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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------- ---------
Commission File Number
MediaNews Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 76-0425553
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
1560 Broadway
Denver, Colorado 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 563-6360
--------------
(MEDIANEWS GROUP, INC. IS THE SUCCESSOR ISSUER TO GARDEN STATE NEWSPAPERS, INC.,
PURSUANT TO RULE 15d-5 UNDER THE SECURITIES ACT OF 1933)
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check mark whether a registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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INDEX TO MEDIANEWS GROUP, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
Item No. Page
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<S> <C> <C>
PART I - FINANCIAL INFORMATION
1 Financial Statements 3
2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
PART II - OTHER INFORMATION
1 Legal Proceedings 3
2 Changes in Securities 3
3 Defaults Upon Senior Securities 3
4 Submission of Matters to a Vote of Security Holders 3
5 Other Information 4
6 Exhibits and Reports on Form 8-K 4
</TABLE>
2
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PART I
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
The information required by this item is filed as part of this Form 10-Q. See
Index to Financial Information at page 5 of this Form 10-Q.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is filed as part of this Form 10-Q. See
Index to Financial Information at page 5 of this Form 10-Q.
PART II
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ITEM 1. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the ordinary course of
business, none of which is expected to result in material loss.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the rights of security holders during the quarter for
which this report is filed.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There were no defaults upon senior securities during the quarter for which this
report is filed.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the quarter
for which this report is filed.
3
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ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
10.4 Employment Agreement dated March 15, 2000 between MediaNews Services,
Inc. and William Dean Singleton.
10.19 Employment Agreement dated March 15, 2000 between MediaNews Services,
Inc. and Joseph J. Lodovic, IV.
10.20 MediaNews Group Shareholders' Agreement dated January 31, 2000.
10.21 Singleton Family Voting Trust Agreement for MediaNews Group, Inc. dated
January 31, 2000.
10.22 Scudder Family Voting Trust Agreement for MediaNews Group, Inc. dated
January 31, 2000.
27 Financial Data Schedule.
Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 2000.
SIGNATURES
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
MediaNews Group, Inc.
<S> <C>
Dated: May 12, 2000 By: /s/ Joseph J. Lodovic, IV
-------------------------------------- --------------------------------------------
Joseph J. Lodovic, IV
Executive Vice President,
Chief Financial Officer and
Duly Authorized Officer of Registrant
</TABLE>
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MEDIANEWS GROUP, INC.
Index to Financial Information
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS: PAGE
----
<S> <C>
Condensed Consolidated Balance Sheets.................................................... 6
Unaudited Condensed Consolidated Statements of Operations................................ 8
Unaudited Condensed Consolidated Statements of Cash Flows................................ 9
Notes to Unaudited Condensed Consolidated Financial Statements........................... 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................................................... 14
</TABLE>
5
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CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) Garden State
MediaNews Group, Newspapers, Inc.
Inc. and Subsidiaries and Subsidiaries
ASSETS March 31, 2000 June 30, 1999
------------ ------------
(in thousands)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ....................................................... $ -- $ 2,882
Accounts receivable, less allowance for doubtful
accounts of $11,470 and $8,163 at March 31, 2000
and June 30, 1999, respectively .............................................. 111,957 72,776
Inventories of newsprint and supplies ........................................... 22,408 9,278
Prepaid expenses and other assets ............................................... 6,883 4,574
Income tax receivable ........................................................... 3,693 3,016
------------ ------------
TOTAL CURRENT ASSETS ......................................................... 144,941 92,526
PROPERTY, PLANT AND EQUIPMENT
Land ............................................................................ 29,690 25,151
Buildings and improvements ...................................................... 115,732 84,437
Machinery and equipment ......................................................... 371,748 242,077
------------ ------------
TOTAL PROPERTY, PLANT AND EQUIPMENT .......................................... 517,170 351,665
Less accumulated depreciation and amortization .................................. (153,384) (76,236)
------------ ------------
NET PROPERTY, PLANT AND EQUIPMENT ............................................ 363,786 275,429
OTHER ASSETS
Investment in newspaper partnerships ............................................ 17,844 18,378
Subscriber accounts, less accumulated amortization of
$78,442 and $68,084 at March 31, 2000 and June 30,
1999, respectively ........................................................... 118,520 127,075
Excess of cost over fair value of net assets acquired, less
accumulated amortization of $34,137 and $26,319
at March 31, 2000 and June 30, 1999, respectively ............................ 327,015 286,022
Covenants not to compete and other identifiable intangible
assets, less accumulated amortization of $28,767 and
$23,704 at March 31, 2000 and June 30, 1999, respectively .................... 12,544 16,175
Other ........................................................................... 43,488 13,973
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TOTAL OTHER ASSETS ........................................................... 519,411 461,623
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TOTAL ASSETS ................................................................. $ 1,028,138 $ 829,578
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements
6
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CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited) Garden State
MediaNews Group, Newspapers, Inc.
Inc. and Subsidiaries and Subsidiaries
LIABILITIES AND SHAREHOLDERS' DEFICIT March 31, 2000 June 30, 1999
------------ ------------
(in thousands, except share data)
<S> <C> <C>
CURRENT LIABILITIES
Trade accounts payable ........................................................... $ 32,440 $ 7,831
Accrued liabilities .............................................................. 57,917 46,862
Unearned income .................................................................. 27,086 18,140
Current portion of long-term debt and obligations under capital leases ........... 11,758 7,830
------------ ------------
TOTAL CURRENT LIABILITIES ...................................................... 129,201 80,663
LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES ................................. 835,801 750,107
OTHER LIABILITIES ................................................................... 16,215 7,543
DEFERRED INCOME TAXES ............................................................... 40,333 18,370
MINORITY INTEREST ................................................................... 129,283 123,796
SHAREHOLDERS' DEFICIT
Common stock, par value $0.001 and $1.00 per share; at March 31, 2000 and
June 30, 1999, respectively; 3,000,000 and 1,000 shares authorized and
2,314,346 and 1,000 shares issued and
outstanding at March 31, 2000 and June 30, 1999, respectively .................. 23 1
Additional paid-in capital ....................................................... 3,610 --
Deficit .......................................................................... (126,328) (150,902)
------------ ------------
TOTAL SHAREHOLDERS' DEFICIT .................................................... (122,695) (150,901)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT .................................... $ 1,028,138 $ 829,578
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</TABLE>
See notes to unaudited condensed consolidated financial statements
7
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
------------------------------------- ------------------------------------
2000 1999 2000 1999
---------------- ----------------- --------------- -----------------
(In thousands, except share data)
MediaNews Garden State MediaNews Garden State
Group, Inc. and Newspapers, Inc. Group, Inc. and Newspapers, Inc.
Subsidiaries and Subsidiaries Subsidiaries and Subsidiaries
---------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
REVENUES
Advertising ....................................$ 182,925 $ 97,467 $ 567,328 $ 306,661
Circulation .................................... 37,235 26,784 113,509 80,246
Other .......................................... 7,046 3,559 19,389 11,372
----------- ----------- ----------- -----------
TOTAL OPERATING REVENUES ....................... 227,206 127,810 700,226 398,279
COST AND EXPENSES
Cost of sales .................................. 79,201 41,824 238,348 127,367
Selling, general, and administrative ........... 111,681 61,028 329,020 182,145
Depreciation and amortization .................. 15,628 10,549 46,823 31,756
Interest expense ............................... 18,350 13,335 55,891 40,463
Other, (net) ................................... 2,686 6,053 6,780 7,882
----------- ----------- ----------- -----------
TOTAL COST AND EXPENSES ........................ 227,546 132,789 676,862 389,613
GAIN ON SALE OF NEWSPAPER
PROPERTIES ...................................... -- -- 3,323 --
MINORITY INTEREST ............................... 5,241 -- 20,706 --
----------- ----------- ----------- -----------
NET INCOME (LOSS) BEFORE INCOME
TAXES AND EXTRAORDINARY LOSS .................... (5,581) (4,979) 5,981 8,666
INCOME TAX (EXPENSE) BENEFIT .................... 567 399 (1,461) (3,530)
----------- ----------- ----------- -----------
INCOME NET (LOSS) BEFORE
EXTRAORDINARY LOSS .............................. (5,014) (4,580) 4,520 5,136
----------- ----------- ----------- -----------
EXTRAORDINARY LOSS
(NET OF TAXES OF $1,479) ........................ -- -- -- (2,154)
----------- ----------- ----------- -----------
NET INCOME (LOSS) ...............................$ (5,014) $ (4,580) $ 4,520 $ 2,982
=========== =========== =========== ===========
Pro Forma Pro Forma
----------- -----------
NET INCOME (LOSS) PER COMMON SHARE:
Net income (loss) before extraordinary
loss .......................................$ (2.17) $ (2.87) $ 1.95 $ 3.22
Extraordinary loss ........................... -- -- -- (1.35)
----------- ----------- ----------- -----------
Net income (loss) per common share ...........$ (2.17) $ (2.87) $ 1.95 $ 1.87
=========== =========== =========== ===========
Weighted average number of
shares outstanding ......................... 2,314,346 1,596,022 2,314,346 1,596,022
=========== =========== =========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended March 31,
--------------------------------
2000 1999
------------ ------------
MediaNews Group, Garden State
Inc. and Newspapers, Inc.
Subsidiaries and Subsidiaries
------------ ------------
(in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ................................................... $ 4,520 $ 2,982
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .............................. 45,496 30,806
Provision for losses on accounts receivable ................ 8,764 4,431
Amortization of debt discount .............................. 2,931 2,733
Net gain on sale of assets ................................. (1,671) (85)
Debt issuance cost and repurchase premium .................. -- 9,198
Distributions in excess of (less than) earnings from
Joint Operating Agreements ............................... 534 (599)
Change in defined benefit plan assets ...................... (1,613) --
Deferred income tax expense ................................ 315 2,055
Minority Interest in net income ............................ 20,706 --
Change in operating assets and liabilities ................. (14,233) (12,720)
------------ ------------
NET CASH FLOWS FROM OPERATING ACTIVITIES ................ 65,749 38,801
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of newspaper assets ................................... 8,000 1,334
Acquisition of newspaper properties ........................ (6,300) (57,751)
Purchase of machinery and equipment ........................ (22,592) (8,154)
------------ ------------
NET CASH FLOWS FROM INVESTING ACTIVITIES ................ (20,892) (64,571)
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction of long-term debt ................................ (62,478) (176,361)
Reduction of non-operating liabilities ..................... (1,712) (530)
Debt issuance cost and repurchase premium .................. -- (9,198)
Issuance of long-term debt ................................. 41,397 303,533
Dividends paid ............................................. -- (12,586)
Distributions paid to minority interest .................... (24,946) --
------------ ------------
NET CASH FLOWS FROM FINANCING ACTIVITIES ................ (47,739) 104,858
------------ ------------
CHANGE IN CASH AND CASH EQUIVALENTS ............................. (2,882) 79,088
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................ 2,882 999
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ...................... $ -- $ 80,087
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid............................................... $ 44,331 $ 33,755
============ ============
Income taxes paid........................................... $ 750 $ 20
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements
9
<PAGE> 10
MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: REORGANIZATION AND BASIS OF PRESENTATION
As a result of a corporate reorganization, as is more fully described below,
MediaNews Group, Inc. (the "Company" or "MediaNews", formerly known as
Affiliated Newspapers Investments, Inc.) became the successor issuer to Garden
State Newspapers, Inc., pursuant to Rule 15d-5, under the Securities Act of
1933.
Reorganization
o In June 1999, Affiliated Newspapers Investments, Inc., parent of
Garden State Newspapers, Inc., changed its name to MediaNews Group,
Inc.
o On June 30, 1999, MediaNews purchased an additional 20% interest in
The Denver Post Corporation ("Denver Post"), bringing its total
ownership interest in the Denver Post to 80%. In addition, the Denver
Post Shareholder Agreement was modified, giving MediaNews control of
the Denver Post board of directors. Accordingly, the Denver Post
became a consolidated subsidiary of MediaNews.
o On September 1, 1999, Garden State Newspapers, Inc. was merged into
MediaNews, with MediaNews as the surviving corporation.
Basis of Presentation
As a result of the reorganization described above, the condensed
consolidated financial statements dated March 31, 2000, included the
consolidated results of operations of MediaNews and its subsidiaries, which
includes the Denver Post and the operations of the Company formerly known as
Garden State Newspapers, Inc. and subsidiaries ("Garden State"). The financial
statement data for June 30, 1999 and the three and nine month periods ended
March 31, 1999, included in this 10-Q, only includes Garden State. All
significant intercompany accounts and transactions were eliminated upon
consolidation.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Basis of Quarterly Financial Statements
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulations S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
consolidated financial statements and should be read in conjunction with the
consolidated financial statements and footnotes thereto included in Garden
State's Annual Report on Form 10-K for the year ended June 30, 1999. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended March 31, 2000, are not
necessarily indicative of the results that may be expected for the year ended
June 30, 2000.
Reclassifications
Certain prior year and previous quarter balances have been reclassified in
order to confirm with current reporting classifications.
Income Taxes
The effective income tax rate varies from the federal statutory rate
primarily because of the nondeductibility of certain expenses and the
utilization of net operating losses that were previously subject to valuation
allowances.
10
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (CONTINUED)
Seasonality
Newspaper companies tend to follow a distinct and recurring seasonal
pattern, with higher advertising revenues in months containing significant
events or holidays. Accordingly, the fourth calendar quarter, or the Company's
second fiscal quarter, is the Company's strongest revenue quarter of the year.
Due to generally poor weather and lack of holidays, the first calendar quarter,
or the Company's third fiscal quarter, is the Company's weakest revenue quarter
of the year.
Earnings Per Share
Earnings per share for the three and nine months ended March 31, 1999, have
been restated to give effect to the merger of Garden State, into MediaNews as if
the merger occurred effective July 1, 1998. The pro forma weighted average
outstanding shares at March 31, 1999 is based on the historical number of shares
of tracking stock issued by MediaNews, which are attributable to Garden State.
Business Acquisitions
Effective October 1, 1999 and January 1, 2000, a subsidiary of the Company,
California Newspapers Partnership, purchased a shopper in Ukiah, California and
a weekly newspaper in Milpitas, California, respectively. The purchase price
included cash and future payments under covenants not to compete.
Effective October 31, 1999, the Company acquired substantially all of the
assets used in the publication of the Deming Headlight, a morning newspaper
published in Deming, New Mexico, for approximately $2.0 million cash. The
newspaper has daily paid circulation of approximately 3,850.
Effective March 1, 2000 the Company acquired substantially all the assets
used in the publication of six weekly newspapers and three monthly publications,
distributed in and around Ayer, Massachusetts. The purchase price of
approximately $4.2 million, included cash, a note payable and future payments
under covenants not to compete.
These acquisitions have been accounted for as purchases; accordingly, the
unaudited condensed consolidated financial statements include the operations of
the acquired newspapers from the date of each acquisition. The assets acquired
and the liabilities assumed have been recorded at their estimated fair market
value. The estimated fair market value of assets acquired reflects management's
current best estimate; however, are subject to change in the final allocation of
purchase price. The excess of cost over fair market value of net assets acquired
and intangible assets related to subscriber lists are being amortized on a
straight line basis over 40 years and 15 years, respectively.
Disposition
Effective July 31, 1999, the California Newspapers Partnership sold the
assets of The Hemet News and Moreno Valley Times for a pre-tax gain of
approximately $3.3 million. A portion of the proceeds from the sale were used to
purchase the California Newspapers Partnership newspaper assets described above.
The remaining cash was distributed to the partners in the California Newspapers
Partnership.
NOTE 3: LONG TERM DEBT
In conjunction with the previously described reorganization, MediaNews
borrowed $100.4 million under a new credit facility. Proceeds from this
borrowing were used to acquire an additional 20% interest in the Denver Post,
repay the Denver Post's bank debt, redeem the Denver Post's preferred stock,
including accrued dividends, and pay fees and expenses associated with
MediaNews' new credit facility. In conjunction with this transaction, MediaNews
and the Denver Post also entered into a Master Intercompany Note, representing
the amount of borrowings under the Company's new credit facility, which are
directly attributable to the operations of the Denver Post. Approximately $60.0
million of the total borrowing was directly attributable to the Denver Post at
June 30, 1999.
11
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3: LONG TERM DEBT (CONTINUED)
Amounts borrowed under the Master Intercompany note are guaranteed by the Denver
Post. The Denver Post's debt guarantee is limited to the Permitted Debt of the
Denver Post as defined in the Denver Post Shareholder's Agreement between
MediaNews and Media General.
The following table sets forth the approximate expected scheduled maturities
of long-term debt, excluding capital leases, of the Company for the fiscal years
indicated, (in thousands):
<TABLE>
<S> <C>
2000............................. $ 1,737
2001............................. 10,098
2002............................. 8,580
2003............................. 8,473
2004............................. 44,407
Thereafter....................... 757,542
-----------
$ 830,837
===========
</TABLE>
NOTE 4: COMMITMENTS
MediaNews has entered into newsprint swap agreements covering 75,000 metric
tons of newsprint, which expire over the next six to nine years. MediaNews uses
the agreements to reduce the Company's exposure to the uncertainty of future
newsprint price fluctuations. Settlements are made on a monthly or quarterly
basis, and vary based on the difference between the fixed contract price and the
price as published in the Paper Trader (also known as the RISI index). The
weighted average fixed price of newsprint under the agreements is $592 per
metric ton. MediaNews accounts for amounts received or paid under these
agreements as an adjustment to newsprint expense. MediaNews also participates in
fixed price contracts, which expire over the next nine months to nine years.
Under these contracts, the Company currently purchased 166,000 metric tons of
newsprint at a weighted average price of approximately $526 per metric ton.
The Denver Post Shareholder Agreement provides Media General and MediaNews
with a put and a call option, respectively, on Media General's remaining 20%
interest in the Denver Post. The put can be exercised by Media General beginning
June 30, 2001 and expires June 30, 2004. The call option can be exercised by
MediaNews beginning July 1, 2004 and expires June 30, 2005. The price of the put
and call are the same and is based on the appraised fair market value of the
Denver Post, less Permitted Debt of the Denver Post. MediaNews has one year to
close on the purchase from the date of the put notice.
NOTE 5: SUBSEQUENT EVENTS
Common Stock Repurchase
On April 7, 2000, the Company repurchased 16,000 shares of its common stock
at $125.0 per share, for a total purchase price of $2.0 million. The repurchased
shares represent less then 1.0% of the Company's outstanding shares. The
repurchased shares are held in treasury.
Denver Newspaper Agency
On May 11, 2000, MediaNews and E.W. Scripps Company ("Scripps"), owner of
the Denver Rocky Mountain News, agreed to form the Denver Newspaper Agency
L.L.C. (the "Agency"), which will be owned 50% by MediaNews and 50% by Scripps.
The Agency will be responsible for all business functions for the Denver Rocky
Mountain News and The Denver Post, including advertising and circulation sales,
production and distribution. News and editorial functions at The Denver Post and
the Denver Rocky Mountain News will remain completely separate from the Agency.
12
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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
When the Agency is formed, MediaNews and Scripps will each contribute
substantially all of their operating assets used in the publication of The
Denver Post and the Denver Rocky Mountain News. Scripps will also pay MediaNews
a one time cash payment of $60.0 million to reach its 50% share in the Agency.
The Agency will be governed by a four person board, with MediaNews and Scripps
each appointing two members.
The creation of the Denver Newspaper Agency under the provisions of the
Newspaper Preservation Act of 1970, which allows two newspapers to combine
business functions under a Joint Operating Agreement requires the approval of
the U.S. Attorney General. We currently have no estimate of when such approval
might be obtained.
13
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATING RESULTS
Three Months Ended March 31, 2000 and 1999
Revenues
Revenues increased $99.4 million or 77.8% in the third quarter of fiscal
year 2000 as compared to the same quarter of fiscal year 1999. The increase in
revenue was primarily attributable to the consolidation of the Denver Post and
the formation of the California Newspapers Partnership ("CNP"). Excluding the
consolidation of the Denver Post and the CNP partnership, our remaining
newspaper operations ("existing newspapers") had a 6.8% increase in operating
revenues for the third quarter of fiscal year 2000. Advertising revenues at
existing newspapers increased by approximately 8.8%, driven by continued growth
in all advertising categories.
Cost of Sales
Cost of sales increased $37.4 million or 89.4% in the third quarter of
fiscal year 2000 compared to the same quarter of fiscal year 1999. The
consolidation of the Denver Post and the CNP partnership caused the majority of
the cost of sales increase for the quarter ended March 31, 2000. Excluding the
consolidation of the Denver Post and the CNP partnership, cost of sales
increased approximately 2.8%. The majority of the increase was the result of
increased editorial cost and newsprint associated with corporate newsprint
contracts.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses increased $50.6
million or 83.0% in the third quarter of fiscal year 2000 as compared to the
same quarter of fiscal year 1999. The consolidation of the Denver Post and the
CNP partnership caused almost all of the SG&A expense increase in the third
quarter of fiscal year 2000. Excluding the consolidation of the Denver Post and
the CNP partnership, SG&A expense increased approximately 11.6%. The increase in
SG&A at the newspapers is associated with increases in advertising and
circulation expenditures, which were primarily related to ongoing efforts to
increase advertising lineage and total paid circulation. We have also increased
our spending at corporate and the newspapers, in the current fiscal year, as we
continue to develop our internet sales, improve and maintain our newspaper
websites and support the addition of the CNP partnership. While SG&A expense has
increased as a result of the CNP partnership, the increase is offset by
management fees paid to us by the CNP partnership, the effect of which is
reflected as a reduction in minority interest expense.
EBITDA
EBITDA, net of EBITDA related to minority interest, increased $3.7 million
or 14.9% in the third quarter of fiscal year 2000. The majority of the increase
was due to the consolidation of the Denver Post; however, our existing
newspapers realized a 8.9% increase in EBITDA. EBITDA represents total revenues
less cost of sales and selling, general and administrative expense. Although
EBITDA is not a measure of performance calculated in accordance with GAAP, we
believe that EBITDA is an indicator and measurement of our leverage capacity and
debt service ability.
Depreciation and Amortization
Depreciation and amortization increased $5.1 million in the third quarter of
fiscal year 2000 as compared to the same period of fiscal year 1999. The
aforementioned consolidation of the Denver Post and the formation of the CNP
partnership caused the majority of the increase in depreciation and amortization
expense.
Interest Expense
Interest expense increased $5.0 million in the third quarter of fiscal year
2000 as compared to the same period in fiscal year 1999. Interest expense
increased as a result of a $229.1 million increase in average debt outstanding,
primarily associated with
14
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
acquisitions, debt repurchases and the inclusion of debt related to the Denver
Post and MediaNews (f.k.a. Affiliated Newspapers Investments, Inc.), which was
not previously part of Garden State's consolidated debt. This increase was
partially offset by a 29 basis point decrease in the average interest rate.
Other Expense
Other expense increased approximately $2.1 million in the third quarter of
fiscal year 2000 as compared to the same period in fiscal year 1999 after
excluding $5.5 million of debt issuance costs in conjunction with our $200.0
million bond offering in March 1999. The increase in other expense is primarily
attributable to the recognition of losses in excess of our equity investment in
AdOne (a non cash loss), legal fees associated with corporate reorganization and
an increase in other long-term liabilities associated with an option repurchase
accrual, which cannot be exercised prior to January, 2003.
Net Income
We reported a net loss of approximately $5.0 million in the third quarter of
fiscal year 2000 compared to an adjusted net income of $0.9 million in the third
quarter of fiscal year 1999, after excluding debt issuance cost of approximately
$5.5 million. The change in net income is primarily attributable to a $5.0
million increase in interest expense and a $2.1 million increase in adjusted
other expense described above, which was only partially offset by a $1.0 million
increase in operating profit, net of minority interest.
Nine Months Ended March 31, 2000 and 1999
Revenues
Revenues increased $301.9 million or 75.8% in the first nine months of
fiscal year 2000 as compared to the same nine month period of fiscal year 1999.
The increase in revenue was primarily attributable to the consolidation of the
Denver Post; the formation of the CNP partnership; the August 21, 1998
acquisition of the 50% interest in the Charleston Newspaper joint venture; and
the October 1, 1998 acquisition of the Daily Times, published in Farmington, New
Mexico. Excluding these newspaper acquisitions, consolidation of the Denver Post
and the CNP partnership, our remaining newspaper operations ("existing
newspapers") had a 4.5% increase in operating revenues for the first nine months
of fiscal year 2000. Advertising revenues at existing newspapers increased by
approximately 6.0%, driven by continued growth in all advertising categories.
Cost of Sales
Cost of sales increased $111.0 million or 87.1% in the first nine months of
fiscal year 2000 compared to the same nine month period of fiscal year 1999. The
aforementioned acquisitions and consolidation of the Denver Post caused the
majority of the cost of sales increase for the first nine months of fiscal year
2000. Excluding these transactions, cost of sales decreased slightly, primarily
driven by decreased production and newsprint expenses, which was offset by
increases in editorial spending.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses increased $146.9
million or 80.6% in the first nine months of fiscal year 2000 as compared to the
same nine month period of fiscal year 1999. The acquisitions discussed above,
consolidation of the Denver Post and the CNP partnership caused the majority of
the SG&A expense increase in the first nine months of fiscal year 2000.
Excluding these transactions, SG&A expense increased approximately 8.3%. The
increase in SG&A is associated with increases in advertising and circulation
expenditures, which were primarily related to ongoing efforts to increase
advertising lineage and total paid circulation. We have also increased our
spending at corporate and the newspapers, in the current fiscal year, as we
continue to develop our internet sales, improve and maintain our newspaper
websites and support the addition of the CNP partnership. While SG&A expense has
increased as a result of the CNP partnership, the increase is offset by
management fees paid to us by the CNP partnership, the effect of which is
reflected as a reduction in minority interest expense.
15
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
EBITDA
EBITDA, net of EBITDA related to minority interest, increased $17.4 million
or 19.6% in the first nine months of fiscal 2000 as compared to the same nine
month period of fiscal year 1999. The majority of the increase was due to the
consolidation of the Denver Post, formation of the CNP partnership and prior
year acquisitions; however, our existing newspapers realized a 7.6% increase in
EBITDA. EBITDA represents total revenues less cost of sales and selling, general
and administrative expense. Although EBITDA is not a measure of performance
calculated in accordance with GAAP, we believe that EBITDA is an indicator and
measurement of our leverage capacity and debt service ability.
Depreciation and Amortization
Depreciation and amortization increased $15.1 million in the first nine
months of fiscal year 2000 as compared to the same nine month period of fiscal
year 1999. The aforementioned consolidation of the Denver Post, formation of the
CNP partnership and acquisitions caused the majority of the increase in
depreciation and amortization expense.
Interest Expense
Interest expense increased $15.4 million in the first nine months of fiscal
year 2000 as compared to the same nine month period in fiscal year 1999.
Interest expense increased as a result of a $285.2 million increase in average
debt outstanding, primarily associated with acquisitions, debt repurchases and
the inclusion of debt related to the Denver Post and MediaNews (f.k.a.
Affiliated Newspapers Investments, Inc.), which was not previously part of
Garden State's consolidated debt. This increase was partially offset by a 62
basis point decrease in the average interest rate.
Other Expense
Other expense increased approximately $4.4 million in the first nine months
of fiscal year 2000 compared to the same nine month period in fiscal year 1999,
after excluding the $5.5 million of debt issuance costs incurred in conjunction
with our $200.0 million bond offering in March 1999. The current year increase
was primarily attributable to the loss on the sale of the land and building in
CNP partnership as a result of relocating certain operations in the San
Francisco bay area, recognition of losses in excess of our equity investment in
AdOne (a non cash loss), legal fees associated with the corporate reorganization
and an increase in other long-term liabilities associated with an option
repurchase accrual, which cannot be exercised prior to January, 2003.
Extraordinary Loss
In fiscal year 1999, Garden State repurchased $37.0 million of its 12%
Senior Subordinated Secured Notes at a premium of approximately $3.6 million.
The premium, net of income taxes, was recorded as an extraordinary loss. With
the early extinguishment of our 12% Senior Subordinated Secured Notes we
realized interest savings, which more than offset the prepayment premium.
Net Income
We reported adjusted net income of approximately $4.0 million for the first
nine months of fiscal year 2000, after excluding our share of the gain on sale
of a CNP newspaper property of approximately $2.0 million and $1.5 million loss
on the sale of land and buildings in CNP, compared to an adjusted net income of
$10.6 million in the first nine months of fiscal year 1999, after excluding the
extraordinary loss of $2.2 million and $5.5 million of debt issuance cost
described above. The decrease in adjusted net income is primarily attributable
to a $15.4 million increase in interest expense and a $2.9 million increase in
adjusted other expense in fiscal year 2000, which was only offset in part by a
$9.6 million increase in operating profit, net of minority interest, and a $2.0
million reduction in income tax expense.
16
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
Net cash flows from operating activities were approximately $65.7 million
and $38.8 million for the nine months ended March 31, 2000 and 1999,
respectively. The $26.9 million increase in cash flow from operating activities
was primarily the result of the $44.1 million increase in EBITDA for the nine
months ended March 31, 2000, compared to the same period of the prior year. The
increase in EBITDA was partially offset by a $10.6 million increase in cash
interest paid, a $4.4 million increase in adjusted other expense a $1.5 million
change in operating asset and liabilities due to timing differences and a $0.7
million increase in income taxes paid.
Net cash flows from investing activities were ($20.9) million and ($64.6)
million for the nine months ended March 31, 2000 and 1999, respectively. The
$43.7 million reduction was primarily the result of our spending a net $56.4
million on acquisitions in fiscal year 1999 compared to a net $1.7 million in
proceeds from purchasing and selling newspaper properties in the first nine
months of fiscal year 2000. The decrease in acquisition spending was partially
offset, by a $14.4 million increase in capital spending primarily associated
with the completion of year 2000 projects, land acquisitions and building
improvements associated with the ANG Newspaper relocation, web width reduction
at CNP and the addition of a press line at the Denver Post, which was added, in
conjunction with a long-term contract to print and deliver the New York Times.
The new press line at the Denver Post was financed under a sale lease back
agreement. A substantial portion of the current year increase in capital
spending relates to CNP and the Denver Post, which are not included in the March
31, 1999 financial statements. In addition, while 100% of capital spending for
CNP is included in the statement of cash flows 41.2% is actually funded by the
minority partners.
Net cash flows from financing activities were ($47.7) million and $104.9
million for the nine months ended March 31, 2000 and 1999, respectively. The
reduction of approximately $152.6 million was primarily attributable to our
paying down a net $22.8 million of long-term debt and other liabilities in the
first nine months of fiscal 2000, compared to a net borrowing of $126.6 million
in fiscal 1999. The majority of the 1999 borrowings were made in conjunction
with the previously discussed acquisitions and to fund debt repurchases in our
fiscal fourth quarter. The borrowings associated with the debt repurchase are
included in cash at March 31, 1999. Fiscal year 1999 also included $21.8 million
of borrowings and disbursements used for debt prepayment premiums and issuance
cost totaling $9.2 million and a $12.6 million dividend paid to MediaNews to
fund the repurchase of MediaNews' debt prior to the reorganization discussed in
Note 1, to the financial statements. We made distributions to our CNP minority
interest partners of $24.9 million in fiscal year 2000.
Liquidity
Based upon current and expected future operating results, we believe that we
will have sufficient cash flows from operations to fund scheduled payments of
principal and interest and to meet anticipated capital expenditure and working
capital requirements for at least the next twelve months. We have approximately
$103.0 million available for future borrowings under our bank credit agreement,
net of approximately $3.8 million in outstanding letters of credit, which should
be more than sufficient to fund unanticipated capital needs or other cash
requirements should they arise.
NEAR TERM OUTLOOK
Newsprint Prices
Several North American newsprint suppliers have announced a $50 per metric
ton price increase for 30 pound newsprint effective April 1, 2000. If the full
price increase takes hold, North American 30 pound newsprint will average $565
per metric ton for large newsprint buyers. We expect to pay a portion of the
increase in May 2000 shipments and the remainder in June. To minimize the
influence of newsprint price fluctuations, we have entered into fixed price
newsprint contracts and newsprint swap agreements, which expire over the next
nine months to nine years. The weighted average price for newsprint under both
the fixed price newsprint contracts and newsprint swaps for calendar year 2000
is $546 per metric ton. Approximately 65% of our calendar year 2000 newsprint
consumption is expected to be purchased under fixed price agreements. In
addition, we have a contract that allows us to purchase 36,000 metric tons of
newsprint 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.
17
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
YEAR 2000
The year 2000 issue results from computer programs that have time-sensitive
software, which may recognize a date using "00" as the year 1900 rather than the
year 2000. We did not have any system failures or significant disruption in our
operations or with our suppliers as a result of the year 2000 issue.
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
10.4 Employment Agreement dated March 15, 2000 between MediaNews Services,
Inc. and William Dean Singleton.
10.19 Employment Agreement dated March 15, 2000 between MediaNews Services,
Inc. and Joseph J. Lodovic, IV.
10.20 MediaNews Group Shareholders' Agreement dated January 31, 2000.
10.21 Singleton Family Voting Trust Agreement for MediaNews Group, Inc. dated
January 31, 2000.
10.22 Scudder Family Voting Trust Agreement for MediaNews Group, Inc. dated
January 31, 2000.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of March 15, 2000 between MediaNews
Services, Inc. (the "Company"), a corporation organized and existing under the
laws of the State of Delaware to provide management services to various entities
conducting the business of publishing newspapers and WILLIAM DEAN SINGLETON (the
"Executive").
WITNESSETH:
WHEREAS, the Company wishes to employ and retain the services of
Executive, and Executive wishes to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and the Executive agree as follows:
1. Period of Employment and Compensation
Company shall employ the Executive to perform the services described
with his principal office activities being situated in Denver, Colorado, or such
other location as the Executive shall elect, for the period commencing January
1, 2000, and terminating at the close of business December 31, 2009, unless
thereafter extended as subsequently provided in this Section, during which
period the Executive shall:
(a) be paid a base salary, in equal monthly installments, on
the regular pay day established for executives of the Company, at the
annual rate of Seven
<PAGE> 2
Hundred Seventy-One Thousand Dollars ($771,000.00) commencing January
1, 2000, which salary shall be increased annually thereafter,
commencing January 1, 2001, at an annual rate of five percent (5%), or
such higher annual rate as the Company shall determine appropriate;
provided, that if the Chief Executive Officer of the Company determines
that business conditions are such that the foregoing increases should
in whole or in part be deferred until those business conditions
improve, then the Chief Executive officer may elect appropriately to
defer such increases;
(b) be reimbursed in a manner consistent with policies of the
Company established for executive personnel, for all reasonable
expenses of the Company incurred by the Executive in the discharge of
any duties hereunder;
(c) receive such fringe benefits including accident,
hospitalization, disability, medical and life insurance plans, as shall
be made generally available to the executive personnel or other
employees of the Company; provided, however, that all payments made
payable to the Executive under this Agreement shall be subject to
withholding for any applicable taxes, social security or other
governmental levies and for insurance, savings or any other deductions
authorized by or for the benefit of the Executive under the programs
established for or made available to the executive personnel or other
employees of the Company.
(d) throughout the term of his employment, be assisted by the
Company through the establishment of a split dollar life insurance
program adequate for his and his family's needs. Pursuant to this
program, the Company will, upon the Executive's request, periodically
advance on the Executive's behalf amounts equal
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<PAGE> 3
to the annual premiums for such insurance. These advances will be
evidenced by promissory notes and will be collateralized by assignments
to the Company of the cash value of the insurance policies. If the
Executive chooses to pay all or a portion of the current annual cost of
such insurance himself, then the Company will reimburse the Executive's
related costs in doing so.
(e) be eligible to receive a bonus for the Company's current
fiscal year and each subsequent fiscal year commencing on or before the
termination of this Agreement of up to $200,000 payable as soon as
practicable after the end of the Company's fiscal year, based on a
comparison of operating profits to budget of the Company during such
fiscal year as follows:
(i) If operating profits for such fiscal year are 100%
or more of budget, then the $200,000 bonus shall be
payable in full;
(ii) If operating profits for such fiscal year are 90%
or more (but under 100%) of budget, then the bonus
amount payable shall be $150,000;
(iii) If operating profits for such fiscal year are 80%
or more (but under 90%) of budget, then the bonus
amount payable shall be $100,000;
(iv) If operating profits for such fiscal year are less
than 80% of budget, or if no budget has been
adopted and approved for such fiscal year pursuant
to the Company's Certificate of Incorporation and
bylaws, then no bonus shall be payable.
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<PAGE> 4
The amount of the Executive's salary, fringe benefits and bonus
established hereunder shall constitute his entire compensation for all services
performed by him on behalf of MediaNews Services, MediaNews Group, Inc., their
subsidiaries and affiliates, except in so far as those entities may from time to
time elect, in their sole discretion, to pay to him such additional bonus or
other forms of additional compensation as may be deemed appropriate.
Effective January 1, 2010, this Agreement shall be automatically
renewed for additional periods of one year each; provided, however, that at
least one hundred and twenty (120) days prior to December 31, 2009 or the
expiration of any subsequent one-year term, either party may give notice to the
other, as provided for herein, terminating this Agreement as of December 31,
2009 or the next annual expiration date.
2. Duties.
The Executive shall perform such executive, managerial, business and
administrative duties as may be assigned to him by the Board of Directors of the
Company, it being presently intended that the Executive will serve as Vice
Chairman, President and Chief Executive Officer of MediaNews Services, Inc.,
MediaNews Group, Inc. and each of their affiliates and subsidiaries, subject to
the provisions of those entities' by-laws or other operative documents, and in
such capacities oversee the business of publishing and managing the newspapers
owned or managed by such entities, and otherwise serve in an administrative
capacity as a consultant with regard to the affairs of such entities in a manner
in accordance with his experience. All such services shall be
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<PAGE> 5
rendered in diligent, competent, efficient and faithful manner commensurate with
the responsibilities involved.
3. Acceptance
The Executive accepts the aforementioned responsibilities at the
compensation and upon the terms specified herein. During the term of this
Agreement, the Executive shall devote his best efforts principally to the
service of the Company, its affiliates and their subsidiaries and the
performance of the duties specified above, it being understood that the
preponderance of the Executive's time will be applied to furthering the interest
of such entities; provided, however, that Executive's services concurrently as a
director (or otherwise overseeing operations) of a non-competing entity shall be
permitted hereunder. The Executive shall not, however, engage in any other
business activity or outside activity which is materially inconsistent with or
an impediment to the carrying out of his duties hereunder.
4. Vacation.
The Executive shall be entitled to an annual paid vacation of five
weeks, such vacation to be taken at such times as he may select.
5. Death or Incapacity.
In the event of death of the Executive during the term hereof, this
Agreement shall terminate, and, except for the rights of the Executive and his
beneficiaries under the split dollar life insurance program described in Section
1(d) and the benefit plans described in
-5-
<PAGE> 6
Section 1(c) of this Agreement, the Company shall not be subject to any further
obligation to such deceased Executive hereunder, except that the estate of said
Executive shall be entitled to receive the unpaid compensation due for service
prior to his death, and through and including the last day of the month in which
the Executive died, including any deferred compensation and/or bonuses which
then may have accrued in full or pro rata.
If, on account of physical or mental disability, the Executive shall
fail or be unable to perform the duties contemplated by this Agreement for a
period of 180 consecutive days, the Company may, at any time thereafter upon 30
days' notice to the Executive, terminate this Agreement. In such event, this
Agreement shall terminate and come to an end on the date set forth in such
notice as if such date were the termination date of this Agreement, but said
Executive shall be entitled to receive his salary, benefits and any other
applicable compensation or reimbursement for expenses through the effective date
of the termination of this Agreement, as set forth in such notice.
6. Covenant Not To Compete.
The Executive agrees during the term of this Agreement and for a period
of five (5) years after any termination hereof, that he will not, within any
geographical areas in which newspapers owned or managed by the Company, its
affiliates and/or their subsidiaries are now or may hereafter be circulated in
material quantities, unless acting as an officer or employee of the Company, its
affiliates or their subsidiaries, or with the prior written consent of the
boards of directors thereof, directly or indirectly, own, manage, operate, join,
control, or participate in, or be connected as an officer, employee, partner,
independent contractor or otherwise with, any business enterprise which directly
or indirectly materially
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<PAGE> 7
competes with such entities as the latter then conduct its business. The
Executive acknowledges that the remedy at law for any breach by him of this
covenant will be inadequate and that the Company shall be entitled to injunctive
relief for the same. The Executive agrees that such covenant is made in his
capacity as a shareholder and director of the Company, and not as an employee.
7. Termination For Cause.
Either party may terminate this Agreement prior to its stated term for
cause or in the event of a material breach thereof by the other. Such
termination shall be by notice in writing specifying such cause or material
breach and shall be effective on the date of said notice, without prejudice to
the rights of the party upon whom such notice is served to contest such
termination by any judicial means at such party's disposal.
For purposes of termination of this Agreement by the Company, the
following events shall, by way of illustration, and without any limitation, be
considered as cause:
(a) failure by the Executive to faithfully or diligently perform
any of his material obligations under this contract in the
manner provided, after he has received written notice from the
Company or MediaNews Group, Inc. of his alleged failure to
perform the same, and has failed within a reasonable period of
time substantively to cure such failure;
(b) theft, embezzlement or misappropriation by the Executive of
any funds or other property of the Company, its affiliates or
their subsidiaries;
-7-
<PAGE> 8
(c) any material act of self-dealing between the Executive and the
business of the Company, its affiliates or their subsidiaries
which is not disclosed in full to, and approved by, the boards
of directors of the Company and MediaNews Group, Inc.;
(d) intentional falsification by the Executive of any material
records or reports pertaining to the Company, its affiliates
or their subsidiaries;
(e) fraud or similar misconduct on the part of the Executive
pertaining to the Company, its affiliates or their
subsidiaries;
(f) failure to adhere to the normal and customary duties and
ethics within the newspaper industry attendant to the
positions which he may from time to time hold at the
newspapers owned by the Company, its affiliates or their
subsidiaries, promptly after he has received notice from the
Company or MediaNews Group, Inc. of his alleged failure to
adhere to the same; or
(g) any conviction or a plea of nolo contendre with respect to any
felony or any other serious crime which causes the Executive,
or his continued employment by the Company, to become a source
of material embarrassment, disgrace or ridicule to the
Company, its affiliates or any of their newspapers.
In the event of such termination the Executive shall be entitled to
receive compensation only through the date of his termination, and the Company
shall reserve all rights, if any, which it may have against the Executive under
this Agreement or otherwise, in connection with the termination or otherwise.
-8-
<PAGE> 9
8. Notices.
All communications and notices made pursuant to this Agreement shall be
in writing and delivered by hand or sent by certified mail or telegram as
follows:
(a) If to Company, to:
MediaNews Services, Inc.
c/o MediaNews Group, Inc.
Attn: Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
1560 Broadway, Suite 2100
Denver, Colorado 80202
With a copy to:
Verner, Liipfert, Bernhard, McPherson
and Hand, Chartered
Attn: Howell E. Begle, Jr.
901 Fifteenth Street, N.W., Suite 700
Washington, D.C. 20005
(b) If to the Executive, addressed to:
William Dean Singleton
4660 South Franklin Street
Englewood, Colorado 80110
or to such other address as either of the foregoing may from time to time
specify in writing.
9. Interpretation.
No provision of this Agreement may be altered, waived, discharged or
terminated except in writing, executed by the party against whom enforcement of
any alteration, waiver, discharge or termination is sought. No waiver of any
breach by either party to this Agreement shall operate or be construed as a
waiver of any subsequent breach by any party. This Agreement constitutes the
entire contract between the parties hereto with
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<PAGE> 10
respect to employment, and no party shall be bound in any manner related to
employment by any warranties, representations or guarantees, except as
specifically set forth in this Agreement. This Agreement shall be interpreted
under the laws of the State of Delaware.
10. Successors and Assigns.
This Agreement shall be binding upon the parties hereto, their
respective heirs, legal representatives, successors and assigns, but may not be
assigned by either party without the prior written consent of the other party,
and any assignment without such consent shall be void and of no effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MediaNews Services, Inc.
By: /s/ Joseph J. Lodovic, IV
---------------------------------
Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
/s/ William Dean Singleton
------------------------------------
William Dean Singleton
-10-
<PAGE> 1
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of March 15, 2000 between MediaNews
Services, Inc. (the "Company"), a corporation organized and existing under the
laws of the State of Delaware to provide management services to various entities
conducting the business of publishing newspapers and JOSEPH J. LODOVIC, IV (the
"Executive").
WITNESSETH:
WHEREAS, the Company wishes to employ and retain the services of
Executive, and Executive wishes to be employed by the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the Company and the Executive agree as follows:
1. Period of Employment and Compensation
Company shall employ the Executive to perform the services described
herein, with his principal office activities being situated in Denver, Colorado,
or such other location as the Executive and the Company's Chief Executive
Officer shall mutually agree upon, for the period commencing January 1, 2000,
and terminating at the close of business December 31, 2009, unless thereafter
extended as subsequently provided in this Section, during which period the
Executive shall:
<PAGE> 2
(a) be paid a base salary, in equal monthly installments, on
the regular pay day established for executives of the Company, at the
annual rate of Five Hundred Four Thousand Dollars ($504,600.00)
commencing January 1, 2000, which salary shall be increased annually
thereafter, commencing January 1, 2001, at an annual rate of five
percent (5%), or such higher annual rate as the Company shall determine
appropriate; provided, that if the Company's Chief Executive Officer
determines that business conditions are such that all or a portion of
the foregoing increases should be deferred until such time as those
conditions improve, then concurrently with the Chief Executive
Officer's decision to defer or forego similar annual increases relative
to his own salary, such increases may appropriately be deferred;
(b) be reimbursed in a manner consistent with policies of the
Company established for executive personnel, for all reasonable
expenses of the Company incurred by the Executive in the discharge of
any duties hereunder;
(c) receive such fringe benefits including accident,
hospitalization, disability, medical and life insurance plans, as shall
be made generally available to the executive personnel or other
employees of the Company or as otherwise approved by the Company's
Chief Executive Officer; provided, however, that all payments made
payable to the Executive under this Agreement shall be subject to
withholding for any applicable taxes, social security or other
governmental levies and for insurance, savings or any other deductions
authorized by or for the benefit of the Executive under the programs
established for or made available to the executive personnel or other
employees of the Company.
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<PAGE> 3
(d) have an appropriate opportunity, commensurate with his
executive stature, to participate in all stock options or other forms
of equity ownership plans which may be established for executive
personnel of the Company, its affiliates or their subsidiaries.
(e) be eligible to receive a bonus for the Company's current
fiscal year and each subsequent fiscal year commencing on or before the
termination of this Agreement of up to $200,000 payable as soon as
practicable after the end of the Company's fiscal year, based on a
comparison of operating profits to budget of the Company during such
fiscal year as follows:
(i) If operating profits for such fiscal year are 100%
or more of budget, then the $200,000 bonus shall be
payable in full;
(ii) If operating profits for such fiscal year are 90%
or more (but under 100%) of budget, then the bonus
amount payable shall be $150,000;
(iii) If operating profits for such fiscal year are 80%
or more (but under 90%) of budget, then the bonus
amount payable shall be $100,000;
(iv) If operating profits for such fiscal year are less
than 80% of budget, or if no budget has been
adopted and approved for such fiscal year pursuant
to the Company's Certificate of Incorporation and
bylaws, then no bonus shall be payable.
The amount of the Executive's salary, fringe benefits and bonus
established hereunder shall constitute his entire compensation for all services
performed by him on
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<PAGE> 4
behalf of the Company, its affiliates, MediaNews Group, Inc. ("MNG"), their
subsidiaries and affiliates, except in so far as those entities may from time to
time elect, in their sole discretion, to pay to him such additional bonus or
other forms of additional compensation as may be deemed appropriate.
Effective January 1, 2010, this Agreement shall be automatically
renewed for additional periods of one year each; provided, however, that at
least one hundred and twenty (120) days prior to December 31, 2009 or the
expiration of any subsequent one-year term, either party may give notice to the
other, as provided for herein, terminating this Agreement as of December 31,
2009 or the next annual expiration date.
2. Duties.
The Executive shall perform such executive, managerial, business and
administrative duties as may be assigned to him by the Chief Executive Officer
or Board of Directors of the Company, it being presently intended that the
Executive will serve as Executive Vice President and Chief Financial Officer of
MediaNews Services, Inc., MNG and each of their affiliates and subsidiaries,
subject to the provisions of those entities' by-laws or other operative
documents, and in such capacities shall have financial oversight
responsibilities pertaining to the business of such entities, and otherwise
serve in an administrative capacity as a consultant with regard to the affairs
of such entities in a manner in accordance with his experience. All such
services shall be rendered in diligent, competent, efficient and faithful manner
commensurate with the responsibilities involved.
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<PAGE> 5
3. Acceptance
The Executive accepts the aforementioned responsibilities at the
compensation and upon the terms specified herein. During the term of this
Agreement, the Executive shall devote his best efforts principally to the
service of the Company, its affiliates and their subsidiaries and the
performance of the duties specified above, it being understood that the
preponderance of the Executive's time will be applied to furthering the interest
of such entities. The Executive shall not engage in any other business activity
or outside activity which is materially inconsistent with or an impediment to
the carrying out of his duties hereunder.
4. Vacation.
The Executive shall be entitled to an annual paid vacation of five
weeks, such vacation to be taken at such times as he may select.
5. Death or Incapacity.
In the event of death of the Executive during the term hereof, this
Agreement shall terminate, and, except for the rights of the Executive and his
beneficiaries under the benefit plans described in Section 1(c) of this
Agreement, the Company shall not be subject to any further obligation to such
deceased Executive hereunder, except that the estate of said Executive shall be
entitled to receive the unpaid compensation due for service prior to his death,
and through and including the last day of the month in which the Executive died,
including any deferred compensation and/or bonuses which then may have accrued
in full or pro rata.
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<PAGE> 6
If, on account of physical or mental disability, the Executive shall
fail or be unable to perform the duties contemplated by this Agreement for a
period of 180 consecutive days, the Company may, at any time thereafter upon 30
days' notice to the Executive, terminate this Agreement. In such event, this
Agreement shall terminate and come to an end on the date set forth in such
notice as if such date were the termination date of this Agreement, but said
Executive shall be entitled to receive his salary, benefits and any other
applicable compensation or reimbursement for expenses through the effective date
of the termination of this Agreement, as set forth in such notice.
6. Covenant Not To Compete.
The Executive agrees during the term of this Agreement and for a period
of five (5) years after any termination hereof, that he will not, within any
geographical areas in which newspapers owned or managed by the Company, its
affiliates and/or their subsidiaries are now or may hereafter be circulated in
material quantities, unless acting as an officer or employee of the Company, its
affiliates or their subsidiaries, or with the prior written consent of the
boards of directors thereof, directly or indirectly, own, manage, operate, join,
control, or participate in, or be connected as an officer, employee, partner,
independent contractor or otherwise with, any business enterprise which directly
or indirectly materially competes with such entities as the latter then conduct
its business. The Executive acknowledges that the remedy at law for any breach
by him of this covenant will be inadequate and that the Company shall be
entitled to injunctive relief for the same.
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<PAGE> 7
7. Obligations of MNG Upon Termination of Executive's Employment
Following the termination of Executive's employment (a) at or after the
end of the initial term of employment specified in Section 1 hereof (i.e.,
December 31, 2009) or (b) such earlier date as may be occasioned by (I) the
Executive's death (ii) the mutual agreement of the executive or the Company,
other than for cause on the part of the Company within the meaning of Section 8
hereof or (iii) Executive's unilateral determination, as a consequence of the
Company's determination to diminish materially his current responsibilities and
stature as a senior executive of the Company or the Company's material breach of
one or more of its material obligations hereunder (after having afforded the
Company an appropriate opportunity to cure the same and the Company having
failed to do so in a timely manner), the Executive, or his estate, shall have a
put to the Company's affiliate MNG, which shall be exercisable upon written
notice during the thirty (30) day period commencing one hundred eighty (180)
days following such termination, with respect to all shares of common stock (or
rights to acquire the same) of MNG which Executive may acquire during the term
of his employment by the Company, for 100% of fair market value thereof
(determined as hereinafter provided); provided, that prior to the date of such
termination there shall not previously have occurred an initial public offering
with respect to such shares on a recognized national or international securities
exchange (an "IPO").
As a consequence of any termination of Executive's employment other
than that described in the preceding paragraph, MNG shall have a call, which may
be exercised by MNG upon written notice within the thirty (30) day period
commencing one hundred eighty (180) days following such termination and the
Executive shall have a put, which may be
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<PAGE> 8
exercised by the Executive upon written notice within the 30 day period
commencing June 30, 2010, with respect to all shares of common stock of MNG (or
rights to acquire the same) which may be owned by the Executive as of the date
of termination of his employment, at the following stated percentages of fair
market value (determined as hereinafter provided as of the date of exercise of
such put or call): For termination on or after December 31, 2008, 95%; for
termination on or after December 31, 2007, 90%; for termination on or after
December 31, 2006, 85%; for termination on or after December 31, 2005, 80%; for
termination on or after December 31, 2004, 75%; for termination on or after
December 31, 2003, 70%; for termination on or after December 31, 2002, 65%; for
termination on or after December 31, 2001, 60%; for termination on or after
December 31, 2000, 55%; for termination prior to December 31, 2000, 50%.
With regard to any exercise of any put or the call described in this
Section 7, the Company may, upon written notice to the Executive within ten (10)
days of such exercise, elect to consummate the same in up to ten (10) equal
separate purchases of ten percent (10%) of the total number of shares subject
thereto, the first of which purchase shall occur not later than the thirtieth
(30th) day following the initial notice of such exercise, and the remainder of
which purchase shall occur on the first through ninth anniversaries of the
initial purchase. For purposes of the foregoing, the purchase price for each
separate purchase shall be separately calculated with respect to the fair market
value of the shares being purchased at the time of each separate purchase.
For purposes of this Section 7, the fair market value of the shares of
common stock of MNG subject to the above described put or call shall be
determined (without any discount for lack of marketability or the minority
nature of such shares) by independent
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<PAGE> 9
appraisal in the manner set forth in Section 5.05 of the MNG Shareholders
Agreement dated as of January 31, 2000.
Notwithstanding any foregoing provisions of this Section, if as of the
date of (a) any exercise of any put or call described in this Section 7 the
Company's performance of any of its obligations hereunder with respect thereto
would violate the terms of any indenture or agreement with respect to borrowed
money then applicable to the Company, or (b) any exercise before January 1, 2010
of any put or call described in this Section 7, the Company's leverage ratio as
defined in the Indenture dated October 1, 1997 by and between the Company and
the Bank of New York is greater than 3:1, then the performance by the Company of
any such obligation shall automatically be deferred until the earliest date upon
which such performance would no longer violate such indenture or agreement, or
(as appropriate) the Company's leverage ratio is no longer greater than 3:1.
8. Termination Of This Agreement For Cause.
Either party may terminate this Agreement prior to its stated term for
cause or in the event of a material breach thereof by the other. Such
termination shall be by notice in writing specifying such cause or material
breach and shall be effective on the date of said notice, without prejudice to
the rights of the party upon whom such notice is served to contest such
termination by any judicial means at such party's disposal.
For purposes of termination of this Agreement by the Company, the
following events shall, by way of illustration, and without any limitation, be
considered as cause:
(a) failure by the Executive to faithfully or diligently perform
any of his material obligations under this contract in the
manner provided, after he has received
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<PAGE> 10
written notice from the Company or MNG of his alleged failure
to perform the same, and has failed within a reasonable period
of time substantively to cure such failure;
(b) theft, embezzlement or misappropriation by the Executive of
any funds or other property of the Company, its affiliates or
their subsidiaries;
(c) any material act of self-dealing between the Executive and the
business of the Company, its affiliates or their subsidiaries
which is not disclosed in full to, and approved by, the boards
of directors of the Company and MNG;
(d) intentional falsification by the Executive of any material
records or reports pertaining to the Company, its affiliates
or their subsidiaries;
(e) fraud or similar misconduct on the part of the Executive
pertaining to the Company, its affiliates or their
subsidiaries;
(f) failure to adhere to the normal and customary duties and
ethics within the newspaper industry attendant to the
positions which he may from time to time hold at the
newspapers owned by the Company, its affiliates or their
subsidiaries, promptly after he has received notice from the
Company or MNG of his alleged failure to adhere to the same;
or
(g) any conviction or a plea of nolo contendere with respect to
any felony or any other serious crime which causes the
Executive, or his continued employment by the Company, to
become a source of material embarrassment, disgrace or
ridicule to the Company, its affiliates or any of their
newspapers.
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<PAGE> 11
In the event of such termination the Executive shall be entitled to
receive compensation only through the date of his termination, and the Company
shall reserve all rights, if any, which it may have against the Executive under
this Agreement or otherwise, in connection with the termination or otherwise.
9. Notices.
All communications and notices made pursuant to this Agreement shall be
in writing and delivered by hand or sent by certified mail or telegram as
follows:
(a) If to Company, to:
MediaNews Services, Inc.
c/o MediaNews Group, Inc.
Attn: William Dean Singleton
Vice Chairman, President
and Chief Executive Officer
1560 Broadway, Suite 2100
Denver, Colorado 80202
With a copy to:
Verner, Liipfert, Bernhard,
McPherson and Hand, Chartered
Attn: Howell E. Begle, Jr., Esq.
901 Fifteenth Street, N.W., Suite 700
Washington, D.C. 20005
(b) If to the Executive, addressed to:
Joseph J. Lodovic, IV
4920 East Progress Court
Greenwood Village, CO 80121
or to such other address as either of the foregoing may from time to time
specify in writing.
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<PAGE> 12
10. Interpretation.
No provision of this Agreement may be altered, waived, discharged or
terminated except in writing, executed by the party against whom enforcement of
any alteration, waiver, discharge or termination is sought. No waiver of any
breach by either party to this Agreement shall operate or be construed as a
waiver of any subsequent breach by any party. This Agreement constitutes the
entire contract between the parties hereto with respect to employment, and no
party shall be bound in any manner related to employment by any warranties,
representations or guarantees, except as specifically set forth in this
Agreement. This Agreement shall be interpreted under the laws of the State of
Delaware.
11. Successors and Assigns.
This Agreement shall be binding upon the parties hereto, their
respective heirs, legal representatives, successors and assigns, but may not be
assigned by either party without the prior written consent of the other party,
and any assignment without such consent shall be void and of no effect.
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
MediaNews Services, Inc.
By: /s/ W. Dean Singleton
----------------------------------
W. Dean Singleton
Vice Chairman, President
and Chief Executive Officer
/s/ Joseph J. Lodovic, IV
-------------------------------------
Joseph J. Lodovic, IV
(WITH RESPECT TO THE PUT OBLIGATIONS SET
FORTH IN SECTION 7 OF THIS AGREEMENT
ONLY.)
MediaNews Group, Inc.
By: /s/ W. Dean Singleton
----------------------------------
W. Dean Singleton
Vice Chairman, President
and Chief Executive Officer
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<PAGE> 1
EXHIBIT 10.20
EXECUTION COPY
MEDIANEWS GROUP, INC.
SHAREHOLDERS' AGREEMENT
THIS AGREEMENT is made effective as of January 31, 2000, by and among
The Singleton Family Voting Trust for MediaNews Group, Inc. (the "Singleton
Family Voting Trust"), by Howell E. Begle Jr., Trustee, The Singleton Family
Irrevocable Trust by Howell E. Begle, Jr. and Patricia Robinson, Trustees, The
Singleton Family Revocable Trust by William Dean Singleton and Howell E. Begle,
Jr., Trustees (the Singleton Family Voting Trust, the Singleton Family
Irrevocable Trust and the Singleton Family Revocable Trust being sometimes
collectively referred to herein as the "Singleton Shareholders"), The Scudder
Family Voting Trust for MediaNews Group, Inc. (the "Scudder Family Voting
Trust") by Jean L. Scudder, Trustee, The Jean L. Scudder Irrevocable Trust by
Jean L. Scudder, Trustee (the "Jean L. Scudder Irrevocable Trust"), the Scudder
Family 1987 Trust by Jean L. Scudder, Trustee (the "Scudder Family 1987 Trust"),
Charles Scudder individually, Jean L. Scudder individually, Carolyn Miller,
individually, as custodian under the Uniform Gift to Minors Act ("UGMA") for
Katherine Miller, subject to the Katherine Miller Irrevocable Trust, and as
Trustee under the Jennifer Miller Irrevocable Trust and the Katherine Miller
Irrevocable Trust, and Elizabeth H. Difani, individually, as custodian under the
UGMA for Katya Difani, subject to the Katya Difani Irrevocable Trust, as
custodian under the UGMA for Miguel Difani, subject to the Miguel Difani
Irrevocable Trust and as Trustee under the Chipeta Difani Irrevocable Trust, the
Katya Difani Irrevocable Trust and the Miguel Difani Irrevocable Trust (the
Scudder Family Voting Trust, the Jean L. Scudder Irrevocable Trust, the Scudder
Family 1987 Trust, Charles Scudder individually, Jean Scudder individually,
Carolyn Miller, individually, as custodian for Katherine and as Trustee for the
Jennifer Miller Irrevocable Trust and the Katherine Miller Irrevocable Trust,
and Elizabeth
<PAGE> 2
H. Difani, individually, as custodian for Katya and Miguel Difani and as Trustee
for the Chipeta Difani Irrevocable Trust, the Katya Difani Irrevocable Trust and
the Miguel Difani Irrevocable Trust, being sometimes collectively referred to
herein as the "Scudder Shareholders"), Joseph J. Lodovic, IV and MediaNews
Group, Inc., a Delaware corporation ("MNG" or the "Company").
WHEREAS, the current equitable ownership of the Class A Common Stock,
par value $0.001 per share, (the "Class A Common Stock") of MNG is as follows:
<TABLE>
<S> <C> <C>
The Singleton Family 254,858.9900 Shares of Class A Common Stock
Revocable Trust
The Singleton Family 786,426.5100 Shares of Class A Common Stock
Irrevocable Trust
Joseph J. Lodovic, IV 58,199.0000 Shares of Class A Common Stock
Jean L. Scudder, Individually 185,817.3750 Shares of Class A Common Stock
Charles Scudder, Individually 260,321.3750 Shares of Class A Common Stock
Jean L. Scudder, as Trustee for 123,743.7450 Shares of Class A Common Stock
Kurt Miller and Gabriel Difani
under The Scudder Family 1987
Trust
Jean L. Scudder, as Trustee for 74,504.0000 Shares of Class A Common Stock
Benjamin Fulmer under The
Jean L. Scudder Irrevocable
Trust
Elizabeth H. Difani, Individually 86,773.7917 Shares of Class A Common Stock
Elizabeth H. Difani, as Custodian 132,299.6658 Shares of Class A Common Stock
for Katya and Miguel Difani,
and as Trustee for the
Chipeta Difani Irrevocable Trust,
the Katya Difani Irrevocable Trust and
the Miguel Difani Irrevocable Trust
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
Carolyn Miller, Individually 59,275.1825 Shares of Class A Common Stock
Carolyn Miller, as 118,550.3750 Shares of Class A Common Stock;
Custodian for Katherine Miller
and as Trustee for the Jennifer
Miller Irrevocable Trust and the
Katherine Miller Irrevocable Trust
</TABLE>
WHEREAS, the MNG shareholders who are parties to this Agreement now
own, legally and beneficially, 2,140,770 shares, representing 92.5% of the
issued and outstanding shares of the Class A Common Stock (the Class A Common
Stock is sometimes referred to herein as the "Stock");
WHEREAS, concurrently with the execution of this Agreement (i) the
Scudder Shareholders are entering into the Scudder Family Voting Trust and (ii)
the Singleton Shareholders are entering into the Singleton Family Voting Trust;
WHEREAS, the parties hereto desire to enter into this Shareholders'
Agreement in order to provide a continuing framework for their relationship as
the legal and beneficial owners of ninety-two and five tenths percent (92.5%) of
the outstanding Class A Common Stock and to further define their mutual
obligations.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto mutually agree as follows:
1. PROPOSED ACTIVITIES OF MNG
1.01 Newspaper Publishing Business. MNG will engage only in the
business of owning and holding the securities or assets of companies that are in
the business of publishing and distributing newspapers or are engaged in related
advertising or media based business.
2. RESTRICTIONS UPON SALE OR TRANSFER OF STOCK
2.01 Generally. At any time during the term of this Agreement none of
the Singleton Shareholders, the Scudder Shareholders nor any other party to this
Agreement shall sell, transfer,
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<PAGE> 4
assign, pledge, give away or otherwise dispose of, alienate, or encumber in any
manner any interest in, any shares of, or interest in any voting trust
certificates relating to, any class, now or hereafter authorized, of the Common
Stock of MNG (any Common Stock of MNG or interest in any voting trust
certificate relating thereto being hereinafter referred to as the "Stock")
beneficially owned by any of them, other than as hereinafter expressly provided
in Sections 3, 4 or 5 of this Agreement, and any attempt to sell, transfer,
assign, pledge, give away or otherwise dispose of or alienate or encumber any
interest in any of the Stock in violation of this Agreement shall be void and of
no effect and shall not be recognized or recorded in the stock transfer books of
MNG.
2.02. Additional Restrictions. Until the earlier of (i) the date on
which none of the Company's 8 3/4% Senior Subordinated Notes due October 1, 2009
or its 8 5/8% Senior Subordinated Noes due July 1, 2011 is outstanding, or (ii)
the date on which MNG's Leverage Ratio, as such term is defined in the Indenture
dated October 1, 1997 by and between the Company (then known as Garden State
Newspapers, Inc.) and the Bank of New York as Trustee, is less than 3:1, and
except as otherwise provided in Section 3 or 4 hereof, no person who is a party
to or who is otherwise bound by the terms of this Agreement shall sell,
transfer, assign, pledge, give away or otherwise dispose of, alienate, or
encumber in any manner whatsoever (each, as "Transfer") any shares or interest
in any shares of any class, now or hereafter authorized, of the Stock
beneficially owned by it unless all shares of Stock of the Company then
outstanding are Transferred by the holders thereof in a single transaction or
series of related transactions on substantially the same terms.
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<PAGE> 5
2.03 Tag-Along Restrictions/Rights.
(a) No shareholder (a "Selling Shareholder") shall, individually or
collectively, in any one transaction or series of transactions, directly or
indirectly, Transfer rights to all or any part of the Selling Shareholder's
Stock in a transaction not otherwise permitted under Section 3 or Section 4
hereof, to any person (other than a Permitted Transferee) (a "Third Party")
unless the terms and conditions of such Transfer to such Third Party shall
include an offer to each other Shareholder (each, for purposes of the Section
2.03, a "Tag-Along Offeree,") to include at the option of each Tag-Along
Offeree, in the sale or other disposition to the Third Party such number of
shares owned by each such Tag-Along offeree at the time of such Transfer
determined in accordance with this Section 2.03. The Selling Shareholder
proposing to effect such Transfer (the "Transferor") shall send a written notice
(the "Tag-Along Notice") to each of the Tag-Along Offerees setting forth the
maximum number of shares of Stock the Third Party is willing to purchase or
otherwise acquire. At any time within 30 days after its receipt of the Tag-Along
Notice, each of the Tag-Along Offerees may exercise its option to sell a number
of shares of Stock owned by such Tag-Along Offeree determined in accordance with
the provisions of Section (b) of this Section 2.03 by furnishing written notice
of such exercise (the "Exercise Notice") to the Transferor, which Exercise
Notice shall set forth the maximum and minimum number of shares of Stock that
such Tag-Along Offeree wishes to Transfer to the Third Party.
(b) If the proposed sale or other disposition to the Third Party by the
Transferor is consummated, each Tag-Along Offeree shall have the right to sell
to the Third Party as part of such proposed Transfer the same percentage of the
total number of shares of Stock then owned by such Tag-Along Offeree as the
percentage of the total number of shares of Stock then owned by the Selling
Shareholder to be Transferred to the Third Party; provided, however, that, in
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<PAGE> 6
the event that the total number of shares of Stock proposed to be Transferred by
the Transferor and all Tag-Along Offerees as set forth in their respective
Exercise Notices exceeds the maximum number of shares of Stock that the Third
Party is willing to purchase or otherwise acquire, then the number of shares of
Stock to be Transferred by the Transferor and the Tag-Along Offerees who have
given Exercise Notices shall be allocated among the Transferor and such
Tag-Along Offerees (with rounding to avoid fractional shares) in proportion to
the number of shares of Stock that each of them originally proposed to Transfer
to the Third Party; provided that if such allocation would result in any such
Tag-Along Offeree Transferring less than the minimum number of shares of Stock
set forth in such Tag-Along Offeree's Exercise Notice, such Exercise Notice
shall be deemed revoked and the shares of Stock which such Tag-Along Offeree
would otherwise have been entitled to Transfer to the Third Party shall be
allocated among the Transferor and the other Tag-Along Offerees who gave
Exercise Notices in accordance with the foregoing provisions of this sentence.
All calculations pursuant to this paragraph Section 2.03 shall exclude and
ignore any unissued shares of Stock issuable pursuant to stock options, warrants
and other rights to acquire shares of Stock.
(c) Each of the Transferor and the Third Party shall have the right, in
its sole discretion, at all times prior to consummation of the proposed Transfer
giving rise to the tag-along right granted by this Section 2.03, to abandon,
rescind, annul, withdraw or otherwise terminate such Transfer whereupon all
tag-along rights in respect of such sale or other disposition pursuant to this
Section 2.03 shall become null and void, and neither the Transferor nor the
Third Party shall have any liability or obligation to any Tag-Along Offeree with
respect thereto by virtue of such abandonment, rescission, annulment, withdrawal
or termination.
(d) The purchase from the Tag-Along Offerees pursuant to this Section
2.03 shall be on the same terms and conditions, including but not limited to the
per share price and the date of sale
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<PAGE> 7
or other disposition, as are applicable to the Transferor which shall be as
stated in the Tag-Along Notice provided to the Tag-Along Offerees by the
Transferor.
(e) If within 30 days after receipt of the Tag-Along Notice, any
Tag-Along Offeree has not delivered an Exercise Notice, such Tag-Along Offeree
will be deemed to have waived any and all of its rights with respect to the
Transfer described in the Tag-Along Notice and the Transferor shall have 90 days
after the expiration of such 30 day period in which to Transfer not more than
the number of shares of Stock described in the Tag-Along Notice (minus the
number of shares of Stock Transferred to the Third Party by Tag-Along Offerees)
on terms not more favorable to the Transferor than were set forth in the
Tag-Along Notice. If, at the end of 120 days following the receipt of the
Tag-Along Notice, the Transferor has not completed the Transfer of Stock of the
Transferor in accordance with the terms described in the Tag-Along Notice, all
the restrictions on Transfer contained in this Agreement with respect to Stock
owned by the Transferor shall again be in effect.
3. PERMITTED TRANSFERS AMONG RELATED PARTIES
3.01 Permitted Transfers. At any time during the term of this
Agreement, any shareholder may at any time sell to MNG all or any portion of
their interest in shares of Stock, for such consideration as such Shareholder
and MNG shall mutually determine appropriate, and any of the Singleton or
Scudder Shareholders may at any time sell, transfer, or assign by inter vivos
gift, testamentary bequest, or otherwise, for such consideration, if any, as
such person or entity shall, in its or his sole discretion, determine
appropriate (and without the prior consent of any other shareholder or party to
this Agreement), all or a portion of their interest in shares of Stock to
members of their respective families (i.e., their spouses, parents, siblings,
children, any descendants of the foregoing or any spouses of any of the
foregoing) or to a trust for the benefit of such family member(s) or in the case
of a trust, to its grantor or to its beneficiaries, (all such permitted
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<PAGE> 8
transferees sometimes being hereafter referred to as "Permitted Transferees"),
provided that the person or trustee of any trust to whom such shares are
transferred shall, together with his successors, assigns, distributees,
legatees, personal representatives, any receiver or trustee in bankruptcy or
trust beneficiaries, shall take such Stock subject to and bound by all of the
terms and conditions of this Agreement, including, without limitation, the
provisions of this Section 3 and of Sections 2, 4, 5, 6 and 7 hereof, and
further provided that the Transferee shall execute and deliver to MNG a written
acknowledgment of the foregoing, whereupon a new certificate shall be issued
representing the shares of Stock transferred and bearing the restrictive legend
set forth in Paragraph 6.01 hereof.
3.02 Agreement of the Trustees. Each of the Trustees acknowledges that
he or she has only bare legal title to the Stock beneficially owned by the
Singleton Shareholders and the Scudder Shareholders, respectively, and he or she
agrees with all parties hereto that he or she shall promptly take all action
necessary and appropriate to effect the transfer of title to any Stock that is
permitted or required to be transferred by the Singleton Shareholders or the
Scudder Shareholders, as the case may be, pursuant to the provisions of this
Section 3 or under Sections 4 or 5. Each such Trustee further agrees that he or
she shall not have the power to transfer title to any of the Stock owned of
record by him except pursuant to a transfer permitted or required to be made by
the Singleton Shareholders or Scudder Shareholders under this Section 3 or under
Sections 4 or 5. All of the provisions of this Section 3.02 shall be binding
upon all successors and assigns of each such Trustee.
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<PAGE> 9
4. TRANSFER OF STOCK BY CONSENT OF PARTIES
4.01 Transfer by Consent. At any time during the term of this Agreement
any Shareholder may Transfer, with or without consideration, all or any part of
its Stock free and clear of any restrictions or limitations in this Agreement,
but only with the express prior written consent of all of the other parties to
this Agreement, which consent may be granted or withheld in the sole and
absolute discretion of each of such parties. In the event such prior written
consent is obtained, this Agreement shall not apply to the Stock to which the
consent relates, so long as the Transfer is made in accordance with all the
terms and conditions of such consent.
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<PAGE> 10
5. COMPANY'S AND SHAREHOLDERS' OPTIONS TO PURCHASE STOCK
5.01 Option to Purchase. Subject to the restrictions set forth in
Sections 2.02 and 2.03 hereof, should any Shareholder (for purposes of this
Section 5, a "Selling Shareholder") desire to Transfer rights in all or any part
of the Selling Shareholder's Stock in a transaction not otherwise permitted
under Section 3 or 4 hereof, whether the Selling Shareholder desires to initiate
a Transfer or is responding affirmatively to an offer to Transfer, before doing
so the Selling Shareholder shall first permit (i) the Company and thereafter
(ii) the other Shareholders (the "Remaining Shareholders") to exercise an option
to purchase the shares of Stock which the Selling Shareholder desires to
Transfer in accordance with the provisions of this Section.
(a) Subject to the restrictions set forth in Sections 2.02 and 2.03
above, a Shareholder may solicit third parties to purchase its Stock prior to
offering the same to the Company and the Remaining Shareholders, but no Transfer
to a third party may be consummated until such Stock has been offered to (i) the
Company and thereafter, (ii) the Remaining Shareholders in accordance with this
Agreement.
5.02 Required Notice. Upon deciding to Transfer all or any rights in
all or any part of his stock, whether the Selling Shareholder desires to
initiate a Transfer or is responding affirmatively to an offer to purchase,
except for Transfers expressly authorized pursuant to Sections 3 and 4 of this
Agreement, the Selling Shareholder shall simultaneously notify the Company and
the Remaining Shareholders of the intended Transfer. Such notice (the "Transfer
Notice") shall contain a complete description of the proposed transaction,
including the identity of any proposed Transferee, the "Purchase Price" (as such
term is defined in Section 5.04 hereof) offered by the Selling Shareholder or
proposed by a bona fide third party transferee and all other material terms of
such disposition. The Transfer Notice shall also specify whether the Selling
Shareholder is only willing to Transfer
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<PAGE> 11
all of his Stock, or is willing to Transfer only a portion thereof, and such
specifications shall control the scope of any option to purchase thereunder.
5.03 Scope and Priority of Company's and Remaining Shareholders'
Options.
(a) Upon receipt of a Transfer Notice from a Selling Shareholder
pursuant to Section 5.02, the Company shall thereupon have the first option to
purchase all (but not less than all) of such shares of Stock tendered at the
Purchase Price. Such option to purchase must be exercised by the Company within
thirty (30) days after receipt of the Transfer Notice. Any exercise of such
option to purchase Stock by the Company shall be made by notice in writing to
the Selling Shareholder, with a copy to all other Shareholders, mailed within
such thirty day period. If the Company elects not to exercise such option to
purchase it shall so notify in writing the Selling Shareholder, with a copy to
all other Shareholders, (the "Non-Exercise Notice") mailed within such thirty
day period.
(b) If the Company fails to exercise its option to purchase all of the
Selling Shareholder's Stock in accordance with Section 5.03(a) above, then upon
receipt of a notice (the "Second Transfer Notice") from a Selling Shareholder
that the Company has failed to exercise its option to purchase pursuant to
Section 5.03(a) above, or that the Company has notified the Selling Shareholder
that it has elected not to exercise such option to purchase, the Remaining
Shareholder(s) shall thereupon have an option to purchase all of such shares
tendered at the Purchase Price. This option to purchase must be exercised by the
Remaining Shareholder(s) within thirty (30) days after receipt by the Remaining
Shareholders of the Second Transfer Notice. If any Remaining Shareholder fails
to exercise his option to purchase shares, or exercises such option to purchase
less than all the shares available to him, then the other Remaining Shareholders
shall have a period of thirty (30) days following the initial thirty day period
to acquire all or any part of such offered shares which are left. Any exercise
of such option to purchase Stock by the Remaining Shareholder(s) shall be made
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<PAGE> 12
by notice in writing to the Selling Shareholder, with a copy to all other
Shareholders, mailed within such thirty (30) day period (or, if not all shares
of the Selling Shareholder are acquired during such first period, then by notice
mailed within the ten day period following).
(c) Any notice given pursuant to this Section 5 shall be given as
provided in Section 9.01 of this Agreement.
5.04 Purchase Price.
(a) If the purchase price (the "Purchase Price") set forth in the
Transfer Notice is a bona fide all cash offer, then the Purchase Price shall be
such all cash offer.
(b) If all or any part of the Purchase Price set forth in the Transfer
Notice is non-cash consideration, then the Fair Market Value (as such term is
defined herein) of such non-cash consideration shall be determined pursuant to
the provisions of Section 5.05 hereof. The time periods for exercise of options
to purchase set forth in Section 5.03(a) and (b) hereof shall be tolled until
such time as the Fair Market Value of a non-cash offer has been determined in
accordance with the provisions of Section 5.05 hereof.
(c) As used in this Agreement, "Fair Market Value" shall mean the
amount that would be paid for all of the outstanding shares of capital stock of
the Company as a going concern, on a consolidated basis with its subsidiaries,
by a willing buyer to a willing seller, both knowledgeable in the newspaper
publishing industry.
5.05 Determination of Fair Market Value.
(a) If all or any part of the Purchase Price specified in the Transfer
Notice is a non-cash offer, then the Selling Shareholder and the Company may
mutually agree as to the Fair Market Value of the non-cash offer. If the Selling
Shareholder and the Company are unable to agree on such value within thirty (30)
days after the Company and the Remaining Shareholders receive the Transfer
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<PAGE> 13
Notice, then in such event, Fair Market Value shall be established as
hereinafter provided by two independent qualified appraisers knowledgeable in
the newspaper publishing industry, one to be appointed by the Selling
Shareholder and the other to be appointed by majority vote of the Remaining
Shareholders (irrespective of whether the Company shall exercise the option
granted to it under Section 5.03 of this Agreement).
(b) The two independent appraisers shall be appointed within thirty
(30) days after receipt by the Company and Remaining Shareholders of the
Transfer Notice. If either the Selling Shareholder or the Remaining Shareholders
fails to appoint an appraiser within this time period, then its right to do so
shall lapse, and the appraisal made by the one independent appraiser who is
timely appointed shall be the Fair Market Value. If two appraisals are made, and
if the higher appraisal does not exceed 110% of the lower, Fair Market Value
will be the average of the two. If the two appraisals are further apart, a third
appraiser will be selected within thirty (30) days by the first two appraisers,
and the Fair Market Value will be deemed to be the average of the third
appraisal and the one of the first two appraisals which is closer to the third.
All appraisals shall be made within thirty (30) days of appointment of an
appraiser and written notice of the results of such appraisal shall be given to
the parties within such time. The Fair Market Value of MNG will be determined in
its entirety as a going concern, with the Selling Shareholder to receive a
proportionate part of the total value based on the number of shares being sold
by it. In making any appraisal hereunder all debts and liabilities shall be
taken into account and there shall be no discount made on account of the Selling
Shareholder's interest being a minority interest, and no premium imposed on
account of the Selling Shareholder's interest being a majority interest. The
Selling Shareholder shall pay the fee of the appraiser selected by it, and the
Remaining Shareholders (irrespective of whether the Company shall exercise the
option granted to it under Section 5.03 of this Agreement) shall pay the fee of
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<PAGE> 14
the appraiser selected by them (in proportion to their respective ownership
interests in the Company) with the fee of any third appraiser to be divided
equally among the Selling Shareholder and the Remaining Shareholders.
5.06 Failure To Exercise. If the Remaining Shareholder(s) fails to
exercise its/their option to purchase the Selling Shareholder's Stock, the
Selling Shareholder shall be free to dispose of such Stock within the ninety
(90) day period after the expiration of the Remaining Shareholder(s) option, but
not below the Purchase Price offered to the Remaining Shareholders, and not to a
different transferee than specified in the Transfer Notice (if any transferee
was so specified), or in a materially different manner or on materially
different terms. If the Stock is not disposed of within such ninety (90) day
period then this right shall lapse and the Selling Shareholder must thereafter
recommence the offering process to the Company and the Remaining Shareholder(s)
if he subsequently wishes to dispose of his shares. For purposes of this
Section, a sale shall be deemed made when closing has occurred, and the transfer
agent (or if no transfer agent has been appointed, the Secretary of MNG) has
been requested to record the transfer of Stock in the stock transfer records of
MNG. Any person to whom the shares of the Selling Shareholder are transferred,
following the Remaining Shareholder(s)l failure to exercise its/their option to
purchase, shall take such shares subject to all the terms and conditions and
restrictions imposed by this Agreement.
5.07 Payment of Purchase Price.
(a) The purchaser of any Stock under this Section 5 shall have the
option to pay the Purchase Price in one of two methods. The first method, called
Option 1, shall consist of full payment of the Purchase Price by a wire transfer
of immediately available federal funds to a bank account designated by the
Selling
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<PAGE> 15
Shareholder upon a date mutually selected by the Selling Shareholder and the
purchaser which is not more than ninety (90) days after the determination of the
Purchase Price as hereinbefore provided (such date being herein referred to as
the "Closing Date").
Upon receipt of the Purchase Price on the Closing Date, all interest of
the Selling Shareholder in the Stock being sold shall terminate, and the Selling
Shareholder shall cease to have any further rights as a Shareholder in the Stock
being sold.
At the Closing or the Closing Date, the Selling Shareholder shall
deliver to the purchaser a certificate or certificates duly endorsed for
transfer representing all of the Stock being sold on that date by the Selling
Shareholder.
(b) The second method of payment for Stock called Option 2 shall
consist of paying not less than ten percent (10%) of the total Purchase Price in
cash on the Closing Date, and by giving the Selling Stockholder the purchaser's
promissory note for the balance of the Purchase Price in not more than 120 equal
monthly installments of principal.
Simple interest on the unpaid principal balance of the Purchase Price
shall accrue from the Closing Date and shall be payable monthly at the base rate
of interest established by Bankers Trust Company, as such rate may change from
time to time, but in no event less than the minimum rate of interest that is
required under the Internal Revenue Code and the regulations thereunder to avoid
the imputation of a higher rate. The first installment of principal and interest
shall be due on the first day of the first calendar month following the Closing
Date, and such installments shall continue on the first day of each month
thereafter until the entire principal balance together with interest thereon
have been paid, but in any case for a period of not more than ten (10) years
from the date of the first installment.
The purchaser's promissory note shall provide that such note shall be
payable in full (i) upon the sale of all or substantially all of the assets used
by MNG or its direct or indirect subsidiaries in
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<PAGE> 16
the operation of their business, (ii) upon the sale of 50% or more of the then
outstanding Stock of MNG within any 180 day period, or (ii) upon the offering of
any equity securities by MNG or any subsidiary of MNG for sale to the public
after the date hereof. As used in this paragraph, the term "sale" includes an
exchange of assets or Stock for assets or stock, whether or not gain or loss
attributable to such transaction is recognized for federal income tax purposes.
However, the term "sale" shall not include any transaction by which the Stock or
assets of MNG become owned by any parties to this Agreement or any Transferee
permitted under Section 3 hereof or any corporation or other entity that is
wholly owned by one or more of the parties to this Agreement.
If the purchaser elects Option 2, in order to secure the performance by
the purchaser of the obligations under his or its promissory note, the purchaser
shall place the stock certificate or certificates representing the Stock
purchased in escrow with the law firm of Verner, Liipfert, Bernhard, McPherson &
Hand, 901 15th Street, N.W., Suite 700, Washington, D.C. 20005-2301, or such
other person or entity as shall be mutually acceptable to the purchaser and
seller, as escrow agent (the "Escrow Agent") , with stock powers duly endorsed
in blank, as security for the payment of the unpaid principal balance and
interest on the purchaser's promissory note. The Escrow Agent may require the
purchaser and seller to execute and deliver an escrow agreement more fully
outlining the obligations of the Escrow Agent and otherwise containing terms and
conditions typically found in escrow agreements in commercial transactions and
not inconsistent with this Agreement. The promissory note given by each
purchaser shall provide that upon default in payment of any installment of
principal or interest if such default shall continue for more than thirty (30)
days after written notice of default has been given to the purchaser by the
holder of the note, the holder of the note at that time may inform the Escrow
Agent in writing of the default, and thereupon, the Escrow Agent shall deliver
the stock certificates and accompanying stock powers to the holder of the
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<PAGE> 17
promissory note. Upon such delivery (1) all obligations of the Escrow Agent to
all of the parties hereunder shall cease and (2) the holder of the promissory
note shall be entitled to pursue whatever remedies it may have in law or equity
against the purchaser.
Voting and dividend rights (other than the rights to any liquidating
dividend) with respect to the pledged Stock shall be vested in the purchaser
while such Stock is held in escrow and until there has been a default in payment
of interest or principal with respect to the promissory note.
All Stock pledged hereunder and all the accompanying stock powers shall
be returned to the purchaser upon full satisfaction of the promissory note.
In addition to the provisions for payment contained above in this
Section, the purchaser, at its sole option, may prepay any amount of principal
or interest due on the purchaser's promissory note at any time, without penalty.
Any prepayment shall be applied against the remaining principal installments due
under the note to the Selling Shareholder in the inverse order in which such
installments fall due. Any prepayment shall be applied first to pay any interest
that is in arrears, and then shall be applied to reduce the entire principal
balance before any prepayment is applied to interest that is not in arrears.
6. RESTRICTIVE LEGEND
6.01 Form of Legend. All certificates for the shares of the Stock shall
bear the legend set forth below.
"Sale, transfer, assignment, pledge, gift or any other disposition,
alienation or encumbrance of the shares represented by this certificate
is restricted by the terms of a Shareholders' Agreement dated as of
January 31, 2000, among certain Shareholders and the Company, which may
be examined at the office of the Company, and such shares may be sold,
transferred, assigned, pledged, given or otherwise disposed of,
alienated or encumbered only upon compliance, with the terms of that
Agreement, which is incorporated herein by reference."
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<PAGE> 18
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the 'Act') and may not be offered,
sold, or otherwise transferred, unless and until (i) a registration
statement with respect thereto is effective under the Act or (ii) in
the opinion of counsel, which opinion is reasonably satisfactory in
form and in substance to counsel for the Company, such offer, sale or
other transfer is in compliance with the Act and any applicable state
securities laws."
6.02 Stock Not Registered; Purchase for Investment. The parties hereto
expressly acknowledge and agree that the Stock is restricted as described in the
above legends; and that MNG is under absolutely no obligation to, and has no
plans to, register any of the Stock under the Securities Act of 1933, as
amended.
7. GENERAL COVENANTS
7.01 Applicability of Covenants. The covenants set forth in this
Section 7 are made for the benefit only of each of the parties to this Agreement
and any permitted transferee of any such party.
7.02 Negative Covenants.
(a) From and after the date hereof, no equity securities of MNG shall
be issued, or class of securities convertible into equity securities of MNG
created, or obligations of MNG to issue additional equity securities incurred.
(b) MNG covenants that it shall not do, take or permit any of the
following actions, unless the same shall have first been approved by the
approval of all directors then serving on MNG's Board of Directors, or by
unanimous approval of the full Executive Committee of MNG's Board of Directors
as appointed by all directors then serving on the Board of Directors, or by the
holders of not less than 75% of the shares of Stock then outstanding, voting as
a single class, and each of the parties to this Agreement covenant that they
shall cause MNG to refrain from such actions, unless they have been approved in
the manner provided above:
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<PAGE> 19
(1) Declare and pay any dividends on its common stock;
(2) Purchase or redeem any of its capital stock;
(3) Adopt annual capital or annual operating budgets;
(4) Except as otherwise provided in the Certificate of
Incorporation, create, establish or acquire any subsidiary, or liquidate or
dissolve itself or any subsidiary, or merge or consolidate, or cause or permit
any subsidiary to be merged or consolidated, with any corporation, or enter into
any transaction under which any class of its stock would be acquired or the
stock of any subsidiary would be sold, or sell, lease, encumber, convey,
transfer or otherwise dispose of all or any substantial part of its assets or
those of any subsidiary, or amend its Certificate of Incorporation or Bylaws,
or, except as otherwise provided in the Certificate of Incorporation, issue any
capital stock not specifically permitted herein, or permit any subsidiary to
issue capital stock to any person other than MNG or elect any directors of any
subsidiary;
(5) Increase the aggregate borrowing capacity of MNG and its
subsidiaries by more than $10 million in any fiscal year beyond the current
level of $350,000,000 which is reflected under MNG's and its subsidiaries
current bank credit facilities;
(6) Enter into or acquiesce in any agreement which limits or
restricts the rights of MNG or any of the parties to this Agreement to comply
with the provisions of this Agreement; or,
(7) Replacing or discharging the chief executive officer of MNG.
8. MISCELLANEOUS
8.01 Notices. All notices and other communications hereunder shall be
in writing and deemed to have been duly given if delivered by hand or mailed,
postage prepaid by certified mail,
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<PAGE> 20
return receipt requested to the following persons and addresses:
(a) To MNG: W. Dean Singleton,
Vice Chairman, Chief Executive Officer
and President
1560 Broadway, Suite 2100
Denver, Colorado 80202
Facsimile: (303) 894-9340
With A Copy To: Howell E. Begle, Jr., Esq.
Verner, Liipfert, Bernhard,
McPherson & Hand Chartered
901 15th Street, N.W., Suite 700
Washington D.C. 20005
Facsimile: (202) 371-6163
(b) To The Scudder Family To or in care of:
Voting Trust Or Any Jean L. Scudder
Other Scudder 193 Old Kents Hill Road
Shareholder: Readfield, Maine 04335
With A Copy To: Frederick W. Rose, Esq.
Cooper, Rose & English, LLP
20 Bingham Avenue
Rumson, New Jersey 07760
Facsimile: (732) 758-1879
(c) To The Singleton Howell E. Begle, Jr., Esq.
Family Voting Trust: Verner, Liipfert, Bernhard,
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, D.C. 20005
Facsimile: (202) 371-6163
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<PAGE> 21
(d) To The Singleton W. Dean Singleton
Family Revocable 1560 Broadway, Suite 2100
Trust: Denver, Colorado 80202
Facsimile: (303) 894-9340
Howell E. Begle, Jr., Esq.
Verner, Liipfert, Bernhard,
McPherson & Hand, Chartered
901 15th Street, N.W., Suite 700
Washington D.C. 20005
Facsimile: (202) 371-6163
(e) To The Singleton Patricia Robinson
Family Irrevocable 1560 Broadway, Suite 2100
Trust: Denver, Colorado 80202
Facsimile: (303) 894-9340
Howell E. Begle, Jr., Esq.
Verner, Liipfert, Bernhard,
McPherson & Hand Chartered
901 15th Street, N.W., Suite 700
Washington D.C. 20005
Facsimile: (202) 371-6163
(f) To Joseph J. Lodovic, IV: Joseph J. Lodovic, IV
MediaNews Group, Inc.
1560 Broadway, Suite 2100
Denver, Colorado 80202
Facsimile: (303) 894-9340
or to such subsequent persons and addresses as may be specified by notice.
8.02 Equitable Relief. The parties hereby acknowledge that monetary
damages are insufficient to adequately remedy the damages which will accrue, or
which have accrued, to a part hereto by reason of a failure to perform any of
the obligations required under this Agreement. Therefore, if any party hereto
shall institute any action or proceeding to enforce the provisions hereof, any
person (including MNG) 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.
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. All of the terms and conditions herein
contained shall bind each of the parties hereto, their successors, assigns,
distributees, legatees, heirs, executors,
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<PAGE> 22
administrators and personal representatives and also any receiver or trustee in
bankruptcy or insolvency.
8.05 Brokerage and Expenses. The parties hereto agree to pay their
respective expenses incurred in connection with this Agreement. Each of the
parties represents that it has had no dealings in connection with this
transaction with any finder, broker or other third party who may have a claim
against any of the other parties hereto arising out of or in connection with any
of the transactions contemplated by this Agreement; and each agrees to indemnify
the others against and hold the others harmless from any and all liabilities
(including without limitation, cost of counsel) to any persons claiming
brokerage commissions or finder's fees on account of services purported to have
been rendered on behalf of, or loss of investment rights or opportunity caused
by, the indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
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. 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 Amendment. This Agreement may be amended only by a written
instrument executed by all of the parties hereto.
8.08 Announcement. Such public announcement or "release" describing the
transactions provided for herein as may be required by applicable law or
regulation shall be made by MNG. 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.
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<PAGE> 23
8.09 Captions and Pronouns. The captions appearing in this Agreement
are included solely for the convenience of the parties and shall not be given
any effect in construing this Agreement. wherever singular pronouns are used
herein, the same shall include the plural, and vice versa, and wherever words of
any gender are used herein, such words shall include other genders.
8.10 Choice of Law. This Agreement shall be construed and interpreted
in accordance with the internal laws of the State of Delaware without regard to
the conflict of laws provisions thereof.
8.11 Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile signatures, each of which shall be deemed to be an
original, and all of which taken together shall be deemed to be one and the same
instrument.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first shown above.
MEDIANEWS GROUP, INC.
By: /s/ W. Dean Singleton
----------------------------------
W. Dean Singleton, Vice Chairman,
Chief Executive Officer and President
THE SINGLETON FAMILY VOTING TRUST
FOR MEDIANEWS GROUP, INC.
By: /s/ Howell E. Begle, Jr.
----------------------------------
Howell E. Begle, Jr., Trustee
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<PAGE> 24
THE SINGLETON FAMILY IRREVOCABLE TRUST
By: /s/ Howell E. Begle, Jr.
----------------------------------
Howell E. Begle, Jr., Trustee
By: /s/ Patricia Robinson
----------------------------------
Patricia Robinson, Trustee
THE SINGLETON FAMILY REVOCABLE TRUST
By: /s/ William Dean Singleton
----------------------------------
William Dean Singleton, Trustee
By: /s/ Howell E. Begle, Jr.
----------------------------------
Howell E. Begle, Jr., Trustee
/s/ Joseph J. Lodovic, IV
-------------------------------------
Joseph J. Lodovic, IV
THE SCUDDER FAMILY VOTING TRUST
FOR MEDIANEWS GROUP, INC.
By: /s/ Jean L. Scudder, Trustee
----------------------------------
Jean L. Scudder, Trustee
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<PAGE> 25
THE JEAN L. SCUDDER IRREVOCABLE TRUST
By: /s/ Jean L. Scudder
----------------------------------
Jean L. Scudder, Trustee
THE SCUDDER FAMILY 1987 TRUST
By: /s/ Jean L. Scudder
----------------------------------
Jean L. Scudder, Trustee
/s/ Jean L. Scudder
-------------------------------------
Jean L. Scudder, Individually
/s/ Charles Scudder
-------------------------------------
Charles Scudder, Individually
/s/ Carolyn Miller
-------------------------------------
Carolyn Miller, Individually, as
Custodian for Katherine Miller and as
Trustee for the Jennifer Miller
Irrevocable Trust and the Katherine
Miller Irrevocable Trust
/s/ Elizabeth Difani
-------------------------------------
Elizabeth Difani, Individually, as
Custodian for Katya and Miguel Difani,
and as Trustee for the Chipeta Difani
Irrevocable Trust, the Katya Difani
Irrevocable Trust and the Miguel Difani
Irrevocable Trust
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<PAGE> 1
EXHIBIT 10.21
SINGLETON FAMILY
VOTING TRUST AGREEMENT
FOR MEDIANEWS GROUP, INC.
This Agreement is made as of January 31, 2000 by and between (i) The
Singleton Family Irrevocable Trust by Howell E. Begle, Jr. and Patricia
Robinson, Trustees (the "Irrevocable Trust"), The Singleton Family Revocable
Trust by William Dean Singleton and Howell E. Begle, Jr. Trustees (the
"Revocable Trust") and Joseph J. Lodovic, IV (the Irrevocable Trust and the
Revocable Trust and Lodovic are collectively referred to herein as the
"Shareholders") and (ii) Howell E. Begle, Jr. as Voting Trustee hereunder
(hereinafter referred to as the "Voting Trustee").
W I T N E S S E T H
WHEREAS, the Shareholders are the respective owners in the aggregate of
One Million Seventy Thousand Three Hundred Eighty-Five (1,070,385) shares of
Class A Common Stock of MediaNews Group, Inc., a Delaware corporation, (the
"Company");
WHEREAS, the Shareholders believe it to be in their best interests to
unite the voting powers held by them as Shareholders of the Company and to
assign, transfer and vest the same in the hands of the Voting Trustee; and
WHEREAS, Howell E. Begle, Jr. has agreed to serve as Voting Trustee
with respect to the Shareholders' Stock;
<PAGE> 2
NOW, THEREFORE, it is agreed between the parties as follows:
1. Voting Trust Agreement. Copies of this Voting Trust Agreement shall
be filed in the principal office of the Company at 1560 Broadway, Suite 2100,
Denver, Colorado 80202 and in the registered office of the Company in the State
of Delaware and shall be open to the inspection of any stockholder of the
Company, as well as any beneficiary of the Trust under this Agreement, daily
during business hours. All Voting Trust Certificates issued as hereinafter
provided shall be issued, received, and held subject to all of the terms of this
Agreement. Each of the Shareholders shall be entitled to receive a Voting Trust
Certificate representing the Stock held by each Shareholder, and all transferees
and assigns of each of the Shareholders, upon accepting Voting Trust
Certificates issued hereunder, shall be bound by the provisions of this
Agreement.
2. Transfer of Stock Shares to Trustee.
(a) Prior to the execution of this Agreement, the Irrevocable Trust and
Lodovic, or their predecessors in interest, did deposit with the Voting Trustee
certificates of various shares of common stock of the Company (then known as
Affiliated Newspapers Investments, Inc.) under the predecessor to this
Agreement, the Singleton Family Voting Trust Agreement For Affiliated Newspapers
Investments, Inc. dated as of May 20, 1994. Pursuant to the terms of the
Company's Amended and Restated Certificate of Incorporation, as in effect on May
19, 1999, those previously deposited certificates were converted as of that date
into Eight Hundred Fifteen Thousand Five Hundred Twenty Six shares of Class A
Common Stock of the Company, and a new share certificate evidencing the same has
previously been issued in the name of the Voting Trustee, on behalf,
collectively, of the Irrevocable Trust and Lodovic. The Voting Trustee holds
that new share
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<PAGE> 3
certificate subject to the terms of this Agreement and promptly following its
execution of this Agreement by each of the Shareholders shall forthwith issue
and deliver to each of the Irrevocable Trust and Lodovic a Voting Trust
Certificate representing and evidencing the number of shares of the Company's
Class A Common Stock which each of them is deemed to have owned beneficially as
of May 19, 1999.
(b) Upon the death or incapacity of William Dean Singleton, the
Revocable Trust will deposit with the Voting Trustee a stock certificate (the
"Revocable Trust Certificate") representing the shares of Stock then held by the
Revocable Trust. The Certificates shall be endorsed, or accompanied by an
appropriate instrument of transfer, so as to enable the Voting Trustee to cause
the Company to issue a stock certificate in the name of the Voting Trustee, as
hereinafter provided. Upon receipt by the Voting Trustee of a stock certificate
from the Company (in exchange for the Certificates deposited by the Revocable
Trust), the Voting Trustee shall hold the same subject to the terms of this
Agreement, and shall thereupon forthwith issue and deliver to the Revocable
Trust a Voting Trust Certificate for the shares of the Company so deposited by
it.
3. Voting Trust Certificate. The Voting Trust Certificate shall be in
the form attached as Exhibit A to this Agreement.
4. Transfer of Certificates. The Voting Trust Certificates shall be
transferable at the office of the Voting Trust, c/o MediaNews Group, Inc., 1560
Broadway, Suite 2100, Denver, Colorado 80202, by the registered owner thereof.
The Voting Trustee may treat the registered holder of the Voting Trust
Certificate as the owner thereof for all purposes whatsoever, but he shall not
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<PAGE> 4
be required to deliver stock certificates hereunder without the surrender of
such Voting Trust Certificates.
5. Dividends.
(a) Prior to the Termination of this Agreement, the holder of each
Voting Trust Certificate shall be entitled to receive payments equal to the cash
dividends, if any, received by the Voting Trustee upon a like number and class
of shares of capital stock of the Company as is called for by each such Voting
Trust Certificate. If any dividend in respect of the stock deposited with the
Voting Trustee is paid, in whole or in part, in stock of the Company having
general voting powers, the Voting Trustee shall likewise hold, subject to the
terms of this Agreement, the certificates for stock which are received by it on
account of such dividend, and the holder of each Voting Trust Certificate
representing Stock on which such stock dividend has been paid shall be entitled
to receive a Voting Trust Certificate issued under this Agreement for the number
of shares and class of stock received as such dividend with respect to the
shares represented by such Voting Trust Certificate.
(b) In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of Voting Trust Certificates pursuant
to the provisions of this Agreement, the Voting Trustee may instruct the Company
to pay such dividends directly to the holders of the Voting Trust Certificates.
Upon such instructions being given by the Voting Trustee to the Company, and
until revoked by the Voting Trustee, all liability of the Voting Trustee with
respect to such dividends shall cease.
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<PAGE> 5
6. Rights of Voting Trustee.
(a) The Voting Trustee shall have the right with respect to the
Shareholders' Stock to exercise in person or by nominee or proxy, all
stockholders' voting rights and powers in respect of the Shareholders' Stock and
to take part in, or consent to any corporate or stockholders' action of any kind
whatsoever. The right to vote shall include, without limitation, the right to
vote for the election of directors, in favor of or against any resolution or
proposed action which may be presented at any meeting or require the consent of
stockholders of the Company, including those pertaining to mortgaging, creating
a security interest in, or pledging all or any part of the property of the
Company, the dissolution of the Company, or the consolidation, merger,
reorganization or recapitalization of the Company.
(b) The Voting Trustee, in voting the shares of capital stock of the
Company, shall vote such stock in accordance with his best judgment, subject in
each instance to the terms of any applicable shareholders' and/or related
agreement which may from time to time be in effect.
7. Appointment of Voting Trustee.
(a) The Voting Trustee hereunder shall be Howell E. Begle, Jr. and the
Company's stock certificates to be issued as provided aforesaid shall be issued
to and held by the Voting Trustee in the name of "Howell E. Begle, Jr. as Voting
Trustee."
(b) The Voting Trustee (and any successor trustee) may at any time
resign by mailing to the registered holders of Voting Trust Certificates a
written resignation, to take effect ten days
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<PAGE> 6
thereafter, or upon the prior acceptance thereof. Upon the death, incapacity or
unwillingness to act of Howell E. Begle, Jr. or upon his resignation as Voting
Trustee, such person as is unanimously selected by the Trustees of the
Irrevocable Trust shall become successor Voting Trustee for Howell E. Begle, Jr.
8. Term.
(a) The Voting Trust created by this Agreement shall continue in effect
until January 31, 2010 (subject to extension as hereinafter set forth).
(b) At any time within two years prior to January 31, 2010, or at any
time within two years prior to the time of expiration of this Agreement as
extended, one or more holders of Voting Trust Certificates hereunder may, by
agreement in writing and with the written consent of the Voting Trustee, extend
the duration of this Agreement as to them for an additional period not exceeding
ten years from the then expiration date. In the event of such extension, the
Voting Trustee shall, prior to the time of expiration, as hereinabove provided,
as originally fixed or as theretofore extended, as the case may be, file in the
principal office of the Company and in the registered office of the Company in
the State of Delaware, a copy of such extension agreement and of the consent
thereto, and thereupon the duration of this Agreement shall be extended for the
period fixed by such extension agreement, provided, however, that no such
extension agreement shall extend the term of this Agreement beyond the maximum
period then permitted by applicable law or affect the rights or obligations of
persons not parties thereto.
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<PAGE> 7
(c) Upon the termination of this Agreement as to one or more of the
parties hereto and upon the delivery of the Voting Trust Certificates of such
parties to the Voting Trustee, such parties shall receive the number of shares
of Stock of the Company which are represented by their Voting Trust Certificates
and said transaction shall be recorded on the books of the Company.
9. Compensation and Reimbursement of Voting Trustee. The Voting Trustee
shall serve without compensation. The Voting Trustee shall have the right to
incur and pay such reasonable expenses and charges, to employ and pay such
agents, attorneys and counsel as they may deem necessary and proper for carrying
this Agreement into effect. Any such expenses or charges incurred by and due to
the Voting Trustee may be deducted from the dividends or other moneys or
property received by the Voting Trustee on the stock deposited hereunder.
Nothing herein contained shall disqualify the Voting Trustee or successor
trustees, or incapacitate them from serving the Company or any of its
subsidiaries as officer or director or in any other capacity, and in any such
capacity receiving compensation.
10. Release of Shares. At any time following the occurrence of an
initial public offering with respect to the Stock on a recognized national or
international securities exchange (an "IPO"), any of the parties hereto who are
shareholders of the Company may, subject (a) to their prior compliance with the
provisions of Section 5 of this Company's Shareholders' Agreement and (b) to
both the Company and the Remaining Shareholders (as therein defined) having
failed to exercise the purchase options provided them under Section 5.03(a) or
5.03(b) thereof, upon written notice to the Trustees during the third (30) day
period immediately following the expiration of the ten (10) day option period
specified in Section 5.3(b), elect to withdraw from this Trust the shares of
Stock
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<PAGE> 8
offered the Company and the Remaining Shareholders. Moreover, if at any time
hereafter the Company shall acquire ownership of any shares subject to this
Agreement, the Company may, upon its so doing, elect to withdraw from this Trust
those shares.
11. Notice.
(a) Unless otherwise in this Agreement specifically provided, any
notice to or communication with the holders of the Voting Trust Certificates
hereunder shall be deemed to be sufficiently given or made if mailed,
first-class, postage prepaid, if addressed as follows:
To the Singleton Family W. Dean Singleton, Trustee
Revocable Trust: 1560 Broadway, Suite 2100
Denver, Colorado 80202
and
Howell E. Begle, Jr., Trustee
Verner, Liipfert, Bernhard
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, D.C. 20005
and
To the Singleton Family Howell E. Begle, Jr., Trustee
Irrevocable Trust: Verner, Liipfert, Bernhard,
McPherson and Hand Chartered
901 15th Street, NW, Suite 700
Washington, D.C. 20005
and
Patricia Robinson
c/o MediaNews Group, Inc.
1560 Broadway, Suite 2100
Denver, Colorado 80202
-8-
<PAGE> 9
To Joseph J. Lodovic, IV: Joseph J. Lodovic, IV
4920 East Progress Court
Greenwood Village, Colorado 80121
To the Voting Trustee: Howell E. Begle, Jr.
Verner, Liipfert, Bernhard,
McPherson and Hand Chartered
901 15th Street, N.W., Suite 700
Washington, D.C. 20005
Every notice so given shall be effective, whether or not received, and the date
of mailing shall be the date such notice is deemed given for all purposes.
(b) Any notice to the Voting Trustee hereunder may be mailed,
first-class, postage prepaid, and sent by registered mail to the Voting Trustee,
addressed to him at such address as may from time to time be furnished in
writing to the Company by the Voting Trustee, and if no such address has been
furnished by the Voting Trustee, then to the Voting Trustee in care of the
Company.
(c) All distributions of cash, securities, or other property hereunder
by the Voting Trustee to the holders of Voting Trust Certificates may be made,
in the discretion of the Voting Trustee, by mail (regular or registered mail, as
the Trustee may deem available) , in the same manner as hereinabove provided for
the giving of notices to the holders of Voting Trust Certificates.
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<PAGE> 10
IN WITNESS WHEREOF, the parties have signed and sealed this Agreement,
effective January 31, 2000.
THE SINGLETON FAMILY
IRREVOCABLE TRUST
By: /s/ Patricia Robinson
----------------------------------
Patricia Robinson, Trustee
By: /s/ Howell E. Begle, Jr.
----------------------------------
Howell E. Begle, Jr., Trustee
THE SINGLETON FAMILY
REVOCABLE TRUST
By: /s/ W. Dean Singleton
----------------------------------
W. Dean Singleton, Trustee
By: /s/ Howell E. Begle, Jr.
----------------------------------
Howell E. Begle, Jr., Trustee
/s/ Joseph J. Lodovic, IV
-------------------------------------
Joseph J. Lodovic, IV
VOTING TRUSTEE
/s/ Howell E. Begle, Jr.
-------------------------------------
Howell E. Begle, Jr.
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<PAGE> 11
EXHIBIT A
MEDIANEWS GROUP, INC.
A DELAWARE CORPORATION
VOTING TRUST CERTIFICATE
Certificate No._______________ for ____________________________ ( ) shares.
This certifies that ____________________________ is the beneficial
owner of ___________ shares of the Class A Common Stock of MediaNews Group,
Inc., a Delaware corporation (the "Company"), which have been deposited with the
Voting Trustee hereinafter named, under the Singleton Family Voting Trust
Agreement for MediaNews Group, Inc. dated as of January 31, 2000 between Howell
E. Begle, Jr as Voting Trustee and certain shareholders of the Company. The
original of said Voting Trust Agreement is on file with the Voting Trustee. A
copy of said Voting Trust Agreement is on file in the registered office of the
Company in the State of Delaware, and additional copies thereof may be obtained
upon request from the Voting Trustee. This certificate has been issued pursuant
to and subject to said Voting Trust Agreement and represents said
shareholder-depositor's beneficial interest in said Voting Trust. This
Certificate is transferable only on the books of the Voting Trustee by the
registered holder either in person or by attorney duly authorized on surrender
hereof, and until so transferred, the Voting Trustee shall treat the registered
holder as the owner thereof for all purposes.
The holder of this Voting Trust Certificate takes the same subject to
all the terms and conditions of the aforesaid Voting Trust Agreement, and
becomes a party to said Voting Trust Agreement and is entitled to the benefits
thereof.
<PAGE> 12
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed this ____ day of __________, 20____.
/s/ Howell E. Begle, Jr.
-------------------------------------
Howell E. Begle, Jr. Voting Trustee
(Form of Assignment):
For value received ____________________________ hereby assigns the
within certificate, and all rights and interests represented thereby, to
__________________________ and appoints ___________________________ attorney to
transfer this certificate on the books of the Trustee mentioned therein, with
full power of substitution.
DATED:
In the presence of:
- -----------------------------
- -----------------------------
<PAGE> 13
MEDIANEWS GROUP, INC.
A DELAWARE CORPORATION
VOTING TRUST CERTIFICATE
Certificate No. 1 for SEVEN HUNDRED EIGHTY-SIX THOUSAND FOUR HUNDRED TWENTY-SIX
AND FIFTY-ONE ONE HUNDREDTHS (786,426.51) shares.
This certifies that THE SINGLETON FAMILY IRREVOCABLE TRUST is the
beneficial owner of SEVEN HUNDRED EIGHTY-SIX THOUSAND FOUR HUNDRED TWENTY-SIX
AND FIFTY-ONE ONE HUNDREDTHS (786,426.51) shares of the Class A Common Stock of
MediaNews Group, Inc., a Delaware corporation (the "Company"), which have been
deposited with the Voting Trustee hereinafter named, under the Singleton Family
Voting Trust Agreement for MediaNews Group, Inc. dated as of January 31, 2000
between Howell E. Begle, Jr. as Voting Trustee and certain shareholders of the
Company. The original of said Voting Trust Agreement is on file with the Voting
Trustee. A copy of said Voting Trust Agreement is on file in the registered
office of the Company in the State of Delaware, and additional copies thereof
may be obtained upon request from the Voting Trustee. This certificate has been
issued pursuant to and subject to said Voting Trust Agreement and represents
said shareholder-depositor's beneficial interest in said Voting Trust. This
Certificate is transferable only on the books of the Voting Trustee by the
registered holder either in person or by attorney duly authorized on surrender
hereof, and until so transferred, the Voting Trustee shall treat the registered
holder as the owner thereof for all purposes.
The holder of this Voting Trust Certificate takes the same subject to
all the terms and conditions of the aforesaid Voting Trust Agreement, and
becomes a party to said Voting Trust Agreement and is entitled to the benefits
thereof.
<PAGE> 14
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed this 31st day of January, 2000.
/s/ Howell E. Begle, Jr.
-------------------------------------
Howell E. Begle, Jr. Voting Trustee
(Form of Assignment):
For value received ____________________________ hereby assigns the
within certificate, and all rights and interests represented thereby, to
__________________________ and appoints ___________________________ attorney to
transfer this certificate on the books of the Trustee mentioned therein, with
full power of substitution.
DATED:
In the presence of:
- ---------------------------
- ---------------------------
<PAGE> 15
MEDIANEWS GROUP, INC.
A DELAWARE CORPORATION
VOTING TRUST CERTIFICATE
Certificate No. 2 for TWENTY-NINE THOUSAND NINETY-NINE AND FIFTY ONE HUNDREDTHS
(29,099.50) shares.
This certifies that JOSEPH J. LODOVIC, IV is the beneficial owner of
TWENTY-NINE THOUSAND NINETY-NINE AND FIFTY ONE HUNDREDTHS (29,099.50) shares of
the Class A Common Stock of MediaNews Group, Inc., a Delaware corporation (the
"Company"), which have been deposited with the Voting Trustee hereinafter named,
under the Singleton Family Voting Trust Agreement for MediaNews Group, Inc.
dated as of January 31, 2000 between Howell E. Begle, Jr. as Voting Trustee and
certain shareholders of the Company. The original of said Voting Trust Agreement
is on file with the Voting Trustee. A copy of said Voting Trust Agreement is on
file in the registered office of the Company in the State of Delaware, and
additional copies thereof may be obtained upon request from the Voting Trustee.
This certificate has been issued pursuant to and subject to said Voting Trust
Agreement and represents said shareholder-depositor's beneficial interest in
said Voting Trust. This Certificate is transferable only on the books of the
Voting Trustee by the registered holder either in person or by attorney duly
authorized on surrender hereof, and until so transferred, the Voting Trustee
shall treat the registered holder as the owner thereof for all purposes.
The holder of this Voting Trust Certificate takes the same subject to
all the terms and conditions of the aforesaid Voting Trust Agreement, and
becomes a party to said Voting Trust Agreement and is entitled to the benefits
thereof.
<PAGE> 16
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed this 31st day of January, 2000.
/s/ Howell E. Begle, Jr.
-------------------------------------
Howell E. Begle, Jr. Voting Trustee
(Form of Assignment):
For value received ____________________________ hereby assigns the
within certificate, and all rights and interests represented thereby, to
__________________________ and appoints ___________________________ attorney to
transfer this certificate on the books of the Trustee mentioned therein, with
full power of substitution.
DATED:
In the presence of:
- -----------------------------
- -----------------------------
<PAGE> 1
EXHIBIT 10.22
EXECUTION COPY
SCUDDER FAMILY
VOTING TRUST AGREEMENT
FOR MEDIANEWS GROUP, INC.
This Agreement is made as of January 31, 2000 by and between (i)
Charles A. Scudder, individually, Carolyn S. Miller, individually, as Custodian
under the Uniform Gift to Minors Act (UGMA") for Katherine Miller, subject to
the Katherine Miller Irrevocable Trust, and as Trustee under the Jennifer Miller
Irrevocable Trust and the Katherine Miller Irrevocable Trust, Elizabeth H.
Difani, individually, as Custodian for Katya Difani, under the UGMA, subject to
the Katya Difani Irrevocable Trust, as Custodian under the UGMA for Miguel
Difani, subject to the Miguel Difani Irrevocable Trust and as Trustee under the
Chipeta Difani Irrevocable Trust, the Katya Difani Irrevocable Trust and the
Miguel Difani Irrevocable Trust, Jean L. Scudder, individually, as Trustee for
the Scudder Family 1987 Trust (for the benefit of Kurt Miller and Gabriel
Difani) and as Trustee for The Jean L. Scudder Irrevocable Trust (for the
benefit of Benjamin Fulmer) and Joseph J. Lodovic, IV, (collectively referred to
as the "Shareholders") and (ii) Jean L. Scudder as voting trustee hereunder
(hereinafter referred to as the "Voting Trustee").
WITNESSETH:
WHEREAS, the Shareholders are the respective owners of in the aggregate
of One Million Seventy Thousand Three Hundred Eighty Five (1,070,385) shares of
Class A Common Stock of MediaNews Group, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Shareholders believe it to be in their best interests to
unite the voting powers held by them as shareholders of the Company and to
assign, transfer and vest the same in the hands of the Voting Trustee; and
<PAGE> 2
WHEREAS, Jean L. Scudder has agreed to serve as Voting Trustee with
respect to the Shareholders' Stock;
NOW, THEREFORE, it is agreed between the parties as follows:
1 . Voting Trust Agreement. Copies of this Voting Trust Agreement shall
be filed in the principal office of the Company at 1560 Broadway, Suite 2100,
Denver, CO 80202 and in the registered office of the Company in the State of
Delaware and shall be open to the inspection of any stockholder of the Company,
as well as any beneficiary of the trust under this Agreement, daily during
business hours. All Voting Trust Certificates issued as hereinafter provided
shall be issued, received, and held subject to all of the terms of this
Agreement. Each of the Shareholders shall be entitled to receive a Voting Trust
Certificate representing the Stock held by each Shareholder, and all transferees
and assigns of each of the Shareholders, upon accepting Voting Trust
Certificates issued hereunder, shall be bound by the provisions of this
Agreement.
2. Transfer of Stock Shares to Trustee.
(a) Prior to the execution of this Agreement, the Shareholders, or
their predecessors in interest, did deposit with the Voting Trustee certificates
of various shares of common stock of the Company (then known as Affiliated
Newspapers Investments, Inc.) under the predecessor to this Agreement, the
Scudder Family Voting Trust Agreement For Affiliated Newspapers Investments,
Inc. dated as of May 30, 1999. Pursuant to the terms of the Company's Amended
and Restated Certificate of Incorporation, as in effect on May 19, 1999, those
previously deposited certificates automatically converted as of that date into
One Million Seventy Thousand Three Hundred Eighty Five shares of Class A Common
Stock of this Company, and a new share certificate evidencing the
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<PAGE> 3
same has previously been issued in the name of the Voting Trustee, on behalf of
each of the Shareholders. The Voting Trustee holds that new share certificate
subject to the terms of this Agreement and promptly following execution of this
Agreement by each of the Shareholders shall forthwith issue and deliver to each
of the Shareholders a Voting Trust Certificate representing and evidencing the
number of shares of the Company's Class A Common Stock which each of the
Shareholders is deemed to have owned beneficially as of May 19, 1999.
(b) The Voting Trustee hereunder shall be Jean L. Scudder and the
Company's stock certificate for One Million Seventy Thousand Three Hundred
Eighty Five shares of its Class A Common Stock has been, as provided aforesaid,
issued to and is currently held by the Voting Trustee in the name of "Jean L.
Scudder as Voting Trustee."
3. Voting Trust Certificate. Each Voting Trust Certificate shall be in
the form attached as Exhibit A to this Agreement.
4. Transfer of Certificates. The Voting Trust Certificates shall be
transferable at the office of the Voting Trust, c/o MediaNews Group, Inc., 1560
Broadway, Suite 2100, Denver, Colorado 80202, by the registered owner thereof.
The Trustee may treat the registered holder of the Voting Trust Certificate as
the owner thereof for all purposes whatsoever, but she shall not be required to
deliver stock certificates hereunder without the surrender of such Voting Trust
Certificates.
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<PAGE> 4
5. Dividends.
(a) Prior to the Termination of this Agreement, the holder of each
Voting Trust Certificate shall be entitled to receive payments equal to the cash
dividends, if any, received by the Voting Trustee upon a like number and class
of shares of capital stock of the Company as is called for by each such Voting
Trust Certificate. If any dividend in respect of the stock deposited with the
Voting Trustee is paid, in whole or in part, in stock of the Company having
general voting powers, the Voting Trustee shall likewise hold, subject to the
terms of this Agreement, the certificates for stock which are received by it on
account of such dividend, and the holder of each Voting Trust Certificate
representing stock on which such stock dividend has been paid shall be entitled
to receive a Voting Trust Certificate issued under this Agreement for the number
of shares and class of stock received as such dividend with respect to the
shares represented by such Voting Trust Certificate.
(b) In lieu of receiving cash dividends upon the capital stock of the
Company and paying the same to the holders of Voting Trust Certificates pursuant
to the provisions of this Agreement, the Voting Trustee may instruct the Company
to pay such dividends directly to the holders of the Voting Trust Certificates.
Upon such instructions being given by the Voting Trustee to the Company, and
until revoked by the Voting Trustee, all liability of the Voting Trustee with
respect to such dividends shall cease.
6. Rights of Voting Trustee.
(a) The Voting Trustee shall have the right with respect to the
Shareholders' Stock to exercise in person or by their nominees or proxies, all
stockholders' voting rights and powers in respect of the Shareholders' Stock and
to take part in, or consent to any corporate or stockholders'
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<PAGE> 5
action of any kind whatsoever. The right to vote shall include, without
limitation, the right to vote for the election of directors, in favor of or
against any resolution or proposed action which may be presented at any meeting
or require the consent of stockholders of the Company, including those
pertaining to mortgaging, creating a security interest in, or pledging all or
any part of the property of the Company, the dissolution of the Company, or the
consolidation, merger, reorganization or recapitalization of the Company.
(b) The Voting Trustee, in voting the shares of capital stock of the
Company, shall vote such stock in accordance with her best judgment, subject in
each instance to the terms of any applicable shareholders' and/or related
agreement which may from time to time be in effect.
(c) Notwithstanding the provisions of subsection (a) of this Section,
the Voting Trustee shall not exercise any rights she possesses to vote any Stock
concerning (i) the acquisition or divestiture by the Company of any newspaper or
any other business venture, (ii) the dissolution, consolidation, merger,
reorganization or recapitalization of the Company, (iii) the sale, exchange,
pledge or encumbrance of all or substantially all of the Company's assets, (iv)
amendment of the Company's Certificate of Incorporation or bylaws or (v) the
election of directors, without first conferring with and obtaining the prior
consent of the beneficial owners of at least one-half of the shares of the Stock
owned at the time of such shareholder vote by the Shareholders.
The parties intend by the foregoing, in their capacity as shareholders,
to provide a mechanism for the Voting Trustee to authorize routine actions that
customarily are presented to a corporation's shareholders for approval, while
reserving to each Shareholder the right to fully participate in certain major
decisions concerning the Company. All Shareholders and the Voting Trustee shall
act in good faith in carrying out this intention.
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<PAGE> 6
7. Successor Voting Trustee. The Trustee (and any successor trustee)
may at any time resign by mailing to the registered holders of Voting Trust
Certificates a written resignation, to take effect ten days thereafter, or upon
the prior acceptance thereof. Upon the death, incapacity or unwillingness to act
of Jean L. Scudder, or upon her resignation as Voting Trustee, Carolyn S. Miller
shall become successor Voting Trustee for Jean L. Scudder. Upon the death,
incapacity or unwillingness to act of Carolyn S. Miller, or upon her resignation
as Voting Trustee, Charles A. Scudder shall become successor Voting Trustee for
Carolyn S. Miller.
8. Term.
(a) The Voting Trust created by this Agreement shall continue in effect
until January 31, 2010 (subject to extension as hereinafter set forth).
(b) At any time within two years prior to January 31, 2010, or at any
time within two years prior to the time of expiration of this Agreement as
extended, one or more holders of Voting Trust Certificates hereunder may, by
agreement in writing and with the written consent of the Voting Trustee, extend
the duration of this Agreement as to them for an additional period not exceeding
ten years from the then expiration date. In the event of such extension, the
Voting Trustee shall, prior to the time of expiration, as herein above provided,
as originally fixed or as theretofore extended, as the case may be, file in the
principal office of the Company and in the registered office of the Company in
the State of Delaware, a copy of such extension agreement and of the consent
thereto, and thereupon the duration of this Agreement shall be extended for the
period fixed by such extension agreement, provided, however, that no such
extension agreement shall extend the term of
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<PAGE> 7
this Agreement beyond the maximum period then permitted by applicable law or
affect the rights or obligations of persons not parties thereto.
(c) Upon the termination of this Agreement as to one or more of the
parties hereto and upon the delivery of the Voting Trust Certificates by such
parties to the Voting Trustee, such parties shall receive the number of shares
of common stock of the Company which are represented by their Voting Trust
Certificates and said transaction shall be recorded on the books of the Company.
9. Compensation and Reimbursement of Voting Trustee. The Voting Trustee
shall serve without compensation. The Voting Trustee shall have the right to
incur and pay such reasonable expenses and charges, to employ and pay such
agents, attorneys and counsel as they may deem necessary and proper for carrying
this Agreement into effect. Any such expenses or charges incurred by and due to
the Voting Trustee may be deducted from the dividends or other moneys or
property received by the Voting Trustee on the stock deposited hereunder.
Nothing herein contained shall disqualify the Voting Trustee or successor
trustees, or incapacitate them from serving the Company or any of its
subsidiaries as officer or director or in any other capacity, and in any such
capacity receiving compensation.
10. Release of Shares. At any time following the occurrence of an
initial public offering with respect to the Stock on a recognized national or
international securities exchange (an "IPO"), any of the parties hereto who are
shareholders of the Company may, subject (a) to their prior compliance with the
provisions of Section 5 of this Company's Shareholders' Agreement and (b) to
both the Company and the Remaining Shareholders (as therein defined) having
failed to exercise
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<PAGE> 8
the purchase options provided them under Section 5.03(a) or 5.03(b) thereof,
upon written notice to the Trustees during the third (30) day period immediately
following the expiration of the ten (10) day option period specified in Section
5.3(b), elect to withdraw from this Trust the shares of Stock offered the
Company and the Remaining Shareholders. Moreover, if at any time hereafter the
Company shall acquire ownership of any shares subject to this Agreement, the
Company may, upon its so doing, elect to withdraw from this Trust those shares.
11. Notice.
(a) Unless otherwise in this Agreement specifically provided, any
notice to or communication with or on behalf of the holders of the Voting Trust
Certificates hereunder shall be deemed to be sufficiently given or made if
mailed, first-class, postage prepaid, if addressed as follows:
To Charles A. Scudder 4 Ellsworth Place
Pittsburgh, Pennsylvania 15232
To Carolyn S. Miller 926 South Waterloo Road
Devon, Pennsylvania 19333
To Elizabeth H. Difani 6000 Apple Road
Route 1, Box 138
Polson, Montana 59860
To Jean L. Scudder 193 Old Kents Hill Road
Readfield, Maine 04355
To Joseph J. Lodovic, IV 4920 East Progress Court
Greenwood Village, Colorado 80121
Every notice so given shall be effective, whether or not received, and the date
of mailing shall be the date such notice is deemed given for all purposes.
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<PAGE> 9
(b) Any notice to the Voting Trustee hereunder may be mailed,
first-class, postage prepaid, and sent by registered mail to the Voting Trustee,
addressed to her at such address as may from time to time be furnished in
writing to the Company by the Voting Trustee, and if no such address has been
furnished by the Voting Trustee, then to the Voting Trustee in care of the
Company.
(c) All distributions of cash, securities, or other property hereunder
by the Voting Trustee to the holders of Voting Trust Certificates may be made,
in the discretion of the Voting Trustee, by mail (regular or registered mail, as
the Trustee may deem available), in the same manner as hereinabove provided for
the giving of notices to the holders of Voting Trust Certificates.
12. Counterpart. This Agreement may be executed in one or more
counterparts and by facsimile signatures, each of which shall be deemed to be an
original, and all of which taken together shall be deemed to be one and the
same-instrument.
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<PAGE> 10
IN WITNESS WHEREOF, the parties have signed and sealed this Agreement,
effective January 31, 2000.
/s/ Joseph J. Lodovic, IV
-----------------------------------
Joseph J. Lodovic, IV
/s/ Charles A. Scudder
-----------------------------------
Charles A. Scudder
/s/ Carolyn S. Miller
-----------------------------------
Carolyn S. Miller, individually, as
Custodian for Katherine Miller and as
Trustee under the Jennifer Miller
Irrevocable Trust and the Katherine
Miller Irrevocable Trust
/s/ Elizabeth H. Difani
-----------------------------------
Elizabeth H. Difani, individually, as
Custodian for Katya and Miguel Difani,
and as Trustee under the Chipeta Difani
Irrevocable Trust, the Katya Difani
Irrevocable Trust and the Miguel Difani
Irrevocable Trust
/s/ Jean L. Scudder
-----------------------------------
Jean L. Scudder, individually, as
Trustee for the Scudder Family 1987
Trust (for the benefit of Kurt Miller
and Gabriel Difani), as Trustee for The
Jean L. Scudder Irrevocable Trust (for
the benefit of Benjamin Fulmer) and as
Voting Trustee under this Agreement
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<PAGE> 11
EXHIBIT A
MEDIANEWS GROUP, INC.
A DELAWARE CORPORATION
VOTING TRUST CERTIFICATE
Certificate No. ______ for _________________ (_______) shares.
This certifies that _____________________ is the beneficial owner of
________ shares of the Class A Common Stock of MediaNews Group, Inc., a Delaware
corporation (the "Company"), which have been deposited with the Voting Trustee
hereinafter named, under the Scudder Family Voting Trust Agreement for MediaNews
Group, Inc. dated as of January 31, 2000, between Jean L. Scudder and certain
shareholders of the Company. The original of said Voting Trust Agreement is on
file with the Voting Trustee. A copy of said Voting Trust Agreement is on file
in the registered office of the Company in the State of Delaware, and additional
copies thereof may be obtained upon request from the Voting Trustee. This
certificate has been issued pursuant to and subject to said Voting Trust
Agreement and represents said shareholder-depositor's beneficial interest in
said Voting Trust. This Certificate is transferable only on the books of the
Voting Trustee by the registered holder either in person or by attorney duly
authorized on surrender hereof, and until so transferred, the Voting Trustee
shall treat the registered holder as the owner thereof for all purposes.
The holder of this Voting Trust Certificate takes the same subject to
all the terms and conditions of the aforesaid Voting Trust Agreement, and
becomes a party to said Voting Trust Agreement and is entitled to the benefits
thereof.
IN WITNESS WHEREOF, the Voting Trustee has caused this Certificate to
be signed this _______ day of _______________, 20____.
/s/ Jean L. Scudder
-----------------------------------
Jean L. Scudder
Voting Trustee
-11-
<PAGE> 12
(Form of Assignment):
For value received ______________________________ hereby assigns the
within certificate, and all rights and interests represented thereby, to
________________________ and appoints ______________________ attorney to
transfer this certificate on the books of the Trustee mentioned therein, with
full power of substitution.
DATED:
----------------------------
---------------------------------------
In presence of:
- -------------------------------
- -------------------------------
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MEDIA NEWS
GROUP INC.'S FORM 10-Q FOR THE NINE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q. MEDIANEWS GROUP, INC. WAS
FORMERLY KNOWN AS GARDEN STATE NEWSPAPERS, INC.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 111,957
<ALLOWANCES> 11,470
<INVENTORY> 22,408
<CURRENT-ASSETS> 144,941
<PP&E> 517,170
<DEPRECIATION> 153,384
<TOTAL-ASSETS> 1,028,138
<CURRENT-LIABILITIES> 129,201
<BONDS> 835,801
23
0
<COMMON> 0
<OTHER-SE> (122,695)
<TOTAL-LIABILITY-AND-EQUITY> 1,028,138
<SALES> 700,226
<TOTAL-REVENUES> 700,226
<CGS> 238,348
<TOTAL-COSTS> 614,191
<OTHER-EXPENSES> 6,780
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,891
<INCOME-PRETAX> 5,981
<INCOME-TAX> 1,461
<INCOME-CONTINUING> 4,520
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,520
<EPS-BASIC> 1.95
<EPS-DILUTED> 1.95
</TABLE>
