from the incurrence
thereof, (y) the ratio of Consolidated Debt to Operating Cash Flow shall be
equal to or less than 5.00:1 after giving effect to such incurrence and (z) the
material terms of such Indebtedness (1) are no more restrictive or onerous on
the Borrower and its Restricted Subsidiaries, or confer greater rights on the
holders thereof, than the terms of the Loan Documents and the rights of the
Administrative Agent and the Banks thereunder and (2) do not (absent the right
to accelerate the maturity thereof upon the occurrence of an event of default in
connection therewith) require the repayment or prepayment of any portion of such
Indebtedness prior to the date that is six months after the Maturity Date.
Section 4.07 Guaranties.
Be obligated, at any time, in respect of any Guaranty, except that
this Section 4.07 shall not apply to (a) Existing Guaranties, (b) Permitted
Guaranties and (c) guaranties which are permitted Indebtedness under Section
4.06.
Section 4.08 Liens.
Permit to exist, at any time, any Lien upon any of its properties or
assets of any character, whether now owned or hereafter acquired, or upon any
income or profits therefrom, except that this Section 4.08 shall not apply to
Permitted Liens; provided, however, that if, notwithstanding this Section 4.08,
any Lien to which this Section is applicable shall be created or arise, the
Liabilities of the Loan Parties under the Loan Documents shall, to the extent
such Lien attaches to any asset that does not constitute Collateral or to any
asset with respect to which such Lien would be prior to the Security Interest,
automatically be secured by such Lien equally and ratably with the other
Liabilities secured thereby, and the holder of such other Liabilities, by
accepting such Lien, shall be deemed to have agreed thereto and to share with
the Banks, on that
<PAGE>
basis, the proceeds of such Lien, whether or not the Banks' security interest
shall be perfected; provided further, however, that notwithstanding such equal
and ratable securing and sharing, the existence of such Lien shall constitute a
default by the Borrower in the performance or observance of this Section 4.08.
Section 4.09 Restricted Payments.
Make or declare or otherwise become obligated to make any Restricted
Payment, except that this Section 4.09 shall not apply to any Restricted Payment
(a) made by any Restricted Subsidiary to the Borrower or any other Restricted
Subsidiary (other than, so long as any such Person is not a Wholly Owned
Subsidiary, the California Partnership, DNI or any of DNI's Subsidiaries, if the
aggregate amount of Restricted Payments made to such Persons, together with the
aggregate amount of Investments made after the Restated Agreement Date in the
California Partnership and DNI and its Subsidiaries by the Borrower and the
Restricted Subsidiaries would, without duplication, exceed $50,000,000), (b)
made by any Restricted Subsidiary to the holders of any class of its Capital
Securities, pro rata in accordance with their respective interests in such class
of Capital Securities, (c) consisting of payments under the Tax Sharing
Agreement or the DNI Tax Sharing Agreement, (d) consisting of regularly
scheduled payments of interest on the Greenco Note, but only to the extent
required in accordance with the terms thereof to be made in cash, and (e) so
long as no Default shall have occurred and be continuing or would result
therefrom, made by the Borrower in an aggregate amount not in excess of the sum
of (i) $25,000,000 during the period from the Restated Agreement Date to the
Repayment Date, (ii) an additional $5,000,000 during any fiscal year of the
Borrower, commencing with the fiscal year ending June 30, 2000 and (iii) an
additional amount in any fiscal year of the Borrower equal to 50% of Excess Cash
Flow for the immediately preceding fiscal year commencing with the fiscal year
ending June 30, 2000, so long as the ratio of Consolidated Debt to Operating
Cash Flow is less than 4.50 to 1.00 before and after giving effect thereto, with
any portion of such amounts described in clauses (ii) and (iii) not paid in such
fiscal year being permitted to be carried forward and paid in any subsequent
fiscal year; provided, however, that the amount of Restricted Payments permitted
to be made pursuant to this Section 4.09(e) shall be reduced by the amount of
Investments made pursuant to Section 4.12(h).
Section 4.10 Merger or Consolidation, Acquisitions.
Merge or consolidate with any Person, or acquire any assets or
business from or Capital Securities of any Person (other than an acquisition of
Capital Securities of a Restricted Subsidiary, as long as such acquisition of
Capital Securities is permitted under Section 4.12(d)), except that, if both
before and after giving effect thereto no Default exits or would exist, this
Section 4.10 shall not apply to (a) the Reorganization, (b) any acquisition of
assets in the ordinary course of business, (c) any merger or consolidation of
the Borrower with any one or more Persons; provided, that the Borrower shall be
the continuing Person (other than as a result of the Reorganization), (d) any
merger or consolidation of any Restricted Subsidiary with any one or more other
Restricted Subsidiaries (except that the California Partnership, DNI and DNI's
Subsidiaries (so long as any such Person is not a Wholly Owned Subsidiary),
shall merge only into a Restricted Subsidiary that is a Guarantor and a Wholly
Owned Subsidiary) and that shall
<PAGE>
have executed and delivered a Pledge Agreement and such Restricted Subsidiary
shall be the continuing Person and, in all other cases, if any such Restricted
Subsidiary is a Loan Party, it shall be the continuing Person, and (e) any
acquisition (whether by purchase or exchange, and whether constituting a
purchase of assets or stock) of newspaper publishing properties and directly
related businesses so long as, in the event that the aggregate purchase price
with respect to such acquisition is greater than $5,000,000, the Borrower shall
have provided to the Banks a certificate of the president or chief financial
officer of the Borrower stating that (i) each Loan Document Representation and
Warranty is true and correct in all material respects both immediately before
and after giving effect to such acquisition and (ii) no Default shall have
occurred and be continuing both immediately before and after giving effect to
such acquisition, and no Default shall have occurred and be continuing,
including under Sections 4.22 through 4.26, after giving pro forma effect to
such acquisition and any related incurrence of Indebtedness by the Borrower or
any Restricted Subsidiary.
Section 4.11 Disposition of Assets.
Sell, lease, license, transfer or otherwise dispose of any asset
(which shall include, but not be limited to, for the purposes of this Agreement,
any Capital Securities or other ownership interests) or any interest therein,
except that this Section 4.11 shall not apply to (a) any disposition of any
asset or any interest therein in the ordinary course of business, (b) any
disposition of any obsolete or retired property not used or useful in its
business, (c) any disposition of any asset or any interest therein to the
Borrower or a Restricted Subsidiary that is a Guarantor (d) any transaction to
which any of the other provisions of this Agreement (other than Section 4.15) is
by its express terms inapplicable, and (e) any other disposition, so long as no
Default shall have occurred and be continuing immediately prior or after giving
effect to such disposition and
(i) such disposition is a sale to any Person for cash in an
amount not less than the fair market value of the assets sold net of the
liabilities assumed, as determined in the good faith judgment of the Board
of Directors of the Borrower or the applicable Restricted Subsidiary, and
(A) the Cash Flow Percentage attributable to such assets (including the
portion of assets exchanged, as provided in clause (ii) below, to which
the cash component, if any, of any such exchange is attributable),
together with the Cash Flow Percentage of all other assets sold by the
Borrower and its Restricted Subsidiaries pursuant to this clause (i), or
exchanged by the Borrower and its Restricted Subsidiaries pursuant to
clause (ii) below, within the prior four fiscal quarters of the Borrower,
does not exceed 15% and (B) the Cash Flow Percentage attributable to such
assets, together with the Cash Flow Percentage (determined, with respect
to prior sales at the time of each such sale) of all assets sold by the
Borrower and its Restricted Subsidiaries pursuant to this clause (i), and
exchanged by the Borrower and its Restricted Subsidiaries pursuant to
clause (ii) below, since the Restated Agreement Date does not exceed 30%,
and (C) the Borrower shall have furnished to the Banks, not later than the
fifth Business Day preceding the date of any such disposition wherein the
sale price or the fair market value of the assets of the applicable
Restricted Subsidiary is greater than $5,000,000, a certificate of the
president or chief financial officer of the Borrower stating that (1) each
<PAGE>
Loan Document Representation and Warranty is true and correct in all
material respects both immediately before and after giving effect to such
disposition, and (2) no Default shall have occurred and be continuing both
immediately before and after giving effect to such disposition, and no
Default shall have occurred and be continuing, including under Sections
4.22 through 4.26, after giving pro forma effect to such disposition, or
(ii) such disposition is an exchange, with any Person, of
assets exchanged by the Borrower or applicable Restricted Subsidiary
comprising one or more newspaper publishing properties or the stock of a
Person owning such property or properties for assets comprising one or
more other newspaper publishing properties of a similar nature and of
equal or greater value, as determined in the good faith judgment of the
Board of Directors of the Borrower or the applicable Restricted
Subsidiary, and (A) the Cash Flow Percentage attributable to such assets
exchanged by the Borrower or applicable Restricted Subsidiary, together
with the Cash Flow Percentage attributable to all other assets exchanged
by the Borrower and its Restricted Subsidiaries pursuant to this clause
(ii), or sold by the Borrower and its Restricted Subsidiaries pursuant to
clause (i) above, within the prior four fiscal quarters of the Borrower,
does not exceed 15%, (B) the Cash Flow Percentage attributable to such
assets, together with the Cash Flow Percentage (determined, with respect
to prior exchanges, at the time of each such exchange) attributable to all
other assets exchanged by the Borrower and its Restricted Subsidiaries
pursuant to this clause (ii), and exchanged by the Borrower and its
Subsidiaries pursuant to clause (i) above, since the Restated Agreement
Date, does not exceed 30%, and (C) the Borrower shall have furnished to
the Banks, not later than the fifth Business Day preceding the date of any
such exchange wherein the fair market value of the assets received in
exchange is greater than $5,000,000, a certificate of the president or
chief financial officer of the Borrower stating that (1) each Loan
Document Representation and Warranty is true and correct in all material
respects both immediately before and after giving effect to such
disposition, (2) no Default shall have occurred and be continuing both
immediately before and after giving effect to such disposition, and no
Default shall have occurred and be continuing, including under Sections
4.22 through 4.26, after giving pro forma effect to such disposition and
(3) the value of the assets received by the Borrower or applicable
Restricted Subsidiary in such exchange is not less than the fair market
value of the assets disposed by the Borrower or such Restricted Subsidiary
in such exchange.
Section 4.12 Investments.
Make or acquire any Investment or have any Investment outstanding,
except that this Section 4.12 shall not apply to (a) Existing Investments, (b)
Money Market Investments, (c) Investments constituting acquisitions permitted
under Section 4.10, (d) (i) the Reorganization and (ii) Investments by the
Borrower or any Restricted Subsidiary in the Borrower or any Restricted
Subsidiary that is a Guarantor (other than DNI and each of its Subsidiaries so
long as DNI or any of its Subsidiaries is not a Wholly Owned Subsidiary), (e)
advances made by ANI to DNI under the Master Intercompany Note, provided that
the aggregate principal amount of all such advances at any time outstanding is
not in excess of $90,000,000, (f) Investments by the
<PAGE>
Borrower or any Restricted Subsidiary in the California Partnership or DNI,
provided that such Investments, together with the aggregate amount of Restricted
Payments made to, so long as such Person is not a Wholly Owned Subsidiary, the
California Partnership, DNI or any of DNI's Subsidiaries pursuant to Section
4.09(a), without duplication, shall not exceed $50,000,000 in the aggregate, (g)
notes or other instruments received by the Borrower or any Restricted Subsidiary
as payment for the disposition of assets in accordance with Section 4.11(a)
hereof and (h) other Investments (other than in, so long as such Person is not a
Wholly Owned Subsidiary, the California Partnership or DNI or any of DNI's
Subsidiaries) in newspaper publishing properties and related internet businesses
and other directly related businesses in an aggregate amount not in excess of
$25,000,000.
Section 4.13 Taxes of Other Persons.
(a) File a consolidated, combined, unitary or similar group Tax
return with any other Person other than, in the case of the Borrower, a
Consolidated Tax Subsidiary or ANI and, in the case of any such Subsidiary, the
Borrower, a Consolidated Tax Subsidiary or ANI or (b) except as required by
Applicable Law or as permitted by Section 4.09 hereof, pay or enter into any
Contract to pay any Taxes owing by any Person other than the Borrower or a
Consolidated Tax Subsidiary.
Section 4.14 Benefit Plans.
(a) Have, or permit any of its ERISA Affiliates to have, any Benefit
Plan other than an Existing Benefit Plan; (b) permit any Existing Benefit Plan
to be amended in any manner that would cause the aggregate Unfunded Benefit
Liabilities under all Existing Benefit Plans to exceed $500,000; or (c) permit
any Existing Benefit Plan to have a Funded Current Liability Percentage of less
than 60%.
Section 4.15 Transactions with Affiliates.
Effect any transaction (or series of related transactions) (each a
"Transaction") with any Affiliate of the Borrower, including, without
limitation, any sale, purchase, lease or loan or any other direct or indirect
payment, transfer or other disposition of assets, property or services, unless
(a) such Transaction is on terms no less favorable to the Borrower or the
applicable Restricted Subsidiary, as the case may be, than those that could be
obtained in a comparable arm's-length transaction with an independent third
party (the "Fairness Condition") and (b) prior to effecting such Transaction,
the Borrower shall deliver to the Administrative Agent (i) with respect to any
Transaction involving aggregate consideration in excess of $1,000,000, a
certificate of the president or the chief financial officer of the Borrower
certifying that a majority of the disinterested members of the Board of
Directors of the Borrower has approved such Transaction and has determined that
the terms of such Transaction satisfy the Fairness Condition and (ii) with
respect to any Transaction (x) involving aggregate consideration in excess of
$1,000,000 in which there are no disinterested directors or (y) involving
aggregate consideration in excess of $10,000,000, a written opinion from a
nationally recognized investment banking firm stating that the terms of such
Transaction satisfy the Fairness Condition
<PAGE>
or are fair to the Borrower or the applicable Restricted Subsidiary from a
financial point of view; provided, however, that clause (b)(ii)(y) shall not
apply to purchases of newsprint in the ordinary course of business by the
Borrower and its Restricted Subsidiaries from Affiliates of the Borrower.
Notwithstanding the foregoing, this provision shall not apply to (A) any
Transaction, in the ordinary course of business, between the Borrower and DNI or
a Wholly Owned Subsidiary of the Borrower, or between Wholly Owned Subsidiaries
of the Borrower and DNI or other Wholly Owned Subsidiaries of the Borrower, (B)
the making of Investments not prohibited by Section 4.12, (C) the making of any
Restricted Payment not prohibited by Section 4.09, (D) the payment of fees
payable pursuant to the Management Agreement, (E) the Tax Sharing Agreement and
the DNI Tax Sharing Agreement and (F) any Transaction comprising part of the
Reorganization.
Section 4.16 Limitation on Restrictive Covenants.
Permit to exist, at any time, any consensual restriction limiting
the ability (whether by covenant, event of default, subordination or otherwise)
of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on shares of its capital stock held by the Borrower or any other
Restricted Subsidiary, (b) pay any obligation owed to the Borrower or any other
Restricted Subsidiary, (c) make any loans or advances to or investments in the
Borrower or in any other Restricted Subsidiary, (d) transfer any of its property
or assets to the Borrower or any other Restricted Subsidiary or (e) create any
Lien upon its property or assets whether now owned or hereafter acquired or upon
any income or profits therefrom, except that this Section 4.16 shall not apply
to Permitted Restrictive Covenants.
Section 4.17 Issuance or Disposition of Capital Securities.
Issue any of its Capital Securities or sell, transfer or otherwise
dispose of any Capital Securities of any Restricted Subsidiary, except for (a)
any issuance of Capital Securities that are subjected to the Security Interest
in a manner satisfactory to the Administrative Agent and (b) any disposition of
Capital Securities of any Restricted Subsidiary so long as all of the assets of
such Restricted Subsidiary could have been disposed of in compliance with
Section 4.11(c) or (e).
Section 4.18 Substance Storage and Disposal.
Permit any hazardous wastes, environmental contaminants or other
substances, the improper release or disposal of which could result in the
incurrence by the Borrower or any of its Restricted Subsidiaries of material
remedial obligations under Applicable Law, to be brought onto or stored on the
properties owned or leased by it except for (a) substances to be used in
connection with the business of the Borrower and its Restricted Subsidiaries,
pending and during such use and (b) substances that were generated or used in
connection with such business, pending their disposal.
Section 4.19 Tax Sharing Agreement and DNI Tax Sharing Agreement.
<PAGE>
Amend, supplement or otherwise change (or agree to any amendment,
supplement or other change of) the terms of the the DNI Tax Sharing Agreement
or, prior to the consummation of the ANI Merger, the Tax Sharing Agreement.
Section 4.20 Certain Restrictions with Respect to Other Indebtedness.
Amend, supplement or otherwise change (or agree to any amendment,
supplement or other change of) the terms of the 1997 Subordinated Notes, the
1999 Subordinated Notes, the 1997 Indenture, the 1999 Indenture, the Greenco
Note, the Greenco Note Purchase Agreement, or make any payment consistent with
an amendment, supplement or change thereto, if the effect of such amendment,
supplement or change is to increase the interest rate payable on the 1997
Subordinated Notes, the 1999 Subordinated Notes or the Greenco Note, advance the
dates upon which payments of principal or interest are due on the 1997
Subordinated Notes, the 1999 Subordinated Notes or the Greenco Note (including
any such change that adds or modifies mandatory or voluntary prepayments),
change, in a manner adverse to the Borrower and the Restricted Subsidiaries or
which confers additional rights on the holders thereof, any event of default or
covenant (or any definition relating thereto) with respect to the 1997
Subordinated Notes, the 1999 Subordinated Notes or the Greenco Note, change the
redemption or repurchase provisions with respect to the 1997 Subordinated Notes,
the 1999 Subordinated Notes or the Greenco Note in a manner adverse to the
Borrower and the Restricted Subsidiaries or which confers additional rights on
the holders thereof, change the subordination provisions of the 1997
Subordinated Notes, the 1999 Subordinated Notes or the Greenco Note or otherwise
increase the obligations of the obligor or confer additional rights on the
holders of the 1997 Subordinated Notes, the 1999 Subordinated Notes or the
Greenco Note without, in each case, obtaining the prior written consent of the
Required Banks to such amendment or change.
Section 4.21 Year 2000.
The Borrower shall take, and shall cause each of its Subsidiaries to
take, all necessary action to complete in all material respects by September 30,
1999, the reprogramming of computer software, hardware and firmware systems and
equipment containing embedded microchips owned or operated by or for the
Borrower and its Subsidiaries or used or relied upon in the conduct of their
business (including systems and equipment supplied by others or with which such
systems of the Borrower or any of its Subsidiaries interface) required as a
result of the Year 2000 Issue to permit the proper functioning of such computer
systems and other equipment and the testing of such systems and equipment, as so
reprogrammed. At the request of the Administrative Agent or any Bank, the
Borrower shall provide, and shall cause each of its Subsidiaries to provide, to
the Administrative Agent or such Bank reasonable assurance of its compliance
with the preceding sentence.
D. The Borrower shall not at any time:
Section 4.22 Ratio of Consolidated Debt to Operating Cash Flow.
Permit the ratio of Consolidated Debt to Operating Cash Flow at any
time during
<PAGE>
a period set forth below to be greater than the ratio set forth opposite such
period:
(a) From the Restated Agreement Date through December 31, 1999:
6.50:1;
(b) From January 1, 2000 through December 31, 2000: 6.25:1;
(c) From January 1, 2001 through June 30, 2001: 6.00:1;
(d) From July 1, 2001 through June 30, 2002: 5.50:1;
(e) From July 1, 2002 through June 30, 2003: 5.00:1; and
(f) From July 1, 2003 and thereafter: 4.75:1;
provided, however, that if the Borrower shall have issued or otherwise incurred
Indebtedness contemplated by Section 4.06(g) at any time prior to July 1, 2002,
the Borrower shall not permit the ratio of Consolidated Debt to Operating Cash
Flow to be greater than 5.00:1 at any time from the date of such issuance or
incurrence through June 30, 2003.
Section 4.23 Ratio of Consolidated Senior Debt to Operating Cash Flow.
Permit the ratio of Consolidated Senior Debt to Operating Cash Flow
at any time to be greater than 3.00:1.
Section 4.24 Pro Forma Interest Coverage.
Permit the ratio of Operating Cash Flow to Pro Forma Consolidated
Interest Expense determined as of the end of any fiscal quarter ending in a
period set forth below to be less than the ratio set forth opposite such period:
(a) From the Restated Agreement Date through June 29, 2000: 1.50:1;
(b) From June 30, 2000 through June 29, 2002: 1.75:1; and
(c) From June 30, 2002 and thereafter: 2.00:1.
Section 4.25 Pro Forma Debt Service Coverage.
Permit the ratio of Operating Cash Flow to Pro Forma Debt Service
determined as of the end of any fiscal quarter to be less than 1.25:1.
Section 4.26 Fixed Charge Coverage.
Permit the ratio of Operating Cash Flow to Consolidated Fixed
Charges determined as of the end of any fiscal quarter to be less than 1.15:1.
<PAGE>
E. The Borrower shall not permit the California Partnership to, and in the
case of clauses (b) and (c) of Section 4.27 the Borrower shall not, directly or
indirectly:
Section 4.27 Certain Activities of the California Partnership.
(a) So long as it is not a Wholly Owned Subsidiary, fail to make
such partnership distributions or otherwise transfer its cash and cash
equivalents to the Borrower or any of the Restricted Subsidiaries, so that, as a
result of such distributions and transfers, the California Partnership shall own
or hold cash and cash equivalents not in excess of $10,000,000 at any time, (b)
amend, waive, modify or supplement the Contribution Agreement or the Partnership
Agreement in any manner that (i) is materially adverse to the Borrower or any
Restricted Subsidiary or (ii) has the effect of further limiting or restricting
the transferability of the partnership interests in the California Partnership
held by West Coast MediaNews or any of its Affiliates or could otherwise have a
material adverse effect on the practical ability of the Banks to realize the
benefits of the Security Interest (as the Security Interest applies to the
partnership interests in the California Partnership) and (c) take any action or
refrain from taking any action the result of which, directly or indirectly, is
that the California Partnership no longer constitutes a Subsidiary or the
Borrower no longer controls, directly or indirectly, the California Partnership.
F. The Borrower shall not, and shall not permit DNI and it Subsidiaries
to, directly or indirectly:
Section 4.28 Certain Activities of DNI; Denver Acquisition Documents.
(a) So long as DNI or any of its Subsidiaries is not a Wholly Owned
Subsidiary, fail to make such corporate distributions or otherwise transfer its
cash and cash equivalents to the Borrower or any of the Restricted Subsidiaries
(other than the California Partnership so long as it is not a Wholly Owned
Subsidiary), so that, as a result of such distributions and transfers, DNI and
it Subsidiaries shall own or hold cash and cash equivalents not in excess of
$10,000,000 at any time, or (b) amend, waive, modify or supplement the Denver
Acquisition Documents in any manner that (i) is materially adverse to the
Borrower or any Restricted Subsidiary or (ii) has the effect of further limiting
or restricting the transferability of the Capital Securities of DNI or any of
its Subsidiaries owned by the Borrower or any Restricted Subsidiary or could
otherwise have a material adverse effect on the practical ability of the Banks
to realize the benefits of the Security Interest (as the Security Interest
applies to such Capital Securities).
G. ANI shall not (and, in the case of Section 4.30, shall not permit DNI
to), directly or indirectly:
Section 4.29 Indebtedness of ANI.
Prior to the consummation of the ANI Merger, create, incur, assume or
suffer to exist any Indebtedness, except that this Section 4.29 shall not apply
to (a) Indebtedness under the Loan Documents and (b) its Guaranty of the Greenco
Note.
<PAGE>
Section 4.30 Master Intercompany Note.
Amend, waive or modify the Master Intercompany Note, or fail to perform or
fail to require the performance of the Master Intercompany Note, in each case in
accordance with the terms thereof.
ARTICLE 5
INFORMATION
Section 5.01 Information to Be Furnished.
From the Restated Agreement Date and until the Repayment Date, the
Borrower shall furnish to each Bank:
(a) Quarterly Financial Statements.
As soon as available and in any event within 45 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
the Borrower, commencing with the quarterly period ended September 30, 1999
consolidated and consolidating balance sheets of the Borrower and the
Consolidated Subsidiaries, as at the end of such quarterly period and the
related consolidated statements of income, statements of income of each
Consolidated Subsidiary, and consolidated statements of cash flows of the
Borrower and the Consolidated Subsidiaries, for such quarterly period and for
the elapsed portion of the fiscal year ended with the last day of such quarterly
period, setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year.
(b) Monthly Reports.
As soon as available and in any event within 45 days after the end
of each month, the statements of revenues and operating expenses of each of the
Borrower and its Subsidiaries, for such month and for the portion of the fiscal
year then ended, including comparisons of operations with budget and the prior
year, in the form currently prepared for management.
(c) Year-End Financial Statements; Accountants' Certificate.
As soon as available and in any event within 90 days after the end
of each fiscal year of the Borrower, commencing with the fiscal year ended June
30, 1999:
(i) consolidated and consolidating balance sheets of the
Borrower and the Consolidated Subsidiaries, as at the end of such fiscal
year and the related consolidated statements of income, statements of
income of each Consolidated Subsidiary, and consolidated statements of
cash flows of the Borrower and the Consolidated Subsidiaries, for such
fiscal year, setting forth in comparative form the figures as at the end
of and for the previous fiscal year;
<PAGE>
(ii) an audit report of Ernst & Young, or other independent
certified public accountants of recognized standing reasonably
satisfactory to the Required Banks, on such of the financial statements
referred to in clause (i) as are consolidated financial statements, which
report shall be in scope and substance reasonably satisfactory to the
Required Banks;
(iii) a certificate of such accountants addressed to the Banks
(A) stating that they have caused this Agreement to be reviewed and that,
in making the examination necessary for their report on such consolidated
financial statements, nothing came to their attention that caused them to
believe that, as of the date of such financial statements, any Default
exists in respect of Sections 4.22 through 4.26 insofar as they relate to
accounting matters and (B) having attached the calculations required to
establish whether or not the Borrower was in compliance with the covenants
contained in Sections 4.22 to 4.26; and
(iv) the operating budget summary setting forth the
projections of operating revenues and expenses of the Borrower and the
Subsidiaries for the succeeding budget year.
(d)(i) Officer's Certificates. At the time that financial
statements are furnished pursuant to Section 5.01(a) or (c), a certificate
of the president or chief financial officer of the Borrower in the form of
Schedule 5.01(d). At the time that financial statements are furnished
pursuant to Section 5.01(a) and within 45 days after the end of each
fiscal year of the Borrower, a certificate of the president or chief
financial officer of the Borrower demonstrating the ratios of Consolidated
Debt to Operating Cash Flow and Consolidated Senior Debt to Operating Cash
Flow and stating, if applicable, that a change in the Base Rate Margin or
Eurodollar Rate Margin should be made.
(ii) Additional Financial Statements. In the event that there
are any Unrestricted Subsidiaries during any period in respect of which
financial statements are required to be delivered pursuant to subsections
(a) and (c) above, the Borrower shall also furnish to each Bank, at the
time such financial statements are so delivered, an additional set thereof
with respect to the Borrower and the Restricted Subsidiaries.
(e) Reports and Filings. (i) Promptly upon receipt thereof, copies
of all reports, if any, submitted to the Borrower or any Restricted Subsidiary,
or the Board of Directors of the Borrower or any Restricted Subsidiary, by its
independent certified public accountants, including any management letter; (ii)
as soon as practicable, copies of all such financial statements and reports as
ANI, the Borrower or any Restricted Subsidiary shall send to its stockholders
and of all registration statements and all regular or periodic reports that ANI,
the Borrower or any Restricted Subsidiary shall file, or may be required to
file, with the Securities and Exchange Commission or any successor commission;
(iii) promptly upon the effectiveness thereof, copies of each amendment,
supplement or modification to the 1997 Indenture or the 1999 Indenture and (iv)
as soon as practicable, copies of all Information furnished to the holders of
the 1997 Subordinated Notes or the 1999 Subordinated Notes.
<PAGE>
(f) Requested Information. From time to time and promptly upon
request of any Bank, such Information regarding the Loan Documents, the Loans,
the Letters of Credit or the business, assets, Liabilities, financial condition,
results of operations or business prospects of the Borrower and the Subsidiaries
as such Bank may request, in each case in form and substance and certified in a
manner reasonably satisfactory to the requesting Bank.
(g) Notice of Defaults, Material Adverse Changes and Other Matters.
Prompt notice of:
(i) any Default of which the Borrower has knowledge,
(ii) the acquisition or formation of a new Subsidiary and, in
the case of each such new Subsidiary, its name, jurisdiction of
incorporation, the percentages of the various classes of its Capital
Securities owned by the Borrower or another Subsidiary and whether or not
such new Subsidiary is a Consolidated Subsidiary,
(iii) any change in the name of any Subsidiary, its
jurisdiction of incorporation, the percentages of the various classes of
its Capital Securities owned by the Borrower or another Subsidiary or its
status as a Consolidated or non-Consolidated Subsidiary,
(iv) to the extent that the Borrower has knowledge thereof,
the threatening or commencement of, or the occurrence or nonoccurrence of
any change or event relating to, any action, suit or proceeding that would
cause the Representation and Warranty contained in Section 3.05 to be
incorrect if made at such time,
(v) to the extent that the Borrower has knowledge thereof, the
occurrence or nonoccurrence of any change or event that would cause the
Representation and Warranty contained in Section 3.07 or Section 3.10 to
be incorrect if made at such time,
(vi) any event or condition referred to in clauses (i) through
(vii) of Section 6.01(g), whether or not such event or condition shall
constitute an Event of Default,
(vii) any amendment of the certificate of incorporation or
by-laws of the Borrower or any Subsidiary that is a Loan Party, and
(viii) the giving or receipt of any material notice or other
written communication under the Greenco Note Purchase Agreement, the
Partnership Agreement or the Denver Acquisition Documents, together with
copies of each such notice or other communication.
Section 5.02 Accuracy of Financial Statements and Information.
(a) Historical Financial Statements. The Borrower hereby represents
and warrants that (i) Schedule 5.02(a) sets forth a complete and correct list of
the financial statements
<PAGE>
submitted by the Borrower to the Banks in order to induce them to execute and
deliver this Agreement, (ii) such financial statements are complete and correct
and present fairly, in accordance with Generally Accepted Accounting Principles
(except for normal year-end audit adjustments and, in the case of unaudited
financial statements, the absence of footnotes), the consolidated and, to the
extent applicable, consolidating financial position of the Borrower and the
Consolidated Subsidiaries as at their respective dates and the consolidated and,
to the extent applicable, consolidating results of operations, retained earnings
and, as applicable, changes in financial position or cash flows of the Borrower
and such Subsidiaries for the respective periods to which such statements
relate, and (iii) except as disclosed or reflected in such financial statements
or otherwise disclosed in writing to the Banks, as at December 31, 1998, neither
the Borrower nor any Subsidiary had any Liability, contingent or otherwise, or
any unrealized or anticipated loss, that, singly or in the aggregate, has had or
would reasonably be expected to have a Materially Adverse Effect on the Borrower
and the Restricted Subsidiaries taken as a whole.
(b) Future Financial Statements. The financial statements delivered
pursuant to Section 5.01(a) or (c) shall be complete and correct and present
fairly, in accordance with Generally Accepted Accounting Principles (except for
changes therein or departures therefrom that are described in the certificate or
report accompanying such statements and that have been approved in writing by
the Borrower's then current independent certified public accountants, and except
for normal year-end audit adjustments and, in the case of financial statements
delivered pursuant to Section 5.01(a), the absence of footnotes) the
consolidated and, if prepared by the Borrower, consolidating financial position
of the Borrower and the Consolidated Subsidiaries as at their respective dates
and the consolidated and, if prepared by the Borrower, consolidating results of
operations, retained earnings and cash flows of the Borrower and such
Subsidiaries for the respective periods to which such statements relate, and the
furnishing of the same to the Banks shall constitute a representation and
warranty by the Borrower made on the date the same are furnished to the Banks to
that effect and to the further effect that, except as disclosed or reflected in
such financial statements, as at the respective dates thereof, neither the
Borrower nor any Subsidiary had any Liability, contingent or otherwise, or any
unrealized or anticipated loss, that, singly or in the aggregate, has had or
might have a Materially Adverse Effect on the Borrower and the Restricted
Subsidiaries taken as a whole.
(c) Historical Information. The Borrower hereby represents and
warrants that all Information furnished to the Administrative Agent or the Banks
by or on behalf of the Borrower or any Subsidiary prior to the Restated
Agreement Date in connection with or pursuant to the Loan Documents and the
relationships established thereunder, at the time the same was so furnished, but
in the case of Information dated as of a prior date, as of such date, (i) in the
case of any Information prepared in the ordinary course of business, was
complete and correct in the light of the purpose prepared, and, in the case of
any Information the preparation of which was requested by any Bank, was complete
and correct in all material respects to the extent necessary to give such Bank
true and accurate knowledge of the subject matter thereof, (ii) did not contain
any untrue statement of a material fact, and (iii) did not omit to state a
material fact necessary in order to make the statements contained therein not
misleading in the light of the circumstances under which they were made.
<PAGE>
(d) Future Information. All Information furnished or to be furnished
to the Administrative Agent or the Banks by or on behalf of the Borrower or any
Subsidiary on or after the Restated Agreement Date in connection with or
pursuant to the Loan Documents or in connection with or pursuant to any
amendment or modification of, or waiver of rights under, the Loan Documents,
shall, at the time the same is so furnished, but in the case of Information
dated as of a prior date, as of such date, (i) in the case of any Information
prepared in the ordinary course of business, be complete and correct in the
light of the purpose prepared, and, in the case of any Information required by
the terms of the Loan Documents or the preparation of which was requested by any
Bank, be complete and correct to the extent necessary to give such Bank true and
accurate knowledge of the subject matter thereof, (ii) not contain any untrue
statement of a material fact, and (iii) not omit to state a material fact
necessary in order to make the statements contained therein not misleading in
the light of the circumstances under which they were made, and the furnishing of
the same to the Administrative Agent or any Bank shall constitute a
representation and warranty by the Borrower made on the date the same are so
furnished to the effect specified in clauses (i), (ii) and (iii).
Section 5.03 Additional Covenants Relating to Disclosure.
From the Restated Agreement Date and until the Repayment Date, the
Borrower shall and shall cause each Subsidiary to:
(a) Accounting Methods and Financial Records.
Maintain a system of accounting, and keep such books, records and
accounts (which shall be true and complete), as may be required or necessary to
permit (i) the preparation of financial statements required to be delivered
pursuant to Section 5.01(a) and (c) and (ii) the determination of the compliance
of the Borrower and its Subsidiaries with the terms of the Loan Documents.
(b) Fiscal Year.
Maintain the same opening and closing dates for each fiscal year as
for the fiscal year reflected in the Base Financial Statements.
(c) Visits, Inspections and Discussions.
Permit, or, in the case of premises, property, books, records or
Persons not within its immediate control, promptly take such actions as are
necessary or desirable in order to permit, representatives (whether or not
officers or employees) of any Bank, from time to time upon reasonable prior
notice, as often as may be reasonably requested, to (i) visit any of its
premises or property or any premises or property of others on which any of its
property or books and records (or books and records of others relating to it)
may be located, (ii) inspect, and verify the amount, character and condition of,
any of its property, (iii) review and make extracts from its books and records
and books and records of others relating to it, including management letters
prepared by its independent certified public accountants, and (iv) discuss with
any Person (including its
<PAGE>
principal officers, independent certified public accountants) its business,
assets, Liabilities, financial condition, results of operation and business
prospects.
Section 5.04 Authorization of Third Parties to Deliver Information and
Discuss Affairs.
The Borrower hereby authorizes and directs each Person whose preparation or
delivery to the Administrative Agent or the Banks of any opinion, report or
other Information is a condition or covenant under the Loan Documents (including
under Article 2 or this Article 5) to so prepare or deliver such Information for
the benefit of the Administrative Agent and the Banks. Until further written
notice from the Borrower, the Borrower further authorizes and directs all
Persons (a) to furnish to the Banks any Information regarding the matters
referred to in Section 5.01(f) that any Bank may request, (b) to permit
representatives of any Bank upon reasonable notice to make the visits,
inspections, reviews and extracts of premises, property, books and records
within their possession and control contemplated by Section 5.03(c) and (c) to
discuss with representatives of any Bank the matters referred to in Section
5.03(c). The Borrower agrees to promptly execute and deliver from time to time
such further authorizations to effect the purposes of this Section 5.04 as the
Administrative Agent or any Bank may reasonably request.
ARTICLE 6
DEFAULT
Section 6.01 Events of Default.
Each of the following shall constitute an Event of Default, whatever
the reason for such event and whether it shall be voluntary or involuntary, or
within or without the control of the Borrower, any Restricted Subsidiary or any
other Loan Party, or be effected by operation of law or pursuant to any judgment
or order of any court or any order, rule or regulation of any governmental or
nongovernmental body:
(a) Any payment of principal of or interest on any of the Loans or
the Notes, any reimbursement of any Drawing or any payment of any fee, or any
cash collateralization of any Contingent Reimbursement Obligation, shall not be
made when and as due (whether at maturity, upon mandatory prepayment, by reason
of notice of prepayment or acceleration or otherwise) and in accordance with the
terms of this Agreement and the Notes;
(b) Any Loan Document Representation and Warranty shall at any time
prove to have been incorrect or misleading in any material respect when made;
(c) (i) The Borrower shall default in the performance or observance
of:
(A) any term, covenant, condition or agreement contained in
Section 4.01, Section 4.02(a)(i) (insofar as such Section requires the
preservation of the corporate existence of each of the Loan Parties),
4.02(a)(vi), 4.05 through 4.30, 5.01(g)(i), 5.03(b) or 5.03(c); or
<PAGE>
(B) any term, covenant, condition or agreement contained in
any Loan Document (other than a term, covenant, condition or agreement a
default in the performance or observance of which is elsewhere in this
Section specifically dealt with) and, if capable of being remedied, such
default shall continue unremedied for a period of 30 days; or
(ii) Any Loan Party shall default in the performance or observance
of:
(A) any term, covenant, condition or agreement contained in
Sections 1.02, 3.01, 3.02(a) (insofar as such Section requires the
preservation of the corporate existence of such Loan Party), 3.02(d),
3.03(a) or 3.06 of any Pledge Agreement to which such Loan Party is a
party; or
(B) any term, covenant, condition or agreement contained in
any Loan Document (other than any term, covenant, condition or agreement a
default in the performance or observance of which is elsewhere in this
Section specifically dealt with) and, if capable of being remedied, such
default shall continue unremedied for a period of 30 days after notice
shall have been given by the Administrative Agent to such Loan Party
requiring that such default be cured; or
(d) (i) ANI, the Borrower, any Restricted Subsidiary or any other
Loan Party shall fail to pay, in accordance with its terms and when due and
payable (giving effect to any applicable grace period), any of the principal of
or interest on any of its Indebtedness (other than the Loans) having an
aggregate principal amount in excess of $3,000,000, (ii) the maturity of any
such Indebtedness shall, in whole or in part, have been accelerated, or any such
Indebtedness shall, in whole or in part, have been required to be prepaid prior
to the stated maturity thereof, in accordance with the provisions of any
Contract evidencing, providing for the creation of or concerning such
Indebtedness, or (iii) (A) any event shall have occurred and be continuing that
permits (or, with the passage of time or the giving of notice or both, would
permit) any holder or holders of such Indebtedness, any trustee or agent acting
on behalf of such holder or holders or any other Person so to accelerate such
maturity or require any such prepayment and (B) if the Contract evidencing,
providing for the creation of or concerning such Indebtedness provides for a
cure period for such event, such event shall not be cured prior to the end of
such cure period;
(e) (i) ANI, the Borrower, any Subsidiary or any other Loan Party
shall (A) commence a voluntary case under the Federal bankruptcy laws (as now or
hereafter in effect), (B) file a petition seeking to take advantage of any other
laws, domestic or foreign, relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, (C) consent to or fail to
contest in a timely and appropriate manner any petition filed against it in an
involuntary case under such bankruptcy laws or other laws, (D) apply for, or
consent to, or fail to contest in a timely and appropriate manner, the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or the like of itself or of a substantial part of its assets,
domestic or foreign, (E) admit in writing its inability to pay, or generally not
be paying, its debts
<PAGE>
(other than those that are the subject of bona fide disputes) as they become
due, (F) make a general assignment for the benefit of creditors, or (G) take any
corporate action for the purpose of effecting any of the foregoing;
(ii) (A) A case or other proceeding shall be commenced against
ANI, the Borrower, any Subsidiary or any other Loan Party seeking (1)
relief under the Federal bankruptcy laws (as now or hereafter in effect)
or under any other laws, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, winding up or composition or adjustment of
debts, or (2) the appointment of a trustee, receiver, custodian,
liquidator or the like of ANI, the Borrower, any such Subsidiary or any
other Loan Party, or of all or any substantial part of the assets,
domestic or foreign, of ANI, the Borrower, any such Subsidiary or any
other Loan Party, and such case or proceeding shall continue undismissed
and unstayed for a period of 45 days, or (B) an order granting the relief
requested in such case or proceeding against ANI, the Borrower, any such
Subsidiary or any other Loan Party (including an order for relief under
such Federal bankruptcy laws) shall be entered;
(f) A judgment or order shall be entered against ANI, the Borrower,
any Restricted Subsidiary or any other Loan Party by any court, and (i) in the
case of a judgment or order for the payment of money, either (A) such judgment
or order shall continue undischarged and unstayed for a period of 30 days in
which the aggregate amount of all such judgments and orders exceeds $3,000,000
or (B) enforcement proceedings shall have been commenced upon such judgment or
order and (ii) in the case of any judgment or order for other than the payment
of money, such judgment or order could, in the reasonable judgment of the
Required Banks, together with all other such judgments or orders, have a
Materially Adverse Effect on the Borrower and the Restricted Subsidiaries taken
as a whole;
(g) (i) any Termination Event shall occur with respect to any
Benefit Plan of the Borrower, any Restricted Subsidiary, any other Loan Party or
any of their respective ERISA Affiliates, (ii) any Accumulated Funding
Deficiency, whether or not waived, shall exist with respect to any such Benefit
Plan, (iii) any Person shall engage in any Prohibited Transaction involving any
such Benefit Plan, (iv) the Borrower, any Restricted Subsidiary, any other Loan
Party or any of their respective ERISA Affiliates shall be in "default" (as
defined in ERISA Section 4219(c)(5)) with respect to payments owing to any such
Benefit Plan that is a Multiemployer Benefit Plan as a result of such Person's
complete or partial withdrawal (as described in ERISA Section 4203 or 4205)
therefrom, (v) the Borrower, any Restricted Subsidiary, any other Loan Party or
any of their respective ERISA Affiliates shall fail to pay when due an amount
that is payable by it to the PBGC or to any such Benefit Plan under Title IV of
ERISA, (vi) a proceeding shall be instituted by a fiduciary of any such Benefit
Plan against the Borrower, any Restricted Subsidiary, any other Loan Party or
any of their respective ERISA Affiliates to enforce ERISA Section 515 and such
proceeding shall not have been dismissed within 30 days thereafter, or (vii) any
other event or condition shall occur or exist with respect to any such Benefit
Plan, except that no event or condition referred to in clauses (i) through (vii)
shall constitute an Event of Default if it, together with all other such events
or conditions at the time existing, has not subjected, and in the reasonable
determination of the Required Banks will
<PAGE>
not subject, the Borrower, any Restricted Subsidiary or any other Loan Party to
any Liability that, alone or in the aggregate with all such Liabilities for all
such Persons, exceeds $1,000,000;
(h) Any Loan Party or any Affiliate of any Loan Party asserts, or
any Loan Party or any Affiliate of any Loan Party or any other Person institutes
any proceedings seeking to establish, that (i) any provision of the Loan
Documents is invalid, not binding or unenforceable or (ii) the Security Interest
is not a valid and perfected first priority security interest in the Collateral
subject only to Permitted Liens;
(i) Richard B. Scudder, William Dean Singleton, members of their
families, their estates or trusts for the benefit of such Persons shall at any
time cease to be the beneficial owners, directly or indirectly, of common stock
of the Borrower representing not less than 80% of the issued and outstanding
shares of the Borrower's common stock; or
(j) William Dean Singleton and Joseph J. Lodovic, IV shall at any
time cease to be senior officers of the Borrower and MediaNews Group, Inc. (to
be known as MediaNews Services, Inc. upon the consummation of the
Reorganization) or otherwise remain actively involved in the management of the
Borrower and MediaNews Group, Inc. (as so renamed) and shall not have been
replaced by one or more senior officers reasonably satisfactory to the Required
Banks within 90 days of such event.
Section 6.02 Remedies Upon Event of Default.
During the continuance of any Event of Default (other than one
specified in Section 6.01(e)) and in every such event, the Administrative Agent,
upon notice to the Borrower, may (but shall not be obligated to), and if
directed by the Required Banks shall, do any or all of the following: (a)
declare, in whole or, from time to time, in part, the principal of and interest
on the Loans and the Notes and all other amounts owing under the Loan Documents
to be, and the Loans and the Notes and all such other amounts shall thereupon
and to that extent become, due and payable (b) demand that the Borrower deliver
cash collateral to the Administrative Agent in an amount equal to the aggregate
amount of Contingent Reimbursement Obligations then outstanding to be held in
accordance with Section 9.19 and such amount shall thereupon become due and
payable to the Administrative Agent and (c) terminate, in whole or, from time to
time, in part, the Commitments. Upon the occurrence of an Event of Default
specified in Section 6.01(e), automatically and without any notice to the
Borrower, (a) the principal of and interest on the Loans and the Notes and all
other amounts owing under the Loan Documents shall be due and payable, (b) the
Commitments shall terminate and (c) an amount equal to the aggregate amount of
Contingent Reimbursement Obligations then outstanding shall be due and payable
to the Administrative Agent to be held in accordance with Section 9.19.
Presentment, demand, protest
<PAGE>
or notice of any kind (other than the notice provided for in the first sentence
of this Section 6.02) are hereby expressly waived.
ARTICLE 7
ADDITIONAL CREDIT FACILITY PROVISIONS
Section 7.01 Mandatory Suspension and Conversion of Eurodollar Rate Loans.
A Bank's obligations to make, continue or convert into Eurodollar
Rate Loans of any Type shall be suspended, all such Bank's outstanding Loans of
that Type shall be converted on the last day of their applicable Interest
Periods (or, if earlier, in the case of clause (c) below, on the last day such
Bank may lawfully continue to maintain Loans of that Type or, in the case of
clause (d) below, on the day determined by such Bank to be the last Business Day
before the effective date of the applicable restriction) into, and all pending
requests for the making or continuation of or conversion into Loans of such Type
by such Bank shall be deemed requests for, Base Rate Loans, if:
(a) on or prior to the determination of an interest rate for a
Eurodollar Rate Loan of that Type for any Interest Period, the Administrative
Agent determines that for any reason appropriate information is not available to
it for purposes of determining the Adjusted Eurodollar Rate for such Interest
Period;
(b) on or prior to the first day of any Interest Period for a
Eurodollar Rate Loan of that Type, such Bank determines that the Adjusted
Eurodollar Rate as determined by the Administrative Agent for such Interest
Period would not accurately reflect the cost to such Bank of making, continuing
or converting into a Eurodollar Rate Loan of such Type for such Interest Period;
(c) at any time such Bank determines that any Regulatory Change
makes it unlawful or impracticable for such Bank or its applicable Lending
Office to make, continue or convert into any Eurodollar Rate Loan of that Type,
or to comply with its obligations hereunder in respect thereof; or
(d) such Bank determines that, by reason of any Regulatory Change,
such Bank or its applicable Lending Office is restricted, directly or
indirectly, in the amount that it may hold of (i) a category of liabilities that
includes deposits by reference to which, or on the basis of which, the interest
rate applicable to Eurodollar Rate Loans of that Type is directly or indirectly
determined or (ii) the category of assets that includes Eurodollar Rate Loans of
that Type.
If, as a result of this Section 7.01, any Loan of any Bank that would
otherwise be made or maintained as or converted into a Eurodollar Rate Loan of
any Type for any Interest Period is instead made or maintained as or converted
into a Base Rate Loan, then, unless the corresponding Loan of each of the other
Banks is also to be made or maintained as or converted into a Base Rate Loan,
such Loan shall be treated as being a Eurodollar Rate Loan of such Type
<PAGE>
for such Interest Period for all purposes of this Agreement (including the
timing, application and proration among the Banks of interest payments,
conversions and prepayments) except for the calculation of the interest rate
borne by such Loan. The Administrative Agent shall promptly notify the Borrower
and each Bank of the existence or occurrence of any condition or circumstance
specified in clause (a) above, and each Bank shall promptly notify the Borrower
and the Administrative Agent of the existence or occurrence of any condition or
circumstance specified in clause (b), (c) or (d) above applicable to such Bank's
Loans, but the failure by the Administrative Agent or such Bank to give any such
notice shall not affect such Bank's rights hereunder.
Section 7.02 Regulatory Changes.
If in the determination of any Bank or, in the case of any Letter of
Credit or Drawing, the Issuing Bank (a) any Regulatory Change shall directly or
indirectly (i) reduce the amount of any sum received or receivable by (A) such
Bank with respect to any Eurodollar Rate Loan or Letter of Credit Participation
or the return to be earned by such Bank on any Eurodollar Rate Loan or Letter of
Credit Participation or (B) the Issuing Bank with respect to any Letter of
Credit or Drawing, (ii) impose a cost on (A) such Bank or any Affiliate of such
Bank that is attributable to the making or maintaining of, or such Bank's
commitment to make or acquire, any Eurodollar Rate Loan or Letter of Credit
Participation or (B) the Issuing Bank or any of its Affiliates that is
attributable to the issuance or maintaining of, or the commitment to issue, any
Letter of Credit or the making or maintaining of any Drawing, (iii) require (A)
such Bank or any Affiliate of such Bank to make any payment on or calculated by
reference to the gross amount of any amount received by such Bank under any Loan
Document in respect of its Eurodollar Rate Loans or its obligations to make
Eurodollar Rate Loans or (B) the Issuing Bank or any of its Affiliates to make
any payment on or calculated by reference to the gross amount of any amount
received by the Issuing Bank or any of its Affiliates in respect of any Letter
of Credit or its commitment to issue any Letter of Credit or Drawing or (iv)
reduce, or have the effect of reducing, the rate of return on any capital of (A)
such Bank or any Affiliate of such Bank that such Bank or such Affiliate is
required to maintain on account of any Eurodollar Rate Loan or Letter of Credit
Participation or such Bank's commitment to make any Eurodollar Rate Loan or
Letter of Credit Participation or (B) the Issuing Bank or any of its Affiliates
that the Issuing Bank or such Affiliate is required to maintain on account of
any Letter of Credit or Drawing or the Issuing Bank's commitment to issue any
Letter of Credit and (b) such reduction, increased cost or payment shall not be
fully compensated for by an adjustment in the applicable rates of interest
payable under the Loan Documents, then the Borrower shall pay to such Bank or
the Issuing Bank, as the case may be, such additional amounts as such Bank or
the Issuing Bank, as the case may be, determines will, together with any
adjustment in the applicable rates of interest payable hereunder, fully
compensate for such reduction, increased cost or payment. Such additional
amounts shall be payable, in the case of those applicable to prior periods,
within 15 days after request by such Bank or the Issuing Bank, as the case may
be, for such payment and, in the case of those applicable to future periods, on
the dates specified, or determined in accordance with a method specified, by
such Bank or the Issuing Bank, as the case may be. Each Bank and the Issuing
Bank will promptly notify the Borrower of any determination made by it referred
to in clauses (a) and (b) above, but the failure to give such notice shall not
affect such Bank's, or the
<PAGE>
Issuing Bank's, as the case may be, right to such compensation.
Section 7.03 Funding Losses.
The Borrower shall pay to each Bank, upon request, such amount or
amounts as such Bank determines are necessary to compensate it for any loss,
cost or expense incurred by it as a result of (a) any payment, prepayment or
conversion of a Eurodollar Rate Loan on a date other than the last day of an
Interest Period for such Eurodollar Rate Loan or (b) a Eurodollar Rate Loan for
any reason not being made or converted, or any payment of principal thereof or
interest thereon not being made, on the date therefor determined in accordance
with the applicable provisions of this Agreement. At the election of such Bank,
and without limiting the generality of the foregoing, but without duplication,
such compensation on account of losses may include an amount equal to the excess
of (i) the interest that would have been received from the Borrower under this
Agreement on any amounts to be reemployed during an Interest Period or its
remaining portion over (ii) the interest component of the return that such Bank
determines it could have obtained had it placed such amount on deposit in the
interbank Dollar market selected by it for a period equal to such Interest
Period or its remaining portion.
Section 7.04 Certain Determinations.
In making the determinations contemplated by Sections 7.01, 7.02 and
7.03, each Bank and the Issuing Bank may make such estimates, assumptions,
allocations and the like that such Person in good faith determines to be
appropriate, and such Person's selection thereof in accordance with this Section
7.04, and the determinations made by such Bank on the basis thereof, shall be
final, binding and conclusive upon the Borrower, except, in the case of such
determinations, for manifest errors in computation or transmission. Each Bank
and the Issuing Bank shall furnish to the Borrower upon request a certificate
outlining in reasonable detail the computation of any amounts claimed by it
under Sections 7.02 and 7.03 and the assumptions underlying such computations.
Section 7.05 Change of Lending Office.
If an event occurs with respect to a Lending Office of any Bank or,
in the case of any Letter of Credit or Drawing, the Issuing Bank, that makes
operable the provisions of clause (c) or (d) of Section 7.01 or entitles such
Bank or the Issuing Bank, as the case may be, to make a claim under Section
7.02, such Bank or the Issuing Bank, as the case may be, shall, if requested by
the Borrower, use reasonable efforts to designate another Lending Office or
Offices the designation of which will eliminate such operability or reduce the
amount such Bank or the Issuing Bank, as the case may be, is so entitled to
claim, provided that such designation would not, in the sole and absolute
discretion of such Bank, or the Issuing Bank, as the case may be, be
disadvantageous to such Bank in any manner or contrary to such Bank's or the
Issuing Bank's, as the case may be, policies. Each Bank and the Issuing Bank may
at any time and from time to time change any Lending Office and shall give
notice of any such change to the Administrative Agent and the Borrower. Except
in the case of a change in Lending Offices made at the request of the Borrower,
the designation of a new Lending Office by any Bank or the Issuing Bank shall
<PAGE>
not make operable the provisions of clause (c) or (d) of Section 7.01 or entitle
such Bank to make a claim under Section 7.02 if the operability of such clause
or such claim results solely from such designation and not from a subsequent
Regulatory Change.
ARTICLE 8
THE AGENTS
Section 8.01 Appointment and Powers.
Each Bank hereby irrevocably appoints and authorizes The Bank of New
York, and The Bank of New York hereby agrees, to act as the agent for and
representative (within the meaning of Section 9-105(m) of the Uniform Commercial
Code) of such Bank under the Loan Documents with such powers as are delegated to
the Administrative Agent and the Secured Party by the terms thereof, together
with such other powers as are reasonably incidental thereto. The Administrative
Agent's duties shall be purely ministerial and it shall have no duties or
responsibilities except those expressly set forth in the Loan Documents. The
Administrative Agent shall not be required under any circumstances to take any
action that, in its judgment, (a) is contrary to any provision of the Loan
Documents or Applicable Law or (b) would expose it to any Liability or expense
against which it has not been indemnified to its satisfaction. The
Administrative Agent shall not, by reason of its serving as the Administrative
Agent, be a trustee or other fiduciary for any Bank. Bank of America NT & SA, in
its capacity as Syndication Agent, First Union National Bank, in its capacity as
Documentation Agent, and Fleet National Bank, in its capacity as
Co-Documentation Agent, shall be entitled to all of the rights (other than with
respect to fees payable to the Administrative Agent) and immunities of the
Administrative Agent provided for in the Loan Documents, but shall have no
duties or responsibilities except for those expressly set forth therein.
Section 8.02 Limitation on Administrative Agent's Liability.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable or responsible for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence, willful misconduct or
knowing violations of law. The Administrative Agent shall not be responsible to
any Bank for (a) any recitals, statements, representations or warranties
contained in the Loan Documents or in any certificate or other document referred
to or provided for in, or received by any of the Banks under, the Loan
Documents, (b) the validity, effectiveness or enforceability of the Loan
Documents or any such certificate or other document, (c) the value or
sufficiency of the Collateral or (d) any failure by the Loan Parties to perform
any of their obligations under the Loan Documents. The Administrative Agent may
employ agents and attorneys-in-fact and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact so long as the
Administrative Agent was not grossly negligent in selecting or directing such
agents or attorneys-in-fact. The Administrative Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) believed by it to be genuine
and correct and to have been signed or
<PAGE>
given by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent. As to any matters not expressly provided for by the
Loan Documents, the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under the Loan Documents in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks.
Section 8.03 Defaults.
The Administrative Agent shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment to it of principal of or
interest on Loans or fees) unless the Administrative Agent has received notice
from a Bank or the Borrower specifying such Default and stating that such notice
is a "Notice of Default". In the event that the Administrative Agent has
knowledge of such a non-payment or receives such a notice of the occurrence of a
Default, the Administrative Agent shall give prompt notice thereof to the Banks.
In the event of any Default, the Administrative Agent shall (a) in the case of a
Default that constitutes an Event of Default, take any or all of the actions
referred to in clauses (a), (b) and (c) of the first sentence of Section 6.02 if
so directed by the Required Banks and (b) in the case of any Default, take such
other action with respect to such Default as shall be reasonably directed by the
Required Banks. Unless and until the Administrative Agent shall have received
such directions, in the event of any Default, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default as it shall deem advisable in the best interests of
the Banks.
Section 8.04 Rights as a Bank.
Each Person acting as the Administrative Agent that is also a Bank
shall, in its capacity as a Bank, have the same rights and powers under the Loan
Documents as any other Bank and may exercise the same as though it were not
acting as the Administrative Agent, and the term "Bank" or "Banks" shall include
such Person in its individual capacity. Each Person acting as the Administrative
Agent (whether or not such Person is a Bank) and its Affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to and
generally engage in any kind of banking, trust or other business with the Loan
Parties and their Affiliates as if it were not acting as the Administrative
Agent, and such Person and its Affiliates may accept fees and other
consideration from the Loan Parties and their Affiliates for services in
connection with the Loan Documents or otherwise without having to account for
the same to the Banks.
Section 8.05 Indemnification.
The Banks agree to indemnify the Administrative Agent (to the extent
not reimbursed by the Loan Parties under the Loan Documents), ratably on the
basis of the respective principal amounts of the Loans outstanding made by the
Banks (or, if no Loans are at the time outstanding, ratably on the basis of
their respective Commitments), for any and all Liabilities,
<PAGE>
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever that may be imposed on, incurred
by or asserted against the Administrative Agent (including the costs and
expenses that the Loan Parties are obligated to pay under the Loan Documents) in
any way relating to or arising out of the Loan Documents or any other documents
contemplated thereby or referred to therein or the transactions contemplated
thereby or the enforcement of any of the terms thereof or of any such other
documents, provided that no Bank shall be liable for any of the foregoing to the
extent they arise from gross negligence, willful misconduct or knowing
violations of law by the Administrative Agent.
Section 8.06 Non-Reliance on Administrative Agent and Other Banks.
Each Bank agrees that it has made and will continue to make,
independently and without reliance on the Administrative Agent or any other
Bank, and based on such documents and information as it deems appropriate, its
own credit analysis of the Loan Parties, its own evaluation of the Collateral
and its own decision to enter into the Loan Documents and to take or refrain
from taking any action in connection therewith. The Administrative Agent shall
not be required to keep itself informed as to the performance or observance by
the Loan Parties of the Loan Documents or any other document referred to or
provided for therein or to inspect the properties or books of any Loan Party or
any Subsidiary thereof or the Collateral. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by the
Administrative Agent under the Loan Documents, the Administrative Agent shall
have no obligation to provide any Bank with any information concerning the
business, status or condition of any Loan Party or any Subsidiary thereof, the
Loan Documents or the Collateral that may come into the possession of the
Administrative Agent or any of its Affiliates.
Section 8.07 Execution and Amendment of Loan Documents on Behalf of the
Banks.
Each Bank hereby authorizes the Administrative Agent to (a)
execute and deliver, in the name of and on behalf of such Bank, (i) the
Pledge Agreements, (ii) all UCC financing and continuation statements and
other documents the filing or recordation of which are, in the determination
of the Administrative Agent, necessary or appropriate to create, perfect or
maintain the existence or perfected status of the Security Interest and (iii)
any other Loan Document requiring execution by or on behalf of such Bank, and
(b) release Collateral from the Security Interest to the extent that such
Collateral has been disposed of in accordance with Section 4.11. The
Administrative Agent shall consent to any amendment of any term, covenant,
agreement or condition of the Pledge Agreements, or to any waiver of any
right thereunder, if, but only if, the Administrative Agent is directed to do
so in writing by the Required Banks; provided, however, that (i) the
Administrative Agent shall not be required to consent to any such amendment
or waiver that affects its rights or duties and (ii) the Administrative Agent
shall not, unless directed to do so in writing by each Bank, (A) consent to
any assignment by any Loan Party of any of its rights or obligations under
any such agreement or (B) release any Collateral from the Security Interest,
except as specified in clause (b) above.
Section 8.08 Resignation of the Administrative Agent.
The Administrative Agent may at any time give notice of its
resignation to the
<PAGE>
Banks and the Borrower. Upon receipt of any such notice of resignation, the
Required Banks may, after consultation with the Borrower, appoint a successor
Administrative Agent. If no successor Administrative Agent shall have been so
appointed by the Required Banks and shall have accepted such appointment within
30 days after the resigning Administrative Agent's giving of notice of
resignation, then the resigning Administrative Agent may, on behalf of the Banks
and after consultation with the Borrower, appoint a successor Administrative
Agent. Upon the acceptance by any Person of its appointment as a successor
Administrative Agent, (a) such Person shall thereupon succeed to and become
vested with all the rights, powers, privileges, duties and obligations of the
resigning Administrative Agent and the resigning Administrative Agent shall be
discharged from its duties and obligations as Administrative Agent under the
Loan Documents and (b) the resigning Administrative Agent shall promptly
transfer all Collateral within its possession or control to the possession or
control of the successor Administrative Agent and shall execute and deliver such
notices, instructions and assignments as may be necessary or desirable to
transfer the rights of the Administrative Agent with respect to the Collateral
to the successor Administrative Agent. After any resigning Administrative
Agent's resignation as Administrative Agent, the provisions of this Article 8
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Administrative Agent.
ARTICLE 9
MISCELLANEOUS
Section 9.01 Notices and Deliveries.
(a) Notices and Materials Other than Collateral. Except as provided in
Section 9.01(b):
(i) Manner of Delivery. All notices, communications and
materials (including all Information) to be given or delivered pursuant to
the Loan Documents shall, except in those cases where giving notice by
telephone is expressly permitted, be given or delivered in writing (which
shall include telex and telecopy transmissions). Notices under Sections
1.02, 1.04(c), 1.06, 1.08 and 6.02 may be by telephone, promptly, in the
case of each notice other than one under Section 6.02, confirmed in
writing. In the event of a discrepancy between any telephonic notice and
any written confirmation thereof, such written confirmation shall be
deemed the effective notice except to the extent that the Administrative
Agent has acted in reliance on such telephonic notice.
(ii) Addresses. All notices, communications and materials to
be given or delivered pursuant to the Loan Documents shall be given or
delivered at the following respective addresses and telex, telecopier and
telephone numbers and to the attention of the following individuals or
departments:
(A) if to the Borrower, to it at:
Garden State Newspapers, Inc.
<PAGE>
1560 Broadway, Suite 1485
Denver, CO 80202
Telecopier No.: (303) 820-1929
Telephone No.: (303) 820-1619
Attention: Joseph J. Lodovic, IV
Executive Vice
President & Chief
Financial Officer
with a copy to:
Verner, Liipfert, Bernhard, McPherson
and Hand
901-15th Street, N.W.
Washington, D.C. 20005-2301
Telecopier No.: (202) 371-6279
Telephone No.: (202) 371-6000
Attention: Howell E. Begle Jr.
and with a copy to:
Hughes Hubbard & Reed, LLP
One Battery Park Plaza
New York, NY 10004
Telecopier No.: (212) 422-4726
Telephone No.: (212) 837-6000
Attention: James Modlin
(B) if to any Guarantor, to it at the address or telex,
telecopier or telephone number and to the attention of the
individual or department, set forth below such Guarantor's name on
Annex B, or in the case of a Guarantor that becomes a Guarantor
pursuant to a Subsidiary Guaranty Supplement, set forth in such
Subsidiary Guaranty Supplement;
(C) if to the Administrative Agent or the Secured Party,
to it at:
The Bank of New York
Media and Telecommunications Division
One Wall Street, 16th Floor
New York, NY 10286
<PAGE>
Telecopier No.: (212) 635-8595/8593
Telephone No.: (212) 635-8609
Attention: John R. Ciulla
Vice President
with a copy to:
The Bank of New York
One Wall Street
New York, NY 10286
Telecopier No.: (212) 635-6365 (6366 or 6367)
Telephone No.: (212) 635-4694
Attention: Genoveso Caviness, Agency Function
Administration, 18th Floor
(D) if to any Bank (including any Bank in its capacity
as the Issuing Bank or the Swing Loan Lender), to it at the address
or telex, telecopier or telephone number and to the attention of the
individual or department, set forth below such Bank's name under the
heading "Notice Address" on Annex A or, in the case of a Bank that
becomes a Bank pursuant to an assignment, set forth under the
heading "Notice Address" in the Notice of Assignment given to the
Borrower and the Administrative Agent with respect to such
assignment;
or at such other address or telex, telecopier or telephone number or to the
attention of such other individual or department as the party to which such
information pertains may hereafter specify for the purpose in a notice
specifically captioned "Notice of Change of Address" given to (x) if the party
to which such information pertains is the Borrower or any Guarantor, the
Administrative Agent and each Bank, (y) if the party to which such information
pertains is the Administrative Agent, the Borrower, each Guarantor and each Bank
and (z) if the party to which such information pertains is a Bank, the Borrower,
each Guarantor and the Administrative Agent.
(iii) Effectiveness. Each notice and communication and any
material to be given or delivered pursuant to the Loan Documents shall be
deemed so given or delivered (A) if sent by registered or certified mail,
postage prepaid, return receipt requested, on the third Business Day after
such notice, communication or material, addressed as above provided, is
delivered to a United States post office and a receipt therefor is issued
thereby, (B) if sent by any other means of physical delivery, when such
notice, communication or material is delivered to the appropriate address
as above provided, (C) if sent by telex, when such notice, communication
or material is transmitted to the appropriate number determined as above
provided in this Section 9.01 and the appropriate answer-back is received,
(D) if sent by telecopier, when such notice, communication or material is
transmitted to the appropriate telecopier number as above
<PAGE>
provided and is received at such number and (E) if given by telephone,
when communicated to the individual or any member of the department
specified as the individual or department to whose attention notices,
communications and materials are to be given or delivered, or, in the case
of notice by the Administrative Agent to the Borrower under Section 6.02
given by telephone as above provided, if any individual or any member of
the department to whose attention notices, communications and materials
are to be given or delivered is unavailable at the time, to any other
officer or employee of the Borrower, except that (x) notices of a change
of address, telex, telecopier or telephone number or individual or
department to whose attention notices, communications and materials are to
be given or delivered shall not be deemed given until received and (y)
notices, communications and materials to be given or delivered to the
Administrative Agent or any Bank pursuant to Sections 1.02, 1.04(c), 1.06,
1.08 and 1.13(b) and Article 5 shall not be deemed given or delivered
until received by the officer of the Administrative Agent or such Bank
responsible, at the time, for the administration of the Loan Documents.
(iv) Reasonable Notice. Any requirement under Applicable Law
of reasonable notice by the Administrative Agent or the Banks to the
Borrower or any Guarantor of any event in connection with, or in any way
related to, the Loan Documents or the exercise by the Administrative Agent
or the Banks of any of their rights thereunder shall be met if notice of
such event is given to the Borrower or such Guarantor in the manner
prescribed above at least 10 days before (A) the date of such event or (B)
the date after which such event will occur.
(b) Collateral. Until the Administrative Agent shall otherwise
specify, all Collateral to be delivered to the Administrative Agent pursuant to
the Loan Documents consisting of instruments, securities, chattel paper, letters
of credit or documents shall be delivered to the Administrative Agent at the
Administrative Agent's Office either by hand delivery or by registered or
certified mail, postage prepaid, return receipt requested, in either case
insured in an amount not less than the greater of the aggregate face amount and
the aggregate fair market value of the Collateral so being delivered. All other
Collateral to be delivered to the Administrative Agent pursuant to the Loan
Documents shall be delivered to such Person, at such address, by such means and
in such manner as the Administrative Agent may designate.
Section 9.02 Expenses; Indemnification.
Whether or not any Loans are made, or any Letter of Credit is
issued, hereunder, the Borrower shall:
(a) pay or reimburse the Administrative Agent, the Issuing Bank, the
Swing Loan Lender and each Bank for all transfer, documentary, stamp and similar
taxes, and all recording and filing fees and taxes, payable in connection with,
arising out of, or in any way related to, the execution, delivery and
performance of the Loan Documents or the making of the Loans or the issuance of
the Letters of Credit;
<PAGE>
(b) pay or reimburse the Administrative Agent for all costs and
expenses (including reasonable fees and disbursements of legal counsel,
appraisers, accountants and other experts employed or retained by the
Administrative Agent) incurred by the Administrative Agent in connection with,
arising out of, or in any way related to (i) the negotiation, preparation,
execution and delivery of (A) the Loan Documents and (B) whether or not
executed, any waiver, amendment or consent thereunder or thereto, (ii) after the
occurrence of a Default, consulting with respect to any matter in any way
arising out of, related to, or connected with, the Loan Documents, including (A)
the protection or preservation of the Collateral, (B) the protection,
preservation, exercise or enforcement of any of the rights of the Administrative
Agent, the Issuing Bank, the Swing Loan Lender or the Banks in, under or related
to the Collateral or the Loan Documents or (C) the performance of any of the
obligations of the Administrative Agent, the Issuing Bank, the Swing Loan Lender
or the Banks under or related to the Loan Documents, (iii) protecting or
preserving the Collateral or (iv) after the occurrence of a Default, protecting,
preserving, exercising or enforcing any of the rights of the Administrative
Agent, the Issuing Bank, the Swing Loan Lender or the Banks in, under or related
to the Collateral or the Loan Documents, including defending the Security
Interest as a valid, perfected, first priority security interest in the
Collateral subject only to Permitted Liens;
(c) pay or reimburse each Bank, the Issuing Bank and the Swing Loan
Lender for all costs and expenses (including reasonable fees and disbursements
of legal counsel and other experts employed or retained by such Bank, the
Issuing Bank or the Swing Loan Lender) incurred by such Bank, the Issuing Bank
or the Swing Loan Lender in connection with, arising out of, or in any way
related to protecting, preserving, exercising or enforcing any of its rights in,
under or related to the Collateral or the Loan Documents, in each case, after
the occurrence of a Default; and
(d) indemnify and hold each Indemnified Person harmless from and
against all losses (including judgments, penalties and fines) suffered, and pay
or reimburse each Indemnified Person for all costs and reasonable expenses
(including reasonable fees and disbursements of legal counsel and other experts
employed or retained by such Indemnified Person) incurred, by such Indemnified
Person in connection with, arising out of, or in any way related to (i) any Loan
Document Related Claim (whether asserted by such Indemnified Person, the
Borrower, any Guarantor or any other Person), including the prosecution or
defense thereof and any litigation or proceeding with respect thereto (whether
or not, in the case of any such litigation or proceeding, such Indemnified
Person is a party thereto), or (ii) any investigation, governmental or
otherwise, arising out of, related to, or in any way connected with, the Loan
Documents or the relationships established thereunder, except that the foregoing
indemnity in this subsection (d) shall not be applicable to any loss suffered by
any Indemnified Person to the extent such loss is determined by a judgment of a
court that is binding on the Borrower and such Indemnified Person, final and not
subject to review on appeal, to be the result of acts or omissions on the part
of such Indemnified Person constituting (x) willful misconduct, (y) knowing
violations of law or (z) in the case of claims by the Borrower against such
Indemnified Person, such Indemnified Person's failure to observe any other
standard applicable to it under any of the other provisions of the Loan
Documents or, but only to the extent not waivable
<PAGE>
thereunder, Applicable Law.
Section 9.03 Amounts Payable Due Upon Request for Payment.
All amounts payable by the Borrower under Section 9.02 and under the
other provisions of the Loan Documents shall, except as otherwise expressly
provided, be immediately due upon request for the payment thereof.
Section 9.04 Remedies of the Essence.
The various rights and remedies of the Administrative Agent, the
Issuing Bank, the Swing Loan Lender and the Banks under the Loan Documents are
of the essence of those agreements, and the Administrative Agent, the Issuing
Bank, the Swing Loan Lender and the Banks shall be entitled to obtain a decree
requiring specific performance of each such right and remedy.
Section 9.05 Rights Cumulative.
Each of the rights and remedies of the Administrative Agent, the
Issuing Bank, the Swing Loan Lender and the Banks under the Loan Documents shall
be in addition to all of their other rights and remedies under the Loan
Documents and Applicable Law, and nothing in the Loan Documents shall be
construed as limiting any such rights or remedies.
Section 9.06 Confidentiality.
The Administrative Agent, the Issuing Bank, the Swing Loan Lender
and the Banks agree to exercise all reasonable efforts to keep any information
delivered or made available by the Borrower concerning the Collateral or the
Borrower, any Guarantor or any Subsidiary confidential from anyone other than
persons employed or retained by such Person who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans of the
Administrative Agent, the Issuing Bank, the Swing Loan Lender or any Bank;
provided, however, that nothing herein shall prevent any Person from disclosing
such information (a) to any Affiliate of such Person or to any other such
Person, (b) upon the order of any court or administrative agency, (c) upon the
request or demand of any regulatory agency or authority having jurisdiction over
such Person, (d) that has been publicly disclosed, (e) in connection with any
litigation relating to the Loans, this Agreement or any transaction contemplated
hereby to which any Bank, any Loan Party or any Administrative Agent may be a
party, (f) to the extent reasonably required in connection with the exercise of
any remedy hereunder, (g) to such Person's legal counsel and independent
auditors and (h) to any actual or proposed participant or assignee of all or any
part of the Loans hereunder, if the intended recipient of such information,
prior to such disclosure, agrees for the benefit of the Borrower to comply with
the provisions of this Section 9.06.
Section 9.07 Amendments; Waivers.
Any term, covenant, agreement or condition of the Loan Documents may
be
<PAGE>
amended, and any right under the Loan Documents may be waived, if, but only if,
such amendment or waiver is in writing and is signed by (a) in the case of an
amendment or waiver with respect to the Loan Documents referred to in Section
8.07(a), the Administrative Agent, (b) in the case of an amendment or waiver
with respect to any other Loan Document, the Required Banks and, if the rights
and duties of the Administrative Agent, the Issuing Bank, or the Swing Loan
Lender are affected thereby, by the Administrative Agent, the Issuing Bank, or
the Swing Loan Lender, as the case may be and (c) in the case of an amendment
with respect to any Loan Document, by the Borrower and any Guarantor which is a
party thereto; provided, however, that no amendment or waiver shall be
effective, unless in writing and signed by each Bank affected thereby, to the
extent it (i) changes the amount of such Bank's Commitment, (ii) reduces the
principal of or the rate of interest on such Bank's Loans or Note, the amount of
such Bank's Letter of Credit Participations or any fees payable to such Bank
hereunder, (iii) postpones any date fixed for, or reduces the amount of, any
reduction of the Commitments or any payment of principal of or interest on such
Bank's Loans, Note, Letter of Credit Participations or any fees payable to such
Bank hereunder, (iv) releases any Collateral from the Security Interest except
to the extent that such Collateral has been disposed of in accordance with
Section 4.17 (on the basis of the provisions of Section 4.11(e) or, if such
release shall have been consented to by the Required Banks, Section 4.11(c)) or
releases any Guarantor from its obligations under Section 10.01 except to the
extent that all of the Capital Securities of such Guarantor have been disposed
of in accordance with Section 4.17 (on the basis of the provisions of Section
4.11(e) or, if such release shall have been consented to by the Required Banks,
Section 4.11(c)), or (v) amends Section 1.15, this Section 9.07, the definition
of "Required Banks" contained in Section 10.01 or any other provision of this
Agreement requiring the consent or other action of all of the Banks. Unless
otherwise specified in such waiver, a waiver of any right under the Loan
Documents shall be effective only in the specific instance and for the specific
purpose for which given. No election not to exercise, failure to exercise or
delay in exercising any right, nor any course of dealing or performance, shall
operate as a waiver of any right of the Administrative Agent, the Issuing Bank,
the Swing Loan Lender or any Bank under the Loan Documents or Applicable Law,
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right of the
Administrative Agent, the Issuing Bank, the Swing Loan Lender or any Bank under
the Loan Documents or Applicable Law.
Section 9.08 Set-Off; Suspension of Payment and Performance.
The Administrative Agent, the Issuing Bank, the Swing Loan Lender
and each Bank is hereby authorized by the Borrower and each Guarantor, at any
time and from time to time, without notice, (a) during any Event of Default, to
set off against, and to appropriate and apply to the payment of, the Liabilities
of the Borrower or any Guarantor under the Loan Documents (whether owing to such
Person or to any other Person that is the Administrative Agent, the Issuing
Bank, the Swing Loan Lender or a Bank and whether matured or unmatured, fixed or
contingent or liquidated or unliquidated and including amounts to which a Bank
is entitled with respect to its Letter of Credit Participations) any and all
Liabilities owing by such Person or any of its Affiliates to the Borrower, each
Guarantor or any Wholly Owned Subsidiary (whether payable in Dollars or any
other currency, whether matured or unmatured and, in the case of Liabilities
that are deposits, whether general or special, time or demand and however
<PAGE>
evidenced and whether maintained at a branch or office located within or without
the United States) and (b) during any Event of Default, to suspend the payment
and performance of such Liabilities owing by such Person or its Affiliates and,
in the case of Liabilities that are deposits, to return as unpaid for
insufficient funds any and all checks and other items drawn against such
deposits.
Section 9.09 Sharing of Recoveries.
Each Bank agrees that, if, for any reason, including as a result of
(a) the exercise of any right of counterclaim, set-off, banker's lien or similar
right, (b) its claim in any applicable bankruptcy, insolvency or other similar
law being deemed secured by a Debt owed by it to any Loan Party, including a
claim deemed secured under Section 506 of the Bankruptcy Code, or (c) the
allocation of payments by the Administrative Agent or any Loan Party in a manner
contrary to the provisions of Section 1.15, such Bank shall receive payment of a
proportion of the aggregate amount due and payable to it hereunder as principal
of or interest on the Loans or fees that is greater than the proportion received
by any other Bank in respect of the aggregate of such amounts due and payable to
such other Bank hereunder, then the Bank receiving such proportionately greater
payment shall purchase participations (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the rights of the other
Banks hereunder so that all such recoveries with respect to such amounts due and
payable hereunder (net of costs of collection) shall be pro rata; provided that
if all or part of such proportionately greater payment received by the
purchasing Bank is thereafter recovered by or on behalf of any Loan Party from
such Bank, such purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such Bank to the extent of such
recovery, but without interest (unless the purchasing Bank is required to pay
interest on the amount recovered to the Person recovering such amount, in which
case the selling Bank shall be required to pay interest at a like rate). The
Borrower and each Guarantor expressly consents to the foregoing arrangements and
agrees that any holder of a participation in any rights hereunder so purchased
or acquired pursuant to this Section 9.09(a) shall, with respect to such
participation, be entitled to all of the rights of a Bank under Sections 7.02,
9.02 and 9.08 (subject to any condition imposed on a Bank hereunder with respect
thereto) and may exercise any and all rights of set-off with respect to such
participation as fully as though the Borrower and each Guarantor were directly
indebted to the holder of such participation for Loans in the amount of such
participation.
Section 9.10 Assignments and Participations.
(a) Assignments. (i) Neither the Borrower nor any Guarantor may
assign any of its rights or obligations under the Loan Documents without the
prior written consent of (A) in the case of the Loan Documents referred to in
Section 8.07(a), the Administrative Agent and (B) in the case of any of the
other Loan Documents, the Issuing Bank, the Swing Loan Lender and each Bank, and
no assignment of any such obligation shall release the Borrower or any Guarantor
therefrom unless the Administrative Agent, the Issuing Bank, the Swing Loan
Lender and each Bank, as applicable, shall have consented to such release in a
writing specifically referring to the obligation from which the Borrower or such
Guarantor is to be released.
<PAGE>
(ii) Each Bank may from time to time assign any or all of its
rights and obligations under the Loan Documents to one or more Persons;
provided that, except in the case of the grant of a security interest to a
Federal Reserve Bank (which may be made without condition or restriction),
no such assignment shall be effective unless (A) the assignment is
consented to by the Borrower (unless an Event of Default exists) the
Issuing Bank, the Swing Loan Lender and the Administrative Agent, such
consents not to be unreasonably withheld, (B) in the case of a partial
assignment, the assignment shall involve the assignment of not less than
$5,000,000 of the assignor Bank's Commitment, (C) a Notice of Assignment
with respect to the assignment, duly executed by the assignor and the
assignee, shall have been given to the Borrower, the Issuing Bank, the
Swing Loan Lender and the Administrative Agent and (D) except in the case
of an assignment by the Bank that is the Administrative Agent, the
Administrative Agent shall have been paid an assignment fee of $3,500.
Upon any effective assignment, the assignor shall be released from the
obligations so assigned and, in the case of an assignment of all of its
Loans and Commitment, shall cease to be a Bank. In the event of any
effective assignment by a Bank, the Borrower shall issue a new Note to the
assignee Bank (against, other than in the case of a partial assignment,
receipt of the existing Note of the assignor Bank). Nothing in this
Section 9.10 shall limit the right of any Bank to assign its interest in
the Loans and its Note to a Federal Reserve Bank as collateral security
under Regulation A of the Board of Governors of the Federal Reserve
System, but no such assignment shall release such Bank from its
obligations hereunder.
(b) Participations. Each Bank may from time to time sell or
otherwise grant participations in any or all of its rights and obligations under
the Loan Documents. In the event of any such grant by a Bank of a participation,
such Bank's obligations under the Loan Documents to the other parties thereto
shall remain unchanged, such Bank shall remain solely responsible for the
performance thereof, and the Borrower, each Guarantor, the Issuing Bank, the
Swing Loan Lender, the Administrative Agent and the other Banks may continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations thereunder. A Bank may not grant to any holder of a
participation the right to require such Bank to take or omit to take any action
under the Loan Documents, except that a Bank may grant to any such holder the
right to require such holder's consent to (i) reduce the principal of or the
rate of interest on such Bank's Loans, Note or the amount of such Bank's Letter
of Credit Participations or any fees payable to such Bank hereunder, (ii)
postpone any date fixed for any reduction of the Commitments or any payment of
principal of or interest on such Bank's Loans, Note or the amount of such Bank's
Letter of Credit Participations or any fees payable to such Bank hereunder,
(iii) permit any Loan Party to assign any of its obligations under the Loan
Documents to any other Person or (iv) release any Collateral from the Security
Interest except as required or contemplated by the Loan Documents. Each holder
of a participation in any rights under the Loan Documents, if and to the extent
the applicable participation agreement so provides, shall, with respect to such
participation, be entitled to all of the rights of a Bank as fully as though it
were a Bank under Sections 1.15, 7.02, 7.03, 9.02(d) and 9.07 (subject to any
conditions imposed on a Bank hereunder with respect thereto) and may exercise
any and all rights of set-off with respect to such participation as fully as
though the Borrower were directly indebted to the holder
<PAGE>
of such participation for Loans in the amount of such participation; provided,
however, that no holder of a participation shall be entitled to any amounts that
would otherwise be payable to it with respect to its participation unless such
amounts would have been payable to the Bank that granted such participation if
such participation had not been granted.
(c) Loans by SPC Designees. Notwithstanding anything to the contrary
contained herein, any Bank (a "Granting Bank") may grant to a special purpose
funding vehicle (an "SPC") identified as such in writing from time to time by
the Granting Bank to the Administrative Agent and the Borrower, the option to
provide to the Borrower all or any part of any Loan that such Granting Bank the
("Applicable Granting Bank") would otherwise be obligated to make to the
Borrower pursuant to this Agreement; provided that (i) nothing herein shall
constitute a commitment by any SPC to make any Loan, (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part of such
Loan the Applicable Granting Bank shall be obligated to make such Loan pursuant
to the terms hereof and (iii) no SPC or Applicable Granting Bank shall be
entitled to receive any greater amount pursuant to Section 1.14, 7.02 or 7.03
than the Applicable Granting Bank would have been entitled to receive had the
Applicable Granting Bank not otherwise granted such SPC the option to provide
any Loan to the Borrower. The making of a Loan by an SPC hereunder shall utilize
the Commitment of the Applicable Granting Bank to the same extent, and as if,
such Loan were made by such Granting Bank. Each party hereto hereby agrees that
no SPC shall be liable for any indemnity or similar payment obligation under
this Agreement for which a Bank would otherwise be liable so long as, and to the
extent that, the Applicable Granting Bank makes such payment. In furtherance of
the foregoing, each party hereto hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one year and
one day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against or join any other
person in instituting against such SPC any bankruptcy, reorganization,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. Notwithstanding the foregoing,
the Applicable Granting Bank unconditionally agrees to indemnify the Borrower,
the Administrative Agent and each Bank against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be incurred by or
asserted against the Borrower, the Administrative Agent or such Bank, as the
case may be, in any way relating to or arising as a consequence of any such
forbearance or delay in the initiation of any such proceeding against its SPC.
Each party hereto hereby acknowledges and agrees that no SPC shall have the
rights of a Bank hereunder, such rights being retained by the Applicable
Granting Bank. Accordingly, and without limiting the foregoing, each party
hereby further acknowledges and agrees that no SPC shall have any voting rights
hereunder and that the voting rights attributable to any Loan made by an SPC
shall be exercised only by the Applicable Granting Bank and that each Applicable
Granting Bank shall serve as the administrative agent and attorney in fact for
the SPC to which it granted such option and shall on behalf of such SPC receive
any and all payments made for the benefit of such SPC and take all actions
hereunder to the extent, if any, such SPC shall have any rights hereunder. In
addition, notwithstanding anything to the contrary contained in this Agreement
any SPC may (i) with notice to, but without the prior written consent of any
other party hereto, assign all or a portion of its interest in any
<PAGE>
Loans to the Applicable Granting Bank and (ii) disclose on a confidential basis
any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC.
Section 9.11 Governing Law.
The rights and duties of the Borrower, each Guarantor, the
Administrative Agent and the Banks under this Agreement and the Notes (including
matters relating to the Maximum Permissible Rate) shall, pursuant to New York
General Obligations Law Section 5-1401, be governed by the law of the State of
New York.
Section 9.12 Judicial Proceedings; Waiver of Jury Trial.
Any judicial proceeding brought against the Borrower or any
Guarantor with respect to any Loan Document Related Claim may be brought in any
court of competent jurisdiction in the City and County of New York, and, by
execution and delivery of this Agreement, the Borrower and each Guarantor (a)
accepts, generally and unconditionally, the non-exclusive jurisdiction of such
courts and any related appellate court and irrevocably agrees to be bound by any
judgment rendered thereby in connection with any Loan Document Related Claim and
(b) irrevocably waives any objection it may now or hereafter have as to the
venue of any such proceeding brought in such a court or that such a court is an
inconvenient forum. The Borrower and each Guarantor hereby waives personal
service of process and consents that service of process upon it may be made by
certified or registered mail, return receipt requested, at its address specified
or determined in accordance with the provisions of Section 9.01(a)(ii), and
service so made shall be deemed completed on the third Business Day after such
service is deposited in the mail. Nothing herein shall affect the right of the
Administrative Agent, the Issuing Bank, the Swing Loan Lender, any Bank or any
other Indemnified Person to serve process in any other manner permitted by law
or shall limit the right of the Administrative Agent, the Issuing Bank, the
Swing Loan Lender, any Bank or any other Indemnified Person to bring proceedings
against the Borrower or any Guarantor in the courts of any other jurisdiction.
Any judicial proceeding by the Borrower or any Guarantor against the
Administrative Agent, the Issuing Bank, the Swing Loan Lender, or any Bank
involving any Loan Document Related Claim shall be brought only in a court
located in the City and State of New York. THE BORROWER, EACH GUARANTOR, THE
AGENT, THE ISSUING BANK, THE SWING LOAN LENDER AND EACH BANK HEREBY IRREVOCABLY
WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING ANY LOAN DOCUMENT
RELATED CLAIM.
Section 9.13 LIMITATION OF LIABILITY.
NEITHER THE AGENT, THE ISSUING BANK, THE SWING LOAN LENDER, NOR THE
BANKS NOR ANY OTHER INDEMNIFIED PERSON SHALL HAVE ANY LIABILITY WITH RESPECT TO,
AND THE BORROWER AND EACH GUARANTOR HEREBY WAIVES, RELEASES AND AGREES NOT TO
SUE FOR, ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY THE BORROWER
IN
<PAGE>
CONNECTION WITH ANY LOAN DOCUMENT RELATED CLAIM.
Section 9.14 Severability of Provisions.
Any provision of the Loan Documents that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions thereof or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent permitted by Applicable Law,
the Borrower and each Guarantor hereby waives any provision of Applicable Law
that renders any provision of the Loan Documents prohibited or unenforceable in
any respect.
Section 9.15 Counterparts.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument.
Section 9.16 Survival of Obligations.
Except as otherwise expressly provided therein, the rights and
obligations of the Borrower, each Guarantor, the Administrative Agent, the
Issuing Bank, the Swing Loan Lender, the Banks and the other Indemnified Persons
under the Loan Documents under Sections 1.14, 9.02 and 10.04 (and each other
Section reasonably related thereto) shall survive the Repayment Date and the
termination of the Security Interest.
Section 9.17 Entire Agreement.
This Agreement, the Notes and the other Loan Documents embody the
entire agreement among the Borrower, each Guarantor, the Administrative Agent,
the Issuing Bank, the Swing Loan Lender, and the Banks relating to the subject
matter hereof and supersede all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.
Section 9.18 Successors and Assigns.
All of the provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 9.19 Cash Collateral.
If, at any time, payment, prepayment or cash collateralization of
Contingent Reimbursement Obligations shall be required pursuant to any provision
of any of the Loan Documents, such payment, prepayment or cash collateralization
shall be made by deposit of funds in Dollars, in the amount of such payment,
prepayment or cash collateralization, into a cash collateral account at the
Administrative Agent's Office, which account shall be under the sole dominion
and control of the Administrative Agent and is hereby pledged to the
Administrative Agent for the benefit of itself, the Banks and the Issuing Bank
as security for the payment of the Contingent Reimbursement Obligations and any
other amounts that may become
<PAGE>
payable hereunder. Funds deposited in such account, and any income thereon, may
be applied by the Administrative Agent against amounts payable under the Loan
Documents as such amounts become due. Any funds remaining in such account when
all Contingent Reimbursement Obligations and other amounts payable under the
Loan Documents have been paid and the Repayment Date shall have occurred shall
be promptly remitted to the Borrower.
Section 9.20 Existing Pledge Agreements.
Each of the Loan Parties that shall have executed and delivered a
Pledge Agreement in connection with the entering into of this Agreement on
the Agreement Date and that are not executing and delivering a new Pledge
Agreement as of the Restated Agreement Date hereby confirms that its Pledge
Agreement remains in full force and effect and applies to the Credit
Agreement as amended and restated as of the Restated Agreement Date;
provided, however, that the Secured Obligations (as defined therein) shall
not include, prior to the consummation of the Contribution, the principal of
and interest on the Special ANI Loans.
ARTICLE 10
GUARANTY
Section 10.01 Guaranty of Payment and Performance.
Each Guarantor hereby (a) irrevocably, unconditionally and
absolutely guarantees to each Guaranteed Party the due and punctual payment,
observance and performance of all of the Guaranteed Obligations in accordance
with their respective terms and when and as due (whether at maturity, by reason
of acceleration or otherwise), or deemed to be due pursuant to Section 10.03,
and (b) agrees so to pay, observe or perform the same when so due, or deemed to
be due, upon demand; provided, however, that prior to the time, if any, that DNI
becomes a Wholly Owned Subsidiary, the liability of DNI and its Subsidiaries
pursuant to this Section 10.01 on any day shall be limited to the unpaid
principal amount of the Master Intercompany Note on, and accrued and unpaid
interest and fees thereunder as of, such day.
Section 10.02 Limitation on Guaranty.
It is the intention of each Guarantor and the Guaranteed Parties
that the obligations of each Guarantor under the Loan Documents shall be in, but
not in excess of, the maximum amount permitted by Applicable Law. To that end,
but only to the extent such obligations would otherwise be avoidable, the
obligations of each Guarantor under the Loan Documents shall be limited to the
maximum amount that, after giving effect to the incurrence thereof, would not
render such Guarantor insolvent or unable to pay its Debts as they mature or
leave such Guarantor with an unreasonably small capital. The need for any such
limitation shall be determined, and any such needed limitation shall be
effective, at the time or times that such Guarantor is deemed, under Applicable
Law, to incur obligations hereunder. Any such limitation shall be apportioned
amongst the Guaranteed Obligations of the Guaranteed Parties pro rata in
accordance with their respective amounts thereof. This Section 10.02 is intended
solely to preserve the rights of the Guaranteed Parties under the Loan Documents
to the maximum extent
<PAGE>
permitted by Applicable Law, and no Guarantor nor any other Person shall have
any right under this Section 10.02 that it would not otherwise have under
Applicable Law. For the purposes of this Section 10.02 and Section 10.13,
"insolvency", "unreasonably small capital" and "inability to pay Debts as they
mature" shall be determined in accordance with Applicable Law.
Section 10.03 Continuance and Acceleration of Guaranteed Obligations upon
Certain Events.
If:
(a) any Event of Default specified in Section 6.01(e) shall occur;
(b) any injunction, stay or the like that enjoins any acceleration,
or demand for the payment, observance or performance, of any Guaranteed
Obligations that would otherwise be required or permitted under the Loan
Documents shall become effective; or
(c) any Guaranteed Obligations shall be or be determined to be or
become discharged, disallowed, invalid, illegal, void or otherwise unenforceable
(whether by operation of any present or future law or by order of any court or
governmental agency) against the Borrower;
then (i) such Guaranteed Obligations shall, for all purposes of the Loan
Documents, be deemed (A) in the case of clause (c), to continue to be
outstanding and in full force and effect notwithstanding the unenforceability
thereof against the Borrower and (B) if such is not already the case, to have
thereupon become immediately due and payable and to have commenced bearing
interest at the Post-Default Rate and (ii) the Guaranteed Parties to which such
Guaranteed Obligations are owing may, with respect to such Guaranteed
Obligations, exercise all of the rights and remedies under the Loan Documents
that would be available to them during an Event of Default.
Section 10.04 Recovered Payments.
The Guaranteed Obligations shall be deemed not to have been paid,
observed or performed, and each Guarantor's obligations under the Loan Documents
in respect thereof shall continue and not be discharged, to the extent that any
payment, observance or performance thereof by the Borrower or any other
Guarantor or guarantor, or out of the proceeds of the Collateral or any other
collateral, is recovered from or paid over by or for the account of any
Guaranteed Party for any reason, including as a preference or fraudulent
transfer or by virtue of any subordination (whether present or future or
contractual or otherwise) of the Guaranteed Obligations, whether such recovery
or payment over is effected by any judgment, decree or order of any court or
governmental agency, by any plan of reorganization or by settlement or
compromise by any Guaranteed Party (whether or not consented to by the Borrower,
each Guarantor or any other guarantor) of any claim for any such recovery or
payment over. Each Guarantor hereby expressly agrees that it shall be liable
under the Loan Documents with respect to any Guaranteed Obligation whenever such
a recovery or payment over thereof occurs.
Section 10.05 Binding Nature of Certain Adjudications.
<PAGE>
Each Guarantor shall be conclusively bound by the adjudication in
any action or proceeding, legal or otherwise, involving any controversy arising
under, in connection with, or in any way related to, any of the Guaranteed
Obligations, and by a judgment, award or decree entered therein, if such
Guarantor shall have had the right, or shall have been given the opportunity, to
participate in such action or proceeding and shall have been given notice of
such action or proceeding in time to exercise such right or avail itself of such
opportunity.
Section 10.06 Nature of Guarantor's Obligations.
Each Guarantor's obligations under this Article 10 (a) are absolute
and unconditional, (b) are unlimited in amount except as provided in Section
10.02, (c) constitute a guaranty of payment and performance and not a guaranty
of collection, (d) are as primary obligor and not as a surety only, (e) shall be
a continuing guaranty of all present and future Guaranteed Obligations and all
promissory notes and other documentation given in extension or renewal or
substitution for any of the Guaranteed Obligations and (f) shall be irrevocable.
Section 10.07 No Release of Guarantor.
THE OBLIGATIONS OF EACH GUARANTOR UNDER THIS ARTICLE 10 SHALL NOT BE
REDUCED, LIMITED OR TERMINATED, NOR SHALL SUCH GUARANTOR BE DISCHARGED FROM ANY
THEREOF, FOR ANY REASON WHATSOEVER (other than, subject to Sections 10.04 and
10.11, the payment, observance and performance of the Guaranteed Obligations),
including (and whether or not the same shall have occurred or failed to occur
once or more than once and whether or not such Guarantor shall have received
notice thereof):
(a) (i) any increase in the principal amount of, or interest rate
applicable to, (ii) any extension of the time of payment, observance or
performance of, (iii) any other amendment or modification of any of the other
terms and provisions of, (iv) any release, composition or settlement (whether by
way of acceptance of a plan of reorganization or otherwise) of, (v) any
subordination (whether present or future or contractual or otherwise) of, or
(vi) any discharge, disallowance, invalidity, illegality, voidness or other
unenforceability of, the Guaranteed Obligations;
(b) (i) any failure to obtain, (ii) any release, composition or
settlement of, (iii) any amendment or modification of any of the terms and
provisions of, (iv) any subordination of, or (v) any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability of, any other
guaranties of the Guaranteed Obligations;
(c) (i) any failure to obtain or any release of, (ii) any failure to
protect or preserve, (iii) any release, compromise, settlement or extension of
the time of payment of any obligations constituting, (iv) any failure to perfect
or maintain the perfection or priority of any Lien upon, (v) any subordination
of any Lien upon, or (vi) any discharge, disallowance, invalidity, illegality,
voidness or other unenforceability of any Lien or intended Lien upon, the
Collateral or any other collateral now or hereafter securing the Guaranteed
Obligations or any other guaranties thereof;
<PAGE>
(d) any termination of or change in any relationship between such
Guarantor and the Borrower, including any such termination or change resulting
from a change in the ownership of such Guarantor or the Borrower or from the
cessation of any commercial relationship between such Guarantor and the
Borrower;
(e) any exercise of, or any election not or failure to exercise,
delay in the exercise of, waiver of, or forbearance or other indulgence with
respect to, any right, remedy or power available to the Guaranteed Parties,
including (i) any election not or failure to exercise any right of setoff,
recoupment or counterclaim, (ii) any election of remedies effected by the
Guaranteed Parties, whether or not such election affects the right to obtain a
deficiency judgment, and (iii) any election by the Guaranteed Parties in any
proceeding under the Bankruptcy Code of the application of Section 1111(b)(2) of
such Code; and
(f) ANY OTHER ACT OR FAILURE TO ACT OR ANY OTHER EVENT OR
CIRCUMSTANCE THAT (i) VARIES THE RISK OF SUCH GUARANTOR UNDER THE LOAN DOCUMENTS
OR (ii) BUT FOR THE PROVISIONS HEREOF, WOULD, AS A MATTER OF STATUTE OR RULE OF
LAW OR EQUITY, OPERATE TO REDUCE, LIMIT OR TERMINATE THE OBLIGATIONS OF A
GUARANTOR OR THIRD PARTY SURETY THEREUNDER OR DISCHARGE SUCH GUARANTOR OR THIRD
PARTY SURETY FROM ANY THEREOF.
Section 10.08 Certain Waivers.
Each Guarantor waives, in each case to the extent permitted under any
Applicable Law:
(a) any requirement, and any right to require, that any right or
power be exercised or any action be taken against the Borrower, any other
Guarantor or guarantor or the Collateral or any other collateral for the
Guaranteed Obligations;
(b) all defenses (other than payment of the Guaranteed Obligations)
to, and all setoffs, counterclaims and claims of recoupment against, the
Guaranteed Obligations that may at any time be available to the Borrower or any
other Guarantor or guarantor;
(c) (i) notice of acceptance of and intention to rely on the Loan
Documents, (ii) notice of the making or renewal of any Loans, the issuance of
any Letters of Credit or other extensions of credit hereunder and of the
incurrence or renewal of any other Guaranteed Obligations, (iii) notice of any
of the matters referred to in Section 10.07 and (iv) all other notices that may
be required by Applicable Law or otherwise to preserve any rights against such
Guarantor under the Loan Documents, including any notice of default, demand,
dishonor, presentment and protest;
(d) any defense based upon, arising out of or in any way related to
(i) any claim that any sale or other disposition of the Collateral or any other
collateral for the Guaranteed Obligations was not conducted in a commercially
reasonable fashion or that a public sale, should the Guaranteed Parties have
elected to so proceed, was, in and of itself, not a commercially
<PAGE>
reasonable method of sale, (ii) any claim that any election of remedies by the
Guaranteed Parties, including the exercise by the Guaranteed Parties of any
rights against the Collateral or any other collateral, impaired, reduced,
released or otherwise extinguished any right that such Guarantor might otherwise
have had against the Borrower, any other Guarantor or any other guarantor or
against the Collateral or any other collateral, including any right of
subrogation, exoneration, reimbursement or contribution or right to obtain a
deficiency judgment, (iii) any claim based upon, arising out of or in any way
related to any of the matters referred to in Section 10.07 and (iv) any claim
that the Loan Documents should be strictly construed against the Guaranteed
Parties; and
(e) ALL OTHER DEFENSES UNDER APPLICABLE LAW THAT WOULD, BUT FOR THIS
CLAUSE (e), BE AVAILABLE TO A GUARANTOR OR THIRD PARTY SURETY AS A DEFENSE
AGAINST OR A REDUCTION OR LIMITATION OF ITS OBLIGATIONS UNDER THIS ARTICLE 10.
Section 10.09 Independent Credit Evaluation.
Each Guarantor has independently, and without reliance on any information
supplied by the Guaranteed Parties, taken, and will continue to take, whatever
steps it deems necessary to evaluate the financial condition and affairs of the
Borrower, and the Guaranteed Parties shall have no duty to advise any Guarantor
of information at any time known to them regarding such financial condition or
affairs.
Section 10.10 Subordination of Rights Against the Borrower, Other
Guarantors and Collateral.
All rights that any Guarantor may at any time have against the Borrower,
any other Guarantor or guarantor or the Collateral or any other collateral for
the Guaranteed Obligations, and all obligations that the Borrower or any other
Guarantor or guarantor may at any time have to any Guarantor, in each case
arising out of the performance by such Guarantor of its obligations under this
Article 10, are hereby expressly subordinated to the prior payment, observance
and performance in full of the Guaranteed Obligations. No Guarantor shall
enforce any of the rights, or attempt to obtain payment or performance of any of
the obligations, subordinated pursuant to this Section 10.10 until the
Guaranteed Obligations have been paid, observed and performed in full, except
that such prohibition shall not apply to routine acts, such as the giving of
notices and the filing of continuation statements, necessary to preserve any
such rights. If any amount shall be paid to or recovered by any Guarantor
(whether directly or by way of setoff, recoupment or counterclaim) on account of
any right or obligation subordinated pursuant to this Section 10.10, such amount
shall be held in trust by such Guarantor for the benefit of the Guaranteed
Parties, not commingled with any of such Guarantor's other funds and forthwith
paid over to the Administrative Agent, in the exact form received, together with
any necessary endorsements, to be applied and credited against, or held as
security for, the Guaranteed Obligations and the obligations of such Guarantor
under the Loan Documents.
Section 10.11 Economic Benefits; Solvency.
<PAGE>
Each Guarantor represents and warrants that:
(a) The execution and delivery by the Administrative Agent and the
Banks of this Agreement, and the extensions of credit by the Banks hereunder,
constitute indirect economic benefit to such Guarantor at least equal to such
amount of its obligations under this Article 10.
(b) The guarantee by such Guarantor of the Guaranteed Obligations
and the incurrence by it of its other obligations under the Loan Documents will
not render such Guarantor insolvent or unable to pay its Debts as they mature or
leave such Guarantor with unreasonably small capital.
(c) It does not intend to incur Debts, including those under the
Loan Documents, that would be beyond its ability to pay as such Debts mature.
ARTICLE 11
INTERPRETATION
Section 11.01 Defined Terms.
For the purposes of this Agreement:
"Accumulated Funding Deficiency" has the meaning ascribed to that
term in Section 302 of ERISA.
"Adjusted Eurodollar Rate" means, for any Interest Period, a rate
per annum (rounded upward, if necessary, to the next higher 1/16 of 1%) equal to
the rate obtained by dividing (a) the Eurodollar Rate for such Interest Period
by (b) a percentage equal to 1 minus the Reserve Requirement in effect from time
to time during such Interest Period.
"Administrative Agent" means The Bank of New York, as agent for and
representative (within the meaning of Section 9-105(m) of the Uniform Commercial
Code) of the Banks under the Loan Documents, and any successor Administrative
Agent appointed pursuant to Section 8.08.
"Administrative Agent's Office" means the address of the
Administrative Agent specified in or determined in accordance with the
provisions of Section 9.01(a)(ii).
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person; unless
otherwise specified, "Affiliate" means an Affiliate of the Borrower.
"Agreement" means this Agreement, including all schedules, annexes
and exhibits
<PAGE>
hereto.
"Agreement Date" means May 12, 1999, being the date that this
Agreement (prior to the amendment and restatement hereof as of the Restated
Agreement Date) originally became effective.
"ANI" means MediaNews Group, Inc. (formerly known as Affiliated
Newspapers Investments, Inc.), a Delaware corporation.
"ANI Merger" means the portion of the Reorganization consisting of
the merger of Garden State Newspapers, Inc. into ANI.
"ANI Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, between ANI and the Secured Party, in substantially the form of
Exhibit C.
"Applicable Law" means, anything in Section 9.11 to the contrary
notwithstanding, (a) all applicable common law and principles of equity and (b)
all applicable provisions of all (i) constitutions, statutes, rules, regulations
and orders of governmental bodies, (ii) Governmental Approvals and (iii) orders,
decisions, judgments and decrees of all courts (whether at law or in equity or
admiralty) and arbitrators.
"Bank" means (a) the Administrative Agent and any Person listed on
the signature pages hereof following the Administrative Agent and (b) any Person
that has been assigned any or all of the rights or obligations of a Bank
pursuant to and in accordance with Section 9.10(a).
"Bank Nonparticipation" means (i) the inability of any Bank to
acquire any Letter of Credit Participation pursuant to Section 1.03(e) or to
make any payment required by it under Section 1.03(h) because of such Bank's
having been subject to receivership, insolvency or other similar laws, (ii) the
refusal of any Bank to acquire any Letter of Credit Participation pursuant to
Section 1.03(e) or to make any payment required by it under Section 1.03(h) or
(iii) the giving by any Bank to the Issuing Bank of any notice (which has not
been retracted) of its intention not to so acquire any Letter of Credit
Participation or to make any such required payment, in each case without
limiting the rights and remedies of the Borrower against such Bank arising out
of any of the foregoing.
"Bank Tax" means any Tax based on or measured by net income or
franchise taxes (imposed in lieu of net income taxes) imposed upon any Bank or
the Administrative Agent by any jurisdiction (or any political subdivision
thereof) in which such Bank, the Administrative Agent or any Lending Office is
organized or located or doing business that is unrelated to this Agreement.
"Base Financial Statements" means the most recent, audited,
consolidated balance sheet of the Borrower and the Consolidated Subsidiaries
referred to in Schedule 5.02(a) and the related statements of income, retained
earnings and cash flows for the fiscal year ended with the date of such balance
sheet.
<PAGE>
"Base Rate" means, for any day, a rate per annum equal to the higher
of (a) the Prime Rate in effect on such day and (b) the sum of the Federal Funds
Rate in effect on such day plus 1/2%.
"Base Rate Loan" means any Loan the interest on which is, or is to
be, as the context may require, computed on the basis of the Base Rate.
"Base Rate Margin" means, with respect to Base Rate Loans
outstanding on any day during each period beginning on the 45th day of each
fiscal quarter and ending on the 45th day of the immediately succeeding fiscal
quarter, such percentage as set forth in the following table opposite the
applicable ratio of Consolidated Debt to Operating Cash Flow determined as of
the end of the fiscal quarter immediately preceding such period:
Ratio of Consolidated Applicable
Debt to Operating Cash Flow Base Rate Margin
6.00:1 0.875%
< 6.00:1 but > 5.50:1 0.750%
< 5.50:1 but > 5.00:1 0.375%
< 5.00:1 but > 4.50:1 0.125%
< 4.50:1 but > 4.00:1 0.000%
< 4.00:1 0.000%
Notwithstanding the foregoing, if Indebtedness of the Borrower or ANI hereunder
shall increase or decrease at any time during any such period (as the result of
the borrowing of Loans, the drawing under Letters of Credit or the repayment of
Loans or such drawings) by an amount sufficient to cause a change in the Base
Rate Margin, such change in the Base Rate Margin shall take effect on the day of
such increase or decrease in Indebtedness hereunder, as the case may be.
Notwithstanding the foregoing, prior to the delivery of the financial statements
of the Borrower for the fiscal year ending June 30, 1999 pursuant to Section
5.01(c), the Base Rate Margin shall be the greater of (x) 0.750% and (y) the
Base Rate Margin otherwise determined in accordance with the foregoing.
"Benefit Plan" means, with respect to any Person, at any time, any
employee benefit plan (including a Multiemployer Benefit Plan), the funding
requirements of which (under Section 302 of ERISA or Section 412 of the Code)
are, or at any time within six years immediately preceding the time in question
were, in whole or in part, the responsibility of such Person.
"Borrower" means Garden State Newspapers, Inc. (to be known as
MediaNews Group, Inc. upon consummation of the ANI Merger), a Delaware
corporation and/or, in the case of references to the "Borrower" as such
references may relate to the Special ANI Loans prior to the consummation of the
Contribution, or as the context may otherwise require, ANI. Upon consummation of
the ANI Merger, the Person surviving such merger shall be deemed to be the
"Borrower".
<PAGE>
"Business Day" means any day other than a Saturday, Sunday or other
day on which banks in New York City are authorized to close.
"California Partnership" means California Newspapers Partnership, a
Delaware general partnership.
"Capital Expenditures" means any expenditures in respect of the
purchase or other acquisition (by way of the acquisition of securities of a
Person or otherwise) of fixed or capital assets (excluding any such asset
acquired in connection with normal replacement and maintenance programs properly
charged to current operations or acquired with proceeds of insurance for the
purpose of replacement thereof) and excluding Investments to which Section 4.12
is by its express terms inapplicable.
"Capital Security" means, with respect to any Person, (a) any share
of capital stock of or other unit of ownership interest in such Person or (b)
any security convertible into, or any option, warrant or other right to acquire,
any share of capital stock of or other unit of ownership interest in such
Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than 90 days from the date of acquisition thereof by the Borrower or a
Consolidated Subsidiary, (b) time deposits and certificates of deposit of a Bank
or any United States commercial bank of recognized standing having capital and
surplus in excess of $500,000,000, with maturities of not more than 90 days from
the date of acquisition thereof by the Borrower or a Consolidated Subsidiary,
(c) fully secured repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (a) entered into with
any bank meeting the qualifications specified in clause (b) above, and (d)
commercial paper issued by the parent corporation of a Bank or any United States
commercial bank of recognized standing having capital and surplus in excess of
$500,000,000 and any other commercial paper rated at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Service or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing within 90
days after the date of acquisition thereof by the Borrower or a Consolidated
Subsidiary.
"Cash Flow Percentage" means, as of the date of any sale or exchange
of capital stock or assets, the ratio, expressed as a percentage, derived by
dividing (a) Operating Cash Flow attributable thereto for the four consecutive
fiscal quarters of the Borrower ending on, or most recently ended prior to, such
date for which financial information is available and has been delivered to the
Banks hereunder prior to such date of sale or exchange by (b) Operating Cash
Flow of the Borrower and its Consolidated Subsidiaries for such period.
"Code" means the Internal Revenue Code of 1986.
"Collateral" means all property subject to a Lien created pursuant
to the Loan
<PAGE>
Documents.
"Commitment" means, with respect to any Bank, (i) the amount set
forth opposite such Bank's name under the heading "Commitment" on Annex A or, in
the case of a Bank that becomes a Bank pursuant to an assignment in accordance
with Section 9.10(a), the amount of the assignor's Commitment assigned to such
Bank, in either case as the same may be reduced from time to time pursuant to
Section 1.08 or increased or reduced from time to time pursuant to assignments
in accordance with Section 9.10(a) or (ii) as the context may require, the
obligation of such Bank to make Loans in an aggregate unpaid principal amount
not exceeding such amount.
"Consolidated Debt" means, at any time, the consolidated
Indebtedness of the Borrower and its Restricted Subsidiaries as of such time,
minus for purposes of determining the ratio of Consolidated Debt to Operating
Cash Flow and the ratio of Consolidated Senior Debt to Operating Cash Flow, the
aggregate amount, if any, of (x) cash and Cash Equivalents held at such time by
the Borrower and its Restricted Subsidiaries in excess of $2,000,000 and (y) the
Greenco Subordinated Debt outstanding at such time. Notwithstanding the
foregoing, Consolidated Debt shall include the Special ANI Loans.
"Consolidated Fixed Charges" means, as of any date of determination,
the following, determined with respect to the immediately preceding four fiscal
quarters of the Borrower for which financial statements have been delivered
pursuant to Section 5.01(a) or 5.01(c), the sum of (a) all Required Repayments,
and all other payments of principal of all Indebtedness (including capital
leases) of the Borrower and its Restricted Subsidiaries scheduled to have been
made during such period, determined on a consolidated basis, (b) the aggregate
amount of Capital Expenditures made by the Borrower and the Restricted
Subsidiaries during such period, (c) Interest Expense for such period and (d)
without duplication, taxes paid in cash and payments in respect of taxes made by
the Borrower or any Restricted Subsidiary pursuant to the Tax Sharing Agreement
or the DNI Tax Sharing Agreement during such period.
"Consolidated Net Income" means, for any period, the amount of
consolidated net income of the Borrower and the Restricted Subsidiaries for such
period (taken as a cumulative whole); provided, that there shall be excluded:
(a) any net income (or net loss) of a Restricted Subsidiary (i) for any period
during which it was not a Restricted Subsidiary or (ii), in case of any such net
income, to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary is not at the time permitted by
operation of the terms of any Contract (other than this Agreement) or Applicable
Law; (b) any net income (or net loss) of any Person (other than a Restricted
Subsidiary) in which the Borrower or any Restricted Subsidiary has an ownership
interest, except to the extent that any such income has actually been received
by the Borrower or such Subsidiary in the form of cash dividends or similar
distributions; (c) any restoration of any contingency reserve, except to the
extent that provision for such reserve was made out of income during such
period; (d) any net gains or losses on the sale or other disposition, not in the
ordinary course of business, of investments and other capital assets; provided,
that there shall also be excluded any related charges for taxes thereon; (e) any
net gain arising from the collection of the proceeds of any insurance policy;
(f) any write-up of
<PAGE>
any asset; (g) any net gains resulting from the extinguishment or defeasance of
any Indebtedness; (h) any earnings from discontinued businesses; and (i) any
extraordinary gains or losses.
"Consolidated Senior Debt" means, at any time, Consolidated Debt
other than Subordinated Debt as of such time.
"Consolidated Subsidiary" means, with respect to any Person at any
time, any Subsidiary or other Person the accounts of which would be consolidated
with those of such first Person in its consolidated financial statements as of
such time; unless otherwise specified, "Consolidated Subsidiary" means a
Consolidated Subsidiary of the Borrower.
"Consolidated Tax Subsidiary" means a Subsidiary which could elect
to file consolidated, combined, unitary or similar group Tax returns with ANI,
the Borrower or another Subsidiary.
"Contingent Reimbursement Obligation" means the contingent
obligation of the Borrower to reimburse the Issuing Bank for any Drawings that
may in the future be made under an outstanding Letter of Credit, whenever
issued. Without limiting the foregoing, the amount of all Contingent
Reimbursement Obligations at any time shall be the aggregate amount available to
be drawn under outstanding Letters of Credit at such time.
"Contract" means (a) any agreement, including an indenture, lease or
license, (b) any deed or other instrument of conveyance, (c) any certificate of
incorporation or charter and (d) any by-law.
"Contribution" means the contribution by ANI to the Borrower of all
ANI's shares of DNI's Class B common stock.
"Contribution Agreement" means the Contribution Agreement relating
to the formation of the California Partnership dated March 3, 1999 among the
Borrower, Alameda Newspapers, Inc., V&P Publishing, Inc., Internet Media
Publishing, Inc., DR Partners, a Nevada general partnership, Media West-SBC,
Inc., a Delaware corporation, and The Sun Company of San Bernardino, California,
a California corporation.
"Debt" means any Liability that constitutes "debt" or "Debt" under
section 101(12) of the Bankruptcy Code or under the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any analogous Applicable
Law.
"Default" means any condition or event that constitutes an Event of
Default or that with the giving of notice or lapse of time or both would, unless
cured or waived, become an Event of Default.
"Denver Acquisition Documents" means the Denver Stock Purchase
Agreement and the Denver Shareholders' Agreement.
"Denver Shareholders' Agreement" means the Third Amended and
Restated
<PAGE>
Shareholders' Agreement dated as of June 30, 1999 among ANI, DNI and Media
General.
"Denver Stock Purchase Agreement" means the Stock Purchase Agreement
between ANI and Media General in respect of the purchase by ANI of 20 shares of
DNI's Class A common Stock..
"DNI" means Denver Newspapers, Inc., a Delaware corporation (to be
known as The Denver Post Corporation upon the merger of Denver Newspapers, Inc.
into the Denver Post Corporation pursuant to the Reorganization).
"DNI Loan Agreement" means the secured loan agreement dated as of
May 20, 1994, between DNI and Norwest Bank Colorado, N.A.
"DNI Tax Sharing Agreement" means the Tax Sharing Agreement between
ANI, Media General and DNI entered into pursuant to the Denver Acquisition
Documents.
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"Domestic Lending Office" of any Bank or the Swing Loan Lender means
(a) the branch or office of such Bank or the Swing Loan Lender set forth below
such Bank's or the Swing Loan Lender's name under the heading "Domestic Lending
Office" on Annex A or, in the case of a Bank that becomes a Bank pursuant to an
assignment, the branch or office of such Bank set forth under the heading
"Domestic Lending Office" in the Notice of Assignment given to the Borrower, the
Issuing Bank, the Swing Loan Lender and the Administrative Agent with respect to
such assignment or (b) such other branch or office of such Bank or the Swing
Loan Lender designated by such Bank or the Swing Loan Lender from time to time
as the branch or office at which its Base Rate Loans and Letter of Credit
Participations or Swing Loans, as the case may be, are to be made or maintained.
"Drawing" means the presentation and payment of a drawing under a
Letter of Credit.
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA Affiliate" means, with respect to any Person, any other
Person, including a Subsidiary or other Affiliate of such first Person, that is
a member of any group of organizations within the meaning of Code Sections
414(b), (c), (m) or (o) of which such first Person is a member.
"Eurodollar Business Day" means any Business Day on which dealings
in Dollar deposits are carried on in the relevant interbank market and on which
commercial banks are open for domestic and international business (including
dealings in Dollar deposits) in the jurisdiction in which such interbank market
is located.
"Eurodollar Lending Office" of any Bank means (a) the branch or
office of such Bank set forth below such Bank's name under the heading
"Eurodollar Lending Office" on
<PAGE>
Annex A or, in the case of a Bank that becomes a Bank pursuant to an assignment,
the branch or office of such Bank set forth under the heading "Eurodollar
Lending Office" in the Notice of Assignment given to the Borrower, the Issuing
Bank, the Swing Loan Lender and the Administrative Agent with respect to such
assignment or (b) such other branch or office of such Bank designated by such
Bank from time to time as the branch or office at which its Eurodollar Rate
Loans are to be made or maintained.
"Eurodollar Rate" means, for any Interest Period, the rate per annum
determined by the Administrative Agent to be the rate (rounded upward, if
necessary, to the next higher 1/16 of 1%) per annum at which The Bank of New
York offered or would have offered to place with first-class banks in the
interbank market selected by The Bank of New York deposits in Dollars in amounts
comparable to the Eurodollar Rate Loan of The Bank of New York to which such
Interest Period applies, for a period equal to such Interest Period, at the time
as of which The Bank of New York makes such determination.
"Eurodollar Rate Loan" means any Loan the interest on which is, or
is to be, as the context may require, computed on the basis of the Adjusted
Eurodollar Rate.
"Eurodollar Rate Margin" means, with respect to Eurodollar Rate
Loans outstanding on any day during any period beginning on the 45th day of each
fiscal quarter and ending on the 45th day of the immediately succeeding fiscal
quarter, such percentage as set forth in the following table opposite the
applicable ratio of Consolidated Debt to Operating Cash Flow determined as of
the end of the fiscal quarter immediately preceding such period:
Ratio of Consolidated Applicable Eurodollar
Debt to Operating Cash Flow Rate Margin
6.00:1 2.125%
< 6.00:1 but > 5.50:1 2.000%
< 5.50:1 but > 5.00:1 1.625%
< 5.00:1 but > 4.50:1 1.375%
< 4.50:1 but > 4.00:1 1.125%
< 4.00:1 1.000%
Notwithstanding the foregoing, if Indebtedness of the Borrower or ANI hereunder
shall increase or decrease at any time during any such period (as the result of
the borrowing of Loans, the drawing under Letters of Credit or the repayment of
Loans or such drawings) by an amount sufficient to cause a change in the
Eurodollar Rate Margin, such change in the Eurodollar Rate Margin shall take
effect on the day of such increase or decrease in Indebtedness hereunder, as the
case may be.
Notwithstanding the foregoing, prior to the delivery of the financial statements
of the Borrower for the fiscal year ending June 30, 1999 pursuant to Section
5.01(c), the Eurodollar Rate Margin shall be the greater of (x) 2.000% and (y)
the Eurodollar Rate Margin otherwise determined in accordance with the
foregoing.
"Event of Default" means any of the events specified in Section
6.01.
<PAGE>
"Excess Cash Flow" means, for any period, the excess of (a)
Operating Cash Flow for such period (without giving effect to any adjustment
thereto pursuant to the second sentence of the definition of Operating Cash
Flow) over (b) the sum of (i) Consolidated Fixed Charges for such period, (ii)
the amount of payments of non-operating liabilities as determined in the
consolidated statements of cash flows for such period delivered pursuant to
Section 5.01 and (iii) $2,000,000.
"Existing Benefit Plan" means any Benefit Plan listed on Schedule
4.14.
"Existing Debt" means (i) any Indebtedness outstanding on the
Restated Agreement Date, to the extent set forth on Schedule 4.06 and (ii) any
Indebtedness that constitutes a renewal, extension or replacement of any
Existing Debt, but only if (A) at the time such Indebtedness is entered into and
immediately after giving effect thereto, no Default would exist, (B) such
Indebtedness is binding only on the obligor or obligors under the Indebtedness
so renewed, extended or replaced, (C) the principal amount of the Indebtedness
does not exceed the principal amount of the Indebtedness so renewed, extended or
replaced, (D) the Indebtedness bears interest at a rate per annum not exceeding
the rate borne by the Indebtedness so renewed, extended or replaced except for
any increase that is commercially reasonable at the time of such increase and
(E) such Indebtedness does not mature earlier, or amortize (whether by scheduled
or mandatory prepayment or commitment reduction, or otherwise) more rapidly,
than the Indebtedness so renewed, extended or replaced.
"Existing Guaranty" means (i) any Guaranty outstanding on the
Restated Agreement Date, to the extent set forth on Schedule 4.07 and (ii) any
Guaranty that constitutes a renewal, extension or replacement of an Existing
Guaranty, but only if (A) at the time such Guaranty is entered into and
immediately after giving effect thereto, no Default would exist, (B) such
Guaranty is binding only on the obligor or obligors under the Guaranty so
renewed, extended or replaced, (C) the principal amount of the obligations
Guaranteed by such Guaranty does not exceed the principal amount of the
obligations Guaranteed by the Guaranty so renewed, extended or replaced and (D)
the obligations Guaranteed by such Guaranty bear interest at a rate per annum
not exceeding the rate borne by the obligations Guaranteed by the Guaranty so
renewed, extended or replaced except for any increase that is commercially
reasonable at the time of such increase.
"Existing Investment" means any Investment outstanding on the
Restated Agreement Date, to the extent set forth on Schedule 4.12, and any
renewal or extension thereof not involving an increase therein as the result of
an additional investment by the Borrower or any Subsidiary.
"Federal Funds Rate" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York or, if such rate is not so published for any
day that is a Business Day, the average of quotations for such day on such
<PAGE>
transactions received by The Bank of New York from three Federal funds brokers
of recognized standing selected by such bank.
"Funded Current Liability Percentage" has the meaning ascribed to
that term in Code Section 401(a)(29).
"Generally Accepted Accounting Principles" or "GAAP" means (a) in
the case of the Base Financial Statements, generally accepted accounting
principles at the time of the issuance of the Base Financial Statements and (b)
in all other cases, the accounting principles followed in the preparation of the
Base Financial Statements.
"Governmental Approval" means any authorization, consent, approval,
license or exemption of, registration or filing with, or report or notice to,
any governmental unit.
"Greenco" means Greenco, Inc., a Delaware corporation.
"Greenco Note" means the subordinated promissory note executed by
Borrower to the order of Greenco, in the form set out in Exhibit A-1 to the
Greenco Note Purchase Agreement.
"Greenco Note Purchase Agreement" means the Subordinated Note
Purchase Agreement dated as of January 30, 1998 between the Borrower and
Greenco.
"Greenco Subordinated Debt" means the Indebtedness of Borrower and
Newco under the Greenco Note, including any Guaranty given by Borrower pursuant
to section 8.6(a) of the Greenco Note Purchase Agreement.
"Guaranteed Obligations" means all Liabilities of the Borrower and
ANI owing to, or in favor or for the benefit of, or purporting to be owing to,
or in favor or for the benefit of, the Guaranteed Parties under the Loan
Documents or any Interest Rate Protection Agreement entered into with a Bank or
any of its Affiliates (i) WHETHER NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED,
(ii) whether owing to, or in favor or for the benefit of, or purporting to be
owing to or in favor or for the benefit of, Persons that are Guaranteed Parties
as of the Restated Agreement Date or that become Guaranteed Parties by reason of
any succession or assignment at any time thereafter and (iii) WHETHER OR NOT AN
ALLOWABLE CLAIM AGAINST THE BORROWER OR ANI, AS THE CASE MAY BE, UNDER THE
BANKRUPTCY CODE OR OTHERWISE ENFORCEABLE AGAINST THE BORROWER OR ANI, AS THE
CASE MAY BE, AND INCLUDING, IN ANY EVENT, INTEREST AND OTHER LIABILITIES
ACCRUING OR ARISING AFTER THE FILING BY OR AGAINST THE BORROWER OR ANI, AS THE
CASE MAY BE, OF A PETITION UNDER THE BANKRUPTCY CODE THAT WOULD HAVE SO ACCRUED
OR ARISEN BUT FOR THE FILING OF SUCH A PETITION; provided, however, that prior
to the consummation of the Contribution, the only Guarantors that shall be
liable (subject to the proviso contained in Section 10.01) for the portion of
the Guaranteed Obligations consisting of the principal of and interest on the
Special ANI Loans shall be DNI and its Subsidiaries.
<PAGE>
"Guaranteed Parties" means all Persons that are, or at any time
were, the Agent, the Issuing Bank, the Swing Loan Lender, a Bank or any other
Indemnified Person.
"Guarantor" means (a) ANI and each Restricted Subsidiary of the
Borrower as of the Restated Agreement Date (other than the California
Partnership and York Newspaper Company) and, (b) each other Subsidiary that
shall have executed and delivered a Subsidiary Guaranty Supplement, in each case
for so long as any such Subsidiary remains a Restricted Subsidiary.
"Guaranty" of any Person means any obligation, contingent or
otherwise, of such Person (a) to pay any Liability of any other Person or to
otherwise protect, or having the practical effect of protecting, the holder of
any such Liability against loss (whether such obligation arises by virtue of
such Person being a partner of a partnership or participant in a joint venture
or by agreement to pay, to keep well, to purchase assets, goods, securities or
services or to take or pay, or otherwise) or (b) incurred in connection with the
issuance by a third Person of a Guaranty of any Liability of any other Person
(whether such obligation arises by agreement to reimburse or indemnify such
third Person or otherwise). The word "Guarantee" when used as a verb has the
correlative meaning.
"Indebtedness" of any Person means (a) any obligation of such Person
for borrowed money, (b) any obligation of such Person evidenced by a bond,
debenture, note or other similar instrument, (c) any obligation of such Person
to pay the deferred purchase price of property or services, except a trade
account payable that arises in the ordinary course of business but only if and
so long as the same is payable on customary trade terms, (d) any obligation of
such Person as lessee under a capital lease to the extent that such obligations
are required to be capitalized in accordance with GAAP, (e) any Mandatorily
Redeemable Stock of such Person owned by any Person other than such Person or a
Wholly Owned Subsidiary of such Person (the amount of such Mandatorily
Redeemable Stock to be determined for this purpose as the higher of the
liquidation preference of and the amount payable upon redemption of such
Mandatorily Redeemable Stock), (f) any obligation of such Person to purchase
securities or other property that arises out of or in connection with the sale
of the same or substantially similar securities or property, (g) any
non-contingent obligation of such Person to reimburse any other Person in
respect of amounts paid under a letter of credit or other Guaranty issued by
such other Person to the extent that such reimbursement obligation remains
outstanding after it becomes non-contingent, (h) any Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) a Lien on any asset of such Person,
(i) any Indebtedness of others Guaranteed by such Person and (j) any monetary
obligation of such Person arising out of a non-competition agreement entered
into by such Person in connection with the acquisition of assets, stock, or
other equity interest of a third Person. Notwithstanding the foregoing, (x)
Mandatorily Redeemable Stock of the Borrower in an aggregate amount not in
excess of $100,000,000 shall not constitute Indebtedness (except for purposes of
determining Interest Expense) so long as the terms thereof and of any security,
instrument or other item of Indebtedness into which such Mandatorily Redeemable
Stock may be converted (A) do not require the payment, redemption, purchase or
other retirement of any
<PAGE>
portion thereof prior to the date that is one year after the Maturity Date, and
(B) do not provide for, or could not otherwise result in, the acceleration of
any payment required to be made in respect thereof to a date that is prior to
such date, (y) for purposes of Sections 4.22 through 4.26 and for purposes of
determining the Base Rate Margin, the Eurodollar Rate Margin and the commitment
fees payable pursuant to Section 1.09(a), Indebtedness of the California
Partnership shall constitute Indebtedness only to the extent of (1) in the case
of Existing Indebtedness, 100% of the amount thereof and (2) in the case of
other Indebtedness, the percentage thereof equal to the Borrower's percentage
ownership interest in the California Partnership on the date of determination
and (z) the obligations of ANI (and, upon consummation of the Contribution, the
Borrower) under Section 1.6 of the Denver Stock Purchase Agreement and under
Article 4 of the Denver Shareholders' Agreement shall not constitute
Indebtedness.
"Indemnified Person" means any Person that is, or at any time was,
the Administrative Agent, the Issuing Bank, the Swing Loan Lender, a Bank, an
Affiliate of the Administrative Agent, the Issuing Bank, the Swing Loan Lender
or a Bank or a director, officer, employee or agent of any such Person.
"Information" means data, certificates, reports, statements
(including financial statements), opinions of counsel, documents and other
information.
"Intellectual Property" means (a) (i) patents and patent rights,
(ii) trademarks, trademark rights, trade names, trade name rights, corporate
names, business names, trade styles, service marks, logos and general
intangibles of like nature and (iii) copyrights, in each case whether
registered, unregistered or under pending registration and, in the case of any
such that are registered or under pending registration, whether registered or
under pending registration under the laws of the United States or any other
country, (b) reissues, continuations, continuations-in-part and extensions of
any Intellectual Property referred to in clause (a), and (c) rights relating to
any Intellectual Property referred to in clause (a) or (b), including rights
under applications (whether pending under the laws of the United States or any
other country) or licenses relating thereto.
"Intercompany Debt" means Indebtedness owed by the Borrower or any
Consolidated Subsidiary to the Borrower or any Restricted Subsidiary (other than
so long as such Person is not a Wholly Owned Subsidiary, the California
Partnership, DNI and its Subsidiaries).
"Interest Expense" means, for any period, without duplication, the
sum of all interest payments and payments in the nature of interest under
capital leases and Mandatorily Redeemable Stock, payable during such period by
the Borrower and its Restricted Subsidiaries, with respect to all Indebtedness
of such Persons.
"Interest Payment Date" means the last day of March, June, September
and December of each year.
"Interest Period" means a period commencing, in the case of the
first Interest Period applicable to a Eurodollar Rate Loan, on the date of the
making of, or conversion into,
<PAGE>
such Loan, and, in the case of each subsequent, successive Interest Period
applicable thereto, on the last day of the immediately preceding Interest
Period, and ending, depending on the Type of Loan, on the same day in the first,
second, third, sixth or, if made available by all of the Banks, twelfth calendar
month thereafter, except that (a) any Interest Period that would otherwise end
on a day that is not a Eurodollar Business Day shall be extended to the next
succeeding Eurodollar Business Day unless such Eurodollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Eurodollar Business Day and (b) any Interest Period that begins on the
last Eurodollar Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month in which such Interest
Period ends) shall end on the last Eurodollar Business Day of a calendar month.
"Interest Rate Protection Agreement" means any interest rate
protection agreement, future, option swap, cap or collar agreement or other
arrangement designed to fix interest rates or otherwise hedge against
fluctuations in interest rates.
"Internet Media Publishing" means Internet Media Publishing, Inc., a
Delaware corporation.
"Investment" of any Person means (a) any Capital Security, evidence
of Indebtedness or other security or instrument issued by any other Person, (b)
any loan, advance or extension of credit to, or any contribution to the capital
of, any other Person and (c) any other investment in any other Person. For all
purposes hereof, "Investment" shall include any redesignation of a Restricted
Subsidiary as an Unrestricted Subsidiary pursuant to the definition of
"Restricted Subsidiary," and the amount of any such Investment shall be the fair
market value of the Subsidiary so redesignated at the time of such
resdesignation, as reasonably determined by the Borrower, and as set forth in a
certificate of a Responsible Officer of the Borrower delivered to the
Administrative Agent, so long as such valuation is reasonably satisfactory to
the Administrative Agent. Notwithstanding the foregoing, "Investment" shall not
include purchases or other acquisitions of Capital Securities of Restricted
Subsidiaries by the Borrower or a Restricted Subsidiary.
"Issuing Bank" means The Bank of New York, or such other Bank as the
Borrower, such Bank and The Bank of New York shall agree, in each case in its
capacity as the issuer of each Letter of Credit.
"LC Commitment" means at any time $15,000,000 minus the pro rata
share thereof (computed on the basis of the Commitments at such time) of each
Nonparticipating Bank.
"Lending Office" of any Bank means the Domestic Lending Office or
the Eurodollar Lending Office of such Bank.
"Letter of Credit" means a letter of credit issued by the Issuing
Bank pursuant to Section 1.03.
"Letter of Credit Participation" means, in the case of any Bank
(other than the Issuing Bank) with respect to any Letter of Credit, the
participation interest of such Bank in such
<PAGE>
Letter of Credit acquired pursuant to Section 1.03(e) and, in the case of the
Issuing Bank, its retained interest in such Letter of Credit. The amount of the
Letter of Credit Participation of a Bank (including the Issuing Bank) in any
Letter of Credit at any time shall be deemed to be the amount equal to such
Bank's pro rata share (determined on the basis of the Commitments at such time
of each of the Banks) of the sum of (a) the aggregate unpaid amount of all
Drawings thereunder at such time and (b) the amount of the Contingent
Reimbursement Obligation with respect thereto at such time that shall not have
been prepaid or cash collateralized in accordance with the terms hereof at such
time.
"Liability" of any Person means (in each case, whether with full or
limited recourse) any indebtedness, liability, obligation, covenant or duty of
or binding upon, or any term or condition to be observed by or binding upon,
such Person or any of its assets, of any kind, nature or description, direct or
indirect, absolute or contingent, due or not due, contractual or tortious,
liquidated or unliquidated, whether arising under Contract, Applicable Law, or
otherwise, whether now existing or hereafter arising, and whether for the
payment of money or the performance or non-performance of any act.
"Lien" means, with respect to any property or asset (or any income
or profits therefrom) of any Person (in each case whether the same is consensual
or nonconsensual or arises by Contract, operation of law, legal process or
otherwise) (a) any mortgage, lien, pledge, attachment, levy or other security
interest of any kind thereupon or in respect thereof or (b) any other
arrangement, express or implied, under which the same is subordinated,
transferred, sequestered or otherwise identified so as to subject the same to,
or make the same available for, the payment or performance of any Liability in
priority to the payment of the ordinary, unsecured Liabilities of such Person.
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset that it has acquired or holds subject to the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means any amount advanced by a Bank pursuant to Section
1.01(a)(i), any Swing Loan and any Special ANI Loan.
"Loan Document Related Claim" means any claim or dispute (whether
arising under Applicable Law, including any "environmental" or similar law,
under Contract or otherwise and, in the case of any proceeding relating to any
such claim or dispute, whether civil, criminal, administrative or otherwise) in
any way arising out of, related to, or connected with, the Loan Documents, the
relationships established thereunder or any actions or conduct thereunder or
with respect thereto, whether such claim or dispute arises or is asserted before
or after the Agreement Date or before or after the Repayment Date.
"Loan Document Representation and Warranty" means any
"Representation and Warranty" as defined in any Loan Document and any other
representation or warranty made or deemed made under any Loan Document.
"Loan Documents" means (a) this Agreement, the Notes, and the Pledge
<PAGE>
Agreements and (b) all other material agreements, documents and instruments
relating to, arising out of, or in any way connected with (i) any agreement,
document or instrument referred to in clause (a), or (ii) any other agreement,
document or instrument referred to in this clause (b).
"Loan Party" means any Person (other than the Administrative Agent,
the Issuing Bank, the Swing Loan Lender, the Documentation Agent or a Bank) that
is a party to a Loan Document.
"Management Agreement" means the Management Agreement dated as of
July 1, 1988 between the Borrower and MediaNews Group, Inc.
"Mandatorily Redeemable Stock" means, with respect to any Person,
any share of such Person's capital stock to the extent that it is (a)
redeemable, payable or required to be purchased or otherwise retired or
extinguished, or convertible into any Indebtedness or other Liability of such
Person (other than upon the occurrence of an event of default in connection
therewith), (i) at a fixed or determinable date, whether by operation of a
sinking fund or otherwise, (ii) at the option of any Person other than such
Person or (iii) upon the occurrence of a condition not solely within the control
of such Person, such as a redemption required to be made out of future earnings
or (b) convertible into Mandatorily Redeemable Stock.
"Master Intercompany Note" means the promissory note in the form of
Exhibit A-3, dated the Restated Agreement Date, issued by DNI in favor of ANI.
"Materially Adverse Effect" means, (a) with respect to any Person,
any materially adverse effect on such Person's business, assets, Liabilities,
financial condition, results of operations or business prospects, (b) with
respect to a group of Persons "taken as a whole", any materially adverse effect
on such Persons' business, assets, Liabilities, financial conditions, results of
operations or business prospects taken as a whole on, where appropriate, a
consolidated basis in accordance with Generally Accepted Accounting Principles,
(c) with respect to any Loan Document, any materially adverse effect, on the
binding nature, validity or enforceability thereof as an obligation of any Loan
Party that is a party thereto and (d) with respect to any Collateral, or any
category of Collateral, pledged by any Loan Party, a materially adverse effect
on its value as Collateral or its utility in such Loan Party's business or a
materially adverse effect on the validity, perfection, priority or
enforceability of the Security Interest therein.
"Maturity Date" means June 30, 2006.
"Maximum Permissible Rate" means, with respect to interest payable
on any amount, the rate of interest on such amount that, if exceeded, could,
under Applicable Law, result in (a) civil or criminal penalties being imposed on
the payee or (b) the payee's being unable to enforce payment of (or, if
collected, to retain) all or any part of such amount or the interest payable
thereon.
"Media General" means Media General, Inc., a Virginia corporation.
"Money Market Investment" means (a) any security issued or directly
and fully
<PAGE>
guaranteed or insured by the United States government or any agency or
instrumentality thereof having a remaining maturity of not more than one year,
(b) any certificate of deposit, eurodollar time deposit and bankers' acceptance
with remaining maturity of not more than one year, any overnight bank deposit,
and any demand deposit account, in each case with any Bank or with any United
States commercial bank having capital and surplus in excess of $500,000,000 and
rated B or better by Thomson Bankwatch Inc., (c) any repurchase obligation with
a term of not more than seven days for underlying securities of the types
described in clauses (a) and (b) above entered into with any financial
institution meeting the qualifications specified in clause (b) above, and (d)
any commercial paper issued by any Bank or the parent corporation of any Bank
and any other commercial paper rated A-1 or higher by Standard & Poor's Ratings
Services, a division of the McGraw Hill Companies, Inc. or Prime-1 by Moody's
Investors Service, Inc. and in any case having a remaining maturity of not more
than one year and any other short-term instrument consented to by the
Administrative Agent.
"Multiemployer Benefit Plan" means any Benefit Plan that is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"1999 Indenture" means the Indenture dated as of March 16, 1999
between the Borrower and The Bank of New York, as trustee, with respect to the
1999 Subordinated Notes.
"1999 Subordinated Notes" means the 8-5/8% Senior Subordinated Notes
due 2011, Series A and Series B, of the Borrower.
"1997 Indenture" means the Indenture dated October 1, 1997 between
the Borrower and The Bank of New York, as trustee, with respect to the 1997
Subordinated Notes.
"1997 Subordinated Notes" means the 8-3/4% Senior Subordinated Notes
due 2009, Series A and Series B, of the Borrower.
"Net Proceeds" means the proceeds received by the Borrower or any
Subsidiary in cash from the sale, lease, assignment or other disposition of any
asset or property (other than sales of assets in the ordinary course of
business, which, for purposes of this definition, shall not include any
disposition of assets in which the total consideration received or receivable is
in excess of $500,000), net of (a) reasonable and customary fees, costs and
expenses incurred in connection with such sale, lease, assignment or other
disposition and payable by or on behalf of the seller or the transferor of the
assets to which such sale or disposition relates, (b) the amount of all foreign,
Federal, state and local taxes payable as a direct consequence of such sale,
lease, assignment or other disposition and (c) the amount of the Indebtedness
and other Liabilities, if any, attributable to or associated with such asset or
property and repaid out of such proceeds. For this purpose, all proceeds of
insurance paid on account of the loss of or damage to any such asset or
property, or group of assets or properties, and awards of compensation for any
such asset or property, or group of assets or properties, taken by condemnation
or eminent domain shall be deemed to be Net Proceeds (provided that, in the case
of proceeds from insurance paid with respect to any loss or damage to any asset,
such proceeds, or any portion thereof, shall not constitute Net Proceeds if the
Administrative Agent has received notice from the Borrower or
<PAGE>
any Subsidiary of its intention to use such proceeds or portion thereof at the
time of such loss or damage, and such proceeds or portion thereof are in fact so
used within one year after the occurrence of such loss or damage to repair,
restore or replace such asset).
"Newco" shall have the meaning ascribed thereto in the Greenco Note
Purchase Agreement.
"New England Internet Media Publishing" means New England Internet
Media Publishing, Inc., a Delaware corporation.
"Nonparticipating Bank" means a Bank designated by the Issuing Bank
as a Bank with respect to which a Bank Nonparticipation has occurred. The
designation of a Bank by the Issuing Bank as a "Nonparticipating Bank" shall not
affect the status of such Bank as a Participating Bank in respect of Letters of
Credit issued prior to such designation.
"Note" means any promissory note in the form of Exhibit A-1
(appropriately modified if requested by any Bank to evidence its Special ANI
Loan) or, as the context may require, any Swing Note.
"Notice of Assignment" means any notice to the Borrower, the Issuing
Bank, the Swing Loan Lender and the Administrative Agent with respect to an
assignment pursuant to Section 9.10(a) in the form of Schedule 9.10(a).
"Operating Cash Flow" means, as of any date of determination, the
following, determined with respect to the immediately preceding four fiscal
quarters of the Borrower for which financial statements of the Borrower have
been delivered pursuant to Section 5.01(a) or 5.01(c), as the case may be: (A)
revenues less (B) the sum of (i) cost of sales, (ii) management fees and (iii)
selling, general and administrative expenses (excluding, for any such period of
four fiscal quarters ending on or prior to March 31, 2001, expenses incurred in
connection with the internet activities of the Borrower and the Restricted
Subsidiaries, in an aggregate amount not in excess of $1,000,000), in each case
for clauses (A) and (B), of the Borrower and its Restricted Subsidiaries, for
such period, determined on a consolidated basis and in accordance with GAAP plus
(C) the lesser of (i) dividends received in cash from any Person not
constituting a Restricted Subsidiary hereunder for such period and (ii) the
Borrower's and its Restricted Subsidiaries' percentage interest in the net
income of such Person; provided that, (x) if any such Restricted Subsidiary is
not a Wholly Owned Restricted Subsidiary of the Borrower, revenues, cost of
sales, management fees and selling, general and administrative expenses of such
Restricted Subsidiary and its Subsidiaries shall be included only to the extent
of the Borrower's common equity ownership on a fully diluted basis therein
(provided, that, so long as (a) no dividends or other distributions have been
made to Media General or its Affiliates in respect of the Capital Securities of
DNI owned by it or its Affiliates (other than payments under the DNI Tax Sharing
Agreement) and (b) the liability of DNI pursuant to Section 10.01 continues to
be limited in accordance with the proviso contained therein and has not been
reduced to zero, 100% of the revenues, cost of sales, management fees and
selling, general and administrative expenses of DNI and its Subsidiaries shall
be included) and (y) operating cash flow of any Restricted
<PAGE>
Subsidiary shall be excluded if and to the extent that, the declaration of
dividends or distribution by that Subsidiary of such operating cash flow is not,
at the time, permitted directly or indirectly, by the terms of its charter, or
any agreement, instrument, judgment, decree, order, statute, rule or government
regulation applicable to that Subsidiary. Notwithstanding the foregoing,
Operating Cash Flow for any period shall be calculated after giving effect on a
pro forma basis for the period of such calculation to (a) the sale or other
disposition of any Restricted Subsidiary (including, for this purpose, the
redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary pursuant
to the definition of "Restricted Subsidiary") or of all or substantially all of
the assets of any Restricted Subsidiary during such period and up to and
including the date of determination (the "Reference Period") and (b) the
acquisition by the Borrower or any Restricted Subsidiary during the Reference
Period of any other Person which, as a result of such acquisition, becomes a
Restricted Subsidiary of the Borrower (including, for this purpose, the
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary pursuant
to the definition of "Restricted Subsidiary"), or the acquisition of assets
during the Reference Period from any Person which constitutes all or
substantially all of an operating unit or business of such Person, as if such
sale or disposition or acquisition (including any such redesignation) occurred
on the first day of the period of such calculation; provided that to the extent
that this sentence requires that pro forma effect be given to an acquisition of,
or an acquisition of all or substantially all of an operating unit or business
from, any Person, such pro forma calculation shall be based upon the four full
fiscal quarters of such Person or operating unit or business for which financial
information is available immediately preceding such acquisition.
"Participating Bank" means a Bank that is not a Nonparticipating
Bank. A Participating Bank shall remain a Participating Bank in all Letters of
Credit with respect to which it was a Participating Bank prior to its
designation as a Nonparticipating Bank.
"Participating Bank Percentage" means, for a Participating Bank,
with respect to any Letter of Credit, the fraction, expressed as a percentage,
the numerator of which is such Participating Bank's Commitment and the
denominator of which is the sum of the aggregate amount of the Commitments of
all Banks that are, at the time of issuance of such Letter of Credit,
Participating Banks.
"Partnership Agreement" means the Partnership Agreement relating to
the California Partnership dated March 31, 1999 among West Coast MediaNews,
Donrey Newspapers LLC, The Sun Company of San Bernardino, California and
MediaWest SBC, Inc.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Guaranty" means any Guaranty that is (a) an endorsement
of a check for collection in the ordinary course of business or (b) a Guaranty
of and only of the obligations of the Loan Parties under the Loan Documents.
"Permitted Lien" means (a) with respect to any asset that does not
constitute Collateral, (i) any Lien securing and only securing the obligations
of the Loan Parties under the Loan Documents; (ii) any Lien securing a tax,
assessment or other governmental charge or levy
<PAGE>
or the claim of a materialman, mechanic, carrier, warehouseman or landlord for
labor, materials, supplies or rentals incurred in the ordinary course of
business, but only if payment thereof shall not at the time be required to be
made in accordance with Section 4.02(e) and foreclosure, distraint, sale or
other similar proceedings shall not have been commenced; (iii) any Lien on the
properties and assets of a Restricted Subsidiary of the Borrower securing an
obligation owing to the Borrower; (iv) any Lien consisting of a deposit or
pledge made in the ordinary course of business in connection with, or to secure
payment of, obligations under worker's compensation, unemployment insurance or
similar legislation; (v) any Lien arising pursuant to an order of attachment,
distraint or similar legal process arising in connection with legal proceedings,
but only if and so long as the execution or other enforcement thereof is not
unstayed for more than 20 days; (vi) any Lien existing on (A) any property or
asset of any Person at the time such Person becomes a Restricted Subsidiary or
(B) any property or asset at the time such property or asset is acquired by the
Borrower or a Restricted Subsidiary, but only, in the case of either (A) or (B),
if and so long as (1) such Lien was not created in contemplation of such Person
becoming a Restricted Subsidiary or such property or asset being acquired, (2)
such Lien is and will remain confined to the property or asset subject to it at
the time such Person becomes a Restricted Subsidiary or such property or asset
is acquired and to fixed improvements thereafter erected on such property or
asset, (3) such Lien secures only the obligation secured thereby at the time
such Person becomes a Restricted Subsidiary or such property or asset is
acquired and (4) the obligation secured by such Lien is not in default; (vii)
any Lien in existence on the Agreement Date to the extent set forth on Schedule
4.08, but only, in the case of each such Lien, to the extent it secures an
obligation outstanding on the Agreement Date to the extent set forth on such
Schedule; (viii) any Lien securing Purchase Money Indebtedness but only if, in
the case of each such Lien, (A) such Lien shall at all times be confined solely
to the property or asset the purchase price of which was financed through the
incurrence of the Purchase Money Indebtedness secured by such Lien and to fixed
improvements thereafter erected on such property or asset and (B) such Lien
attached to such property or asset within 30 days of the acquisition of such
property or asset; (ix) any Lien constituting a renewal, extension or
replacement of a Lien constituting a Permitted Lien by virtue of clause (vi),
(vii), (viii) or (ix) of this definition, but only if (A) at the time such Lien
is granted and immediately after giving effect thereto, no Default would exist,
(B) such Lien is limited to all or a part of the property or asset that was
subject to the Lien so renewed, extended or replaced and to fixed improvements
thereafter erected on such property or asset, (C) the principal amount of the
obligations secured by such Lien does not exceed the principal amount of the
obligations secured by the Lien so renewed, extended or replaced and (D) the
obligations secured by such Lien bear interest at a rate per annum not exceeding
the rate borne by the obligations secured by the Lien so renewed, extended or
replaced except for any increase that is commercially reasonable at the time of
such increase; or (x) any encumbrance constituting a Lien contained in the
Denver Acquisition Documents; and (b) with respect to any asset that constitutes
Collateral, any Lien that constitutes a "Permitted Lien" under the applicable
Pledge Agreement.
"Permitted Restrictive Covenant" means (a) any covenant or
restriction contained in any Loan Document, (b) any covenant or restriction
contained in the Greenco Note Purchase Agreement, so long as such covenant or
restriction is not binding on any Person other than
<PAGE>
Newco, or in the 1997 Indenture, the 1999 Indenture, the Partnership Agreement
or the Denver Acquisition Documents, (c) any covenant or restriction binding
upon any Person at the time such Person becomes a Restricted Subsidiary of the
Borrower if the same is not created in contemplation thereof, (d) any covenant
or restriction of the type contained in Section 4.08 that is contained in any
Contract evidencing or providing for the creation of or concerning Purchase
Money Indebtedness (other than the Greenco Note) so long as such covenant or
restriction is limited to the property purchased therewith, (e) any covenant or
restriction described in Schedule 4.16, but only to the extent such covenant or
restriction is there identified by specific reference to the provision of the
Contract in which such covenant or restriction is contained or (f) any covenant
or restriction that (i) is not more burdensome than an existing Permitted
Restrictive Covenant that is such by virtue of clause (b), (c), (d), (e) or (f),
(ii) is contained in a Contract constituting a renewal, extension or replacement
of the Contract in which such existing Permitted Restrictive Covenant is
contained and (iii) is binding only on the Person or Persons bound by such
existing Permitted Restrictive Covenant.
"Person" means any individual, sole proprietorship, corporation,
limited liability company, partnership, trust, unincorporated organization,
mutual company, joint stock company, estate, union, employee organization,
government or any agency or political subdivision thereof or, for the purpose of
the definition of "ERISA Affiliate", any trade or business.
"Pledge Agreements" means collectively (a) each of the Pledge
Agreements between each Subsidiary and the Administrative Agent, the Pledge
Agreement between the Borrower and the Administrative Agent and the ANI Pledge
Agreement, in each case in substantially the form of Exhibit C and (b) any other
pledge agreement entered into pursuant to Section 4.04, in each case in
substantially the form of Exhibit C.
"Post-Default Rate" means the rate otherwise applicable under
Section 1.04(a) plus 2.00%.
"Prime Rate" means the prime commercial lending rate of The Bank of
New York, as publicly announced to be in effect from time to time. The Prime
Rate shall be adjusted automatically, without notice, on the effective date of
any public announcement of any change in such prime commercial lending rate. The
Prime Rate is not necessarily The Bank of New York's lowest rate of interest.
"Pro Forma Consolidated Interest Expense" means, as of any date of
determination, Interest Expense projected to be paid during the period of four
full fiscal quarters of the Borrower next succeeding such date on all
Indebtedness. For purposes of computing projected interest for any period under
the preceding sentence, (i) it shall be assumed that the amount of Indebtedness
outstanding on the first day of such period remains outstanding during the
entire period except to the extent that such Indebtedness is subject to a
mandatory payment or prepayment of principal during such period, (ii) if such
Person has committed to incur additional Indebtedness during such period,
interest on such additional Indebtedness shall be taken into account from and
after the date on which such Person is committed to incur it and (iii) where
interest varies with or depends on a floating rate, the rate in effect on the
first day of such period
<PAGE>
will be assumed to be in effect and remain constant during the entire period for
which interest is being computed after giving effect to interest rate swaps and
similar obligations which are in effect on such day and will continue in effect
for more than half of the period of such calculation.
"Pro Forma Debt Service" means, as of any date of determination, the
sum of (i) all Required Repayments, and all other payments of principal of all
Indebtedness of the Borrower and its Restricted Subsidiaries scheduled to be
made during the period of four full fiscal quarters of the Borrower next
succeeding such date of determination, and (ii) Pro Forma Consolidated Interest
Expense for such period.
"Prohibited Transaction" means any transaction that is prohibited
under Code Section 4975 or ERISA Section 406 and not exempt under Code Section
4975 or ERISA Section 408.
"Purchase Money Indebtedness" means (a) Indebtedness of the Borrower
that is incurred to finance part or all of (but not more than) the purchase
price of tangible property and related assets, provided that (i) neither the
Borrower nor any Restricted Subsidiary had at any time prior to such purchase
any interest in such asset other than a security interest or an interest as
lessee under an operating lease and (ii) such Indebtedness is incurred within 30
days after such purchase, or (b) Indebtedness that (i) constitutes a renewal,
extension or refunding of, but not an increase in the principal amount of,
Purchase Money Indebtedness that is such by virtue of clause (a) or (b) and (ii)
bears interest at a rate per annum that is commercially reasonable at the time
such Indebtedness is incurred.
"Regulation A" means Regulation A of the Board of Governors of the
Federal Reserve System.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System.
"Regulatory Change" means any Applicable Law, interpretation,
directive, request or guideline (whether or not having the force of law), or any
change therein or in the administration or enforcement thereof, that becomes
effective or is implemented or first required or expected to be complied with
after the Restated Agreement Date, whether the same is (a) the result of an
enactment by a government or any agency or political subdivision thereof, a
determination of a court or regulatory authority, or otherwise or (b) enacted,
adopted, issued or proposed before or after the Restated Agreement Date,
including any such Applicable Law, interpretation, directive, request, guideline
or change that imposes, increases or modifies any Tax, reserve requirement,
insurance charge, special deposit requirement, assessment or capital adequacy
requirement, but excluding any such Applicable Law, interpretation, directive,
request,
<PAGE>
guideline or change that imposes, increases or modifies any income or franchise
tax imposed upon a Bank by any jurisdiction (or any political subdivision
thereof) in which such Bank or any of its Lending Offices is located or doing
business.
"Reinvested Amount" means, with respect to any Net Proceeds, the
portion thereof that, as of the last day of the Reinvestment Contract Period
with respect thereto, shall have been reinvested pursuant to acquisitions
described in Section 4.10(e) in a manner not prohibited by this Agreement or
will be so reinvested pursuant to a Reinvestment Contract entered into by all of
the parties thereto on or prior to such last day.
"Reinvestment Contract" means a binding contract entered into by the
Borrower or a Subsidiary providing for acquisitions described in Section 4.10(e)
in a manner not prohibited by this Agreement.
"Reinvestment Contract Period" means, with respect to any sale or
disposition of assets by the Borrower or any Subsidiary, the period from the
date of such sale or disposition to the date that is 270 days after the date of
such sale or disposition.
"Reinvestment Period" means, with respect to any sale or disposition
of assets by the Borrower or any Subsidiary, the period from the date of such
sale or disposition to the date that is 360 days after the date of such sale or
disposition.
"Reorganization" means the corporate reorganization and
restructuring of ANI, the Borrower and its Subsidiaries described on Schedule
4.01.
"Repayment Date" means the later of (i) the termination of the
Commitments in their entirety (whether as a result of the occurrence of the
Maturity Date, the reduction thereof to zero pursuant to Section 1.08 or the
termination thereof pursuant to Section 6.02), (ii) the payment in full of all
principal of and interest on the Loans and Drawings and all fees and other
amounts payable or accrued hereunder and (iii) the expiration or cancellation
of, or the reduction to zero of the amount available to be drawn under, all
outstanding Letters of Credit.
"Reportable Event" means, with respect to any Benefit Plan of any
Person, (a) the occurrence of any of the events set forth in ERISA Sections
4043(c) (other than a Reportable Event as to which the provision of 30 days'
notice to the PBGC is waived under applicable regulations), 4062(e) or 4063(a)
or the regulations thereunder with respect to such Benefit Plan, (b) any event
requiring such Person or any of its ERISA Affiliates to provide security to such
Benefit Plan under Code Section 401(a)(29) or (c) any failure to make a payment
required by Code Section 412(m) with respect to such Benefit Plan.
"Representation and Warranty" means any representation or warranty
made by the Borrower, any Guarantor or any other Loan Party pursuant to or under
(a) Section 2.02, Article 3, Section 5.02 or any other provision of this
Agreement or (b) any amendment to, or waiver of rights under, this Agreement,
WHETHER OR NOT, IN THE CASE OF ANY REPRESENTATION OR WARRANTY REFERRED TO IN
CLAUSE (a) OR (b) OF THIS DEFINITION (EXCEPT, IN EACH CASE, TO THE EXTENT
OTHERWISE EXPRESSLY
<PAGE>
PROVIDED), THE INFORMATION THAT IS THE SUBJECT MATTER THEREOF IS WITHIN THE
KNOWLEDGE OF SUCH LOAN PARTY.
"Required Banks" means, at any time, Banks having at least 51% of
the Loans (including, if any Swing Loans are outstanding at such time, such
Banks' pro rata share thereof based on the Commitments at such time) and Letter
of Credit Participations outstanding or, if there are no Loans or Letter of
Credit Participations outstanding, at least 51% of the aggregate amount of the
Commitments.
"Required Repayments" means, for any period, an amount equal to the
excess, if any, of (i) the outstanding amount of Loans and Letter of Credit
Participations at the beginning of such period over (ii) the aggregate amount of
the Commitments at the end of such period.
"Reserve Requirement" means, at any time, the then current maximum
rate for which reserves (including any marginal, supplemental or emergency
reserve) are required to be maintained under Regulation D by member banks of the
Federal Reserve System in New York City with deposits exceeding five billion
Dollars against "Eurocurrency liabilities", as that term is used in Regulation
D. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the
effective date of any change in the Reserve Requirement.
"Responsible Officer" means, with respect to any Person, the chief
executive officer, the chief operating officer, the chief financial officer or
treasurer such Person.
"Restated Agreement Date" means June 30, 1999, which date is the
date the executed copies of this Agreement, as amended and restated as of such
date, were delivered by all parties hereto and, accordingly, the date this
Agreement, as amended and restated as of such date, became effective and, for
the first time, binding on such parties.
"Restricted Payment" means (a) any payment with respect to or on
account of any of the Borrower's or any Restricted Subsidiary's Capital
Securities, including any dividend or other distribution on, or any payment of
interest on or principal of, any such Capital Securities, (other than, in the
case of any such payment of interest or principal, any such Capital Securities
constituting Indebtedness for all purposes hereof), (b) any payment on account
of the principal of or interest or premium, if any, on any Subordinated Debt
(other than any regularly scheduled payment of interest thereon and any
repayment of principal thereof upon the stated maturity thereof (subject to the
subordination provisions applicable thereto)) or (c) any payment on account of
any purchase, redemption, retirement, exchange, defeasance or conversion of, or
on account of any claim relating to or arising out of the offer, sale or
purchase of, any such Capital Security or any Subordinated Debt. For the
purposes of this definition, a "payment" shall include the transfer of any asset
or the incurrence of any Indebtedness or other Liability (the amount of any such
payment to be the fair market value of such asset or the amount of such
obligation, respectively) but shall not include the issuance of any capital
stock of the Borrower other than Mandatorily Redeemable Stock that would
constitute Indebtedness in accordance with the definition thereof.
Notwithstanding the foregoing, "Restricted Payment" shall not include purchases
or other acquisitions of Capital Securities of Restricted Subsidiaries by the
Borrower
<PAGE>
or a Restricted Subsidiary.
"Restricted Subsidiary" means (a) each Subsidiary of the Borrower in
existence on the Restated Agreement Date and (b) each Subsidiary of the Borrower
formed, created or acquired by the Borrower or a Restricted Subsidiary after the
Restated Agreement Date, unless such Subsidiary is designated by the Borrower as
an Unrestricted Subsidiary in a notice to the Administrative Agent given prior
to such formation, creation or acquisition; provided that any Subsidiary which
owns, directly or indirectly, the Capital Securities of any Restricted
Subsidiary shall, for so long as it is a Subsidiary, be a Restricted Subsidiary,
and provided, further, that any such Restricted Subsidiary may be redesignated
by the Borrower as an Unrestricted Subsidiary, effective on the date specified
by the Borrower in a notice to the Administrative Agent and the Banks given not
less than five Business Days prior to such specified date, so long as (1) no
Default, including but not limited to a Default under Section 4.11(e), shall
have occurred and be continuing both before and after giving effect to such
redesignation (and by delivering such notice the Borrower shall be deemed to
have made a Representation and Warranty to such effect) and (2) such notice
shall be accompanied by a certificate of a Responsible Officer of the Borrower,
in form and content satisfactory to the Administrative Agent, demonstrating
that, on a pro forma basis determined as if such redesignation had been
consummated on the first day of the most recently completed four fiscal quarters
of the Borrower, the Borrower would have been in compliance at all times with
the requirements of Sections 4.22 through 4.26; provided, further, that any
Unrestricted Subsidiary may be redesignated by the Borrower as a Restricted
Subsidiary, effective on the date specified by the Borrower in a notice to the
Administrative Agent and the Banks given not less than five Business Days prior
to such specified date, so long as (1) no Default shall have occurred and be
continuing after giving effect to such redesignation, (and by delivering such
notice the Borrower shall be deemed to have made a Representation and Warranty
to the effect set forth in this clause (1)) and (2) such notice shall be
accompanied by a certificate of a Responsible Officer of the Borrower, in form
and content satisfactory to the Administrative Agent, demonstrating that, on a
pro forma basis determined as if such redesignation had been consummated on the
first day of the most recently completed four fiscal quarters of the Borrower,
such redesignation would not have resulted in a failure by the Borrower to be in
compliance at all times with the requirements of Sections 4.22 through 4.26.
"Secured Party" has the meaning ascribed to such term in the Pledge
Agreements.
"Security Interest" means the Liens created, or purported to be
created, by the Loan Documents.
"Special ANI Loan" means any amount advanced by a Bank pursuant to
Section 1.01(c).
"Subordinated Debt" means (i) the 1997 Subordinated Notes, (ii) the
1999 Subordinated Notes, (iii) the Greenco Note and (iv) any other Indebtedness
of the Borrower that is subordinated on terms and conditions, and that is
subject to other terms and conditions, satisfactory in form and substance to the
Required Banks.
<PAGE>
"Subsidiary" means, with respect to any Person, any other Person (a)
securities of which having ordinary voting power to elect a majority of the
board of directors (or other persons having similar functions), (b) any other
ownership interests of which ordinarily constitute a majority voting interest,
are at the time, directly or indirectly, owned or controlled by such first
Person, or by one of more of its Subsidiaries, or by such first Person and one
or more of its Subsidiaries or (c) that otherwise constitutes a Consolidated
Subsidiary of such first Person. Unless otherwise specified, "Subsidiary" means
a Subsidiary of the Borrower.
"Subsidiary Guaranty Supplement" means each Subsidiary Guaranty
Supplement entered into pursuant to Section 4.04, in each case in substantially
the form of Exhibit B.
"Swing Loan" means an amount advanced by the Swing Loan Lender
pursuant to Section 1.01(b) hereof.
"Swing Loan Lender" means The Bank of New York.
"Swing Loan Percentage" means, for any Bank, at any time, a
fraction, expressed as a percentage, the numerator of which is such Banks
Commitment at such time and the denominator of which is the aggregate amount of
the Commitments at such time.
"Swing Note" means any promissory note in the form of Exhibit A-2.
"Tax" means any federal, state or foreign tax, assessment or other
governmental charge or levy of any nature (including any withholding tax) upon a
Person or upon its assets, revenues, income or profits including without
limitation, interest, penalties and additional allowances with respect to such
items.
"Tax Sharing Agreement" means the Federal Tax Sharing Agreement
dated as of May 20, 1994 between the Borrower and ANI.
"Termination Event" means, with respect to any Benefit Plan, (a) any
Reportable Event with respect to such Benefit Plan, (b) the termination of such
Benefit Plan, or the filing of a notice of intent to terminate such Benefit
Plan, or the treatment of any amendment to such Benefit Plan as a termination
under ERISA Section 4041(c), (c) the institution of proceedings to terminate
such Benefit Plan under ERISA Section 4042 or (d) the appointment of a trustee
to administer such Benefit Plan under ERISA Section 4042.
"Type" means, with respect to Loans, any of the following, each of
which shall be deemed to be a different "Type" of Loan: Base Rate Loans,
Eurodollar Rate Loans having a one-month Interest Period, Eurodollar Rate Loans
having a two-month Interest Period, Eurodollar Rate Loans having a three-month
Interest Period, Eurodollar Rate Loans having a six-month Interest Period and,
if made available by all of the Banks, Eurodollar Rate Loans having a
twelve-month Interest Period. Any Eurodollar Rate Loan having an Interest Period
that differs from the duration specified for a Type of Eurodollar Rate Loan
listed above solely as a result of the operation of clauses (a) and (b) of the
definition of "Interest Period" shall be deemed to be a
<PAGE>
Loan of such above-listed Type notwithstanding such difference in duration of
Interest Periods.
"Unfunded Benefit Liabilities" means, with respect to any Benefit
Plan at any time, the amount of unfunded benefit liabilities of such Benefit
Plan at such time as determined under ERISA Section 4001(a)(18).
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of New York.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower that
is not a Restricted Subsidiary.
"West Coast MediaNews" means West Coast Media News LLC, a Delaware
limited liability company.
"Wholly Owned Subsidiary" means, with respect to any Person, any
Subsidiary of such Person all of the Capital Securities and all other ownership
interests and rights to acquire ownership interests of which (except directors'
qualifying shares) are, directly or indirectly, owned or controlled by such
Person or one or more Wholly Owned Subsidiaries of such Person or by such Person
and one or more of such Subsidiaries; unless otherwise specified, "Wholly Owned
Subsidiary" means a Wholly Owned Subsidiary of the Borrower.
"Year 2000 Issue" means the failure of computer software, hardware
and firmware systems and equipment containing embedded computer chips to
properly receive, transmit, process, manipulate, store, retrieve, re-transmit or
in any other way utilize data and information due to the occurrence of the year
2000 or the inclusion of dates on or after January 1, 2000.
Section 11.02 Other Interpretive Provisions.
(a) Except as otherwise specified herein, all references herein or in any
other Loan Document (i) to any Person shall be deemed to include such Person's
permitted successors and assigns, (ii) to any Applicable Law defined or referred
to herein shall be deemed references to such Applicable Law or any successor
Applicable Law as the same may have been or may be amended or supplemented from
time to time and (iii) to any Loan Document or Contract defined or referred to
herein shall be deemed references to such Loan Document or Contract (and, in the
case of any Note or any other instrument, any instrument issued in substitution
therefor) as the terms thereof may have been or may be amended, supplemented,
waived or otherwise modified from time to time as permitted hereby.
(b) When used in this Agreement, the words "herein", "hereof" and
"hereunder" and words of similar import shall refer to this Agreement as a whole
and not to any provision of this Agreement, and the words "Article", "Section",
"Annex", "Schedule" and "Exhibit" shall refer to Articles and Sections of, and
Annexes, Schedules and Exhibits to, this Agreement unless otherwise specified.
<PAGE>
(c) Whenever the context so requires, the neuter gender includes the
masculine or feminine, the masculine gender includes the feminine, and the
singular number includes the plural, and vice versa.
(d) Any item or list of items set forth following the word
"including", "include" or "includes" is set forth only for the purpose of
indicating that, regardless of whatever other items are in the category in which
such item or items are "included", such item or items are in such category, and
shall not be construed as indicating that the items in the category in which
such item or items are "included" are limited to such items or to items similar
to such items.
(e) Each authorization in favor of the Administrative Agent, the
Issuing Bank, the Swing Loan Lender, any Bank or any other Person granted by or
pursuant to this Agreement shall be deemed to be irrevocable and coupled with an
interest.
(f) Except as otherwise specified herein, all references herein to
the Administrative Agent, the Issuing Bank, the Swing Loan Lender, any Bank or
any Loan Party shall be deemed to refer to such Person however designated in
Loan Documents, so that (i) a reference to rights or duties of the
Administrative Agent under the Loan Documents shall be deemed to include the
rights or duties of such Person as the Secured Party under the Pledge
Agreements, (ii) a reference to costs incurred by a Bank in connection with the
Loan Documents shall be deemed to include costs incurred by such Person as a
Principal under (and as defined in) the Pledge Agreements and (iii) a reference
to the obligations of the Borrower or any other Loan Party under the Loan
Documents shall be deemed to include the obligations of such Person in any
capacity under the Loan Documents.
Section 11.03 Accounting Matters.
All accounting determinations hereunder and all computations
utilized by the Borrower in complying with the covenants contained herein shall
be made, all accounting terms used herein shall be interpreted, and all
financial statements required to be delivered hereunder shall be prepared, in
accordance with Generally Accepted Accounting Principles, except, in the case of
such financial statements, for changes in Generally Accepted Accounting
Principles that may from time to time be approved by a significant segment of
the accounting profession.
Section 11.04 Representations and Warranties.
All Representations and Warranties shall be deemed made (a) in the
case of any Representation and Warranty contained in this Agreement at the time
of its initial execution and delivery, at and as of the Restated Agreement Date,
(b) in the case of any Representation and Warranty contained in this Agreement
or any other document at the time any Loan is made or Letter of Credit is
issued, at and as of such time and (c) in the case of any particular
Representation and Warranty, wherever contained, at such other time or times as
such Representation and Warranty is made or deemed made in accordance with the
provisions of this Agreement or the document pursuant to, under or in connection
with which such Representation and Warranty is made or deemed made.
<PAGE>
Section 11.05 Captions.
Captions to Articles, Sections and subsections of, and Annexes,
Schedules and Exhibits to, this Agreement are included for convenience of
reference only and shall not constitute a part of this Agreement for any other
purpose or in any way affect the meaning or construction of any provision of
this Agreement.
Section 11.06 Interpretation of Related Documents.
Except as otherwise specified therein, terms that are defined herein
that are used in Notes, certificates, opinions and other documents delivered in
connection herewith shall have the meanings ascribed to them herein and such
documents shall be otherwise interpreted in accordance with the provisions of
this Article 11.
<PAGE>
THIRD AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
MEDIA GENERAL, INC.
MEDIANEWS GROUP, INC.
DENVER NEWSPAPERS, INC.
JUNE 30, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Table of Contents.................................................... i
LIST OF EXHIBITS..................................................... iv
1. SALE OR TRANSFER OF STOCK........................................ 3
1.01 Additional Securities................................. 3
1.02 Restrictions.......................................... 4
1.03 Permitted Transfers................................... 4
1.04 Transferees Bound..................................... 5
1.05 Termination of Restrictions........................... 6
2. ANI'S AND THE COMPANY'S RIGHT OF FIRST PURCHASE IN CONNECTION WITH
PROPOSED PUBLIC OFFERINGS AND RULE 144 SALES BY CLASS
A SHAREHOLDERS................................................. 7
2.01 Proposed Public Offerings by Class A Shareholders..... 7
2.02 Proposed Rule 144 Sales by the Class A Shareholders... 8
3. SHAREHOLDER'S OPTION TO PURCHASE COMMON STOCK; DRAG-ALONG
AND TAG-ALONG RIGHTS........................................... 10
3.01 Option to Purchase.................................... 10
3.02 Required Notice....................................... 11
3.03 Exercise and Scope of Exercise........................ 12
3.04 Bona Fide Non-Cash Third Party Offers................. 13
3.05 Failure To Exercise................................... 14
3.06 Drag-Along Rights..................................... 15
3.07 Tag-Along Rights...................................... 17
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
3.08 Payment of Purchase Price and Closing of the Transfer
of Shares of Common Stock........................... 19
4. PUT AND CALL OPTIONS............................................. 20
4.01 Put Option............................................ 20
4.02 Put Option Term....................................... 20
4.03 Call Option........................................... 20
4.04 Call Option Term...................................... 21
4.05 Determination of Put/Call Purchase Price.............. 21
4.06 Put Option Closing.................................... 22
4.07 Deferral of the Put Option Closing.................... 23
5. RESTRICTIVE LEGEND............................................... 24
5.01 Form of Legend........................................ 24
5.02 Removal of Legend..................................... 24
6. GENERAL COVENANTS................................................ 25
6.01 Applicability of Covenants............................ 25
6.02 Affirmative Covenants................................. 26
6.03 Governance Rights..................................... 31
7. PREEMPTIVE RIGHTS................................................ 38
8. MISCELLANEOUS.................................................... 40
8.01 Indemnification....................................... 40
8.02 Notices............................................... 40
8.03 Entire Agreement...................................... 42
8.04 Successors and Assigns................................ 42
8.05 Brokers and Expenses.................................. 42
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
8.06 Waivers............................................... 43
8.07 Announcement.......................................... 43
8.08 Captions and Pronouns................................. 44
8.09 Choice of Law......................................... 44
8.10 Registration Rights................................... 44
8.11 Facsimile Signatures; Counterparts.................... 44
8.12 Equitable Relief...................................... 44
</TABLE>
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
EXHIBITS
EXHIBIT A - Registration Rights.................................
EXHIBIT B - Preliminary Budget..................................
</TABLE>
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<PAGE>
THIRD AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
This Third Amended and Restated Shareholders' Agreement
(this "AGREEMENT") is made as of this 30th day of June, 1999, by and among
Media General, Inc., a Virginia corporation ("MEDIA GENERAL"), MediaNews
Group, Inc., a Delaware corporation ("ANI"), and Denver Newspapers, Inc., a
Delaware corporation (the "COMPANY"), amending and restating the Second
Amended and Restated Stock and Warrant Purchase and Shareholders' Agreement,
dated May 20, 1994 (the "SECOND SHAREHOLDERS' AGREEMENT"), among Media
General, ANI and the Company. (Media General, ANI and the Company are
sometimes collectively referred to herein as the "PARTIES", and Media General
and ANI are sometimes individually referred to herein as a "SHAREHOLDER" and
collectively as the "SHAREHOLDERS" and the holders of the Class A Common
Stock (as hereafter defined) (other than those to whom shares of Class A
Common Stock are Transferred (as defined below) pursuant to Section 1.03(e))
are sometimes individually referred to herein as a "CLASS A SHAREHOLDER" and
collectively as the "CLASS A SHAREHOLDERS"). Following the Contribution (as
defined below), Garden State Newspapers, Inc., a Delaware corporation
("Garden State"), will succeed to ANI's rights and obligations hereunder and
all references to ANI herein will be deemed to be references to Garden State
(unless the context requires otherwise).
WHEREAS, pursuant to that certain Stock Purchase Agreement,
dated as of June 30, 1999 (the "STOCK PURCHASE AGREEMENT"), between Media
General and ANI, Media General will sell to ANI and ANI will purchase from
Media General, twenty (20) shares of Class A common stock, par value $1.00
per share, of the Company (the "CLASS A COMMON STOCK")
<PAGE>
owned by Media General, which, in accordance with the Second Amended and
Restated Certificate of Incorporation of the Company, will immediately be
converted, on a share for share basis, into shares of Class B common stock,
par value $1.00 per share, of the Company ("CLASS B COMMON STOCK");
WHEREAS, Media General will continue to own twenty (20)
shares of Class A Common Stock, which shares will comprise all of the
remaining issued and outstanding shares of Class A Common Stock of the
Company on such date (the Class A Common Stock and the Class B Common Stock
are sometimes collectively referred to herein as the "COMMON STOCK");
WHEREAS, concurrently with the closing under the Stock
Purchase Agreement (the "CLOSING"), the Shareholders amended and restated the
Second Amended and Restated Certificate of Incorporation of the Company (as
so amended and restated and as may be further amended and restated from time
to time, the "CERTIFICATE OF INCORPORATION"), and amended and restated the
Restated Bylaws of the Company (as so amended and restated and as may be
further amended and restated from time to time, the "BYLAWS");
WHEREAS, it is contemplated that ANI will Transfer (as
defined below) its shares of Common Stock to Garden State, a wholly-owned
subsidiary of ANI (the "Contribution"), whereupon Garden State will succeed
to ANI's rights and obligations hereunder, and that subsequent to such
Transfer Garden State will merge with ANI (the "ANI MERGER");
WHEREAS, as soon after the Closing as is practicable, it is
contemplated that The Denver Post Corporation, a Colorado corporation and a
wholly-owned subsidiary of the Company ("THE DENVER POST"), will merge with
and into the Company, with the Company being the surviving corporation;
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WHEREAS, contemporaneously with the execution and delivery
of this Agreement, ANI, Media General and the Company are entering into a Tax
Sharing Agreement (the "TAX SHARING AGREEMENT"); and
WHEREAS, in consideration of the consummation of the
transactions contemplated by the Stock Purchase Agreement, ANI, Media General
and the Company wish to amend and restate the Second Shareholders' Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, the parties hereto mutually agree to amend
and restate the Second Shareholders' Agreement to read in full as set forth
herein:
1. SALE OR TRANSFER OF STOCK
1.01 ADDITIONAL SECURITIES. The Parties hereby agree that,
except as provided in the Registration Rights, attached as Exhibit A to this
Agreement (the "REGISTRATION RIGHTS"), and other than for (i) the issuance of
shares of Class B Common Stock solely in exchange for Class A Common Stock,
on a share for share basis, as authorized by the Certificate of
Incorporation, and (ii) the issuance of securities or obligations authorized
by the Board of Directors of the Company in the manner provided by Section
6.03(b) hereof, the Company shall not hereafter issue or create and shall not
permit any subsidiary of the Company to issue or create, equity securities of
the Company or any subsidiary or securities convertible into equity
securities of the Company or any subsidiary, or incur any obligation to issue
additional equity securities or securities convertible into equity securities
of the Company or any subsidiary of the Company.
1.02 RESTRICTIONS. No Shareholder shall sell, transfer,
assign, pledge, give away or otherwise dispose of, alienate, or encumber in
any manner any interest in any shares of any class, now or hereafter
authorized of the Common Stock (each, a "TRANSFER") owned from time to
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<PAGE>
time by such Shareholder except (i) with the prior written consent of the
other Parties, which may be granted or withheld in the sole and absolute
discretion of such other Parties, or (ii) as authorized by Section 1.03
hereof. Any attempt to Transfer any of shares of Common Stock in violation of
this Agreement shall be void and of no effect and shall not be recognized or
recorded in the stock transfer books of the Company.
1.03 PERMITTED TRANSFERS. The following Transfers of shares
of Common Stock are permitted:
(a) ANI may Transfer shares of Common Stock to Garden
State and Garden State may transfer shares of Common Stock to MediaNews
Group, Inc. in the ANI Merger.
(b) Media General may Transfer shares of Common Stock
to any business entity controlled (directly or indirectly) by Media General
or the D. Tennant Bryan Media General Trust or any beneficiaries thereof.
(c) ANI may Transfer shares of Common Stock to Media
General and Media General may Transfer shares of Common Stock to ANI.
(d) Subject to its having complied with the provisions
of Article 3 hereof (to the extent applicable), any Shareholder may Transfer
shares of Common Stock to third parties (other than in public offerings or
pursuant to Rule 144 under the Securities Act (as defined below)).
(e) Subject to its having complied with the provisions
of Article 2 hereof, any Class A Shareholder may Transfer shares of Common
Stock to third parties in a public offering registered under the Securities
Act of 1933, as amended (the "SECURITIES ACT"), or
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<PAGE>
(following an initial public offering by the Company) pursuant to Rule 144
under the Securities Act.
(f) ANI may Transfer shares of Common Stock to third
parties in a public offering registered under the Securities Act, or
(following an initial public offering by the Company) pursuant to Rule 144
under the Securities Act.
(g) ANI may pledge and grant security interests, liens
and other encumbrances on shares of the Common Stock in order to secure the
obligations of itself and its affiliates (including the Company and its
subsidiaries) under and in respect of indebtedness of ANI and its affiliates
(including the Company and its subsidiaries) to unaffiliated third party bank
lenders ("BANK LENDERS") and agreements and instruments governing such
indebtedness with such Bank Lenders ("BANK DOCUMENTS"). In the event the Bank
Lenders of such debt (or their agents) foreclose on such shares (or otherwise
acquires such shares pursuant to the exercise of its remedies under the Bank
Documents), they (and all of their subsequent transferees) shall take such
shares free of the terms, conditions and restrictions (as well as any options
and rights ) set forth in this Agreement, but, notwithstanding Section 1.05
hereof, and without limitation of ANI's right to assign its rights
thereunder, ANI shall continue to be bound by its obligations under Sections
4.01, 4.02, 4.05, 4.06 and 4.07 of this Agreement.
1.04 TRANSFEREES BOUND. All transferees of shares of Common
Stock permitted by Section 1.03 (other than a Transfer permitted by Sections
1.03(e), 1.03(f) or 1.03(g)) shall take such shares subject to all of the
terms, conditions and restrictions set forth in this Agreement, and shall be
entitled to such rights and benefits under this Agreement as its transferor
shall have transferred to it, PROVIDED that in the case of a Transfer by
Media General (or any other Class A Shareholder) (x) to a transferee other
than ANI and its affiliates (or other than as
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<PAGE>
permitted pursuant to Section 1.03(e)), the Call Option and the Put Option
(each as defined in Article 4 below) shall under all circumstances bind the
transferees or (y) to ANI and its affiliates, the rights, benefits and
obligations hereunder in respect of such shares shall not be retained by
Media General (or such Class A Shareholder) and (ii) it shall be a condition
to the effectiveness of each such Transfer that the transferee execute an
instrument in form and substance reasonably satisfactory to the Shareholders
by which it agrees to become a party to this Agreement (and be bound by such
terms, conditions and restrictions as if it were the transferring
Shareholder). Any right or benefit afforded Class A Shareholders hereunder
will not extend to Class A Shareholders who receive their shares in a
Transfer described in Section 1.03(e). Transferees in Transfers permitted by
Section 1.03(e), 1.03(f) or 1.03(g) shall take such shares of Common Stock
free of the terms, conditions and restrictions set forth in this Agreement.
In the event that a third-party holder of shares of Common Stock shall become
a party hereto, the Parties shall amend this Agreement so that the terms,
conditions and restrictions set forth herein apply to the new party MUTATIS
MUTANDIS.
1.05 TERMINATION OF RESTRICTIONS. The rights, obligations
and restrictions of this Agreement shall terminate as to any Shareholder at
such time as such Shareholder no longer holds any Common Stock; PROVIDED,
that (x) such Shareholder shall not be released from (and shall remain
responsible for) all obligations accrued and any liability in respect of any
breach of this Agreement occurring prior to such time, (y) indemnification
rights and obligations in respect of the Registration Rights will survive in
respect of registrations theretofore effected and (z) without limitation of
ANI's right to assign its rights thereunder, ANI shall not be released from
its obligations under Sections 4.01, 4.02, 4.05, 4.06 and 4.07 of this
Agreement if it ceases to be a Shareholder.
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<PAGE>
2. ANI'S AND THE COMPANY'S RIGHT OF FIRST PURCHASE IN
CONNECTION WITH PROPOSED PUBLIC OFFERINGS AND RULE 144
SALES BY CLASS A SHAREHOLDERS
2.01 PROPOSED PUBLIC OFFERINGS BY CLASS A SHAREHOLDERS. If
a Class A Shareholders desires to sell any of its Common Stock in a public
offering to be registered under the Securities Act (a "PUBLIC OFFERING
SHAREHOLDER"), it shall deliver to ANI and the Company written notice of such
desire (a "NOTICE OF PROPOSED PUBLIC OFFERING"), describing the Common Stock
proposed to be sold in such offering (the "PUBLICLY OFFERED SHARES"), the
proposed effective date, and the proposed price per share of such public
offering (the "PROPOSED OFFERING PRICE"). The Notice of Proposed Public
Offering shall constitute an option for first ANI and then the Company, to
purchase all, but not less than all, of the Publicly Offered Shares at the
Proposed Offering Price, payable in cash. Exercise of such option shall be
made by ANI or the Company, as the case may be, giving written notice of such
exercise (the "PUBLIC OFFERING EXERCISE NOTICE") to the Public Offering
Shareholder not more than thirty (30) days after receipt of the Notice of
Proposed Public Offering. Such Public Offering Exercise Notice shall set
forth a closing date, which shall be not less than ten (10) nor more than
ninety (90) days after the date of the Public Offering Exercise Notice. If no
Public Offering Exercise Notice is timely given or the Public Offering
Exercise Notice is given with respect to less than all of the Publicly
Offered Shares to which the Notice of Proposed Public Offering relates, the
Public Offering Shareholder may, at any time within six months immediately
following the later of (i) the date the registration statement in respect of
such public offering is declared effective by the Securities and Exchange
Commission (the "SEC") or (ii) the expiration of the period during which the
Public Offering Exercise Notice could be given (or such prior date as ANI and
the Company shall in writing advise the Public Offering Shareholder of their
election not to exercise the right of first purchase
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<PAGE>
set forth in this Section 2.01), sell the Publicly Offered Shares in a public
offering registered under the Securities Act; PROVIDED, HOWEVER, that (y) any
such public offering shall be at a price per share or other unit not less
than 90% of the Proposed Offering Price, and (z) if such price (the "PUBLIC
OFFERING REVISED PRICE") shall be less than 90% of the Proposed Offering
Price, then the Public Offering Shareholder shall deliver to ANI and the
Company written notice of such Public Offering Revised Price (the "NOTICE OF
PUBLIC OFFERING REVISED PRICE"), the Public Offering Shareholder shall not
sell the Publicly Offered Shares until the 10-day period described in the
next sentence has expired (without ANI having exercised the option described
in the next sentence), and this proviso shall apply to any such sale (for
which purpose the Proposed Offering Price shall be the Public Offering
Revised Price). The Notice of Public Offering Revised Price shall constitute
an option for first ANI and then the Company, to purchase all, but not less
than all, of the Publicly Offered Shares subject to such Notice of Proposed
Public Offering at a price equal to 110% of the Public Offering Revised
Price, payable in cash, which option may be exercised only during the 10-day
period beginning on the day after receipt by ANI and the Company of the
Notice of Public Offering Revised Price from the Public Offering Shareholder.
2.02 PROPOSED RULE 144 SALES BY THE CLASS A SHAREHOLDERS.
If following an initial public offering by the Company, a Class A Shareholder
desires to sell any of its Common Stock pursuant to Rule 144 under the
Securities Act (a "144 SHAREHOLDER"), it shall deliver to ANI and the Company
written notice of such desire (a "NOTICE OF PROPOSED 144 SALE"), describing
the Common Stock proposed to be sold in such offering (the "OFFERED 144
SHARES") and the proposed purchase price per share of the Offered 144 Shares
(the "PROPOSED SALE PRICE"). The Notice of Proposed 144 Sale shall constitute
an option for first ANI and then the Company, to purchase all, but not less
than all, of the Offered 144 Shares at the Proposed Sale Price,
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<PAGE>
payable in cash. Exercise of such option shall be made by ANI or the Company,
as the case may be, giving written notice of such exercise (the "144 EXERCISE
NOTICE") to the 144 Shareholder not more than thirty (30) days after receipt
of the Notice of Proposed 144 Sale. Such 144 Exercise Notice shall set forth
a closing date, which shall be not less than ten (10) nor more than ninety
(90) days after the date of the 144 Exercise Notice. If no 144 Exercise
Notice is timely given or the 144 Exercise Notice is given with respect to
less than all of the Offered 144 Shares to which the 144 Exercise Notice
relates, the 144 Shareholder may, at any time within thirty (30) days
immediately following the expiration of the period during which the 144
Exercise Notice could be given (or such prior date as ANI and the Company
shall in writing advise the 144 Shareholder of their election not to exercise
the right of first purchase set forth in this Section 2.02), sell the Offered
144 Shares pursuant to Rule 144; PROVIDED, HOWEVER, that (y) any such sale
shall be for a price per share or other unit not less than 90% of the
Proposed Sale Price, and (z) if such price (the "144 REVISED PRICE") shall be
less than 90% of the Proposed Sale Price, then the 144 Shareholder shall
deliver to ANI and the Company written notice of such 144 Revised Price (the
"NOTICE OF 144 REVISED PRICE"), the 144 Shareholder shall not sell the
Offered 144 Shares until the 10-day period described in the next sentence has
expired (without ANI having exercised the option described in the next
sentence) and this proviso shall apply to any such sale (for which purpose
the Proposed Sale Price shall be the 144 Revised Price). The Notice of 144
Revised Price shall constitute an option for first ANI and then the Company,
to purchase all, but not less than all, of the Offered 144 Shares subject to
such Notice of Proposed 144 Sale at a price equal to 110% of the 144 Revised
Price, payable in cash, which option may be exercised only during the
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10-day period beginning on the day after receipt by ANI and the Company of
the Notice of 144 Revised Price from the 144 Shareholder.
3. SHAREHOLDER'S OPTION TO PURCHASE COMMON STOCK;
DRAG-ALONG AND TAG-ALONG RIGHTS
3.01 OPTION TO PURCHASE. Except as otherwise expressly
authorized pursuant to Section 1.03, should any Shareholder desire to
Transfer all or any part of such Shareholder's Common Stock (in such context,
the "SELLING SHAREHOLDER") to a third-party transferee, whether the Selling
Shareholder desires to initiate a disposition or is responding affirmatively
to an offer to purchase, before doing so the Selling Shareholder shall first
permit ANI (in the case of a Transfer by Class A Shareholders) or the Class A
Shareholders (in the case of a Transfer by ANI) (in such context, the
"REMAINING SHAREHOLDERS") to exercise a first option to purchase (the "FIRST
PURCHASE OPTION") the shares of Common Stock which the Selling Shareholder
desires to Transfer, in accordance with the provisions of this Article 3.
Nothing in this Agreement shall be deemed to restrict or prohibit a
Shareholder from soliciting third parties to purchase its Common Stock prior
to offering the same to the Remaining Shareholders, but no sale to a third
party may be consummated until such Common Stock has been offered to the
Remaining Shareholders in accordance with this Article 3 and any such sale to
a third-party pursuant to this Section 3.01 will be subject to the Tag-Along
Rights and (to the extent applicable) Drag-Along Rights described in Sections
3.06 and 3.07. Upon delivery of the First Right of Purchase Notice (as
defined below) by a Selling Shareholder other than ANI, ANI's right to
exercise its Drag-Along Rights in respect of the shares of Common Stock
subject to such First Right of Purchase Notice and any shares of Common Stock
in respect of which (in connection with the Transfer described in such First
Right of Purchase Notice) any Remaining Shareholder exercises its tag-along
rights in accordance with
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Section 3.07 (except in respect of a Transfer described in a First Right of
Purchase Notice delivered by ANI prior to the delivery of such First Right of
Purchase Notice by such Selling Shareholder) shall be stayed until the
earlier of (x) the consummation of the Transfer of such shares of Common
Stock pursuant to the First Purchase Option or the consummation of the
Transfer described in such First Right of Purchase Notice and (y) the
expiration of the 90-day period specified in Section 3.05.
3.02 REQUIRED NOTICE.
(a) Upon deciding to Transfer all or any part of its
Common Stock, whether the Selling Shareholder desires to initiate a
disposition or is responding affirmatively to an offer to purchase, except as
otherwise expressly authorized pursuant to Section 1.03, the Selling
Shareholder shall simultaneously notify the Company and the Remaining
Shareholders in writing of its intended disposition (the "FIRST RIGHT OF
PURCHASE NOTICE"). Such First Right of Purchase Notices shall be given as
provided in Section 8.02 of this Agreement.
(b) Such First Right of Purchase Notices shall contain
a complete description of the proposed transaction including (i) the identity
of the proposed transferee, (ii) the purchase price offered (PROVIDED,
HOWEVER, that if the purchase offer is a non-cash offer (in whole or in part)
(a "NON-CASH OFFER"), instead of the purchase price, such First Right of
Purchase Notices shall instruct the Remaining Shareholders to contact the
Selling Shareholder for purposes of determining the present cash value of the
Non-Cash Offer in accordance with Section 3.04) (the cash purchase price of
Common Stock or the present cash value of Common Stock offered in a Non-Cash
Offer is referred to hereinafter as the "PURCHASE PRICE"), and (iii) all
other material terms of such transaction. Such First Right of Purchase
Notices shall also specify whether the Selling Shareholder is only willing to
sell all of its shares of Common Stock, or is
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willing to sell only a portion thereof, and such specifications shall control
the scope of any option to purchase such shares thereunder.
3.03 EXERCISE AND SCOPE OF EXERCISE. Upon receipt of a
First Right of Purchase Notice from a Selling Shareholder pursuant to Section
3.02, the Remaining Shareholders shall thereupon have the First Purchase
Option with respect to all, but not less than all, of the shares Common Stock
offered at the Purchase Price. In the event that more than one Remaining
Shareholder exercises the First Purchase Option, each Remaining Shareholder
exercising the First Purchase Option shall be deemed to have exercised the
First Purchase Option in respect of a pro rata portion of the shares subject
to such First Purchase Option (calculated based upon the number of shares of
Common Stock each Remaining Shareholder desires to purchase pursuant to the
First Purchase Option). Except in the case of a Non-Cash Offer, the First
Purchase Option must be exercised by the Remaining Shareholders within thirty
(30) days after receipt of the First Right of Purchase Notice delivered
pursuant to Section 3.02. Any such exercise of a First Purchase Option by the
Remaining Shareholders shall be made within such 30-day period by written
notice to the Selling Shareholder, with copy to the Company, given as
provided in Section 8.02 of this Agreement. In the case of a Non-Cash Offer,
the First Purchase Option shall be exercised as set forth in Section 3.04(e).
3.04 BONA FIDE NON-CASH THIRD PARTY OFFERS.
(a) Upon receipt of a First Right of Purchase Notice
which indicates that the Selling Shareholder has decided to Transfer all or
any part of its Common Stock pursuant to a Non-Cash Offer for such shares of
Common Stock, the Remaining Shareholders and the Selling Shareholder shall
promptly consult to determine the present cash value of such Non-Cash Offer.
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(b) If within 30 days of receipt by the Remaining
Shareholders of such First Right of Purchase Notice, the Selling Shareholder
and the Remaining Shareholders cannot agree on the present cash value of such
Non-Cash Offer, then within forty-five (45) days of receipt by the Remaining
Shareholders of such First Right of Purchase Notice, each of the Selling
Shareholder and the Remaining Shareholders shall appoint one qualified
independent appraiser knowledgeable in the appropriate industry to determine
the present cash value of the Non-Cash Offer. If either the Selling
Shareholder or the Remaining Shareholders fail to appoint an appraiser within
such 45-day period, then its right to do so shall lapse, and the appraisal
made by the one independent appraiser which is timely appointed shall be
conclusive.
(c) If the two appraisers make appraisals of the
present cash value of the Non-Cash Offer, and the higher appraisal does not
exceed 110% of the lower appraisal, the present cash value of the Non-Cash
Offer shall be average of such two appraisals. If the two appraisals are
further apart than 10%, the first two appraisers will select a third
qualified independent appraiser knowledgeable in the appropriate industry
within fifteen (15) business days of the date on which the second appraisal
is delivered to the Selling Shareholder and the Remaining Shareholders. In
such case, the cash value of the Non-Cash Offer will be deemed to be the
average of the appraisal delivered by such third appraiser and the one of the
first two appraisals which is closer to such third appraisal. If the first
two appraisals are equidistant from the third appraisal, the third appraisal
shall be final, conclusive and binding on the Parties.
(d) Each appraiser appointed pursuant to this Article
3 shall deliver its appraisal in writing to the Selling Shareholder and the
Remaining Shareholders concurrently within thirty (30) days of its
appointment. Each of the Parties hereto and the Company agrees that it will
use its best efforts to provide each appraiser with such information as such
appraiser
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may reasonably require in order to complete its appraisal within such 30-day
period. The Selling Shareholder shall pay the fee of the appraiser selected
by it, and the Remaining Shareholders shall pay the fee of the appraiser
selected by it. The fee of any third appraiser shall be divided equally
between the Selling Shareholder and the Remaining Shareholders.
(e) In the case of a Non-Cash Offer, the First
Purchase Option must be exercised by the Remaining Shareholders within twenty
(20) days after the date on which the later, in the case of two appraisals,
or the last, in the case of three appraisals, is delivered to the Selling
Shareholder and the Remaining Shareholders pursuant to Section 3.04(d). Any
such exercise of a First Purchase Option by the Remaining Shareholders shall
be made within such twenty (20) day period by written notice to the Selling
Shareholder, with copy to the Company, given as provided in Section 8.02 of
this Agreement
3.05 FAILURE TO EXERCISE. If the Remaining Shareholders
fail to exercise their First Purchase Options within the period specified in
Sections 3.03 or 3.04(e) (the "EXERCISE PERIOD"), then, subject to Sections
3.06 and 3.07, the Selling Shareholder shall be free to Transfer the shares
of Common Stock specified in the First Right of Purchase Notice within a
90-day period after the expiration of the Exercise Period; PROVIDED, that (i)
the purchase price for such Transfer is at least equal to (and in the same
form as) the Purchase Price at which the First Purchase Option was offered to
the Remaining Shareholders; (ii) the proposed transferee is the same
transferee specified in the First Right of Purchase Notice; and (iii) the
other terms and conditions of such Transfer are equivalent to the remaining
terms and conditions that were specified in the First Right of Purchase
Notice. If the Common Stock is not disposed of within such 90-day period,
then the Selling Shareholders' rights to Transfer shares of Common Stock
under this Section 3.05 shall lapse, and the Selling Shareholder must
thereafter offer to the
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Remaining Shareholders another First Purchase Option if it subsequently
wishes to so Transfer its shares. For purposes of this Section 3.05, a sale
shall be deemed made when closing has occurred, and the transfer agent has
been requested to record the transfer of Common Stock in the stock transfer
records of the Company.
3.06 DRAG-ALONG RIGHTS.
(a) If the Selling Shareholder is ANI and ANI intends
to dispose of shares of Common Stock constituting not less than 50% of the
outstanding Common Stock in a Transfer to which Section 3.01 applies to a
bona fide third party transferee that is not an Affiliate of ANI, and (i) the
Put Option (as defined below) is not and has not previously been exercised
prior to the date on which such Class A Shareholder receives a First Right of
Purchase Notice in accordance with Section 3.02, (ii) the First Purchase
Option has not been exercised in respect of such First Right of Purchase
Notice and (iii) no stay provided for by the last sentence of Section 3.01 is
in effect, then ANI shall have the option to require each Class A Shareholder
that does not exercise Tag-Along Rights set forth in Section 3.07 with
respect to all of its shares of Common Stock (a "DRAGGABLE SHAREHOLDER") to
Transfer all of its shares of Common Stock to the proposed transferee
specified in such First Right of Purchase Notice on the same terms and
conditions described therein (the "DRAG-ALONG RIGHTS") in connection with the
proposed Transfer by ANI of its shares of Common Stock to such transferee. In
connection with such Transfer, no Draggable Shareholder (x) shall be required
to give any representations or warranties or indemnities other than with
respect to itself, its title to the Common Stock and the transfer of such
title to the transferee free and clear of all security interests,
encumbrances, claims, liens or charges of any kind, other than those created
by or through Buyer or its affiliates ("LIENS") (this sentence not being
intended to limit a Draggable Shareholder's responsibility for any Purchase
Price
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adjustment or its participation in escrow arrangements), (y) be required to
Transfer a greater percentage of the Common Stock held by it than the lowest
percentage of Common Stock held that is Transferred by ANI and any other
Draggable Shareholder (assuming that all of the Draggable Shareholders comply
with their obligations under this Section 3.06) or (z) be required to
Transfer any of its shares of Common Stock pursuant to ANI's exercise of such
Drag-Along Right later than six (6) months after delivery of the Drag-Along
Notice required by Section 3.06(b).
(b) Upon deciding to exercise the Drag-Along Rights,
ANI shall simultaneously notify the Company and each other Shareholder in
writing of its intended exercise (the "DRAG-ALONG NOTICES"). Such Drag-Along
Notices shall be given as provided in Section 8.02 of this Agreement.
3.07 TAG-ALONG RIGHTS.
(a) Except as otherwise expressly authorized pursuant
to Section 1.03, no Selling Shareholder shall, in any one transaction or
series of transactions, directly or indirectly, Transfer shares of Common
Stock unless the terms and conditions of such Transfer include an offer to
the Remaining Shareholders (in such context, the "TAG-ALONG OFFEREES") to
include in the Transfer to such third party, at the option of each Tag-Along
Offeree, such number of shares of Common Stock owned by such Tag-Along
Offeree at the time of such Transfer as determined in accordance with this
Section 3.07 on the same terms and conditions (including without limitation,
the proposed Purchase Price and date of Transfer) as are available to the
Selling Shareholder (the "TAG-ALONG RIGHTS").
(b) The Tag-Along Offerees shall be entitled to
include in the contemplated Transfer, at the same price and on the same terms
as available to the Selling
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<PAGE>
Shareholder, a number of shares of Common Stock (the "PROPORTIONATE TAG-ALONG
SHARES") up to the product of (i) the quotient determined by dividing the
number of shares of Common Stock to be transferred by the Selling Shareholder
to the third party by the aggregate number of shares of Common Stock owned by
the Selling Shareholder and (ii) the aggregate number of shares of Common
Stock owned by the Tag-Along Offeree.
(c) A Tag-Along Offeree may exercise its Tag-Along
Rights by delivering written notice of such exercise (the "TAG-ALONG EXERCISE
NOTICE") to the Selling Shareholder, by the expiration of the applicable
Exercise Period in respect of such Transfer.
(d) In the event that the number of shares of Common
Stock proposed to be Transferred by the Selling Shareholder, PLUS the
proportionate number of shares of Common Stock proposed to be transferred by
the Tag-Along Offerees (the "TOTAL TRANSFERRED SHARES"), exceeds the maximum
number of shares of Common Stock that the third party is willing to purchase
or otherwise acquire, then the number of shares of Common Stock to be
Transferred by the Selling Shareholder and each Tag-Along Offeree,
respectively, shall be reduced by equal percentages until the number of Total
Transferred Shares equals the maximum number of shares of Common Stock that
the third party is willing to purchase or otherwise acquire; provided that if
such allocation would result in any such Tag-Along Offeree selling or
disposing of less than the minimum number of shares of Common Stock as set
forth in such Tag-Along Offeree's Tag-Along Exercise Notice, such Tag-Along
Exercise Notice shall be revoked and the shares of Common Stock which such
Tag-Along Offeree would otherwise have been entitled to sell or dispose of to
the Third Party shall be allocated among the Selling Shareholder and the
other Tag-Along Offerees who have given Tag-Along Exercise Notices pro rata
(based
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on the number of shares of Common Stock they would otherwise have
Transferred). All calculations pursuant to this Section 3.07 shall exclude
and ignore any unissued shares of Common Stock of the Company issuable
pursuant to stock options, warrants and other rights to acquire shares of
Common Stock.
(e) Each of the Selling Shareholder and the proposed
transferee shall have the right, in its sole discretion, at all times prior
to the consummation of the proposed Transfer giving rise to the Drag-Along
Rights and Tag-Along Rights set forth in Section 3.06 and this Section 3.07,
to abandon, rescind, annul, withdraw or otherwise terminate such Transfer
whereupon all Drag-Along Rights and Tag-Along Rights in respect of such
Transfer shall become null and void, and neither the Selling Shareholder nor
the third party shall have any liability or obligations to the Draggable
Shareholders and Tag-Along Offerees with respect thereto by virtue of such
abandonment, rescission, annulment, withdrawal or termination.
3.08 PAYMENT OF PURCHASE PRICE AND CLOSING OF THE TRANSFER
OF SHARES OF COMMON STOCK.
(a) Payment for the shares of Common Stock Transferred
pursuant to this Article 3 shall be made in one of the following ways: (i)
subject to clause (iii) below, if the Remaining Shareholder exercises its
First Purchase Option, the Remaining Shareholders shall match the same price
and payment terms offered by the proposed third-party transferee (PROVIDED,
that any non-cash consideration shall be paid in cash at the present cash
value determined pursuant to Section 3.04); or (ii) if a third-party
transferee (other than another Shareholder) purchases the Remaining
Shareholder's shares of Common Stock pursuant to Section 3.06 or 3.07, such
transferee shall match the same price (including the form of the
consideration) and payment terms offered to the Selling Shareholder; or (iii)
if Media General
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purchases ANI's shares of Common Stock, Media General may deliver shares of
the publicly traded common stock of Media General (valued at the average of
the publicly traded closing price for the twenty (20) trading days
immediately preceding the date of delivery) or by a combination thereof in
payment of the Purchase Price (in which case Media General and ANI shall
enter into a registration rights agreement reasonably acceptable to each of
them providing ANI with registration rights in respect of such shares
comparable to the Registration Rights).
(b) The closing of a sale of shares of Common Stock to
the Remaining Shareholders pursuant to Section 3.01 shall occur on a date
mutually selected by the Selling Shareholder and the Remaining Shareholders
which date is not less than ten (10) nor more than one hundred twenty (120)
days after the date the Selling Shareholder delivers the First Right of
Purchase Notice under Section 3.02 of this Agreement.
4. PUT AND CALL OPTIONS
4.01 PUT OPTION. Media General and each other Class A
Shareholder shall have an option (the "PUT OPTION") to require ANI to
purchase for the Put/Call Purchase Price (as defined below), in the manner
set forth below, all, but not less than all, of the shares of Common Stock
owned by Media General and the other Class A Shareholders at the time of the
exercise of the Put Option. If there is more than one Class A Shareholder,
the decision to exercise the Put Option shall be made by Media General in its
sole discretion or by such other Class A Shareholder(s) to which Media
General shall have assigned such authority (provided that ANI shall have been
given written notice of such assignment of authority in accordance with
Section 8.02)) (the "AUTHORIZED SHAREHOLDER").
4.02 PUT OPTION TERM. The Authorized Shareholder may
deliver to ANI in accordance with Section 8.02 a notice of exercise of the
Put Option (the "PUT EXERCISE NOTICE")
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no earlier than the second anniversary and no later than the fifth
anniversary of the date hereof. In the event that the Authorized Shareholder
has not delivered a Put Exercise Notice to ANI by the fifth anniversary of
the date hereof, the Put Option shall expire.
4.03 CALL OPTION. ANI shall have an option (the "CALL
OPTION") to purchase all, but not less than all, of the shares of Common
Stock owned by Media General and the other Class A Shareholders at the time
of the exercise of the Call Option for the Put/Call Purchase Price.
4.04 CALL OPTION TERM. Provided that the Authorized
Shareholder has not theretofore delivered a Put Exercise Notice, ANI may
deliver to the Class A Shareholders in accordance with Section 8.02 a notice
of its exercise of the Call Option (the "CALL EXERCISE NOTICE") no earlier
than the day after the fifth anniversary of the date hereof and no later than
the sixth anniversary of the date hereof.
4.05 DETERMINATION OF PUT/CALL PURCHASE PRICE.
(a) Within fifteen (15) days of delivery of the Put
Exercise Notice or the Call Exercise Notice, Media General (or, in the case
of an exercise of the Put Option, the Authorized Shareholder, in each case on
behalf of the Class A Shareholders) and ANI shall each select a qualified
independent appraiser knowledgeable in the appropriate industry to determine
the fair market value of the Company based on its full, private market value
(such determination is herein referred to as an "APPRAISED FAIR MARKET
VALUE"), each of which firms shall determine the Appraised Fair Market Value
of the Company within thirty (30) days following its selection. In connection
with its determination of Appraised Fair Market Value, each qualified
independent appraiser shall deduct the sum of (i) outstanding Permitted Debt
(as defined in Section 6.03), PLUS (ii) any other Debt of the Company (and
its subsidiaries) the incurrence of which was
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approved by Media General or the Class A Director (as defined in Section
6.02(d)) in accordance with Section 6.03(e), plus (iii) capitalized leases of
the Company (and its subsidiaries) (other than capitalized leases entered
into in violation of Section 6.03(e)).
(b) If the lower of the two determinations of
Appraised Fair Market Value of the Company, as calculated by the two (2)
qualified independent appraisers selected by Media General and ANI, is within
20% of the higher, then the "PUT/CALL PURCHASE PRICE" shall be an amount
equal to the Fraction (as defined below), MULTIPLIED BY of the average of
such two appraisals, which shall be final, conclusive and binding on the
parties. However, if the lower of the appraisals is not within 20% of the
higher, then the two previously chosen qualified independent appraisers will,
within ten (10) days of the completion of their appraisals, select a third
qualified independent appraiser knowledgeable in the appropriate industry to
determine the Appraised Fair Market Value of the Company within thirty (30)
days of the selection of the third appraiser, and the "PUT/CALL PURCHASE
PRICE" shall be an amount equal to the Fraction, MULTIPLIED BY (x) the
average of the two closest of the three appraisals of Appraised Fair Market
Value or (y) by the middle Appraised Fair Market Value if it is equidistant
form the high and low of the three appraisals, which shall be final,
conclusive and binding on the parties. As used herein, "FRACTION" shall mean
a fraction, the numerator of which is the number of shares of Common Stock to
be purchased, and the denominator of which is the number of shares of Common
Stock then outstanding.
(c) The Company and the Shareholders shall cooperate
with the appraisers in all respects, including providing the appraisers with
all financial statements and other information required to complete the
appraisals. ANI and the Class A Shareholders shall each bear the cost and
expenses of their own appraiser. The fees, expenses and costs of the third
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appraisers shall be borne equally by ANI, on the one hand, and the Class A
Shareholders, on the other hand.
4.06 PUT OPTION CLOSING. Within fifteen (15) business days
after the final determination of the Put/Call Purchase Price, ANI will pay to
the Class A Shareholders by wire transfer of immediately available funds the
Put/Call Purchase Price against delivery of the shares of Common Stock to be
sold pursuant to the Put Option or the Call Option, as the case may be, (the
"OPTION SHARES") free and clear of all Liens (other than this Agreement) but
otherwise without representation or warranty or other indemnity, together
with stock powers executed in blank with all necessary stock transfer and
other documentary stamps attached. Amounts payable to ANI pursuant to Section
7(e) of the Tax Sharing Agreement may be offset against the Put/Call Purchase
Price as provided therein. The obligations of the Class A Shareholders to
deliver their shares of Common Stock free and clear of all Liens is several
and not joint and no default by any such Class A Shareholder shall relieve
ANI of its obligation to pay the Put/Call Purchase Price to non-defaulting
Class A Shareholders.
4.07 DEFERRAL OF THE PUT OPTION CLOSING.
(a) In the event the Class A Shareholders exercise
their Put Option pursuant to this Article 4, ANI may elect to defer the
closing of the purchase of the Option Shares for up to twelve (12) months
from the date on which the closing of such purchase is otherwise required to
occur pursuant to Section 4.06 (the "DEFERRAL PERIOD"). During the Deferral
Period, the Put/Call Purchase Price shall increase at a rate equal to seven
percent (7%) per annum during the first three (3) months of the Deferral
Period, nine percent (9%) per annum during the second three (3) months of the
Deferral Period, eleven percent (11%) per annum during the third three (3)
months of the Deferral Period and thereafter at a rate of thirteen percent
(13%) per
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annum until the Put/Call Purchase Price has been paid in full (in each case,
compounded quarterly).
(b) In the event that the closing of the purchase of
the Option Shares as to which the Put Option has been exercised has not
occurred by the end of the Deferral Period (other than as a result of a
default (including the failure to transfer its shares of Common Stock as
provided in Section 4.06) by a Class A Shareholder), ANI's Call Option will
terminate in respect of the shares of Common Stock held by all non-defaulting
Class A Shareholders, and ANI will be deemed to be in breach of the Put
Option of such non-defaulting Class A Shareholders.
5. RESTRICTIVE LEGEND
5.01 FORM OF LEGEND. All certificates for shares of the
Common Stock subject to this Agreement shall bear the legend set forth below:
"Sale, transfer, assignment, pledge, gift or any other
disposition, alienation or encumbrance of the shares
represented by this certificate is restricted by (and shares
represented by this certificate are subject to a right of
first purchase and may be subject to certain other rights of
purchase by certain persons pursuant to) the terms of a Third
Amended and Restated Shareholders' Agreement, dated as of June
30, 1999, among Media General, Inc., MediaNews Group, Inc. and
the Company, which may be examined at the principal office of
the Company, and such shares may be sold, transferred,
assigned, pledged, given or otherwise disposed of, alienated
or encumbered only upon compliance with the terms of that
Agreement."
"The shares represented by this certificate have not been
registered under the Securities Act of 1993 (the "ACT") and
may not be offered, sold or otherwise transferred unless and
until (i) a registration statement with respect thereto is
effective under the Act or (ii) in the opinion of counsel,
which opinion is reasonably satisfactory in form and in
substance to counsel for the Company, such offer, sale or
other transfer is in compliance with the Act and any
applicable state securities laws."
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<PAGE>
5.02 REMOVAL OF LEGEND. The first part of the legend set
forth in Section 5.01 is intended to ensure compliance with Articles 1, 2, 3
and 4 of this Agreement and shall be removed by the Company, or by the
transfer agent and registrar of the Company upon the Company's instructions,
from the certificates evidencing any shares of Common Stock upon Transfer of
such shares in connection with a public offering or Rule 144 sale by ANI in
accordance with Section 1.03(f) or any Class A Shareholder in accordance with
Section 1.02(e) or Article 2 or in connection with a foreclosure described in
Section 3.03(g).
The second part of the legend set forth in Section 5.01 is
intended to ensure compliance with the Securities Act and shall be removed by
the Company, or by the transfer agent and registrar of the Company upon the
Company's instructions, from the certificates evidencing shares of Common
Stock to which either of clause (i) or (ii) of such second part of the legend
applies when (a) a registration statement covering the sale of such Common
Stock becomes effective under the Securities Act or (b) the Company receives
an opinion of counsel satisfactory to the Company that such restrictions are
no longer required on the certificates evidencing such Common Stock in order
to ensure compliance with the Securities Act.
When the holder of any shares of Common Stock is entitled
to have the legend, or any part thereof, set forth in Section 5.01 removed
from the certificates evidencing such Common Stock, the Company shall, or
shall instruct its transfer agent and registrar to, issue new certificates
evidencing such Common Stock in the name of the holder not bearing the
legend, or such part thereof, set forth in Section 5.01 hereof.
6. GENERAL COVENANTS
6.01 APPLICABILITY OF COVENANTS. The covenants set forth in
this Article 6 are made for the benefit of Media General, as the holder of
the Class A Common Stock and, in the
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case of Sections 6.02(b), 6.02(c), and 6.02(d)(i), (ii), (iv), (v) and (vi),
for the benefit of ANI, as the holder of the Class B Common Stock. Such
covenants shall also run in favor of any transferee permitted hereunder of
the Common Stock other than any third party transferee (or subsequent
transferee) of Common Stock sold in connection with a public offering or Rule
144 sale.
6.02 AFFIRMATIVE COVENANTS.
(a) ANI and the Company covenant that they shall
immediately inform each Class A Shareholder of any defaults or events of
default occurring under any loan agreement or other instrument governing Debt
of either of them or of any of their respective direct or indirect
subsidiaries, in each case, in excess of $3,000,000, and shall keep each
Class A Shareholder informed as to the status of such defaults or events of
default. ANI and the Company shall furnish each Class A Shareholder with
copies of all notices and correspondence received or sent by either of them
or by any of their respective direct or indirect subsidiaries relating to any
such defaults or events of default.
(b) ANI and the Company covenant that on October 1 of
each year commencing October 1, 2000 (or the next business day, if such day
is not a business day) (each, a "PAYMENT DATE") all Available Cash (as
defined below) shall be applied to reduce Permitted Debt, with such Available
Cash being applied first to Permitted Debt described in clauses (1), (2) and
(3) of the definition of Permitted Debt. As used herein, "AVAILABLE CASH"
shall mean in respect of a Payment Date an amount equal to all cash and cash
equivalents of the Company and its subsidiaries in excess of $5,000,000 on
such date reduced by (x) amounts payable pursuant to the Tax Sharing
Agreement or to state and local tax authorities in respect of taxes relating
to the fiscal year prior to such Payment Date and (y) such other amounts as
ANI, with the approval of
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Media General (not to be unreasonably withheld) determines should be withheld
to meet future expenditures (i) pursuant to the Approved Budget or (ii) which
otherwise have not been incurred in violation of Section 6.03.
(c) In the event that the Company lacks sufficient
working capital to fund operating needs, each Shareholder covenants that it
will make capital contributions to the Company to fund such requirements in
proportion to its percentage ownership of the Company's Common Stock up to an
amount equal to dividends and distributions received by such Shareholder from
the Company after the Closing in respect of shares of Common Stock held by
such Shareholder at the time the capital contribution is to be made, PROVIDED
(1) that a transferee of Common Stock pursuant to Sections 1.03(a) or 1.03(b)
shall be responsible to make capital contributions pursuant to this paragraph
up to an amount equal to dividends and distributions received after the
Closing by such Shareholder and all previous holders of such shares in
respect of such shares of Common Stock (that were previously transferred to
it pursuant to Sections 1.03(a) or 1.03(b)) and (2) that in the event a
Shareholder is required to make a capital contribution pursuant to this
paragraph that is less than the total dividends and distributions paid after
the Closing in respect of the shares of Common Stock held by it at such time
(as a consequence of having acquired its shares after the Closing), the
capital contributions required to be made by the other Shareholders pursuant
to this paragraph will be reduced such that the capital contributions made by
all Shareholders are in proportion to the shares of Common Stock held by them
at such time.
(d) The Company and the Shareholders hereby covenant
and agree as follows:
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(i) The Shareholders at any annual meeting of
stockholders of the Company or any special
meeting at which directors are to be
elected (or in any written consent in lieu
of any such meeting), will cast or cause to
be cast all their votes of Common Stock so
as to cause the election of one (1)
director to be selected by the holders of
Class A Common Stock (the "CLASS A
DIRECTOR") and four (4) directors to be
selected by the holders of Class B Common
Stock (the "CLASS B DIRECTORS"), in each
case in the manner provided in the
Certificate of Incorporation and Bylaws,
for a total of five (5) directors (which
shall constitute the entire Board of
Directors of the Company). Media General
(so long as it is a Shareholder) shall have
the right to have up to two of its officers
or employees attend all meetings of the
Board of Directors of the Company as
observers.
(ii) If a vacancy with respect to the Class A
Director or a Class B Director should be
created on the Board of Directors of the
Company for any reason, including, but not
limited to, the death, disability,
resignation or removal of such director,
such vacancy will promptly be filled by the
holders of Class A Common Stock, with
respect to the Class A Director, or the
holders of Class B Common Stock, with
respect to the Class B Director, as the
case may be, at a special meeting called
for that purpose (or by a written consent
in lieu of such meeting), and at such
special meeting (or by such consent), the
Shareholders shall cast or cause to be cast
all of their votes in favor of the
replacement director selected by the Common
Shareholders who previously selected the
director whose death, resignation, etc.
created the vacancy. No person who,
directly or indirectly, as an employee,
director, consultant, or in any other
capacity, is engaged in any newspaper
publishing business which is in direct
competition with any newspaper published by
the Company or any of its subsidiaries
shall be a director of the Company or any
of its subsidiaries or one of Media
General's observers.
(iii) The Class A Director shall be (x) a member
of each committee designated by the Board
of Directors, (y) a director of each
subsidiary of the Company and (z) entitled
to access to the Company's outside auditors
in the absence
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of the designation by the Board of Directors
of an audit committee.
(iv) A majority of the entire Board of Directors
of the Company or any of its subsidiaries
shall constitute a quorum for the
transaction of business or of any specified
item of business; PROVIDED, HOWEVER, that
the presence of the Class A Director shall
be necessary to constitute a quorum at any
meeting of any such Board of Directors as
to which any action to be taken (y) was not
described with reasonable specificity as
being part of the agenda in the formal
written notice of such meeting or (z) is
required to be approved by the Class A
Director pursuant to Section 6.03.
(v) All directors shall be entitled to attend
meetings of the Board of Directors of the
Company and its subsidiaries and committees
thereof by telephone.
(vi) Each subsidiary of the Company shall have
five (5) directors. At any annual meeting
of stockholders of a subsidiary of the
Company or any special meeting at which
directors of a subsidiary of the Company
are to be elected (or in any written
consent in lieu of such meeting), the
Company will cast all of its votes of
capital stock of such subsidiary so that
the Class A Director and the Class B
Directors are elected to the Board of
Directors of such subsidiary. If a vacancy
with respect to a director of a subsidiary
of the Company should be created for any
reason, including, but not limited to, the
death, disability, resignation or removal
of such director, such vacancy will
promptly be filled by the Company at a
special meeting called for that purpose (or
by a written consent in lieu of such
meeting), and at such meeting (or by such
consent), the Company shall cause to be
elected a replacement director selected by
the Common Shareholders who previously
selected the director whose death,
resignation, etc. created the vacancy.
(e) The Company will deliver to each Class A
Shareholder:
(i) within twenty-five (25) days after the end
of each month, consolidated balance sheets
of the Company as of the end of such month
and related consolidated statements of
earnings and cash flow for such month and
for the fiscal year through the end of such
month and for the comparable
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month and period of the prior year,
certified by the Company's chief financial
officer as presenting fairly in all
material respects the consolidated
financial position and results of
operations of the Company and its
consolidated subsidiaries in accordance
with generally accepted accounting
principles consistently applied, except
that such financial statements (a) do not
contain footnotes and (b) are subject to
customary year-end adjustments, and with
such other exceptions as are agreed by ANI
and Media General.
(ii) within forty-five (45) days of the close of
the first three fiscal quarters of each
year, quarterly consolidated balance sheets
of the Company as of the end of such
quarter and related consolidated statements
of earnings and cash flow for such quarter
and for the fiscal year through the end of
such quarter and for the comparable quarter
and period of the prior year, certified by
the Company's chief financial officer as
presenting fairly in all material respects
the consolidated financial position and
results of operations of the Company and
its consolidated subsidiaries in accordance
with generally accepted accounting
principles consistently applied, except
that such financial statements (a) do not
contain footnotes and (b) are subject to
customary year-end adjustments, and with
such other exceptions as are agreed by ANI
and Media General.
(iii) within ninety (90) days of the close of the
fiscal year end, year-end audited
financials, including consolidated balance
sheets of the Company as of the end of such
fiscal year and related consolidated
statements of earnings and cash flow for
such fiscal year and for the prior fiscal
year certified by the Company's independent
public accountants presenting fairly the
consolidated financial position and results
of operations of the Company and its
consolidated subsidiaries in accordance
with generally accepted accounting
principles consistently applied.
(iv) promptly (but within any event within three
(3) business days) after receipt by the
Company copies of management letters (if
any) from the Company's independent public
accountants or internal auditors,
(v) a written agenda at least ten (10) days in
advance of each meeting of the board or
board committee of the Company or its
subsidiaries,
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(vi) management's proposed capital and operating
budget for each fiscal year at least
fifteen (15) days prior to the Board
meeting at which it is to be submitted for
approval by the Board and beginning with
the budget for fiscal year 2001, in any
event at least fifteen (15) days prior to
the commencement of such fiscal year (and,
in the case of fiscal year 2000, on or
prior to July 15, 1999),
(vii) prior written explanation of any waiver or
consent that any Class A Shareholder is
requested to sign, if the action for which
such waiver or consent is requested will
conflict with or limit any of Media
General's or the Class A Shareholders'
rights under this Agreement, the
Certificate of Incorporation, the Bylaws,
the Stock Purchase Agreement or the
Tax-Sharing Agreement (collectively, the
"OPERATIVE DOCUMENTS"), and
(viii) any other information that any Class A
Shareholder may reasonably request in
writing.
(f) ANI shall cause the Company to take all actions
necessary and appropriate to comply with the Company's covenants contained in
this Section 6.02.
(g) ANI and the Company covenant and agree that ANI
and the Company shall owe to the Class A Shareholders the full scope of
fiduciary duties, including, but not limited to, good faith, fairness and
fair dealing, which the Company would owe to any of its common stockholders.
The Company and ANI acknowledge that (while the Company is technically not a
"close corporation" under Delaware Law) the Company is a closely held
corporation, and that as such, the fiduciary duties owed by the Company to
the Class A Shareholders and ANI are of the highest degree and character, and
ANI owes to the Class A Shareholders the same fiduciary duties which the
Company owes to its Class A Shareholders.
6.03 GOVERNANCE RIGHTS. Except as provided in the next
sentence, all action of the Board of Directors of the Company and its
subsidiaries (including without limitation the
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declaration of dividends and distributions) shall require the affirmative
vote of a majority of directors present at a meeting at which a quorum is
present. ANI and the Company covenant that the Company shall not, nor shall
it permit any subsidiary to, take or permit any of the following actions,
unless the same shall have first been approved by the requisite number of
directors and the Class A Director, and ANI covenants that it shall cause the
Company and any subsidiary of the Company, to refrain from the following
actions, unless they have been approved in the manner provided above:
(a) Make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or
assets to, or purchase any property or assets
from, or enter into or make or amend any
transaction, contract, agreement, understanding,
loan advance or guarantee with or for the benefit
of ANI or its affiliates (other than the Company
and its subsidiaries), other than (i) the payment
of management fees of $1 million per annum (except
to the extent a greater amount is set forth in the
Approved Budget), (ii) to the extent provided for
(x) in a specific line item of the Approved Budget
(which line item shall specify that the payment is
to or for the benefit of ANI or one of its
affiliates (other than the Company and its
subsidiaries)) or (y) pursuant to the Tax Sharing
Agreement, (iii) loans, advances or other
transfers of properties or assets to the extent
failure to make such loans, advances or other
transfers of properties or assets would cause
Garden State or ANI to be in default under the
indenture dated March 16, 1999 in respect of
Garden State's 8-5/8% Senior Subordinated Notes
due 2011 or the indenture dated October 1, 1997 in
respect of Garden State's 8-3/4% Senior
Subordinated Notes due 2009, in each case as in
effect on the date hereof, and (iv) Permitted
Intercompany Debt (as defined below),
(b) Sell any equity interests or rights to acquire
equity interest in the Company or any of its
subsidiaries,
(c) Merge (other than with The Denver Post),
consolidate, sell substantially all of the
Company's assets or liquidate (other than (x) the
pledge or grant of a security interest in shares
of capital stock of the Company's subsidiaries to
secure Permitted Debt, and the foreclosure on any
such pledge or security interest, and (y) as
permitted by clause (a)(iii) above),
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(d) Make any Investments (including acquisitions of
another business entity and expansion into new
businesses) exceeding an aggregate amount of such
Investments outstanding at any time of $15 million,
(e) Incur any Debt except (i) Permitted Debt and (ii)
capitalized leases of less than $10 million at any
time outstanding (exclusive of those in effect on
the date hereof),
(f) Refinance or refund or amend, supplement or
otherwise modify or waive any material term of any
loan agreement in respect of Debt required to be
approved by the Class A Director pursuant to
clause (e) above,
(g) Enter into joint ventures and partnerships which
amount to a cumulative equity commitment in excess
of $10 million in the aggregate,
(h) Amend the Tax Sharing Agreement, the Certificate
of Incorporation or the Bylaws,
(i) Fix the level of compensation for any employee
over $300,000 per year,
(j) Enter into or permit to exist any agreement which
limits or restricts the rights of Media General or
the Class A Shareholders under the Operative
Documents or the obligations of any Denver Person
(as such term is defined in Section 1.6(a) of the
Stock Purchase Agreement) under the Operative
Documents,
(k) Terminate the independent certified public
accountants of the Company or The Denver Post or
appoint an independent certified public accountant
for the Company or The Denver Post (other than
Ernst & Young LLP),
(l) Appoint and/or dismiss the Publisher of The Denver
Post,
(m) Make capital expenditures in excess of $10 million
in any year (other than to the extent set forth in
the Approved Budget),
(n) Repurchase or redeem securities of the Company, and
(o) Approve the capital and operating budget for the
Company and its subsidiaries for each fiscal year
(as approved, the "APPROVED BUDGET"), provided
that until the Approved Budget for fiscal year
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2000 is adopted, the preliminary budget attached
as Exhibit B shall be deemed to be the fiscal year
2000 Approved Budget.
As used in this Agreement:
"DEBT" means (i) any indebtedness for borrowed money
or the deferred purchase price of property as evidenced by a note, bonds, or
other similar instruments, (ii) obligations as lessee under capital leases
(to the extent required to be capitalized under GAAP), (iii) without
duplication, obligations secured by any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind existing on any asset owned or held
by the Company or any subsidiary of the Company whether or not the Company or
a subsidiary has assumed or become liable for the obligations secured
thereby, (iv) any obligation under any interest rate swap agreement, (v)
accounts payable and (vi) obligations under direct or indirect guarantees of
(including obligations (contingent or otherwise) to assure a creditor against
loss in respect of) indebtedness or obligations of the kinds referred to in
clauses (i), (ii), (iii), (iv) and (v), above; PROVIDED that Debt shall not
include obligations in respect of any accounts payable that are incurred in
the ordinary course of the Company's business.
"INVESTMENT" means (i) any direct or indirect purchase
or other acquisition by the Company or any of its subsidiaries of, or of a
beneficial interest in, stock or other securities of any other Person (other
than a Person that prior to such purchase or acquisition was a wholly-owned
subsidiary of the Company), (ii) any direct or indirect redemption,
retirement, purchase or other acquisition for value, by any subsidiary of the
Company from any Person other than the Company, of any equity securities of
such subsidiary, or (iii) any direct or indirect loan, advance (other than
advances to employees for moving, entertainment and travel expenses in the
ordinary course of business) or capital contribution by the Company or any of
its subsidiaries to
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any other Person other than a wholly-owned subsidiary of the Company
including all indebtedness and accounts receivable from that other Person
that are not current assets or did not arise from sales to that other Person
in the ordinary course of business. The amount of any Investment shall be the
original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"PERMITTED DEBT" shall mean (1) Debt incurred to
redeem the 9% Cumulative Preferred Stock, par value $.01 per share (including
accrued but unpaid dividends to the date of such redemption) as contemplated
by the Stock Purchase Agreement, (2) Debt incurred to refinance the Company's
and The Denver Post's outstanding indebtedness to Norwest Bank Colorado,
National Association ("NORWEST BANK") as of the date of the Closing under the
Loan Agreement, dated as of May 20, 1994, between The Denver Post and Norwest
Bank, as amended, together with the amount of any bank overdrafts at Norwest
Bank outstanding at such time, (3) Debt incurred to fund net losses (other
than depreciation and amortization) pursuant to the Approved Budget or other
initiatives or deviations from the Approved Budget approved by the Board of
Directors of the Company and its subsidiaries (including the Class A
Director) from time to time in accordance with this Section 6.03, (4) Debt
incurred to make capital expenditures (other than capital expenditures made
in violation of Section 6.03(m)), (5) revolving Debt of up to $5 million
incurred for working capital purposes, (6) up to $8 million of Debt incurred
in respect of the press project associated by the New York Times Company
commercial print contract, (7) up to $10 million of other Debt not described
in the immediately preceding clauses (1) through (6), and (8) Debt incurred
to make required payments of principal, interest, fees and other amounts on
Permitted Debt to the extent the Company and its subsidiaries have
insufficient
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funds to make such payments. As used in the preceding sentence, Debt shall
include all fees and expenses incurred and borrowed in connection with the
incurrence of such Debt. Permitted Debt described in clauses (1), (2) and (3)
of the definition thereof that is repaid pursuant to Section 6.02(b) may not
be reborrowed as Permitted Debt, provided that (without limitation of and
subject to Section 6.02(b)), the foregoing shall not limit the ability of the
Company and its subsidiaries to pay down and reborrow Permitted Debt in
connection with cash management activities between Payment Dates; provided
further, that, upon reborrowing, the amount of Permitted Debt described in
clauses (1), (2) and (3) shall not exceed the amount of such Permitted Debt
outstanding on the most recent Payment Date after application of Available
Cash required by Section 6.02(b) to be applied to the repayment of Permitted
Debt on such Payment Date (or, if the Company shall have failed to apply such
Available Cash, the amount of such Permitted Debt that would have been
outstanding assuming such Available Cash had been so applied). Guarantees by
the Company or any of its subsidiaries of Debt or other obligations of ANI or
any of its affiliates (other than the Company and its wholly-owned
subsidiaries) ("GUARANTEED OBLIGATIONS") shall be Permitted Debt only if such
guarantees meet the following conditions: (w) the proceeds of Guaranteed
Obligations may be used solely to fund the business, liabilities and
obligations of the Company and its wholly-owned subsidiaries by way of
Permitted Intercompany Debt and capital contributions, (x) the liability of
the Company in respect of such permitted guarantees shall not exceed (A) the
sum of all proceeds of Guaranteed Obligations advanced to the Company and its
wholly-owned subsidiaries, plus interest on and other amounts payable in
respect of Permitted Intercompany Debt LESS (B) the sum of all amounts paid
by the Company and its subsidiaries to or for the benefit of ANI and its
affiliates
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<PAGE>
(other than the Company and its subsidiaries) for any purpose whatsoever in
excess of amounts permitted by Sections 6.03(a)(i) and (ii) or otherwise
approved by the Board of Directors of the Company (including the Class A
Director) in accordance with Section 6.03, (y) the Company shall be entitled
to offset any amounts paid by the Company or any of its subsidiaries on or in
respect of such permitted guarantees against any amounts owed by the Company
or any of its subsidiaries to ANI or any of its affiliates with such amounts
to be applied first against Permitted Intercompany Debt and (z) the Company
and its subsidiaries shall be subrogated to the rights of the beneficiaries
of such permitted guarantees against ANI and its affiliates (other than the
Company and its subsidiaries) when all obligations of ANI and its affiliates
(including the Company and its subsidiaries) to such beneficiaries have been
discharged.
To the extent that Permitted Debt (x) is borrowed
directly by the Company or its subsidiaries pursuant to a credit facility of
ANI or its affiliates (other than the Company and its subsidiaries), (y)
constitutes a guarantee of Debt of ANI or its affiliates (other than the
Company and its subsidiaries) or (z) is borrowed from ANI or any of its
affiliates (other than the Company and its subsidiaries), such Debt shall be
on terms no less favorable as to amortization, mandatory prepayments,
interest rates, fees and covenants (except as to prepayment and amortization
as provided herein) than Debt of ANI or its affiliates, in the case of clause
(x), under such credit facility, and in the case of clause (y), in respect of
the Debt guaranteed, and in the case of clause (z), under the most favorable
revolving credit facility of ANI and its affiliates (other than the Company
and its subsidiaries) (unless the proceeds of such Debt are loaned to the
Company and its subsidiaries, in which case such terms shall by no less
favorable than those of the credit facility under which such Debt is
incurred). Permitted Debt described in clauses (y) and (z) above is referred
to as "PERMITTED INTERCOMPANY DEBT".
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7. PREEMPTIVE RIGHTS
The Company hereby grants to the Class A Shareholders the
right to purchase additional shares of the Company's equity securities (or
rights to acquire such equity securities) (the "PURCHASE RIGHT") in
connection with any issuance from time to time by the Company of equity
securities after the Closing Date, other than any public offering by the
Company (such securities the issuance of which gives rise to a Purchase Right
are referred to herein as "COVERED SECURITIES") in accordance with the
following provisions:
(a) In the event the Company determines to sell
Covered Securities, it shall deliver to each Class A Shareholder a written
notice (the "TRANSACTION NOTICE") stating (i) its bona fide intention to sell
Covered Securities, (ii) the identity of the proposed transferee and the
material terms of the transaction and (iii) the Per Share Price (as defined
below) at which it intends to issue such Covered Securities.
(b) No later than ten (10) days after delivery to each
Class A Shareholder of a Transaction Notice (or, if later, five days
following the date the independent qualified appraiser described in the
definition of Per Share Price delivers its determination to the Class A
Shareholders), each Class A Shareholder may elect to purchase from the
Company such number of shares of Covered Securities ("PREEMPTIVE SHARES") as
will maintain its percentage ownership in the Company on a fully diluted
basis (after giving effect to the sale of the Covered Securities described in
the Transaction Notice and the sale of the Common Stock pursuant to the
Purchase Right) at a price per share equal to the Per Share Price by delivery
to the Company of an election notice (the "ELECTION NOTICE") stating such
Class A Shareholder's intention to exercise the Purchase Right.
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<PAGE>
(c) PERMITTED SALES. The Company shall have ninety
(90) days from the expiration of the relevant period set forth in Section
7(b) to sell the Covered Securities as to which a Transaction Notice has been
given by the Class A Shareholders to the Person or Persons specified in the
Transaction Notice, but only upon terms and conditions that are no more
favorable in the aggregate to such other Person or Persons or less favorable
to the Company than those set forth in the Transaction Notice.
(d) REDUCTION IN AMOUNT OF OFFERED SECURITIES. In the
event the Company shall sell less than all the Covered Securities specified
in a Transaction Notice (any such sale to be in the manner and on the terms
specified in Section 7(c) above), then the number of the Preemptive Shares to
be purchased by a Class A Shareholder shall be reduced PRO RATA.
(e) CLOSING. Upon the closing of the sale to such
other Person or Persons of Covered Securities, the Class A Shareholders shall
purchase from the Company, and the Company shall sell to the Class A
Shareholders, the number of Preemptive Shares specified in the Election
Notices, as reduced pursuant to Section 7(d).
(f) FURTHER SALE. In each case, any Covered Securities
covered by a Transaction Notice that are not sold on the basis set forth in
paragraph (c) above may not be sold or otherwise disposed of until the
procedures specified in this Section 7 are complied with again.
(g) "PER SHARE PRICE" shall mean, with respect to
Covered Securities to be issued by the Company, an amount equal to the
aggregate consideration (expressed in dollars) to be paid to the Company for
such Covered Securities (which may be zero), DIVIDED BY the number of Covered
Securities to be issued on fully-diluted basis. If such consideration
includes non-cash consideration, and the Class A Shareholders exercising
their rights under this Article 7 and the Company cannot agree on the dollar
value of such consideration within five days of
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<PAGE>
delivery of the Transaction Notice to the Class A Shareholders, such
consideration will be valued for purposes this Article 7 by independent
qualified appraisers jointly engaged by such Class A Shareholders and the
Company, whose fees and expenses shall be split between the Company, on the
one hand, and such Class A Shareholders, on the other hand.
8. MISCELLANEOUS
8.01 INDEMNIFICATION. ANI hereby agrees to indemnify and
hold Media General and each other Class A Shareholder and the Company
harmless from and against any damage to Media General and each other Class A
Shareholder and/or the Company resulting from any breach of any covenant made
herein by ANI, including all actions, suits, judgments, costs and legal and
accounting expenses incident to any of the foregoing. Media General and each
Class A Shareholder hereby agrees to indemnify and hold ANI and the Company
harmless from and against any damage to ANI and/or the Company resulting from
any breach of any covenant made herein by Media General or such Class A
Shareholder, as the case may be, including all actions, suits, judgments,
costs and legal and accounting expenses incident to any of the foregoing.
8.02 NOTICES. All notices and other communications
hereunder shall be in writing and deemed to have been duly given if delivered
by hand or mailed, postage prepaid by certified mail, return receipt
requested or by facsimile transmission to the following persons and addresses:
(a) To the Company, or ANI Mr. W. Dean Singleton,
Vice Chairman
Denver Newspapers, Inc.
Suite 525
4888 Loop Central Drive
Houston, Texas 77081
Facsimile No.: (303) 894-9340
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<PAGE>
With Copies to: Howell E. Begle, Jr., Esq.
Verner, Liipfert, Bernhard,
McPherson & Hand Chartered
Suite 700
901 15th Street, N.W.
Washington, D.C. 20005
Facsimile No.: (202) 371-6279
and
James Modlin, Esq.
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
Facsimile No.: (212) 422-4726
(b) To Media General: Mr. J. Stewart Bryan III
Chairman
Media General, Inc.
333 East Grace Street
Richmond, Virginia 23219
Facsimile No.: (804) 649-6400
and
George L. Mahoney, Esq.
General Counsel & Secretary
Media General, Inc.
333 East Grace Street
Richmond, Virginia 23219
Facsimile No.: (804) 649-6989
With Copies to: Stuart Katz, Esq.
Fried, Frank, Harris,
Shriver & Jacobson
One New York Plaza
New York, New York 10004
Facsimile No.: (212) 859-8587
or to such subsequent persons and addresses as may be specified by notice.
All notices shall be deemed to be given when received, PROVIDED that any
notice received after business hours or on a day that is not a business day
shall be deemed to be received on the next business day.
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<PAGE>
8.03 ENTIRE AGREEMENT. Except as otherwise expressly
provided herein, this Agreement contains the entire agreement among the
parties and it may not be modified, changed, or amended unless the same be in
writing and signed by all of the parties hereto, or their successors or
assigns.
8.04 SUCCESSORS AND ASSIGNS. Subject to Section 1.04, all
of the terms and conditions herein contained shall bind and inure to the
benefit of each of the parties hereto, their successors, assigns,
distributees, legatees, heirs, executors, administrators and personal
representatives and also any receiver or trustee in bankruptcy or insolvency,
including without limitation on Garden State following the Contribution and
on the surviving corporation in the merger of the Company and The Denver Post
(which shall be deemed to be the "Company" hereunder) and the surviving
corporation in the merger of ANI and Garden State (which shall be deemed to
be "ANI" hereunder).
8.05 BROKERS AND EXPENSES. Except as set forth in this
Section 8.05, the Parties agree to pay their respective expenses incurred in
connection with this Agreement. The Company agrees to (a) pay the legal and
accounting expenses necessarily and appropriately incurred by the Company in
the implementation of the transactions contemplated hereby (excluding any
fees relating to the negotiation and documentation of such transactions) and
(b) reimburse Media General for the expenses incurred by no more than two
persons in attending meetings of the Board of Directors of the Company and
any of its subsidiaries and any committees thereof, including the cost of air
travel not to exceed the cost of first class airfare. Each of Media General
and ANI agrees to indemnify the other and the Company against and hold the
others harmless from any and all liabilities (including without limitation,
cost of counsel) to any persons claiming brokerage commissions or finder's
fees on account of services
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purported to have been rendered on behalf of, or loss of investment rights or
opportunity caused by, the indemnifying party in connection with this
Agreement or the transactions contemplated hereby.
8.06 WAIVERS. The terms, covenants, representations,
warranties or conditions of this Agreement may be waived only by a written
instrument executed by the Party waiving compliance. The failure of any Party
at any time or times to require performance of any provision hereof shall in
no manner affect the right at a later time prior to any subsequent change in
capital structure to enforce the same. No waiver by any Party of any breach
of any term, covenant, representation, condition or warranty contained in
this Agreement, whether by contract or otherwise, in any one or more
instances, shall be deemed to be or construed as a waiver of any other breach
of any other term, covenant, representation, condition or warranty contained
in this Agreement.
8.07 ANNOUNCEMENT. Such public announcement or "release"
describing the transactions provided for herein as may be required by
applicable law or regulation shall be made by the Parties, the same to be
approved in advance by all Parties. No other public announcement or release
with respect to the transactions provided for herein shall be made by any
Party, unless the same shall be approved in advance by the other Parties
hereto.
8.08 CAPTIONS AND PRONOUNS. The captions appearing in this
Agreement are included solely for the convenience of the parties and shall
not be given any effect in construing this Agreement. Wherever singular
pronouns are used herein, the same shall include the plural, and vice versa
and wherever words of any gender are used herein, such words shall include
other genders.
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8.09 CHOICE OF LAW. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of New York,
without regard to the conflict of laws provisions thereof.
8.10 REGISTRATION RIGHTS. From and after the date hereof,
Media General, as holder of the shares of Class A Common Stock, shall have
the Registration Rights with respect to such shares of Class A Common Stock
as set forth in Exhibit A hereto, which Exhibit is hereby incorporated in
full herein, and with respect to any other "REGISTRABLE SECURITIES," as
defined therein.
8.11 FACSIMILE SIGNATURES; COUNTERPARTS. This Agreement may
be executed by facsimile signatures and in one or more counterparts, each of
which shall be deemed an original and all of which together will constitute
one and the same instrument.
8.12 EQUITABLE RELIEF. The parties hereby acknowledge that
monetary damages are insufficient to adequately remedy the damages which will
accrue, or which have accrued, to a party hereto by reason of a failure to
perform any of the obligations required under this Agreement. Therefore, if
any Party hereto shall institute any action or proceeding to enforce the
provisions hereof, any Person (including the Company) against whom such
action or proceeding is brought hereby waives the claim or defense therein
that such Party or personal representative has or have an adequate remedy at
law, and such Person shall not advance in any such action or proceeding the
claim or defense that such remedy at law exists.
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<PAGE>
IN WITNESS WHEREOF, the parties have signed this Agreement
as of the date and year first shown above.
DENVER NEWSPAPERS, INC.
By:
------------------------------------
Its: Executive Vice President and Chief
Financial Officer
MEDIA GENERAL, INC.
By:
------------------------------------
Its:
----------------------------------
MEDIANEWS GROUP, INC.
By:
------------------------------------
Its: Executive Vice President and Chief
Financial Officer
GARDEN STATE NEWSPAPERS, INC., agrees to
be bound by this Agreement as "ANI"
following the Contribution
By:
------------------------------------
Its: Executive Vice President and Chief
Financial Officer
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EXHIBIT A
REGISTRATION RIGHTS
1. CERTAIN DEFINITIONS. As used in this Exhibit A, the
following phrases shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the
Securities Act.
"COMMON STOCK" shall mean the Class A Common Stock and the
Class B Common Stock.
"DENVER SHAREHOLDERS' AGREEMENT" shall mean the Third Amended
and Restated Shareholders' Agreement, dated as of June 30,
1999, of which this Exhibit A is a part.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934
or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in
effect at the time.
"HOLDER" shall mean any person who is the owner of record of
any of the Registrable Securities.
"REGISTRABLE SECURITIES" shall mean the shares of Class A
common stock, par value of $1.00 per share (the "CLASS A COMMON
STOCK"), of Denver Newspapers, Inc., a Delaware corporation
(the "COMPANY") held by Media General, Inc. on June 30, 1999,
or hereafter acquired by any Class A Shareholders pursuant to
<PAGE>
Section 3.01 of the Denver Shareholders' Agreement and any
other securities that may be issued or issuable by the Company,
or any successor of the Company, as a dividend or distribution
upon or in exchange for or in replacement or conversion of such
shares (including any shares of Class B common stock, par value
of $1.00 per share ("CLASS B COMMON STOCK") issued upon
conversion of the Class A Common Stock), or any such other
securities. As to any particular Registrable Securities, once
issued such securities shall cease to be Registrable Securities
when (a) a Registration Statement with respect to the sale of
such securities shall have become effective under the
Securities Act and such securities shall have been disposed of
in accordance with such Registration Statement, (b) they shall
have been sold as permitted by, and in compliance with, Rule
144 (or successor provision) promulgated under the Securities
Act, (c) they shall have been otherwise transferred, new
certificates for them not bearing a legend restricting further
transfer under the Securities Act or the Denver Shareholders'
Agreement shall have been delivered by the Company and
subsequent public distribution of them shall not require
registration of them under the Securities Act, or (d) they
shall have ceased to be outstanding.
"REGISTRATION STATEMENT" shall mean a Registration Statement
filed or to be filed by the Company to register under the
Securities Act a sale of any of the Registrable Securities by
or for the account of any Holder. Such term includes any
prospectus included in the Registration Statement.
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"SECURITIES ACT" shall mean the Securities Act of 1933 or any
similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at
the time.
"SELLING HOLDERS" shall mean the Holders of Registrable
Securities included in a registration under either Section 2 or
Section 3 of this Exhibit A.
"TRANSFER" shall mean any sale or other disposition of any
Registrable Securities which would constitute a sale thereof
under the Securities Act.
All other capitalized terms not otherwise defined herein shall
have the meaning assigned to such terms in the Denver
Shareholders' Agreement.
2. PIGGYBACK REGISTRATION.
(a) If at any time the Company determines that it will file a
Registration Statement for any public offering of its securities, either for
its own account or the account of any security holder (a "PIGGYBACK
REGISTRATION"), then the Company shall give written notice to each Holder, at
least 45 days in advance of filing such Registration Statement, that such
filing is expected to be made (the "PIGGYBACK Notice"). Such Notice shall
also be given by the Company to all other holders of the Company's securities
that are entitled to registration rights with respect to such securities and
all such holders shall be offered the opportunity to have such securities
included in the Piggyback Registration. Such Notice to each Holder shall be
deemed to be confidential information about the Company and the Holder hereby
agrees to maintain the confidentiality of such information and shall not,
directly or indirectly, take any action (including, without limitation, the
purchase or sale of the Company's securities), with respect to
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<PAGE>
such information that is inconsistent with the confidential nature of such
information. Upon the written request of any Holder received by the Company
no later than 30 days following the Piggyback Notice (the "PIGGYBACK
REQUEST"), and subject to the conditions set forth in this Section 2, the
Company shall include in such Registration Statement all, but not less than
all, of the Registrable Securities held by such Holder for the purpose of
registering those Registrable Securities for sale by or for the account of
such Holder. The Company shall have exclusive control over the filing,
amending, withdrawal and other actions regarding such Registration Statement
in accordance with the provisions of Section 2(c) hereof. The Company shall
have no obligation to give notice to any Holder with respect to the filing
of, or to include any Registrable Securities for any Holder in, any
Registration Statement on Form S-4 or Form S-8 (or successor forms thereto).
(b) If (i) the securities to be sold by the Company pursuant to
a Registration Statement described in Section 2(a) hereof or (ii) none are to
be sold by the Company then, if the majority of the securities to be sold by
others pursuant to any such Registration Statement, are to be sold in any
underwritten public offering and are of the same class as the Registrable
Securities, the right of any Holder to have the Registrable Securities
included in the same Registration Statement may be conditioned upon the
inclusion of such Holder's Registrable Securities in the same underwriting.
The Company, all Selling Holders and all other security holders proposing to
sell securities in such underwriting shall enter into an underwriting
agreement in customary form with the underwriter or underwriters.
Notwithstanding any other provisions of this Section 2(b), if the managing
underwriter, which shall be a reputable and experienced firm selected by the
Company, determines that marketing factors require a limitation of the number
of securities to be included in the underwriting, the
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<PAGE>
managing underwriter, in its sole discretion, may either eliminate all
Registrable Securities from such underwriting, or ratably limit the number of
Registrable Securities to be included in the underwriting for all Selling
Holders. The Company shall advise all Holders who shall have requested
inclusion of their Registrable Securities in the same underwriting of the
aggregate number of Registrable Securities that may be included for all
Selling Holders. Such aggregate number shall be allocated among all such
Selling Holders in proportion, as nearly as practical, to the number of
Registrable Securities for which each Selling Holder requested registration.
No Registrable Securities excluded from an underwriting by reason of such
marketing limitation shall be included in the Registration Statement. If any
Holder disapproves of the terms of the underwriting, he may elect to withdraw
his Registrable Securities by giving written notice to the Company and the
managing underwriter. After receiving any such Notice, the Company shall
withdraw those Registrable Securities from the Registration Statement. If a
withdrawal of Registrable Securities or any withdrawal of other securities
(except a complete withdrawal of all securities that were to be sold by the
Company, in which case the Company may withdraw the Registration Statement in
its entirety) makes it possible, within the marketing limitation set by the
managing underwriter and the Company, to include in the underwriting a
greater number of Registrable Securities held by other Selling Holders
participating in such underwriting, then to the extent practical, without
delaying the underwriting, the Company shall offer to all Selling Holders who
then have Registrable Securities included in the underwriting an opportunity
to include additional Registrable Securities in the proportion previously
described in this Section 2(b).
(c) After filing such Registration Statement, the Company shall
use its best efforts and shall take all appropriate actions to cause such
Registration Statement to become
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effective as soon as practical. After such Registration Statement becomes
effective, the Company shall use its best efforts and shall take all
appropriate actions to maintain the effectiveness of such Registration
Statement for such reasonable period, not exceeding 15 months, as the Selling
Holders participating in such registration may require to complete their
contemplated sales in compliance with the Securities Act. So long as the
Registration Statement remains in effect, the Company shall furnish to the
Selling Holders participating in such registration and their underwriters
such quantities of each prospectus included in the Registration Statement as
they may reasonably request.
3. REGISTRATION ON REQUEST.
(a) REQUEST. Subject to Section 3(i) hereof, at any time and
from time to time, upon the written request of one or more Holders (the
"INITIATING HOLDERS") of Registrable Securities representing not less than
25% of the Registrable Securities that the Company effect the registration
under the Securities Act of all or part of such Initiating Holders'
Registrable Securities (a "DEMAND NOTICE"), the Company will promptly give
written notice of such requested registration to all registered Holders of
Registrable Securities, and thereupon the Company will use its best efforts
to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company
has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities which the
Company has been requested to register by the Holders thereof by
written request given to the Company within 30 days after the giving of
such written notice by the Company (the "REQUESTING HOLDERS"), all to
the extent requisite to permit the disposition of the Registrable
Securities so to be registered.
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(b) REGISTRATION OF OTHER SECURITIES. Whenever the Company
shall effect a registration pursuant to this Section 3 in connection with an
underwritten offering by one or more Selling Holders of Registrable
Securities, no securities other than Registrable Securities shall be included
among the securities covered by such registration unless (a) the managing
underwriter of such offering shall have advised each Selling Holder of
Registrable Securities to be covered by such registration in writing that the
inclusion of such other securities would not adversely affect such offering
or (b) the Selling Holders of not less than 66-2/3% of all Registrable
Securities to be covered by such registration shall have consented in writing
to the inclusion of such other securities.
(c) REGISTRATION STATEMENT FORM. Registrations under this
Section 3 shall be on such appropriate registration form of the Commission as
shall be selected by the Company and as shall be reasonably acceptable to the
Selling Holders of more than 50% of the Registrable Securities so to be
registered. The Company agrees to include in any such Registration Statement
all information which, in the opinion of counsel to the Selling Holders of
Registrable Securities so to be registered and counsel to the Company, is
required to be included.
(d) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to this Section 3 shall not be deemed to have been effected (i)
unless a Registration Statement with respect thereto has become effective,
(ii) if after it has become effective, such registration is interfered with
by any stop order, injunction or other order or requirement of the Commission
or other governmental agency or court for any reason not attributable to the
Selling Holders and has not thereafter become effective, or (iii) if the
conditions to closing specified in the underwriting agreement, if any,
entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Selling Holders.
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(e) SELECTION OF UNDERWRITERS. The underwriter or underwriters
of each underwritten offering of the Registrable Securities so to be
registered under this Section 3 shall be selected by the Initiating Holders
with the consent of the Selling Holders (including the Initiating Holders) of
more than 50% of the Registrable Securities so to be registered.
(f) PRIORITY IN REQUESTED REGISTRATION. If the managing
underwriter of any underwritten offering shall advise the Company in writing
(with a copy to each Selling Holder of Registrable Securities requesting
registration) that, in its opinion, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the Selling Holders of 66-2/3% of
the Registrable Securities requested to be included in such registration, the
Company will include in such registration, to the extent of the number which
the Company is so advised can be sold in such offering, Registrable
Securities requested to be included in such registration, pro rata among the
Selling Holders requesting such registration on the basis of the percentage
of the Registrable Securities of such Selling Holders requested so to be
registered. No Registrable Securities excluded from an underwriting by reason
of proration under this Section 3(f) shall be included in the Registration
Statement. If the Selling Holders of more than 50% of the Registrable
Securities so to be registered elect to sell their Registrable Securities in
an underwritten public offering, the right of any other Holder to have
Registrable Securities included in the same Registration Statement shall be
conditioned upon the inclusion of such Holder's Registrable Securities in the
same underwriting. All Holders proposing to sell their Registrable Securities
in such underwriting shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected in the manner set forth
above. If any Holder disapproves of the terms of the underwriting, he may
elect to withdraw his Registrable Securities by giving written notice to
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the Company and the managing underwriter. After receiving any such notice the
Company shall withdraw those Registrable Securities from the Registration
Statement.
(g) STOCK SPLIT. In connection with an initial public offering,
upon request from the Initiating Holders, or the managing underwriters
selected in accordance with Section 3(e), the Company and its shareholders
shall promptly effect a stock split of the Common Stock on a pro rata basis
to provide for such number of shares as the Initiating Holders or such
managing underwriter determines is appropriate.
(h) LIMITATIONS IF COMPANY OFFERING IN PROCESS. After the
initial public offering of Registrable Securities, notwithstanding the other
provisions of this Section 3, the Company shall not be obligated to file any
Registration Statement pursuant to Section 3 hereof during any period
commencing with the date of filing of a Registration Statement under the
Securities Act pertaining to an underwritten public offering of Common Stock
to be sold by or for the account of the Company and ending three months after
the effective date of such Registration Statement, provided that (i) the
procedures of Section 2 are complied with in connection with such offering,
(ii) the managing underwriter determined that marketing factors required the
exclusion of all Registrable Securities and (iii) during such period the
Company and the managing underwriter in good faith use reasonable efforts to
cause such Registration Statement to become effective and to complete the
public offering covered by such Registration Statement.
(i) LIMITATIONS ON REGISTRATION ON REQUEST. Notwithstanding
anything in this Section 3 to the contrary, in no event will the Company be
required to effect, in the aggregate pursuant to this Section 3, without
regard to the holder of Registrable Securities making such request, more than
three registrations during the term of this Agreement.
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<PAGE>
4. REGISTRATION AND QUALIFICATION PROCEDURES. Whenever the Company
is required by the provisions of Section 3 to use its best efforts to effect
the registration of any Registrable Securities under the Securities Act or
the Company is required by the provisions of Section 2 to include Registrable
Securities in any registration of its securities, the Company will:
(i) as expeditiously as possible and in any event within
60 days of the Demand Notice in the case of a request for registration
pursuant to Section 3, prepare and file with the Commission a
Registration Statement with respect to such Registrable Securities in
connection with which the Company will give each Selling Holder, the
underwriters, if any, their respective counsel and accountants, the
opportunity to participate in the preparation of such Registration
Statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers
and the independent public accountants that have examined its financial
statements as shall be necessary, in the opinion of such Selling
Holders' and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act;
(ii) in the case of registration required by Section 3,
use its best efforts to cause such registration statement to become
effective not later than 120 days after the Demand Notice;
(iii) prepare and file with the Commission such amendments
and supplements to such Registration Statement and the prospectus used
in connection therewith as may be necessary to keep such Registration
Statement effective and the prospectus current and to comply with the
provisions of the Securities Act with respect to the sale of the
securities
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covered by such registration statement whenever the Selling Holder of
such securities shall desire to sell the same; PROVIDED, HOWEVER, the
Company shall have no obligation to file any amendment or supplement
at its own expense more than 15 months after the effective date of
such Registration Statement;
(iv) furnish to each Selling Holder such numbers of copies
of preliminary prospectuses and prospectuses and each supplement or
amendment thereto and such other documents as each such Selling Holder
may reasonably request in order to facilitate the sale or other
disposition of the Registrable Securities owned by such Selling Holder
in conformity with (A) the requirements of the Securities Act and (B)
such Selling Holders' proposed method of distribution;
(v) register or qualify the Registrable Securities
covered by such Registration Statement under the securities laws of
such jurisdictions within the United States as each Selling Holder
shall reasonably request, and do such other reasonable acts and things
as may be required of it to enable each Selling Holder to consummate
the sale or other disposition in such jurisdictions of the securities
owned by such Selling Holder; PROVIDED, HOWEVER, that the Company shall
not be required to (A) qualify as a foreign corporation or consent to a
general and unlimited service of process in any such jurisdictions, or
(B) qualify as a dealer in securities;
(vi) furnish, at the request of any Selling Holder on the
date such Registrable Securities are delivered to the underwriters for
sale pursuant to such registration or, if such securities are not being
sold through underwriters, on the date the Registration Statement with
respect to such Registrable Securities becomes effective, (i) an
opinion, dated such date, of counsel representing the Company for the
purposes of such
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registration, addressed to the underwriters, if any, and to each
Selling Holder, covering such legal matters with respect to the
registration in respect of which such opinion is being given as the
Selling Holder of such Registrable Securities may reasonably request
and are customarily included in such opinions and (ii) letters, dated,
respectively, (l) the effective date of the Registration Statement and
(2) the date such securities are delivered to the underwriters, if any,
for sale pursuant to such registration, from a firm of independent
public accountants of recognized national standing selected by the
Company, addressed to the underwriters, if any, and to the Selling
Holder making such request, covering such financial, statistical and
accounting matters with respect to the registration in respect of which
such letters are being given as the Selling Holder of such Registrable
Securities may reasonably request and are customarily included in such
letters;
(vii) enter into and perform an underwriting agreement with
the managing underwriter, if any, selected as provided herein,
containing customary (A) terms of offer and sale of the Registrable
Securities, payment provisions, underwriting discounts and commissions,
and (B) representations, warranties, covenants, indemnities, terms and
conditions; the Selling Holders may, at their option, require that any
or all of the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Selling
Holders and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such Selling Holders; such
Selling Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriters other
than representations, warranties or agreements regarding such Selling
Holders and
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<PAGE>
such Selling Holders' intended method of distribution and any other
representation required by law and Section 7(c) hereof; and
(viii) notify each Selling Holder at any time when a
prospectus relating to the registration is required to be delivered
under the Securities Act, upon discovery that, or upon happening of any
event as a result of which, the prospectus included in such
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and at the request of any such Selling Holder promptly prepare and
furnish to such Selling Holder a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so
that as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
5. ALLOCATION OF EXPENSES. If the Company is required by the
provisions hereof to use its best efforts to effect the registration or
qualification under the Securities Act or any state securities laws of any
Registrable Securities, the Company shall pay all expenses in connection
therewith (other than underwriting discounts and commissions attributable to
the Registrable Securities being registered or qualified), including, without
limitation, (i) all expenses incident to filing with the National Association
of Securities Dealers, (ii) registration fees, (iii) printing expenses, (iv)
accounting and legal fees and expenses, except to the extent in a
registration pursuant hereto the holders of Registrable Securities elect to
engage accountants or attorneys in
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addition to the accountants and attorneys engaged by the Company and one firm
of attorneys for the Selling Holders, in which case such holders shall pay
the fees and expenses of such additional accountants and attorneys, (v)
expenses of any special audits incident to or required by any such
registration or qualification, (vi) premiums for insurance in such amount, if
any, deemed appropriate by the managing underwriter and (vii) expenses of
complying with the securities laws of any jurisdictions in connection with
such registration or qualification.
6. INDEMNIFICATIONS. In connection with any Registration Statement
filed pursuant to this Exhibit A, the Company shall indemnify and hold
harmless each Selling Holder whose Registrable Securities are included in the
Registration Statement, each underwriter who may purchase from or sell any
Registrable Securities for any such Selling Holder and each person who
controls any such Selling Holder or any such underwriter, within the meaning
of the Securities Act or the Exchange Act and against any and all losses,
claims, damages, and liabilities (joint or several) caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any preliminary prospectus, prospectus or offering
material or any related state securities or "blue sky" applications or other
instruments or caused by any omission or alleged omission to state in the
Registration Statement or any preliminary prospectus, prospectus or offering
material or any related state securities or "blue sky" applications or other
instruments any material fact required to be stated or necessary to make the
statements which are made, in light of the circumstances under which they
were made, not misleading, or any violation or alleged violation of the
Exchange Act, state securities laws, or the rules and regulation thereunder,
together with the costs of investigating and defending any such claim
(including reasonable attorneys' fees) except insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission or
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alleged omission based upon information furnished in writing to the Company
by such Selling Holder, underwriter or controlling person expressly for use
in the Registration Statement or any related state securities or "blue sky"
applications or other instruments. Each Selling Holder whose Registrable
Securities are included in any Registration Statement filed pursuant to this
Exhibit A shall severally, and not jointly, indemnify and hold harmless the
Company, its directors, each officer signing the Registration Statement, each
other person (including each other Holder) whose securities are included in
the Registration Statement, each underwriter who may purchase from or sell
any securities for the Company or any other person pursuant to the
Registration Statement and each person, if any, who controls the Company, any
such other person or any such underwriter, within the meaning of the
Securities Act, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, preliminary
prospectus, prospectus or offering material or any related state securities
or "blue sky" applications or other instruments or caused by any omission or
alleged omission to state therein any material fact required to be stated or
necessary to make the statements which are made, in light of the
circumstances under which they were made, not misleading, insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
alleged untrue statement or omission or alleged omission based upon
information furnished in writing signed by an officer of the Selling Holder
from whom indemnification is sought expressly for use in the Registration
Statement or any related state securities or "blue sky" applications or other
instruments. To the extent the provisions contained in this Exhibit A are in
conflict with any indemnification provisions that are included in any
underwriting agreement entered into by the Company and/or
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one or more Selling Holders with one or more underwriters in connection with
any underwritten public offering registered under any Registration Statement
filed pursuant to this Exhibit A, the provision of the underwriting agreement
shall govern. The indemnities provided for in this Section 6 shall be
independent of and in addition to any other indemnity provisions of the
Agreement.
7. MISCELLANEOUS.
(a) Each Selling Holder whose Registrable Securities are
included in any Registration Statement filed pursuant to this Exhibit A shall
furnish to the Company such information regarding such Selling Holder and the
sale proposed by such Selling Holder as may reasonably be required for
inclusion in the Registration Statement or any related state securities or
"blue sky" applications or other instruments, as may be necessary to provide
supplement information to the Commission, the National Association of
Securities Dealers, Inc. or any administrator of any state securities or
"blue sky" law, or as the Company or any underwriter may reasonably request.
(b) The registration rights granted in this Exhibit A are not
assignable, in whole or in part, without the prior written consent of the
Company, except such rights shall transfer with the ownership of the
Registrable Securities in accordance with the Denver Shareholders' Agreement.
(c) As a condition to having Registrable Securities included in
any Registration Statement filed pursuant to this Exhibit A, such Holder may
be required to agree, in a manner acceptable to the Company, that in selling
the Registrable Securities the Holder will comply with all applicable laws
and regulations including, but not limited to, Regulation M, if applicable,
promulgated under the Securities Exchange Act of 1934, as amended.
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(d) All rights of Holders of Registrable Securities under this
Exhibit A are subject to compliance with and the rights of the Company and
MediaNews Group, Inc. (and their successors) under Article 2 of the Denver
Shareholders' Agreement.
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TAX AGREEMENT
THIS AGREEMENT, is entered into as of June 30, 1999, among
Media News Group, Inc., a Delaware corporation ("ANI"), Denver Newspapers, Inc.,
a Delaware corporation ("DNI") and Media General, Inc., a Virginia corporation
("Media General").
R E C I T A L S
A. ANI is the common parent corporation of an affiliated group
of corporations which, together with any other corporations which may become
members of such affiliated group, is referred to as the "ANI Consolidated
Group."
B. Pursuant to an agreement dated June 30, 1999, DNI will
enter the ANI Consolidated Group effective at the end of business on June 30,
1999. DNI, if it were not included in the ANI Consolidated Group, would be
the common parent corporation of an affiliated group of corporations within
the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended
(the "Code"), which, together with any other corporations which may become
members of such affiliated group, is referred to as the "DNI Consolidated
Group."
C. It is intended that, effective July 1, 1999, the Denver
Post Corporation, a Colorado Corporation, will merge with and into DNI with
DNI being the surviving corporation.
D. ANI, DNI and Media General desire to set forth in this
Agreement their agreement as to certain matters relating to the inclusion of
the DNI Consolidated Group in the ANI Consolidated Group, including the
allocation of tax liabilities for years in which the DNI Consolidated Group
is so included, and certain other matters relating to taxes.
<PAGE>
The parties agree as follows:
1. EFFECTIVE DATE.
This Agreement shall be effective as of the first date upon
which DNI is included in the ANI Consolidated Group.
2. FILING OF CONSOLIDATED RETURNS AND PAYMENT OF
CONSOLIDATED TAX LIABILITY.
For all taxable years in which ANI files consolidated
federal income tax returns (any such return of the ANI Consolidated Group for
any taxable year, an "ANI Consolidated Return") and is entitled to include
the DNI Consolidated Group in such returns under Sections 1501-1504, or
successor provisions, of the Code, ANI shall include the DNI Consolidated
Group in the consolidated federal income tax returns it files as the common
parent corporation of the ANI Consolidated Group. ANI, DNI and the other
members of the ANI Consolidated Group shall file any and all consents,
elections or other documents and take any other actions as ANI shall deem
necessary or appropriate to effect the filing of such federal income tax
returns. For all taxable years in which the DNI Consolidated Group is
included in the ANI Consolidated Group, ANI shall pay the entire federal
income tax liability of the ANI Consolidated Group. ANI shall indemnify and
hold harmless DNI against any federal income tax liability arising as a
result of the DNI Consolidated Group or any member thereof being part of the
ANI Consolidated Group; PROVIDED, HOWEVER, that DNI shall make payments to,
or receive payments from, ANI as provided in this Agreement in settlement of
the DNI Consolidated Group's federal income tax liability (determined with
reference to the Pro Forma DNI Return) or as compensation for use of the
federal income tax attributes of the DNI Consolidated Group which actually
reduce the ANI Consolidated Group federal income tax liability for any
taxable year (which term shall
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throughout this Agreement include any short taxable year) in which the DNI
Consolidated Group is included in the ANI Consolidated Group (any such
taxable year, an "Agreement Year").
With respect to any payment to be made by DNI to ANI, ANI
to DNI, or ANI to Media General pursuant to this Agreement, (or with respect
to the creation of any receivable between such entities in connection
herewith) ANI shall send to Media General at least 3 days prior to such
payment (or creation of such receivable) a written calculation of such
payment (or receivable) and a brief explanation setting forth the manner in
which such payment (or receivable) was computed. Upon Media General's
request, ANI shall provide Media General with any additional information
relating to tax computations under this Agreement including, without
limitation, a copy of the Pro Forma DNI Returns.
3. PRO FORMA DNI RETURN.
For each Agreement Year for which ANI files an ANI
Consolidated Return that includes the DNI Consolidated Group, ANI shall
prepare a pro forma federal income tax return for the DNI Consolidated Group
(a "Pro Forma DNI Return"). Except as otherwise provided herein, the Pro
Forma DNI Return for each Agreement Year shall be prepared as if DNI filed a
consolidated return on behalf of the DNI Consolidated Group for such taxable
year and all prior taxable years. The Pro Forma DNI Return shall reflect any
carryovers or carrybacks of net operating losses, net capital losses, excess
tax credits, or other tax attributes from other taxable years of the DNI
Consolidated Group. The Pro Forma DNI Return shall be prepared in a manner
that reflects all elections, positions, and methods used in the ANI
Consolidated Return that must be applied on a consolidated basis and
otherwise shall be prepared in a manner consistent with the ANI Consolidated
Return. The provisions of the Code that require
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<PAGE>
consolidated computations, such as Sections 861, 1201-1212, and 1231, shall
be applied separately to the DNI Consolidated Group for purposes of preparing
the Pro Forma DNI Returns. With respect to transactions between the DNI
Consolidated Group and the ANI Consolidated Group, for purposes of preparing
the Pro-Forma DNI Returns, Section 1.1502-13 of the Income Tax Regulations
shall be applied as if the DNI Consolidated Group and the ANI Consolidated
Group (excluding the members of the DNI Consolidated Group) were separate
affiliated groups. For purposes of this Agreement, all determinations made as
if the DNI Consolidated Group had never been included in the ANI Consolidated
Group and as if all Pro Forma DNI Returns were actual returns shall reflect
any actual short taxable years resulting from the DNI Consolidated Group
joining or leaving the ANI Consolidated Group.
4. PRO FORMA DNI RETURN PAYMENTS.
For each Agreement Year, DNI shall make periodic payments
to ANI as ANI determines in its sole discretion are equal to the estimated
tax payments that would be due from the DNI Consolidated Group if it were not
included in the ANI Consolidated Group no later than the dates on which
payments of estimated tax would be due from the DNI Consolidated Group if it
were not included in the ANI Consolidated Group. The balance of the tax that
would be due (including interest, but not including any penalties or other
additions to tax) from the DNI Consolidated Group if it were not included in
the ANI Consolidated Group for an Agreement Year shall be paid by DNI to ANI
no later than the due date of the ANI Consolidated Return for that taxable
year. If DNI's total periodic payments to ANI for any Agreement Year exceed
the amount of its liability under the preceding sentence, ANI shall refund
such excess to DNI (with interest) no later than the date on which the
balance of the ANI Consolidated Group's income tax
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liability is due. For purposes of this Agreement, the term "federal income
tax liability" means the tax imposed by Sections 11, 55 and 59A of the Code,
or any successor provisions to such Sections. ANI shall notify DNI of any
amounts due from DNI to ANI pursuant to this Section 4 no later than 5
business days prior to the date such payments are due and such payments shall
not be considered due until the later of the due date described above or the
fifth day from the notice from ANI. Any item of federal income, gain, loss,
deduction or credit shall be taken into account in computing payments to or
from DNI or to Media General only once.
5. LOSSES, CREDITS OR OTHER ATTRIBUTES.
If, for any Agreement Year, the consolidated federal income
tax liability of the ANI Consolidated Group as reflected in the ANI
Consolidated Return is actually reduced by an amount (the "Reduction Amount")
attributable to the utilization of a net operating loss, net capital loss,
excess tax credits or other tax attributes ("Tax Attributes") reflected in a
Pro Forma DNI Return, that has not already been used in a Pro-Forma DNI
Return to reduce the Pro-Forma DNI Return Payments, then, no later than the
date on which the balance of the ANI Consolidated Group's income tax
liability is due, ANI shall pay to Media General an amount equal to 20
percent of the Reduction Amount, such payment to be treated for income tax
purposes as a contribution of 100% of the Reduction Amount by ANI to DNI
followed by a dividend of 80 percent of such Reduction Amount to ANI and 20%
of such Reduction Amount to Media General. Any such payment which is made
after the due date thereof shall bear interest at the rate applicable to
underpayments of income tax. DNI shall repay to ANI 100% of such Reduction
Amount to the extent such Tax Attributes have not previously been subject to
adjustment
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pursuant to Section 7 hereof and are subsequently used on a Pro-Forma DNI
Return to reduce the Pro-Forma DNI Return Payments.
The determination of whether any federal tax attributes of
the DNI Consolidated Group actually have been utilized by the ANI
Consolidated Group to reduce its consolidated federal income tax liability,
and the amount of any such reduction, shall be made by comparing (1) the ANI
Consolidated Group's consolidated federal income tax liability computed
taking into account the federal tax attributes of the DNI Consolidated Group
to (2) the amount of such consolidated federal income tax liability computed
without taking into account the federal tax attributes of the DNI
Consolidated Group.
6. PREPARATION OF TAX PACKAGE AND OTHER FINANCIAL REPORTING
INFORMATION.
DNI shall provide to ANI in a format determined by ANI all
information requested by ANI as necessary to prepare the ANI Consolidated
Return and the Pro Forma DNI Return (the "ANI Tax Package"). The ANI Tax
Package with respect to any taxable year shall be provided to ANI on a basis
consistent with current practices of the ANI Consolidated Group no later than
September 1 of the following fiscal year. DNI shall also provide to ANI
current federal taxable income, current and deferred tax liabilities, tax
reserve items, and any additional current or prior information required by
ANI on a timely basis consistent with current practices of the ANI
Consolidated Group as are communicated to DNI by ANI.
7. RETURNS, AUDITS, REFUNDS, AMENDED RETURNS,
LITIGATION, AND ADJUSTMENTS.
(a) RETURNS. ANI shall have exclusive and sole
responsibility and control with respect to the preparation and filing of the
ANI Consolidated Returns and any other returns, amended returns and other
documents or statements required to be filed with the Internal
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Revenue Service in connection with the determination of the federal income
tax liability of the ANI Consolidated Group.
(b) AUDITS; REFUND CLAIMS. ANI will have exclusive and sole
responsibility and control with respect to the conduct of Internal Revenue
Service examinations of the returns filed by the ANI Consolidated Group and
any refund claims with respect thereto. DNI shall cooperate with ANI during
the course of any such proceeding. ANI shall give DNI notice of and consult
with DNI with respect to any issues arising in such proceedings relating to
items of income, gain, loss, deduction or credit of members of the DNI
Consolidated Group ("DNI Consolidated Return Items").
(c) LITIGATION. If the federal income tax liability of the
ANI Consolidated Group becomes the subject of litigation in any court, the
conduct of the litigation shall be controlled exclusively by ANI. DNI shall
cooperate with ANI during the course of litigation, and ANI shall consult
with DNI regarding any issues arising in such litigation relating to DNI
Consolidated Return Items.
(d) EXPENSES. DNI shall reimburse ANI for all incremental
reasonable out-of-pocket expenses payable to third parties (including,
without limitation, legal, consulting, and accounting fees) incurred by ANI
in the course of proceedings described in paragraphs (a), (b) and (c) of this
Section to the extent such expenses are reasonably attributable to DNI
Consolidated Return Items for any Agreement Year.
(e) RECALCULATION OF PAYMENTS TO REFLECT ADJUSTMENTS. To
the extent that any audit, litigation or claim for refund with respect to an
ANI Consolidated Return results in an additional payment of tax (including a
payment of tax made preliminary to commencing a refund
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claim or litigation) or a refund of tax (any such additional payment or
refund, an "Adjustment") relating to the treatment of a DNI Consolidated
Return Item a corresponding adjustment shall be made to the corresponding Pro
Forma DNI Return.
All calculations of payments made pursuant to this
Agreement shall be recomputed to reflect the effect of any Adjustments on the
relevant Pro Forma DNI Return and on any Reduction Amount giving rise to a
payment to Media General pursuant to Section 5. If as a result of such
recomputation an amount is owed by DNI to ANI or by ANI to DNI, then within 5
days after any such Adjustment, DNI or ANI, as the case may be, shall make
such payment to the other party reflecting such Adjustment, plus interest
pursuant to Section 9 of this Agreement calculated as if payments by and to
DNI pursuant to Sections 4 and 5 of this Agreement and this Section 7 were
payments and refunds of federal income taxes. DNI shall not be required to
pay to ANI the amount of any penalties, additions to tax or additional
amounts incurred by the ANI Consolidated Group as a result of an adjustment
to any DNI Consolidated Return Item for an Agreement Year, but shall be
required to pay interest pursuant to Section 9 of this Agreement
If as a result of such recomputation an additional amount
is owed by ANI to Media General pursuant to Section 5 of this Agreement, then
within 5 days after any such Adjustment, ANI shall make such payment to Media
General, reflecting such Adjustment, in each case plus interest pursuant to
Section 9 of this Agreement calculated as if payments pursuant to Section 5
of this Agreement and this Section 7 were payments of federal income taxes.
If (i) as a result of such recomputation relating to the
disallowance of a Tax Attribute and elimination of a related Reduction
Amount, or (ii) as a result of the carryback of a
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Tax Attribute of the ANI Consolidated Group (not including, for this purpose,
the members of the DNI Consolidated Group), a payment previously made from
ANI to Media General (or to its transferees pursuant to Section 1.03(b) of
the Shareholder's Agreement (as defined below) pursuant to Section 5 herein
would not have been owing, then, 20% of such unrepaid Reduction Amount
(without any interest or penalties added thereto) shall be credited against
(i) any dividends otherwise to be paid to Media General (or its transferees
pursuant to Section 1.03(b) of the Shareholder's Agreement) with respect to
their remaining shares of DNI common stock (ii) any amounts payable to Media
General (or its transferees pursuant to Section 1.03(b) of the Shareholder's
Agreement) with respect to exercise of their "put" rights or ANI's exercise
of its "call" rights with respect to such common stock pursuant to Section 4
of the Shareholder's Agreement, (iii) any amounts payable to Media General
pursuant to Section 1.6 of the Stock Purchase Agreement, as that term is
defined in the Shareholder's Agreement, and (iv) any subsequent payments
otherwise owing to Media General (or its transferees pursuant to Section
1.03(b) of the Shareholder's Agreement) pursuant to Section 5 herein. The
foregoing obligations shall expire at such time as Media General (or a
transferee pursuant to Section 1.03(b) of the Shareholder's Agreement)
disposes of its shares of DNI common stock (other than to a transferee
pursuant to Section 1.03(b) of the Shareholder's Agreement) and ANI and DNI
shall have no claim against Media General (or any such transferee) with
respect to such obligations thereafter.
8. FIDUCIARY DUTIES
The parties acknowledge that, notwithstanding any other
provision of this Agreement, ANI and DNI's actions pursuant to this Agreement
(including, without limitation, actions relating to the preparation and
filing of tax returns, settlement of audits and litigations,
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and similar proceedings) shall be subject to the fiduciary duties and fair
dealing obligations set forth in Section 6.02(g) of the Shareholders'
Agreement concurrently entered into between ANI, DNI and Media General (the
"Shareholder's Agreement").
9. INTEREST.
Interest required to be paid by or to DNI pursuant to this
Agreement shall, unless otherwise specified, be computed at the applicable
rate and in the manner provided in the Code for interest on underpayments and
overpayments, respectively, of federal income tax for the relevant period,
except that payments concurrently owing from ANI to DNI and DNI to ANI shall
be treated as bearing interest at the identical interest rate. Any other
payments required pursuant to this Agreement which are not made within the
time period specified in this Agreement shall bear interest at the applicable
federal rate, as defined in Code Section 1274, for a short-term debt
instrument with monthly compounding, other than payments made by ANI to Media
General pursuant to the first paragraph of Section 5 hereof.
10. FOREIGN, STATE AND LOCAL INCOME TAXES.
In the case of foreign, state or local taxes based on or
measured by the net income of the ANI Consolidated Group, or any combination
of members thereof (other than solely with respect to members which are
members of the DNI Consolidated Group or which are members of the ANI
Consolidated Group but not the DNI Consolidated Group) on a combined,
consolidated or unitary basis, the provisions of Sections 1 through 9 of this
Agreement with respect to sharing of federal income tax liability, including,
without limitation, the indemnification provided in Section 2, shall apply
with equal force to such foreign, state or local tax whether or not the DNI
Consolidated Group is included in the ANI Consolidated Group for federal
income tax purposes;
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PROVIDED, HOWEVER, that interest pursuant to the first sentence of Section 9
of this Agreement shall be computed at the rate and in the manner provided
under such foreign, state or local law for interest on underpayments and
overpayments of such tax for the relevant period and references to provisions
of the Code shall be deemed to be references to analogous provisions of
state, local, and foreign law. ANI shall have the sole and exclusive
responsibility for determining if a combined, consolidated or unitary tax
return should be filed for any foreign, state or local tax purpose.
11. CONFIDENTIALITY.
Each of ANI, DNI and Media General agrees that any
information furnished pursuant to this Agreement is confidential and, except
as, and to the extent, required during the course of an audit or litigation
or other administrative or legal proceeding, shall not be disclosed to other
persons.
12. SUCCESSORS AND ACCESS TO INFORMATION.
This Agreement shall be binding upon and inure to the
benefit of any successor to any of the parties, by merger, acquisition of
assets or otherwise, to the same extent as if the successor had been an
original party to this Agreement, provided, however, that Media General's
rights and obligations hereunder shall be assignable only pursuant to a
Transfer (as defined in the Shareholder's Agreement) pursuant to Section
1.03(b) or Section 1.03(d) of the Shareholder's Agreement. If Media General
disposes of all or any portion of its interest in DNI (including by means of
a disposition to ANI), then (a) with respect to taxable periods (or portions
thereof) occurring prior to such transaction, its rights and obligations
under this Agreement shall not be reduced, but its obligations shall be
enforceable only in respect of the shares, if any, held by
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Media General and its transferees pursuant to Section 1.03(b) of the
Shareholder's Agreement
and
(b) with respect to taxable periods (or portions thereof) occurring after
such disposition, its rights and obligations under this Agreement shall be
reduced proportionately, or extinguished, as the case may be, to reflect such
disposition. Media General and its transferees shall have no rights or
obligations hereunder in respect of shares transferred to ANI or its
affiliates. If for any taxable year the DNI Consolidated Group is no longer
included in the ANI Consolidated Group, ANI and DNI agree to provide to the
other party any information reasonably required to complete tax returns for
taxable periods beginning after the DNI Consolidated Group is no longer
included in an ANI Consolidated Return, and each of ANI and DNI will
cooperate with respect to any audits or litigation relating to any ANI
Consolidated Return.
13. GOVERNING LAW.
This Agreement shall be governed by and construed in
accordance with the laws of New York excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the
laws of any jurisdiction other than the State of New York.
14. HEADINGS.
The headings in this Agreement are for convenience only and
shall not be deemed for any purpose to constitute a part or to affect the
interpretation of this Agreement.
15. COUNTERPARTS.
This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one counterpart.
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16. SEVERABILITY.
If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the maximum extent
practicable. In any event, all other provisions of this Agreement shall be
deemed valid, binding, and enforceable to their full extent.
17. TERMINATION.
Unless otherwise agreed by the parties, this Agreement
shall remain in force and be binding so long as the period of assessments
under the Code remains unexpired for any taxable year during which the DNI
Consolidated Group is included in an ANI Consolidated Return; PROVIDED,
HOWEVER, that neither ANI nor DNI shall have any liability to the other party
with respect to tax liabilities for taxable years in which the DNI
Consolidated Group is not included in the ANI Consolidated Returns.
18. SUCCESSOR PROVISIONS.
Any reference herein to any provisions of the Code or
Treasury Regulations shall be deemed to include any amendments or successor
provisions thereto as appropriate.
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IN WITNESS WHEREOF, each of the parties of this Agreement
has caused this Agreement to be executed by its duly authorized officer on
this date of ______________, 1999.
Media News Group, Inc.
By: /s/
-----------------------------------
Name:
Title:
Denver Newspapers, Inc.
By: /s/
-----------------------------------
Name:
Title:
Media General, Inc.
By: /s/
-----------------------------------
Name:
Title:
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Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement on Form S-4 and related
Prospectus of Garden State Newspapers, Inc. for the registration of
$200,000,000 of its 8 5/8% Series B Senior Subordinated Notes Due 2011 and to
the incorporation by reference therein of our reports dated September 4,
1998, with respect to the consolidated financial statements and schedule of
Garden State Newspapers, Inc. and Garden State Investments, Inc., included in
the Garden State Newspapers, Inc. Annual Report on Form 10-K for the year
ended June 30, 1998 filed with the Securities and Exchange Commission.
Ernst & Young LLP
Denver, Colorado
July 8, 1999
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference into this Registration Statement on Form S-4 (No. 333-79665) of
our report dated May 14, 1999, covering the financial statements of Donrey
California as of and for the year ending December 31, 1998, which is included
in the Current Report of Garden State Newspapers, Inc. on Form 8-K/A dated
June 14, 1999, and to all references to our firm included in this
Registration Statement.
Arthur Andersen LLP
Little Rock Arkansas,
July 8, 1999.
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference into the Registration
Statement on Form S-4/A (No. 333-79665) of Garden State Newspapers, Inc. of
our report dated May 3, 1999 relating to the financial statements of the San
Bernardino County Sun, which appears in the Current Report on Form 8-K/A of
Garden State Newspapers, Inc. dated June 14, 1999. We also consent to the
references to us under the heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Washington, DC
July 8, 1999
