Contribution Agreement
By and Among
Garden State Newspapers, Inc.
Alameda Newspapers, Inc.
V & P Publishing, Inc.
Internet Media Publishing, Inc.
DR Partners
Media West - SBC, Inc.
And
The Sun Company
of San Bernardino, California
March 31, 1999
TABLE OF CONTENTS
Article I
Formation of West Coast MediaNews LLC
1.1 Formation of West Coast MediaNews LLC . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded MediaNews Assets . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 Excluded MediaNews Liabilities. . . . . . . . . . . . . . . . . . . . . . . 5
Article II
Formation of Donrey Newspapers LLC
2.1 Formation of Donrey Newspapers LLC. . . . . . . . . . . . . . . . . . . . . 5
2.2 Excluded Donrey Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 Excluded Donrey Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 9
Article III
Transfer of Gannett Assets to Partnership and
Assumption of Gannett Liabilities by Partnership
3.1 Transfer of Gannett Assets. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Excluded Gannett Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Excluded Gannett Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 13
Article IV
Formation of California Newspapers
Partnership; Closing
4.1 Formation of California Newspapers Partnership. . . . . . . . . . . . . . . 13
4.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.4 Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.5 Working Capital Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . 16
Article V
Representations, Warranties and
Covenants of the MediaNews Parties
5.1 Organization of the MediaNews Parties . . . . . . . . . . . . . . . . . . . 18
5.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.10 Ownership and Transfer of MediaNews Assets. . . . . . . . . . . . . . . . . 21
5.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 22
5.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 22
5.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.16 No Misstatements of Omissions . . . . . . . . . . . . . . . . . . . . . . . 24
5.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.18 MediaNews Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 29
5.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 30
Article VI
Representations, Warranties and
Covenants of DR Partners
6.1 Organization of DR Partners . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ii
6.10 Ownership and Transfer of Donrey Assets . . . . . . . . . . . . . . . . . . 33
6.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 33
6.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 34
6.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.16 No Misstatements or Omissions . . . . . . . . . . . . . . . . . . . . . . . 36
6.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.18 Donrey Real Estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.19 Donrey Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . 38
6.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 41
6.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 41
Article VII
Representations, Warranties and
Covenants of Gannett
7.1 Organization of MWSB and Sun. . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.6 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.7 Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.8 Litigation, etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.9 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.10 Ownership and Transfer of Gannett Assets. . . . . . . . . . . . . . . . . . 44
7.11 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.12 Contracts, Leases and Other Instruments . . . . . . . . . . . . . . . . . . 44
7.13 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . . . . . 44
7.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.15 Brokers, Finders etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.16 No Misstatements of Omissions . . . . . . . . . . . . . . . . . . . . . . . 47
7.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.18 Gannett Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.19 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.20 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.21 Circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.22 Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
iii
7.23 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.24 Relationships with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 52
7.25 Second Class Mail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.26 No Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 52
Article VIII
Additional Agreements
8.1 Conduct of the Business of the MediaNews Parties. . . . . . . . . . . . . . 53
8.2 Conduct of the Business of DR Partners. . . . . . . . . . . . . . . . . . . 54
8.3 Conduct of the Business of Gannett. . . . . . . . . . . . . . . . . . . . . 56
8.4 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.5 Notice of Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.6 Authorizations and Consents . . . . . . . . . . . . . . . . . . . . . . . . 60
8.7 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.8 Satisfaction of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 61
8.9 Confidentiality.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.10 Continuation of Arrangements with Affiliates. . . . . . . . . . . . . . . . 63
Article IX
Conditions to Closing
9.1 Conditions to Obligations of the MediaNews Parties. . . . . . . . . . . . . 64
9.2 Conditions to Obligations of DR Partners. . . . . . . . . . . . . . . . . . 65
9.3 Conditions to Obligations of Gannett. . . . . . . . . . . . . . . . . . . . 66
Article X
Termination of Agreement
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Article XI
Indemnification
11.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
11.2 Indemnification Obligations . . . . . . . . . . . . . . . . . . . . . . . . 69
11.3 Exclusive Remedy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.4 Third Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
11.5 Other Indemnification Claims. . . . . . . . . . . . . . . . . . . . . . . . 71
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Article XII
General
12.1 Liability for Covenants, Representations and Warranties after Closing . . . 72
12.2 Transactional Costs/Expenses. . . . . . . . . . . . . . . . . . . . . . . . 72
12.3 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.4 Assignment; No Third Party Beneficiary Rights . . . . . . . . . . . . . . . 72
12.5 Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.6 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
12.7 Governing Law and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.8 Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.9 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.11 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.13 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.14 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.15 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
EXHIBITS
Exhibit A Definitions
Exhibit B Schedule of MediaNews Newspapers
Exhibit C Schedule of Permitted MediaNews Liens
Exhibit D Schedule of MediaNews Excluded Assets
Exhibit E Schedule of Excluded MediaNews Liabilities
Exhibit F Schedule of Donrey Newspapers
Exhibit G Schedule of Permitted Donrey Liens
Exhibit H Schedule of Donrey Excluded Assets
Exhibit I Schedule of Excluded Donrey Liabilities
Exhibit J Schedule of Gannett Newspapers
Exhibit K Schedule of Permitted Gannett Liens
Exhibit L Schedule of Gannett Excluded Assets
Exhibit M Schedule of Excluded Gannett Liabilities
Exhibit N Form of Partnership Agreement
Exhibit O Form of Assignment Agreement
Exhibit P Form of Assumption Agreement
Exhibit Q Form of MediaNews Parties' and West Coast MediaNews LLC's Opinion
of Counsel
Exhibit R Form of DR Partners' and Donrey's Opinion of Counsel
Exhibit S Form of Gannett's Opinion of Counsel
Exhibit T Schedule of Categories of Items to be Excluded/Included in
Estimated and Final Working Capital Statement
Exhibit U Form of USA TODAY Printing Agreement
v
MediaNews Newspapers
Disclosure Schedule
Section 5.3 Schedule of Conflicts, Breaches and Violations
Section 5.5 Schedule of MediaNews Newspapers Financial Statements and
GAAP Exceptions
Section 5.6 Notices of Violations
Section 5.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 5.9 Schedule of Certain Employee Related Matters
Section 5.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of MediaNews Assets
Section 5.12 Schedule of Certain Contractual Defaults
Section 5.13 Schedule of Certain Changes or Events
Section 5.14 Schedule of Certain Tax Related Matters
Section 5.17 Schedule of Certain Environmental Matters
Section 5.18 Schedule of MediaNews Real Estate
Section 5.19 Schedule of MediaNews Intellectual Property
Section 5.21 Schedule of Certain Circulation Related Matters
Section 5.22 Schedule of Certain Advertising Related Matters
Section 5.25 Schedule of Affiliate Relationships
Donrey Newspapers
Disclosure Schedules
Section 6.3 Schedule of Conflicts, Breaches and Violations
Section 6.5 Schedule of Donrey Newspapers Financial Statements and GAAP
Exceptions
Section 6.6 Notices of Violation
Section 6.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 6.9 Schedule of Certain Employee Related Matters
Section 6.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of Donrey Newspapers Assets
Section 6.12 Schedule of Certain Contractual Defaults
Section 6.13 Schedule of Certain Changes or Events
Section 6.14 Schedule of Certain Tax Related Matters
Section 6.17 Schedule of Certain Environmental Matters
Section 6.18 Schedule of Donrey Newspapers Real Estate
Section 6.19 Schedule of Donrey Newspapers Intellectual Property
Section 6.21 Schedule of Certain Circulation Related Matters
Section 6.22 Schedule of Certain Advertising Related Matters
Section 6.25 Schedule of Affiliate Relationships
vi
Gannett Newspapers
Disclosure Schedules
Section 7.3 Schedule of Conflicts, Breaches and Violations
Section 7.5 Schedule of Gannett Newspapers Financial Statements and
GAAP Exceptions
Section 7.6 Notices of Violation
Section 7.8 Schedule of Litigation, Claims, Arbitrations and
Investigations
Section 7.9 Schedule of Certain Employee Related Matters
Section 7.10 Schedule of Encumbrances, Restrictions, etc. re Ownership
and Transfer of Gannett Newspapers Assets
Section 7.12 Schedule of Certain Contractual Defaults
Section 7.13 Schedule of Certain Changes or Events
Section 7.14 Schedule of Certain Tax Related Matters
Section 7.17 Schedule of Certain Environmental Matters
Section 7.18 Schedule of Gannett Newspapers Real Estate
Section 7.19 Schedule of Gannett Newspapers Intellectual Property
Section 7.21 Schedule of Certain Circulation Related Matters
Section 7.22 Schedule of Certain Advertising Related Matters
Section 7.25 Schedule of Affiliate Relationships
vii
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "AGREEMENT"), dated as of Xxxxx 0, 0000,
xxxxx Xxxxxx Xxxxx Newspapers, Inc., a Delaware corporation ("GSN"), Alameda
Newspapers, Inc., a Delaware corporation ("ALAMEDA"), V & P Publishing, Inc.,
a California corporation ("V & P"), Internet Media Publishing, Inc. a
Delaware corporation ("IMP") DR Partners, a Nevada general partnership ("DR
PARTNERS") Media West - SBC, Inc., a Delaware corporation ("MWSB") and The
Sun Company of San Bernardino, California, a California corporation ("Sun").
R E C I T A L S :
Each of GSN, Alameda, V&P, IMP, DR Partners MWSB and Sun owns and
operates certain newspaper properties and/or related assets located in the
State of California. Each of these parties desire to combine certain of those
specific newspaper properties into a single business operation through the
creation of the California Newspapers Partnership, a Delaware general
partnership (the "PARTNERSHIP").
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties hereto hereby agree as follows:
I. FORMATION OF WEST COAST MEDIANEWS LLC
1.1 FORMATION OF WEST COAST MEDIANEWS LLC.
(a) Prior to the Closing (as defined below), GSN, Alameda, V
& P and IMP will form and organize a limited liability company to be called
"WEST COAST MEDIANEWS LLC" under the laws of the State of Delaware (hereafter
"WEST COAST MEDIANEWS") and shall be the sole members thereof at formation.
GSN, Alameda, V & P and IMP are hereinafter referred to collectively as the
"MEDIANEWS PARTIES". Upon the terms and subject to the conditions of this
Agreement, each of the MediaNews Parties shall (or shall cause the
appropriate person to), on the Closing Date (as defined below), assign,
transfer, convey and deliver to the Partnership, as a capital contribution
to, and in exchange for membership interests in West Coast MediaNews, all
their right, title and interest in and to all of the assets, properties and
goodwill (such assets, properties and goodwill being referred to herein as
the "MEDIANEWS ASSETS") used, held for use in, located at the premises of or
shown on the financial statements of the businesses of the newspapers listed
in the schedule appended hereto as Exhibit B (the "MEDIANEWS NEWSPAPERS"),
except as otherwise provided in Section 1.2 hereof. The MediaNews Assets
shall include, without limitation, the following items:
(i) all inventory, including, without limitation,
newsprint, ink, raw materials, work in process, finished goods, service parts
and spare parts and circulation, production, maintenance and office supplies
(collectively, "INVENTORY") of the MediaNews Newspapers;
(ii) all furniture, fixtures, improvements, equipment
(including office equipment), on or off site, machinery, parts, computer
hardware, tools, printing presses, vehicles and all other tangible personal
property (other than the Inventory or leased personal property)
(collectively, "EQUIPMENT") of the MediaNews Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the MediaNews Newspapers;
(iv) all accounts receivable, billed or unbilled,
notes receivable, negotiable instruments and chattel paper, including credit
card receivables relative to subscriptions and advertising charged by
customers to credit cards and all accrued interest charges relating thereto
(collectively, "ACCOUNTS RECEIVABLE") of the MediaNews Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the MediaNews Assets or the MediaNews Newspapers
against all persons whomsoever, including, without limitation, all rights
against suppliers under warranties covering any of the Inventory or Equipment
and all Permits and Environmental Permits, to the extent they are legally
transferable by the MediaNews Parties, exclusive of rights and claims to Tax
Assets or those related to any Excluded MediaNews Asset or the subject matter
of any MediaNews Excluded Liabilities;
(vi) all Intellectual Property of the MediaNews
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the MediaNews Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the MediaNews Newspapers and
for the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the MediaNews Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all
advertising service contracts, all service and feature contracts, all
computer software and related hardware licensed or leased with respect to the
MediaNews Newspapers and all other leases, powers of attorney, other
contracts, permits, licenses, authorizations and instruments relating to the
MediaNews Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all MediaNews Excluded Assets, as defined in Section
1.3 of this Agreement;
2
(ix) all existing books, papers, files and records of
the MediaNews Parties relating to the MediaNews Newspapers and not also
relating to other publications owned by the MediaNews Parties or their
Affiliates whether in hard copy, magnetic or other format (collectively, the
"MEDIANEWS PARTIES' RECORDS"), including, without limitation, the following
types of files and records: books of account and accounting information, such
Tax information as the Partnership may reasonably request relating to the
MediaNews Assets, contract files, current and former customer, dealer,
advertiser and supplier files, including, without limitation, advertiser
contracts, copies of newsprint contracts, subscriber and non-subscriber lists
(including those of independent contractors which distribute the MediaNews
Newspapers) and advertiser lists, lists of rack and box locations, lists of
dealers, customer credit information, pricing information, historical and
current circulation draw information, personnel and employment files,
manufacturing and production information, market research and survey reports
and records, equipment maintenance records, equipment warranty information,
sales and advertising material, proprietary software used in connection with
the editorial and classified advertising departments of the MediaNews
Newspapers (including without limitation, all documentation and source codes
and specifications and drawings for such software), equipment drawings,
manuals and data, written confirmations or certificates relating to MediaNews
Permits and MediaNews Environmental Permits, industry information and
information relating to the MediaNews Newspapers' trade secrets and customer
specifications;
(x) all prepaid expenses, all advances and other
prepaid items and credits for or toward the purchase of goods, services and
Inventory (collectively, the "PREPAIDS") by the MediaNews Parties or as
relating to the MediaNews Newspapers, other than those hereinafter defined as
MediaNews Excluded Assets, or relating to MediaNews Excluded Assets, which
have not as of the Closing Date been received in full by the MediaNews
Parties;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the MediaNews Newspapers;
(xii) all of the MediaNews Parties' rights, title and
interest in all security deposits, surety deposits and bonds presently
maintained on behalf of the MediaNews Parties relative to the MediaNews
Newspapers which relate to contracts, leases and agreements being assigned to
and assumed by the Partnership at the Closing;
(xiii) the library of the MediaNews Newspapers,
including, but not limited to the MediaNews Parties' and/or their Affiliates'
right, title and interest in photography, art, clippings, files, prints,
telephone and city directories, historic facts and memorabilia, all microfilm
and microfiche reproductions of back issues, proprietary software, books,
computer printouts, computer data and other reference materials, the morgue,
all bound copies of back issues, and all unbound back issues of each of the
MediaNews Newspapers;
3
(xiv) all leases of motor vehicles and other tangible
personal property of the MediaNews Parties relating to the MediaNews
Newspapers, to the extent assignable to the Partnership, but excluding all
MediaNews Excluded Assets as defined in Section 1.3; and,
(xv) except for the MediaNews Excluded Assets, all
other assets, whether tangible or intangible, not hereinafter expressly
mentioned which are now, or as of the Closing will be, used in or held for
future use in the MediaNews Newspapers' operations, or which are necessary
for the operation of the MediaNews Newspapers as a going concern.
(b) All of the MediaNews Assets shall be assigned,
transferred, conveyed and delivered to the Partnership free and clear of all
security interests, mortgages, pledges, restrictions, charges, liens of any
kind or other material encumbrances ("LIENS") other than Liens described in
Exhibit C hereto (the "PERMITTED MEDIANEWS LIENS") .
1.2 EXCLUDED MEDIANEWS ASSETS. Notwithstanding the provisions of
Section 1.1, the MediaNews Parties shall not assign, transfer, convey or
deliver to the Partnership, and the term "MEDIANEWS ASSETS" shall not
include, any of the following (the "EXCLUDED MEDIANEWS ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by the MediaNews Parties as
of the Closing for the account of or related to the MediaNews Newspapers;
(b) all income taxes receivable from a governmental
authority and all income tax refunds receivable from a governmental authority
(collectively, "TAX ASSETS") of the MediaNews Newspapers and all leases and
agreements relating to the MediaNews Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of the MediaNews
Newspapers as of the Closing relating to MediaNews Excluded Assets or
pursuant to contracts which are not being assigned as of the Closing Date to
the Partnership;
(d) all of the MediaNews Parties' corporate records;
(e) the MediaNews Parties' interests in any retroactive
refunds for worker's compensation insurance premiums paid with respect to
work performed prior to the Closing Date by employees of the MediaNews
Newspapers; and,
(f) all rights and claims relating to any Excluded MediaNews
Asset or the subject matter of any MediaNews Excluded Liabilities.
(g) all newsprint purchase agreements and insurance
policies, except those insurance policies being transferred on a provisional
basis with respect to all or a
4
portion of the 90 day transition period following the Closing, as more fully
described on Exhibit D hereto;
(h) all employee benefit plans relating to the MediaNews
Newspapers, except those being transferred on a provisional basis with
respect to all or a portion of the 90 day transition period following the
Closing, as more fully described on Exhibit D hereto; and,
(i) such other assets, if any, as are specifically described
in Exhibit D hereto.
1.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date the Partnership shall
assume, and agree to pay, perform and discharge when due, all debts,
liabilities and obligations of any kind, character or description, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined
or undetermined (collectively, "LIABILITIES") of the MediaNews Parties
relating to the MediaNews Newspapers and/or MediaNews Assets other than the
Excluded MediaNews Liabilities (as defined below) (collectively, the "ASSUMED
MEDIANEWS LIABILITIES").
1.4 EXCLUDED MEDIANEWS LIABILITIES. Notwithstanding the
provisions of Section 1.3, the MediaNews Parties shall retain, and shall be
responsible for paying, performing and discharging when due, and the
Partnership shall not assume or have any responsibility for, and the term
"ASSUMED MEDIANEWS LIABILITIES" shall not include, any of the Liabilities
relating to the MediaNews Newspapers and/or MediaNews Assets which arise out
of the MediaNews Parties' operation or ownership thereof prior to the Closing
Date and those other liabilities described in Exhibit E hereto (the "EXCLUDED
MEDIANEWS LIABILITIES").
II. FORMATION OF DONREY NEWSPAPERS LLC
2.1 FORMATION OF DONREY NEWSPAPERS LLC.
(a) Prior to the Closing, DR Partners shall cause the
formation and organization of a limited liability company to be called
"DONREY NEWSPAPERS LLC" (hereafter "DONREY"). Donrey shall be organized
under the laws of the State of Arkansas. Only DR Partners shall be a member
of, or otherwise own an equity interest in, Donrey at formation. Upon the
terms and subject to the conditions of this Agreement, DR Partners shall (or
shall cause the appropriate person to), on the Closing Date, assign,
transfer, convey and deliver to the Partnership, as a capital contribution
to, and in exchange for membership interests in Donrey, all their right,
title and interest in and to the following assets and properties (such assets
and properties being referred to herein as the "DONREY ASSETS") used, held
for use in, located at the premises of or shown on the financial statements
of the businesses of the newspapers listed in the schedule appended hereto as
Exhibit F (the "DONREY NEWSPAPERS"), except as otherwise provided in Section
2.2 hereof. The Donrey Assets shall include, without limitation, the
following items:
5
(i) all Inventory, including, without limitation,
newsprint, ink, raw materials, work in process, finished goods, service parts
and spare parts and circulation, production, maintenance and office supplies
of the Donrey Newspapers;
(ii) all Equipment (other than the Donrey Inventory or
leased personal property) of the Donrey Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the Donrey Newspapers;
(iv) all Accounts Receivable of the Donrey Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the Donrey Assets or the Donrey Newspapers against all
persons whomsoever, including, without limitation, all rights against
suppliers under warranties covering any of the Inventory or Equipment and all
Permits and Environmental Permits, to the extent they are legally
transferable by DR Partners, exclusive of rights and claims to Tax Assets or
those relating to any Excluded Donrey Asset or the subject matter of any
Donrey Excluded Liability;
(vi) all Intellectual Property of the Donrey
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the Donrey Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the Donrey Newspapers and for
the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the Donrey Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all newsprint
contracts, all advertising service contracts, all service and feature
contracts, all computer software and related hardware licenses or leased with
respect to the Donrey Newspapers and all other leases, powers of attorney,
other contracts, permits, licenses, authorizations and instruments relating
to the Donrey Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all Donrey Excluded Assets, as defined in Section 2.3
of this Agreement;
(ix) all existing books, papers, files and records of
DR Partners relating to the Donrey Newspapers and not also relating to other
publications owned by DR Partners or its Affiliates, whether in hard copy,
magnetic or other format (collectively, the "DR Partners" Records"),
including, without limitation, the following types of files and records:
books of account and accounting information, such Tax information as the
6
Partnership may reasonably request relating to the Donrey Assets, contract
files, current and former customer, dealer, advertiser and supplier files,
including, without limitation, advertiser contracts, copies of newsprint
contracts, subscriber and non-subscriber lists (including those of
independent contractors which distribute the Donrey Newspapers) and
advertiser lists, lists of rack and box locations, lists of dealers, customer
credit information, pricing information, historical and current circulation
draw information, personnel and employment files, manufacturing and
production information, market research and survey reports and records,
equipment maintenance records, equipment warranty information, sales and
advertising material, proprietary software used in connection with the
editorial and classified advertising departments of the Donrey Newspapers
(including without limitation, all documentation and source codes and
specifications and drawings for such software), equipment drawings, manuals
and data, written confirmations or certificates relating to Permits and
Environmental Permits, industry information and information relating to the
Donrey Newspapers' trade secrets and customer specifications;
(x) all Prepaids relating to the Donrey Newspapers,
other than those hereinafter defined as Donrey Excluded Assets, or relating
to Donrey Excluded Assets, which have not as of the Closing Date been
received in full by DR Partners;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the Donrey Newspapers;
(xii) all of DR Partners' rights, title and interest in
all security deposits, surety deposits and bonds presently maintained on
behalf of DR Partners relative to the Donrey Newspapers which relate to
contracts, leases and agreements being assigned to and assumed by the
Partnership at the Closing;
(xiii) the library of the Donrey Newspapers, including,
but not limited to DR Partners' and/or its Affiliates' right, title and
interest in photography, art, clippings, files, prints, telephone and city
directories, historic facts and memorabilia, all microfilm and microfiche
reproductions of back issues, proprietary software, books, computer
printouts, computer data and other reference materials, the morgue, all bound
copies of back issues, and all unbound back issues of each of the Donrey
Newspapers;
(xiv) all leases of motor vehicles and other tangible
personal property of DR Partners relating to the Donrey Newspapers, to the
extent assignable to the Partnership, but excluding all Donrey Excluded
Assets as defined in Section 2.3; and,
(xv) except for the Donrey Excluded Assets, all other
assets, whether tangible or intangible, not hereinafter expressly mentioned
which are now, or as of the Closing will be, used in or held for future use
in the Donrey Newspapers' operations, or which are necessary for the
operation of the Donrey Newspapers as a going concern.
(b) All of the Donrey Assets shall be assigned, transferred,
conveyed and delivered to the Partnership free and clear of all Liens other
than the Liens described in Exhibit G hereto (the "PERMITTED DONREY LIENS").
7
2.2 EXCLUDED DONREY ASSETS. Notwithstanding the provisions of
Section 2.1, DR Partners shall not assign, transfer, convey or deliver to the
Partnership, and the term "DONREY ASSETS" shall not include, any of the
following (the "DONREY EXCLUDED ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by DR Partners as of the
Closing for the account of or related to the Donrey Newspapers;
(b) all Tax Assets of the Donrey Newspapers and all leases
and agreements relating to the Donrey Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of DR Partners as of
the Closing relating to Donrey Excluded Assets or pursuant to contracts which
are not being assigned as of the Closing Date to the Partnership;
(d) all of DR Partners' partnership records;
(e) DR Partners' interests in any retroactive refunds for
worker's compensation insurance premiums paid with respect to work performed
prior to the Closing Date by employees of the Donrey Newspapers;
(f) all rights and claims relating to any Excluded Donrey
Asset or the subject matter of any Donrey Excluded Liability;
(g) all newsprint purchase agreements and insurance
policies, except those insurance policies being transferred on a provisional
basis with respect to all or a portion of the 90 day transition period
following the Closing, as more fully described on Exhibit H hereto;
(h) all employee benefit plans relating to the Donrey
Newspapers, except those being transferred on a provisional basis with
respect to all or a portion of the 90 day transition period following the
Closing, as more fully described on Exhibit H hereto; and,
(i) such other assets, if any, as are specifically described
in Exhibit H hereto.
2.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Partnership shall
assume, and agree to pay, perform and discharge when due, all Liabilities of
DR Partners relating to the Donrey Newspapers and/or Donrey Assets other than
the Excluded Donrey Liabilities (as defined below) (collectively, the
"ASSUMED DONREY LIABILITIES").
8
2.4 EXCLUDED DONREY LIABILITIES. Notwithstanding the provisions of
Section 2.3, the DR Partners shall retain, and shall be responsible for
paying, performing and discharging when due, and the Partnership shall not
assume or have any responsibility for, and the term "ASSUMED DONREY
LIABILITIES" shall not include any of the Liabilities relating to the Donrey
Newspapers and/or Donrey Assets which arise out of DR Partners' operations
and ownership thereof prior to the Closing Date and those other Liabilities
described in Exhibit I hereto (the "EXCLUDED DONREY LIABILITIES").
III. TRANSFER OF GANNETT ASSETS TO PARTNERSHIP AND
ASSUMPTION OF GANNETT LIABILITIES BY PARTNERSHIP
3.1 TRANSFER OF GANNETT ASSETS.
(a) Upon the terms and subject to the conditions of this
Agreement, MWSB and Sun (hereinafter collectively referred to as "Gannett")
shall (or shall cause the appropriate person to), on the Closing Date,
assign, transfer, convey and deliver to the Partnership, as a capital
contribution to, all of MWSB's and Sun's right, title and interest in and to
the following assets and properties (such assets and properties being
referred to herein as the "GANNETT ASSETS") used, held for use in, located at
the premises of or shown on the financial statements of the businesses of the
newspaper or newspapers listed in the schedule appended hereto as Exhibit J
(the "GANNETT NEWSPAPERS"), except as otherwise provided in Section 3.2
hereof. The Gannett Assets shall include, without limitation, the following
items:
(i) all Inventory, including, without limitation,
newsprint, ink, raw materials, work in process, finished goods, service parts
and spare parts and circulation, production, maintenance and office supplies
of the Gannett Newspapers;
(ii) all Equipment (other than the Gannett Inventory
or leased personal property) of the Gannett Newspapers;
(iii) that certain real property and all appurtenances
thereto and improvements thereon currently used or held for potential future
use in the operations of the Gannett Newspapers;
(iv) all Accounts Receivable of the Gannett Newspapers;
(v) all claims and rights (and benefits arising
therefrom) relating to the Gannett Assets or the Gannett Newspapers against
all persons whomsoever, including, without limitation, all rights against
suppliers under warranties covering any of the Inventory or Equipment and all
Permits and Environmental Permits, to the extent they are legally
transferable by Gannett, exclusive of rights and claims to Tax Assets or
those relating to any Excluded Gannett Assets or the subject matter of any
Gannett Excluded Liability;
9
(vi) all Intellectual Property of the Gannett
Newspapers, and all goodwill associated with such Intellectual Property;
(vii) all sales orders and sales contracts, quotations
and bids of the Gannett Newspapers, including, without limitation, all
contracts, agreements and orders for advertising in, distribution of
advertising materials in and subscriptions to the Gannett Newspapers and for
the provision of commercial printing services;
(viii) all leases of real property used in the
operations of the Gannett Newspapers, to the extent assignable to the
Partnership, and all rights and interests in and under all of the following
types of contracts, leases, permits, licenses, authorizations and
instruments, to the extent assignable to the Partnership: all purchase
contracts for new equipment, including purchase price deposits, all contracts
and advertisers and printing customers, all supplier contracts, all newsprint
contracts, all advertising service contracts, all service and feature
contracts, all computer software and related hardware licenses or leased with
respect to the Gannett Newspapers and all other leases, powers of attorney,
other contracts, permits, licenses, authorizations and instruments relating
to the Gannett Newspapers' operations, and all subsequent additions or
modifications thereto in the ordinary course of business prior to the
Closing, but excluding all Gannett Excluded Assets, as defined in Section 3.3
of this Agreement;
(ix) all existing books, papers, files and records of
Gannett relating to the Gannett Newspapers and not also relating to other
publications owned by Gannett and/or its Affiliates, whether in hard copy,
magnetic or other format (collectively, the "Gannett Records"), including,
without limitation, the following types of files and records: books of
account and accounting information, such Tax information as the Partnership
may reasonably request relating to the Gannett Assets, contract files,
current and former customer, dealer, advertiser and supplier files,
including, without limitation, advertiser contracts, copies of newsprint
contracts, subscriber and non-subscriber lists (including those of
independent contractors which distribute the Gannett Newspapers) and
advertiser lists, lists of rack and box locations, lists of dealers, customer
credit information, pricing information, historical and current circulation
draw information, personnel and employment files, manufacturing and
production information, market research and survey reports and records,
equipment maintenance records, equipment warranty information, sales and
advertising material, proprietary software used in connection with the
editorial and classified advertising departments of the Gannett Newspapers
(including without limitation, all documentation and source codes and
specifications and drawings for such software), equipment drawings, manuals
and data, written confirmations or certificates relating to Permits and
Environmental Permits, industry information and information relating to the
Gannett Newspapers' trade secrets and customer specifications;
(x) all Prepaids relating to the Gannett Newspapers,
other than those hereinafter defined as Gannett Excluded Assets, or relating
to Gannett Excluded Assets, which have not as of the Closing Date been
received in full by Gannett;
(xi) all addresses for real property locations
transferred to the Partnership and, to the extent assignable, telephone
numbers of the Gannett Newspapers;
10
(xii) all of Gannett's rights, title and interest in
all security deposits, surety deposits and bonds presently maintained on
behalf of Gannett relative to the Gannett Newspapers which relate to
contracts, leases and agreements being assigned to and assumed by the
Partnership at the Closing;
(xiii) the library of the Gannett Newspapers, including,
but not limited to Gannett's and/or its Affiliates' right, title and interest
in photography, art, clippings, files, prints, telephone and city
directories, historic facts and memorabilia, all microfilm and microfiche
reproductions of back issues, proprietary software, books, computer
printouts, computer data and other reference materials, the morgue, all bound
copies of back issues, and all unbound back issues of each of the Gannett
Newspapers;
(xiv) all leases of motor vehicles and other tangible
personal property of Gannett relating to the Gannett Newspapers, to the
extent assignable to the Partnership, but excluding all Gannett Excluded
Assets as defined in Section 3.3; and,
(xv) except for the Gannett Excluded Assets, all other
assets, whether tangible or intangible, not hereinafter expressly mentioned
which are now, or as of the Closing will be, used in or held for future use
in the Gannett Newspapers' operations, or which are necessary for the
operation of the Gannett Newspapers as a going concern.
(b) All of the Gannett Assets shall be assigned,
transferred, conveyed and delivered to the Partnership free and clear of all
Liens other than the Liens described in Exhibit K hereto (the "PERMITTED
GANNETT LIENS").
3.2 EXCLUDED GANNETT ASSETS. Notwithstanding the provisions of
Section 3.1, Gannett shall not assign, transfer, convey or deliver to the
Partnership, and the term "GANNETT ASSETS" shall not include, any of the
following (the "GANNETT EXCLUDED ASSETS"):
(a) all bank accounts, cash and cash equivalents, stocks,
bonds, financial instruments, silver, marketable securities and all similar
investments or liquid assets, on deposit or held by Gannett as of the Closing
for the account of or related to the Gannett Newspapers;
(b) all Tax Assets of the Gannett Newspapers and all leases
and agreements relating to the Gannett Newspapers which are not assignable to
the Partnership or which are not expressly assumed by the Partnership;
(c) all deposits and prepaid expenses of Gannett as of the
Closing relating to Gannett Excluded Assets or pursuant to contracts which
are not being assigned as of the Closing Date to the Partnership;
(d) all of Gannett's corporate records;
11
(e) Gannett's interests in any retroactive refunds for
worker's compensation insurance premiums paid with respect to work performed
prior to the Closing Date by employees of the Gannett Newspapers;
(f) all rights and claims relating to any Excluded Gannett
Assets or the subject matter of any Gannett Excluded Liability;
(g) all newsprint purchase agreements and insurance policies;
(h) all employee benefit plans relating to the Gannett
Newspapers and all specific computer support systems and all specific Gannett
intercompany contracts to which Sun is a party which are specifically
described on Exhibit L hereto, except those being transferred on a
provisional basis with respect to all or a portion of the 90 day transition
period following the Closing, as more fully described in Exhibit L hereto;
and,
(i) the use of the name Gannett and such other assets, if
any, as are specifically described in Exhibit L hereto.
3.3 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Partnership shall
assume, and agree to pay, perform and discharge when due, all Liabilities of
Gannett relating to the Gannett Newspapers and/or Gannett Assets other than
the Excluded Gannett Liabilities (as defined below) (collectively, the
"ASSUMED GANNETT LIABILITIES").
12
3.4 EXCLUDED GANNETT LIABILITIES. Notwithstanding the provisions
of Section 3.3, the Gannett shall retain, and shall be responsible for
paying, performing and discharging when due, and the Partnership shall not
assume or have any responsibility for, and the term "ASSUMED GANNETT
LIABILITIES" shall not include any of the Liabilities relating to the Gannett
Newspapers and/or Gannett Assets which arise out of Gannett's operation or
ownership thereof prior to the Closing Date and those other Liabilities
described in Exhibit M hereto (the "EXCLUDED GANNETT LIABILITIES").
IV. FORMATION OF CALIFORNIA
NEWSPAPERS PARTNERSHIP; CLOSING
4.1 FORMATION OF CALIFORNIA NEWSPAPERS PARTNERSHIP.
(a) At the Closing, upon the terms and subject to the
conditions of this Agreement, the MediaNews Parties, DR Partners and Gannett
shall jointly cause West Coast MediaNews, Donrey and Gannett to form and
organize a general partnership, to be called California Newspapers
Partnership pursuant to the partnership agreement substantially in the form
of Exhibit N hereto (the "PARTNERSHIP AGREEMENT"). The Partnership shall be
organized under the laws of the State of Delaware. Donrey, West Coast
MediaNews and Gannett shall be partners in the Partnership. At the Closing,
upon the terms and subject to the conditions of this Agreement, Donrey, West
Coast MediaNews and Gannett shall jointly cause each of DR Partners, the
MediaNews Parties and Gannett to assign, transfer, convey and deliver to the
Partnership, for the benefit of Donrey, West Coast MediaNews and Gannett, and
as a capital contribution to the Partnership by Donrey, West Coast MediaNews
and Gannett, in exchange for the Percentage Interests of the Partnership set
forth in the Partnership Agreement, all their right, title and interest in
and to the Donrey Assets, the MediaNews Assets and the Gannett Assets.
(b) All of the Donrey Assets, the MediaNews Assets and the
Gannett Assets shall be assigned, transferred, conveyed and delivered to the
Partnership free and clear of all Liens other than the Permitted MediaNews
Liens, the Permitted Donrey Liens and the Permitted Gannett Liens.
(c) In addition to the foregoing contributions, West Coast
MediaNews shall contribute to the Partnership, on the Closing Date, cash in
the amount of $588,000, Donrey shall contribute to the Partnership, on the
Closing Date, cash in the amount of $285,000 and Gannett shall contribute to
the Partnership, on the Closing Date, cash in the amount of $127,000.
13
4.2 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Donrey, West Coast MediaNews
and Gannett shall jointly cause the Partnership to assume, and agree to pay,
perform and discharge when due, all Assumed Donrey Liabilities, all Assumed
MediaNews Liabilities and all Assumed Gannett Liabilities.
4.3 CLOSING. Upon the terms and subject to the conditions of this
Agreement, the transactions contemplated by Sections 4.1 and 4.2 shall take
place at a closing (the "CLOSING") to be held at the offices of Verner,
Liipfert, Bernhard, XxXxxxxxx & Hand Chartered, 000 00xx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000 at 10:00 a.m., Washington, D.C., on the later of March
31, 1999 or the second business day following the satisfaction or waiver of
all of the conditions to the obligations of the parties set forth in Article
IX hereof, or at such other time and place as DR Partners, the MediaNews
Parties and Gannett may mutually agree upon in writing, effective as of the
close of business March 31, 1999. (The day on which the Closing is deemed to
be effective being hereinafter referred to as the "CLOSING DATE").
4.4 CLOSING DELIVERIES.
(a) At the Closing, the MediaNews Parties shall deliver (or
shall cause the delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by DR Partners
or Gannett to transfer the MediaNews Assets to the Partnership and/or
evidence such transfer on the public records;
(ii) an executed counterpart of the assumption
agreement, substantially in the form of Exhibit P hereto (an "ASSUMPTION
AGREEMENT");
(iii) an executed counterpart of the Partnership
Agreement in the form of Exhibit N hereto;
(iv) an opinion of counsel on behalf of the MediaNews
Parties and West Coast MediaNews LLC in the form appended as Exhibit Q hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.2;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to DR Partners and Gannett title to each parcel
of MediaNews Real Estate, the title for which is being conveyed to the
Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership, and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that the
14
MediaNews Parties are persons or entities subject to withholding under
FIRPTA, with respect to the MediaNews Real Estate;
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
MediaNews Assets for which a certificate of title or origin is required in
order for title thereto to be transferred to the Partnership; and,
(viii) a printing agreement for USA TODAY and USA TODAY
BASEBALL WEEKLY, in the form of Exhibit U hereto, as executed by the
Partnership.
(b) At the Closing, DR Partners shall deliver (or cause the
delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by the
MediaNews Parties or Gannett to transfer the Donrey Assets to the Partnership
or evidence such transfer on the public records;
(ii) an executed counterpart of the Assumption
Agreement;
(iii) an executed counterpart of the Partnership
Agreement;
(iv) an opinion of counsel on behalf of Donrey in the
form appended as Exhibit R hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.1;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to the MediaNews Parties and Gannett title to
each parcel of Donrey Real Estate, the title for which is being conveyed to
the Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying DR Partners is a person or entity subject to
withholding under FIRPTA, with respect to the Donrey Real Estate;
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
Donrey Assets for which a certificate of title or origin is required in order
for title thereto to be transferred to the Partnership; and,
(viii) a printing agreement for USA TODAY and USA TODAY
BASEBALL WEEKLY, in the form of Exhibit U hereto, as executed by the
Partnership.
15
(c) At the Closing, Gannett shall deliver (or cause the
delivery of):
(i) a contribution and assignment agreement,
substantially in the form of Exhibit O (the "ASSIGNMENT AGREEMENT"), and such
other documents and instruments as may be reasonably requested by the
MediaNews Parties or DR Partners to transfer the Gannett Assets to the
Partnership or evidence such transfer on the public records;
(ii) an executed counterpart of the Assumption
Agreement;
(iii) an executed counterpart of the Partnership
Agreement;
(iv) an opinion of counsel on behalf of Gannett in the
form appended as Exhibit S hereto;
(v) the certificates and other documents and
agreements required to be delivered pursuant to Section 9.1;
(vi) a warrant deed conveying to the Partnership in
such form as may be agreeable to the MediaNews Parties and DR Partners title
to each parcel of Gannett Real Estate, the title for which is being conveyed
to the Partnership, (subject only to Permitted Liens, a standard owner's and
seller's affidavit to and for the benefit of the Partnership and a
certificate in compliance with the Foreign Investment in Real Property Tax
Act ("FIRPTA") certifying that Gannett is a person or entity subject to
withholding under FIRPTA, with respect to the Gannett Real Estate; and,
(vii) certificates of title or origin (or like
documents) with respect to all vehicles and other Equipment included in the
Gannett Assets for which a certificate of title or origin is required in
order for title thereto to be transferred to the Partnership.
16
4.5 WORKING CAPITAL ADJUSTMENT.
(a) WORKING CAPITAL STATEMENT. One hundred eighty days
following the Closing pursuant to this Agreement, the Chief Financial Officer
of the Partnership shall prepare and deliver to the Partners working capital
statements of the businesses contributed to the Partnership by each of them
(the "WORKING CAPITAL STATEMENTS") based upon the books and records of the
Partnership as of the Closing Date, provided, that with respect to Accounts
Receivable, the value thereof shall be determined based upon the actual
collections received by each party or the Partnership with respect thereto
during the 180-day period commencing with the Closing Date. For purposes of
determining a party's collections, all sums received by such party or the
Partnership during the 180-day period shall be credited: (i) to such accounts
receivable, if any, as may be designated by the party submitting the payment,
(ii) in the absence of any such designation, on a first-in-first-out basis
relative to (i) the Accounts Receivable and (ii) such additional accounts
receivable as may be created by the Partnership subsequent to the Closing
Date with respect to any customers of the Partnership who may also be
Accounts Receivable debtors, PROVIDED HOWEVER, that with respect to specific
account balances (if any) which may be disputed by those debtors, no payments
shall be allocated to any such account unless specifically so
17
designated by such debtor. Any uncollected receivable at the end of such 180
day period shall be returned by the Partnership to the Partner who
contributed such receivables to the Partnership. There also shall be paid to
the Partner contributing any receivable characterized as uncollectible on
that Partner's Working Capital Statement any sum collected by the Partnership
with respect to such account, promptly following the Partnership's collection
thereof. Subject to the provisions of Section 4.5(c) and the second to last
sentence hereof, the Working Capital Statements shall be prepared in
accordance with generally accepted accounting principles, but shall use the
special rules set forth in Section 4.5(c) and exclude therefrom all Excluded
Assets and all Excluded Liabilities of each of the parties, as hereinbefore
defined, and such other items as are described in Exhibit T as being excluded
items, and shall, subject to the special rules set forth in Section 4.5(c)
and such exclusions, fairly present the current assets and current
liabilities of the businesses being contributed by such party to the
Partnership as at the Closing Date. In the event that the combined final
working capital of the businesses contributed to the Partnership by a party,
as set forth on the Working Capital Statement of such party, is smaller in
proportion to the combined working capital of the businesses contributed to
the Partnership by all of the parties (as reflected on all of the parties
Working Capital Statements) than such party's Percentage Interest (as defined
in Section 3.1(a) of the Partnership Agreement), then such party shall be
required to pay to the other parties, cash in an amount which when added to
the amount of combined working capital of the business contributed to the
Partnership by such party would be sufficient to cause the combined sum
thereof to be equal to such Party's Percentage Interest in the combined
working capital of the businesses contributed to the Partnership by all of
the parties, as set forth in the orking Capital Statement of each of the
parties. The categories of items to be reflected in the calculation of
current assets and current liabilities on the Working Capital Statements are
as set forth by way of example only in Exhibit T. All payments due under
the preceding provisions of this Section 4.5(a) shall be made within 15 days
of the date of final determination of the amounts due hereunder and shall be
properly reflected on the books of the Partnership.
(b) DISPUTES. In the event of a dispute between West Coast
MediaNews, Donrey and/or Gannett as to any matter set forth in Section
4.5(a), the parties shall use reasonable efforts to resolve any such dispute,
but if a final resolution is not obtained within thirty (30) days after the
Working Capital Statements are delivered to each party, and the Partnership's
Chief Financial Officer has advised each of the parties in writing of the
amounts (if any) due and owing from each pursuant to Section 4.5(a) hereof
any remaining dispute shall be resolved by independent public accountants
selected by unanimous vote of the Management Committee. Such accounting firm
may use such auditing procedures as it may deem appropriate and the decision
of such accounting firm shall be binding and conclusive upon the parties.
The costs and fees of such accounting firm shall be borne by the Partnership.
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(c) VALUATION OF CERTAIN CURRENT ASSETS AND LIABILITIES. In
calculating working capital for the purposes of Section 4.5 (a): (i) there
shall be reflected as a current liability appropriate accruals for
advertising rebates and advertising agency commissions, (ii) all newsprint
inventories, exclusive of items of a quality not readily useable by the
Partnership, shall be valued at $525 per metric ton, (iii) the items included
and the methodologies used to value the assets and liabilities of the
business contributed by the respective parties shall be on a consistent and
comparable basis or an economic adjustment shall be made to achieve
comparability and (iv) all intercompany accounts shall be treated as
shareholder equity.
V. REPRESENTATIONS, WARRANTIES AND
COVENANTS OF THE MEDIANEWS PARTIES
Subject to the understanding that, with respect to the following
representations and warranties, such representations and warranties as made
by GSN, Alameda, V & P and IMP relate solely to the MediaNews Newspapers
and/or MediaNews Assets and not to any other assets or publications of GSN,
Alameda, IMP or their affiliates, each of the MediaNews Parties, jointly and
severally, hereby represents, warrants and covenants to DR Partners and
Gannett:
5.1 ORGANIZATION OF THE MEDIANEWS PARTIES. Each of GSN, Alameda, V
& P and IMP is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority to own, operate or lease its assets and
properties, to conduct its business as currently conducted and is duly
licensed, permitted or qualified to do business, and is in good standing, in
each jurisdiction in which the operation of its business makes such
licensing, permitting or qualification necessary.
5.2 AUTHORITY. Each of the MediaNews Parties has all requisite
power and authority to execute and deliver this Agreement and the other
documents contemplated hereby (the "ANCILLARY AGREEMENTS"), to carry out its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. Each has obtained all necessary corporate
and shareholder approvals for the execution and delivery of this Agreement
and the Ancillary Agreements, the performance of its obligations hereunder
and thereunder, and the consummation of the transactions contemplated hereby
and thereby. This Agreement has been, and upon their execution by such
MediaNews Party, each of the Ancillary Agreements to which it is a party will
be, duly executed and delivered by such party and (assuming due
authorization, execution and delivery by the other parties hereto and
thereto) constitute such party's legal, valid and binding obligation,
enforceable against it in accordance with its terms, except to the extent
that enforcement may be limited by or subject to any bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, or similar Laws now or
hereafter in effect relating to or limiting creditors' rights generally and
19
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3 NON-CONTRAVENTION. Except as set forth in Section 5.3 of the
MediaNews Newspapers Disclosure Schedule, none of the execution and delivery
of this Agreement or the Ancillary Agreements by the MediaNews Parties, the
performance of their obligations hereunder or thereunder, or the consummation
of the transactions contemplated hereby and thereby will conflict with the
charter, by-laws, or other organizational documents of such party or will,
with or without notice, the passage of time or both, constitute a breach or
violation of, be in conflict with, constitute or create a default under, or
result in the creation or imposition of any Liens under (a) any contract,
indenture, agreement, instrument, mortgage, lease or commitment to which any
MediaNews Party is a party or by which any of them is or any of their
properties is bound, or to which any of them is subject or (b) any law or
statute or any judgment, decree, order, regulation or rule of any court or
governmental or regulatory authority relating to any MediaNews Party or to
the business and operations of the MediaNews Parties as currently conducted.
5.4 SOLVENCY. None of the MediaNews Parties is currently
insolvent, as such term is defined in Title 11 of the United States
Bankruptcy Code or any state statute relating to insolvency, and none of the
execution and delivery of this Agreement or the Ancillary Agreements by any
of the MediaNews Parties, the performance of its obligations hereunder or
thereunder, or the consummation by the MediaNews Parties of the transactions
contemplated hereby and thereby will render any such party insolvent.
5.5 FINANCIAL STATEMENTS. MediaNews Group, Inc. has delivered to
DR Partners and Gannett (i) balance sheets for Garden State and Alameda
relating to the MediaNews Newspapers and statements of income for Garden
State and Alameda relating to the MediaNews Newspapers, as of June 30, 1998
and for the fiscal year then ended and (ii) balance sheets and statements of
income for each of the MediaNews Parties as of January 31, 1999 and for the
seven month period ended January 31, 1999 relating to the MediaNews
Newspapers (collectively, the "MEDIANEWS FINANCIAL STATEMENTS"). The
MediaNews Financial Statements fairly present the financial condition and
results of operations of the MediaNews Newspapers as of the dates and for the
periods to which they relate, in accordance with generally accepted
accounting principles, consistently applied, except (x) to the extent that
certain year end adjustments, which are not individually or in the aggregate
material, may not be reflected on the January 31, 1999 financial statements,
(y) for information ordinarily contained in footnotes to audited financial
statements and (z) as may be set forth in Section 5.5 of the MediaNews
Newspapers Disclosure Schedule.
5.6 COMPLIANCE WITH LAWS. The MediaNews Parties have conducted and
continue to conduct, in all respects, the respective business and operations
of the MediaNews Newspapers in accordance with all laws, statutes, rules,
regulations, judgments, orders or decrees of any court or governmental or
regulatory authority applicable to any of the
20
MediaNews Newspapers and/or MediaNews Assets, and none of the MediaNews
Parties is in relation to the MediaNews Newspapers and/or MediaNews Assets in
violation of any such laws, statutes, rules, regulations, judgments, orders
or decrees. Copies of all notices of violation of any of the foregoing which
any of the MediaNews Parties has received within the past 3 years are
attached to Section 5.6 of the MediaNews Newspapers Disclosure Schedule, and
all violations alleged in such notices have been corrected.
5.7 PERMITS. Each of the MediaNews Parties has all permits,
licenses, franchises, orders, certificates and approvals (collectively,
"PERMITS") of any federal, state or local regulatory or administrative
agency, authority or court relating to the MediaNews Newspapers, necessary to
the conduct of their respective business as currently conducted, or to the
use of the MediaNews Assets as currently utilized. Each of the MediaNews
Parties is in compliance with all MediaNews Permits.
5.8 LITIGATION, ETC. Except as set forth in Section 5.8 of the
MediaNews Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of the MediaNews Parties, threatened against any of the
MediaNews Newspapers, their respective business or the MediaNews Assets, or
which question the validity of this Agreement or challenge any of the
transactions contemplated hereby, or the use of the MediaNews Assets, or the
conduct of the MediaNews Newspapers, as currently conducted, after the
Closing Date by the Partnership.
5.9 EMPLOYEES.
(a) Except as set forth in Section 5.9 of the MediaNews
Newspapers Disclosure Schedule, none of the employees of any of the MediaNews
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the MediaNews Newspapers to form or enter into a
labor union or similar organization.
(b) Section 5.9 of the MediaNews Newspapers Disclosure
Schedule sets forth a true and complete list of all employee benefit plans
and all bonus, stock option, stock purchase, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other employee benefit plans, programs or arrangements, and all
material employment or compensation agreements (collectively, "PLANS"), in
each case for the benefit of, or relating to, current employees and former
employees of any of the MediaNews Newspapers, other than those which are
Excluded MediaNews Assets. The MediaNews Parties have made available to DR
Partners and Gannett with respect to each MediaNews Newspapers Plan, a copy
of the plan document, summary plan description the most recent annual report
and, if applicable, the most recent Internal Revenue Service determination
letter.
21
(c) All employee benefit plans, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(the "EMPLOYEE BENEFIT PLANS"), maintained by any MediaNews Party or any
Affiliate of a MediaNews Party with respect to any employees of any of the
MediaNews Newspapers, as determined under Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986 (the "CODE") ("ERISA AFFILIATE"), and which
provide benefit to employees of any of the MediaNews Newspapers comply in all
material respects with and are and have been operated in substantial
accordance with each applicable provision of ERISA, the Code (including,
without limitation, the requirements of Code Section 401(a) to the extent any
of such plans which is an employee pension benefit plan (within the meaning
of Section 3(a) of ERISA) is intended to conform to that section), other
Federal statutes, and the regulations and rules promulgated pursuant thereto
or in connection therewith.
(d) Each Employee Benefit Plan which is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) and which is a
group health plan (within the meaning of Section 5000(b)(1) of the Code) and
which provides benefits to employees of any of the MediaNews Newspapers
complies in all material respects with and has been and operated
substantially in accordance with each of the requirements of Section 162(i)
of the Code as in effect for years beginning prior to 1989, Section 4980B of
the Code for years beginning after December 31, 1988, and Part 6 of Subtitle
B of Title I of ERISA ("COBRA"). There are no pending or, to the knowledge of
the MediaNews Parties, threatened claims, suits or other proceedings by any
employee or former employee of any of the MediaNews Newspapers or by the
beneficiary, dependent or representative of any such person, involving the
failure of any group health plan ever maintained with respect to the
employees of any of the MediaNews Newspapers to comply with the health care
continuation requirements of COBRA.
(e) Neither any MediaNews Party or any Affiliate of a
MediaNews Party with respect to any employees of any of the MediaNews
Newspapers nor any ERISA Affiliate has incurred any liability to the Pension
Benefit Guaranty Corporation ("PBGC") as a result of the voluntary or
involuntary termination of an employee pension benefit plan pertaining to
employees of the Newspaper which is subject to Title IV of ERISA. There is
currently no active filing by any MediaNews Party or any ERISA Affiliate with
the PBGC (and no proceeding has been commenced by the PBGC) to terminate any
employee pension benefit plan pertaining to employees of any of the MediaNews
Newspapers which is subject to Title IV of ERISA, and which has been
maintained or funded, in whole or in part, by any MediaNews Party or any
ERISA Affiliate.
22
5.10 OWNERSHIP AND TRANSFER OF MEDIANEWS ASSETS. Except as
described in Section 5.10 of the MediaNews Newspapers Disclosure Schedule,
the MediaNews Parties have good and marketable title to, or in the case of
leased or subleased MediaNews Assets so indicated therein, valid and
subsisting leasehold interests in, all of the MediaNews Assets, free and
clear of all Liens other than Permitted MediaNews Liens, and will as of the
Closing have, the unrestricted right to transfer, assign, convey and deliver
to the Partnership all right, title and interest in and to the MediaNews
Assets.
5.11 EQUIPMENT. All of the Equipment included in the MediaNews
Assets, including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
MediaNews Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the business of the MediaNews Newspapers as
currently conducted.
5.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the
MediaNews Assets and/or MediaNews Newspapers are in full force and binding
upon the MediaNews Parties (or their Affiliates, as applicable) which are
parties thereto. Except as set forth in Section 5.12 of the MediaNews
Newspapers Disclosure Schedule, (i) no default by any MediaNews Party has
occurred thereunder, (ii) to the knowledge of the MediaNews Parties, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of the MediaNews Parties, no event, occurrence or condition exists
which, with the lapse of time, the giving of notice, or both, or the
happening of any further event or condition, would become a default by any
MediaNews Party thereunder, and (iv) to the knowledge of the MediaNews
Parties none of the other contracting parties has given notice of repudiation
of any of its obligations thereunder.
5.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 1998,
the business of the MediaNews Newspapers have been conducted only in the
ordinary course and consistent with past practices, in all material respects,
and, without limitation of the foregoing, except as may be necessary or
appropriate to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, or as set forth in Section 5.13 of
the MediaNews Newspapers Disclosure Schedule, none of the MediaNews Parties
has with respect to the MediaNews Newspapers and/or MediaNews Assets (except
with respect to the Excluded MediaNews Assets or the Excluded MediaNews
Liabilities), since October 31, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any Lien upon
any of its assets or properties;
23
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any insurance policy pertaining to its
assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations incurred in the ordinary course of business pursuant
to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement with
or acquired an interest in any person, or acquired a substantial portion of
the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000;
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $200,000 annually;
(o) entered into any agreement to take any actions specified
in this Section 5.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.1 hereof; and,
24
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the MediaNews Newspapers, or with respect to the paid
circulation of any of such newspapers, including, without limiting the
generality of the foregoing, the existence or threat of any labor dispute, or
any material adverse change in, or loss of, any relationship between any of
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
5.14 TAXES. Except as set forth in Section 5.14 of the MediaNews
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements, (a) all returns
and reports in respect of taxes required to be filed with respect to the
MediaNews Newspapers and/or MediaNews Assets have been timely filed or will
be timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
any of the MediaNews Parties relating to any of the MediaNews Newspapers
and/or MediaNews Assets, (e) no adjustment relating to such returns has been
proposed formally or informally by any governmental or taxing authority and
no basis exists for any such adjustment, (f) there are no pending or, to the
knowledge of the MediaNews Parties, threatened actions or proceedings for the
assessment or collection of taxes against any of the MediaNews Parties with
respect to any of the MediaNews Newspapers or MediaNews Assets, (g) no tax
Lien has been filed on any of the MediaNews Assets and (h) none of the
MediaNews Parties has been included or is includible in any other
consolidated return for any taxable period for which the statute of
limitations has not expired. None of the MediaNews Parties has extended the
time for any governmental or taxing authority to assess any tax with respect
to any of the MediaNews Parties relating to any of the MediaNews Newspapers
and/or MediaNews Assets. On the MediaNews December 31, 1998 Balance Sheet,
reserves and allowances have been provided which are adequate to satisfy all
Liabilities for taxes relating to te MediaNews Assets and the MediaNews
Newspapers for the period covered thereby.
5.15 BROKERS, FINDERS, ETC. No MediaNews Party or any of its
Affiliates has dealt with any person or entity who is or may be entitled to a
broker's commission, finder's fee, investment banker's fee or similar payment
for arranging the transaction contemplated hereby or introducing the parties
to each other.
5.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by any MediaNews Party is false or misleading as to
any material fact, or omits
25
to state a material fact required to make any of the statements made herein
not misleading in any material respect.
5.17. ENVIRONMENTAL.
(a) The MediaNews Assets and the MediaNews Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which
the MediaNews Parties have received in the past three years alleging any
violation of or liability or potential liability under any applicable
Environmental Law or Environmental Permit pertaining to the MediaNews Assets
and/or the MediaNews Newspapers have been corrected or otherwise addressed to
the satisfaction of regulatory authorities acting pursuant to Environmental
Laws. The MediaNews Parties possess all Environmental Permits which are
required for the operation of the MediaNews Newspapers as currently
conducted, and are in compliance with the provisions of all such
Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by the MediaNews Parties
at or from the MediaNews Real Estate or, to the knowledge of the MediaNews
Parties at any Facility to which the MediaNews Parties sent Hazardous
Materials relating to the MediaNews Newspapers, in a quantity reportable
under, or in violation of, or which may give rise to any obligation or the
incurrence of any damages under, any applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the MediaNews Real Estate or such other real property were removed and
disposed of in compliance with all applicable Environmental Laws.
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by the MediaNews Parties with
respect to any of the MediaNews Newspapers.
(e) No MediaNews Real Estate or Facility relating to any of
the MediaNews Newspapers which is to be owned or used by the Partnership is
listed on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by any of the
MediaNews Parties with respect to any of the MediaNews Newspapers or located
on the MediaNews Real Estate;
26
(ii) no polychlorinated biphenyls are used or stored
on the MediaNews Real Estate; and,
(iii) there are no locations included within the
MediaNews Real Estate at which any Hazardous Material generated, used, owned
or controlled by any of the MediaNews Parties or the MediaNews Parties'
agents or affiliates have been disposed of or Released into the Environment.
5.18. MEDIANEWS REAL ESTATE.
(a) All real property currently owned or leased by the
MediaNews Parties and used or held for use in the business of the MediaNews
Newspapers (the "MEDIANEWS REAL ESTATE") is identified and described in
Section 5.18 of the MediaNews Newspapers Disclosure Schedule. Except as set
forth in Schedule 5.18 of the MediaNews Newspapers Disclosure Schedule, the
MediaNews Parties hold fee simple title to all of the MediaNews Real Estate,
subject only in the case of MediaNews Real Estate which is owned by any of
the MediaNews Parties to real estate taxes not delinquent and to covenants,
conditions, restrictions and easements of record which are set forth in such
Section 5.18. Except as set forth in such Section 5.18 the MediaNews Real
Estate which is owned by any of the MediaNews Parties is not subject to any
leases or tenancies. None of the improvements comprising the MediaNews Real
Estate, nor the business conducted by the MediaNews Parties thereon as
currently conducted, are in violation of any use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law,
code or ordinance or public utility easement.
(b) Except as identified in Schedule 5.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the MediaNews Real Estate which is owned by any
of the MediaNews Parties, and no special arrangements or agreements exist
with any governmental authority with respect thereto.
(c) Except as identified in Schedule 5.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to the MediaNews Parties' knowledge, threatened with
respect to any portion of the MediaNews Real Estate owned by any of the
MediaNews Parties.
(d) Except as identified in Schedule 5.18, there are no
condemnation proceedings pending or, to the MediaNews Parties' knowledge,
threatened with respect to any portion of the MediaNews Real Estate owned by
any of the MediaNews Parties.
(e) All of the MediaNews Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
the MediaNews Parties' knowledge, none of the utility companies servicing any
such facility has threatened any MediaNews Party with any reduction in
service. All of said utilities are installed and operating and all
installation and connection charges have been paid in full.
27
(f) The continued maintenance and operation of all of the
MediaNews Real Estate, as currently maintained and operated, is not dependent
on facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the MediaNews Real Estate; no building or other improvement not part
of such MediaNews Real Estate relies on any of the MediaNews Real Estate or
any interest therein to fulfill any governmental requirement; and no building
or other improvement on any of the MediaNews Real Estate relies on any
property not included within the MediaNews Real Estate to fulfill any
governmental requirement.
5.19. INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the MediaNews Newspapers and/or comprising
part of the MediaNews Assets are referred to herein collectively as the
"MEDIANEWS INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 5.19 of the MediaNews
Newspapers Disclosure Schedule, the MediaNews Parties are the owners of or
duly licensed to use all of the MediaNews Intellectual Property necessary for
the conduct of the Business as now conducted and operated; (ii) to the
MediaNews Parties' knowledge, no other firm, corporation, association or
person claims the right to use in connection with similar or closely related
goods and in the same geographic area, any xxxx which is identical or
confusingly similar to any of the Trademarks; (iii) the MediaNews Parties
have no knowledge of any claim with respect to, and have no reason to believe
that any third party asserts ownership rights in, any of the MediaNews
Intellectual Property; (iv) the MediaNews Parties have no knowledge of any
claim and have no reason to believe that its use of any MediaNews
Intellectual Property infringes any right of any third party; (v) the
MediaNews Parties have no knowledge that any third party is infringing any of
its rights in any of the MediaNews Intellectual Property; (vi) other than as
set forth in Section 5.19 of the MediaNews Newspapers Disclosure Schedule,
the MediaNews Parties are under no obligation to pay any royalties or similar
payments in connection with any license of MediaNews Intellectual Property;
and (vii) except as set forth in Section 5.19 of the MediaNews Newspapers
Disclosure Schedule, the consummation of the transactions contemplated by
this Agreement will not result in the impairment of the Partnership's right
to use any of the MediaNews Intellectual Property necessary for the conduct
of the Business as now conducted and operated nor infringe upon the rights of
any third party.
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5.20 YEAR 2000 COMPLIANCE.
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the MediaNews
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage, retrieval, accessing,
comparison, sorting, manipulation, processing or other use of dates or
date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (iii) will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (i) through (iii) are referred to
herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the MediaNews Newspapers receives data from or
communicates with any component or system external to itself (whether or not
such external component or system is any MediaNews Parties' or any third
party's) that is not itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the
MediaNews Newspapers and/or MediaNews Assets permit the MediaNews Parties' or
a third party to make all modifications, bypasses, debugging, work-arounds,
repairs, replacements, conversions or corrections necessary to permit the
System to operate compatibly, in conformance with their respective
specifications, and to be Year 2000 Compliant; and,
(d) No MediaNews Party has incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the MediaNews
Assets and/or MediaNews Newspapers as a result of not being Year 2000
Compliant.
5.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 5.21(a) of the MediaNews Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports and (ii) the most recent publisher's
statements submitted to ABC for each of the
29
MediaNews Newspapers which is audited by ABC. From the date of the latter of
the foregoing, the paid circulation of each such newspaper has not fallen,
after taking into account seasonal variations, below the circulation levels
reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by any MediaNews Party to the ABC with
respect to any of the MediaNews Newspapers for the periods covered by such
publisher's statements and audit reports have been true and complete in all
material respects.
(c) Since January 1, 1998, no MediaNews Party has taken any
action which was designed to result in a material reduction in circulation of
any MediaNews Newspapers.
(d) Since January 1, 1998, no MediaNews Party has made any
material change in its policies for the pricing of circulation for any
MediaNews Newspapers.
5.22 ADVERTISING. Except as set forth in Section 5.22 of the
MediaNews Newspapers Disclosure Schedule, since January 1, 1998, none of the
MediaNews Newspapers received any written notice of any cancellation,
non-renewal or material modification of any agreements or relationships with
any of its top 10 (by dollar amount) retail, preprint or classified
advertisers for the twelve months ended October 31, 1998, nor has any
MediaNews Newspapers made any material change in its policies for the pricing
of advertising and, no advertiser described above has provided written notice
of their intent to (A) cancel previously scheduled or contracted for
advertising for the period following the Closing, or (B) terminated or
modified significantly their relationship with any of the MediaNews
Newspapers.
5.23 INVENTORY. All of the Inventory of the MediaNews Newspapers is
in the physical possession and control of MediaNews Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
MediaNews Newspapers' business as currently conducted.
5.24 RELATIONSHIPS WITH AFFILIATES. Section 5.25 of the MediaNews
Newspapers Disclosure Schedule sets forth every business relationship (other
than normal employment relationships and other than as may pertain to the
MediaNews Excluded Assets) between any of the MediaNews Parties, on the one
hand, and any affiliates, officers or directors of any MediaNews Party, on
the other hand, which is related to any of the MediaNews Newspapers. None of
said parties (other than the MediaNews Parties) owns any assets which are
used in the business of the MediaNews Newspapers, as currently conducted,
except for MediaNews Excluded Assets, or as reflected in Section 5.25 of the
MediaNews Newspapers Disclosure Schedule.
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5.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the MediaNews Newspapers were true and correct in all material
respects at the time of their filing.
5.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of the
MediaNews Parties, the MediaNews Parties have disclosed to DR Partners and
Gannett all liabilities existing on the date hereof in excess of $100,000
relating to the MediaNews Newspapers or the MediaNews Assets.
VI. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF DR PARTNERS
Subject to the understanding that, with respect to the following
representations and warranties, DR Partners makes such representations and
warranties solely with respect to the Donrey Assets and Donrey Newspapers and
not to any other assets or publications of DR Partners or its affiliates, DR
Partners hereby represents, warrants and covenants to the MediaNews Parties
and Gannett:
6.1 ORGANIZATION OF DR PARTNERS. DR Partners is a partnership duly
organized, validly existing and in good standing under the laws of Nevada and
has all requisite power and authority to own, operate or lease its assets and
properties, to conduct its business as currently conducted and is duly
licensed, permitted or qualified to do business, and is in good standing, in
each jurisdiction in which the operation of its business makes such
licensing, permitting or qualification necessary.
6.2 AUTHORITY. DR Partners has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements, to carry out
its obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. DR Partners has obtained all necessary
approvals for the execution and delivery of this Agreement and the Ancillary
Agreements, the performance of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and thereby. This
Agreement has been, and upon their execution by DR Partners, each of the
Ancillary Agreements to which it is a party will be, duly executed and
delivered by DR Partners and (assuming due authorization, execution and
delivery by the other parties hereto and thereto) constitute DR Partners's
legal, valid and binding obligation, enforceable against it in accordance
with its terms, except to the extent that enforcement may be limited by or
subject to any bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, or similar Laws now or hereafter in effect relating to or
limiting creditors' rights generally and subject to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
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6.3 NON-CONTRAVENTION. Except as set forth in Section 6.3 of the
Donrey Newspapers Disclosure Schedule, none of the execution and delivery of
this Agreement or the Ancillary Agreements by DR Partners, the performance of
their obligations hereunder or thereunder, or the consummation of the
transactions contemplated hereby and thereby will conflict with the
partnership agreement or other organizational documents of such party or
will, with or without notice, the passage of time or both, constitute a
breach or violation of, be in conflict with, constitute or create a default
under, or result in the creation or imposition of any Liens under (a) any
contract, indenture, agreement, instrument, mortgage, lease or commitment to
which DR Partners is a party or by which it is or any of its properties is
bound, or to which any of them is subject or (b) any law or statute or any
judgment, decree, order, regulation or rule of any court or governmental or
regulatory authority relating to DR Partners or to the business and
operations of DR Partners as currently conducted.
6.4 SOLVENCY. DR Partners is not currently insolvent, as such term
is defined in Title 11 of the United States Bankruptcy Code or any state
statute relating to insolvency, and none of the execution and delivery of
this Agreement or the Ancillary Agreements by DR Partners, the performance of
its obligations hereunder or thereunder, or the consummation by DR Partners
of the transactions contemplated hereby and thereby will render DR Partners
insolvent.
6.5 FINANCIAL STATEMENTS. DR Partners has delivered to the
MediaNews Parties and Gannett balance sheets relating to the Donrey
Newspapers as of December 31, 1998, and statements of income relating to such
newspapers for the year then ended. DR Partners has also delivered to the
MediaNews Parties balance sheets relating to the Donrey Newspapers as of
January 31, 1999 and statements of income for such newspapers for the one
month period then ended (collectively, the "DONREY FINANCIAL STATEMENTS").
The Donrey Financial Statements fairly present the financial condition and
results of operations of the Donrey Newspapers as of the date and for the
periods to which they relate, in accordance with generally accepted
accounting principles, consistently applied, except (x) to the extent that
certain year end adjustments, which are not individually or in the aggregate
material, may not be reflected on the January 31, 1999 financial statements,
(y) for information ordinarily contained in footnotes to audited financial
statements and (z) as may be set forth in Section 6.5 of the Donrey
Newspapers Disclosure Schedule.
6.6 COMPLIANCE WITH LAWS. DR Partners has conducted and continues
to conduct, in all respects, the respective business and operations of the
Donrey Newspapers in accordance with all laws, statutes, rules, regulations,
judgments, orders or decrees of any court or governmental or regulatory
authority applicable to any of the Donrey Newspapers and/or Donrey Assets,
and DR Partners is not in relation to the Donrey Newspapers and/or Donrey
Assets in violation of any such laws, statutes, rules, regulations,
judgments, orders or decrees. Copies of all notices of violation of any of
the foregoing which DR Partners has received within the past 3 years are
attached to Section 6.6 of the Donrey Newspapers Disclosure Schedule, and all
violations alleged in such notices have been corrected.
32
6.7 PERMITS. DR Partners has all Permits of any federal, state or
local regulatory or administrative agency, authority or court relating to the
Donrey Newspapers, necessary to the conduct of their respective business as
currently conducted or to the use of the Donrey Assets as currently utilized.
Donrey is in compliance with all Donrey Permits.
6.8 LITIGATION, ETC. Except as set forth in Section 6.8 of the
Donrey Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of DR Partners, threatened against any of the Donrey
Newspapers, their respective business or the Donrey Assets, or which question
the validity of this Agreement or challenge any of the transactions
contemplated hereby or the use of the Donrey Assets or the conduct of the
Donrey Newspapers, as currently conducted, after the Closing Date by the
Partnership.
6.9 EMPLOYEES.
(a) Except as set forth in Section 6.9 of the Donrey
Newspapers Disclosure Schedule, none of the employees of any of the Donrey
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the Donrey Newspapers to form or enter into a labor
union or similar organization.
(b) Section 6.9 of the Donrey Newspapers Disclosure Schedule
sets forth a true and complete list of all Plans, in each case for the
benefit of, or relating to, current employees and former employees of any of
the Donrey Newspapers, other than those which are Excluded Donrey Assets. DR
Partners has made available to the MediaNews Parties, with respect to each
Donrey Newspapers Plan, a copy of the plan document, summary plan description
and the most recent annual report and Internal Revenue Service determination
letter.
(c) All Employee Benefit Plans maintained by any DR Partners
or any Affiliate of Donrey Partners with respect to any employees of any
ERISA Affiliate, and which provide benefit to employees of any of the Donrey
Newspapers comply in all material respects with and are and have been
operated in substantial accordance with each applicable provision of ERISA,
the Code (including, without limitation, the requirements of Code Section
401(a) to the extent any of such plans which is an employee pension benefit
plan (within the meaning of Section 3(a) of ERISA) is intended to conform to
that section), other Federal statutes, and the regulations and rules
promulgated pursuant thereto or in connection therewith.
(d) Each Employee Benefit Plan which is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) and which is a
group health plan (within the meaning of Section
33
5000(b)(1) of the Code) and which provides benefits to employees of any of
the Donrey Newspapers complies in all material respects with and has been and
operated substantially in accordance with each of the requirements of COBRA.
There are no pending or, to the knowledge of the DR Partners, threatened
claims, suits or other proceedings by any employee or former employee of any
of the Donrey Newspapers or by the beneficiary, dependent or representative
of any such person, involving the failure of any group health plan ever
maintained with respect to the employees of any of the Donrey Newspapers to
comply with the health care continuation requirements of COBRA.
(e) Neither DR Partners nor any Affiliate of DR Partners
with respect to any employees of any of the Donrey Newspapers nor any ERISA
Affiliate has incurred any liability to the PBGC as a result of the voluntary
or involuntary termination of an employee pension benefit plan pertaining to
employees of the Newspaper which is subject to Title IV of ERISA. There is
currently no active filing by DR Partners or any ERISA Affiliate with the
PBGC (and no proceeding has been commenced by the PBGC) to terminate any
employee pension benefit plan pertaining to employees of any of the Donrey
Newspapers which is subject to Title IV of ERISA, and which has been
maintained or funded, in whole or in part, by DR Partners or any ERISA
Affiliate.
6.10 OWNERSHIP AND TRANSFER OF DONREY ASSETS. Except as described
in Section 6.10 of the Donrey Newspapers Disclosure Schedule, DR Partners has
good and marketable title to, or in the case of leased or subleased Donrey
Assets so indicated therein, valid and subsisting leasehold interests in, all
of the Donrey Assets, free and clear of all Liens other than Permitted Donrey
Liens, and will as of the Closing have, the unrestricted right to transfer,
assign, convey and deliver to the Partnership all right, title and interest
in and to the Donrey Assets.
6.11 EQUIPMENT. All of the Equipment included in the Donrey Assets,
including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
Donrey Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the Donrey Newspapers.
6.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the Donrey
Assets and/or Donrey Newspapers are in full force and binding upon DR
Partners (or its Affiliates, as applicable). Except as set forth in Section
6.12 of the Donrey Newspapers Disclosure Schedule, (i) no default by DR
Partners has occurred thereunder, (ii) to the knowledge of DR Partners, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of DR Partners, no event,
34
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, or the happening of any further event or condition, would
become a default by DR Partners thereunder, and (iv) to the knowledge of DR
Partners, none of the other contracting parties has given notice of
repudiation of any of its obligations thereunder.
6.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since October 31, 1998,
the business of DR Partners has been conducted only in the ordinary course
and consistent with past practices, in all material respects, and without
limitation of the foregoing, except as may be necessary or appropriate to the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements or as set forth in Schedule 6.13, DR Partners has
(except with respect to the Excluded Donrey Assets or the Excluded Donrey
Liabilities), since October 31, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any material
Lien upon any of its material assets or properties;
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any material insurance policy pertaining to
its assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations of such entity incurred in the ordinary course of
business pursuant to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement
with or acquired an interest in any person, or acquired a substantial portion
of the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000;
35
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any material Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $100,000
annually;
(o) entered into any agreement to take any actions specified
in this Section 6.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.2 hereof; and,
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the Donrey Newspapers, or with respect to the paid
circulation of any of such newspapers, including, without limiting the
generality of the foregoing, the existence or threat of any labor dispute, or
any material adverse change in, or loss of, any relationship between any of
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
6.14 TAXES. Except as set forth in Schedule 6.14 of the Donrey
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements: (a) all returns
and reports in respect of taxes required to be filed with respect to the
Donrey Newspapers and/or the Donrey Assets have been timely filed or will be
timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
DR Partners relating to any of the Donrey Newspapers and/or Donrey Assets,
(e) no adjustment relating to such returns has been proposed formally or
informally by any governmental or taxing authority and no basis exists for
any such adjustment, (f) there are no pending or, to the knowledge of DR
Partners, threatened actions or proceedings for the assessment or collection
of taxes against DR Partners with respect to
36
any of the Donrey Newspapers or Donrey Assets, (g) no tax Lien has been filed
on any of the DR Assets, and (h) DR Partners has not been included or is
includible in any consolidated return for any taxable period for which the
statute of limitation has not expired. DR Partners has not extended the time
for any governmental or taxing authority to assess any tax with respect to DR
Partners relating to any of the Donrey Newspapers and/or Donrey Assets. On
the Donrey December 31, 1998 Balance Sheet, reserves and allowances have been
provided which are adequate to satisfy all Liabilities for taxes relating to
the Donrey Newspapers and the Donrey Assets for the period covered thereby.
6.15 BROKERS, FINDERS, ETC. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on
without the participation of any person or entity acting on behalf of DR
Partners in such manner as to give rise to any valid claim for any brokerage
or finder's fee, commission or similar compensation.
6.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by DR Partners is false or misleading as to any
material fact, or omits to state a material fact required to make any of the
statements made herein not misleading in any material respect.
6.17 ENVIRONMENTAL.
(a) The Donrey Assets and the Donrey Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which DR
Partners has received in the past three years alleging any violation of or
liability or potential liability under any applicable Environmental Law or
Environmental Permit pertaining to the Donrey Assets and/or the Donrey
Newspapers have been corrected or otherwise addressed to the satisfaction of
regulatory authorities acting pursuant to Environmental Laws. DR Partners
possesses all Environmental Permits which are required for the operation of
the Donrey Newspapers as currently conducted, and are in compliance with the
provisions of all such Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by DR Partners at or
from the Donrey Real Estate or, to the knowledge of DR Partners at any
Facility to which DR Partners sent Hazardous Materials relating to the Donrey
Newspapers, in a quantity reportable under, or in violation of, or which may
give rise to any obligation or the incurrence of any damages under, any
applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the Donrey Real Estate or such other real property were removed and disposed
of in compliance with all applicable Environmental Laws.
37
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by DR Partners with respect to
any of the Donrey Newspapers.
(e) No Donrey Real Estate or Facility relating to any of the
Donrey Newspapers which is to be owned or used by the Partnership is listed
on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by DR Partners with
respect to any of the Donrey Newspapers or located on the Donrey Real Estate;
(ii) no polychlorinated biphenyls are used or stored
on the Donrey Real Estate; and,
(iii) there are no locations included within the Donrey
Real Estate at which any Hazardous Material generated, used, owned or
controlled by DR Partners or its or affiliates have been disposed of or
Released into the Environment.
6.18. DONREY REAL ESTATE.
(a) All real property currently owned or leased by the DR
Partners (the "DONREY REAL ESTATE") is identified and described in Section
6.18 of the Donrey Newspapers Disclosure Schedule. Except as set forth in
Schedule 6.18 of the Donrey Newspapers Disclosure Schedule, DR Partners holds
fee simple title to all of the Donrey Real Estate, subject only in the case
of Donrey Real Estate which is owned by DR Partners to real estate taxes not
delinquent and to covenants, conditions, restrictions and easements of record
which are set forth in such Section 6.18. Except as set forth in such
Section 6.18 the Donrey Real Estate which is owned by DR Partners is not
subject to any leases or tenancies. None of the improvements comprising the
Donrey Real Estate, nor the business conducted by DR Partners thereon as
currently conducted, are in violation of any use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law,
code or ordinance or public utility easement.
(b) Except as identified in Schedule 6.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the Donrey Real Estate which is owned by DR
Partners, and no special arrangements or agreements exist with any
governmental authority with respect thereto.
38
(c) Except as identified in Schedule 6.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to DR Partners' knowledge, threatened with respect to
any portion of the Donrey Real Estate owned by.
(d) Except as identified in Schedule 6.18, there are no
condemnation proceedings pending or, to DR Partners' knowledge, threatened
with respect to any portion of the Donrey Real Estate owned by DR Partners.
(e) All of the Donrey Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
DR Partners' knowledge, none of the utility companies servicing any such
facility has threatened DR Partners with any reduction in service. All of
said utilities are installed and operating and all installation and
connection charges have been paid in full.
(f) The continued maintenance and operation of all of the
Donrey Real Estate, as currently maintained and operated, is not dependent on
facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the Donrey Real Estate; no building or other improvement not part of
such Donrey Real Estate relies on any of the Donrey Real Estate or any
interest therein to fulfill any governmental requirement; and to DR Partners'
knowledge, no building or other improvement on any of the Donrey Real Estate
relies on any property not included within the Donrey Real Estate to fulfill
any governmental requirement.
6.19. DONREY INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the Donrey Newspapers and/or comprising
part of the Donrey Assets are referred to herein collectively as the "DONREY
INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 6.19 of the Donrey
Newspapers Disclosure Schedule, DR Partners is the owner of or duly licensed
to use all of the Donrey Intellectual Property necessary for the conduct of
the Business as now conducted and operated; (ii) to DR Partners' knowledge,
no other firm, corporation, association or person claims the right to use in
connection with similar or closely related goods and in the same geographic
area, any xxxx which is identical or confusingly similar to any of the
Trademarks; (iii) DR Partners has no knowledge of any claim with respect to,
and has no reason to believe that any third party asserts ownership rights
in, any of the Donrey Intellectual Property; (iv) DR Partners has no
knowledge of any claim and has no reason to believe that
39
its use of any Donrey Intellectual Property infringes any right of any third
party; (v) DR Partners has no knowledge that any third party is infringing
any of its rights in any of the Donrey Intellectual Property; (vi) other than
as set forth in Section 6.19 of the Donrey Newspapers Disclosure Schedule, DR
Partners is under no obligation to pay any royalties or similar payments in
connection with any license of Donrey Intellectual Property; and (vii) except
as set forth in Section 6.19 of the Donrey Newspapers Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will not
result in the impairment of the Partnership's right to use any of the Donrey
Intellectual Property necessary for the conduct of the Business as now
conducted and operated nor infringe upon the rights of any third party.
6.20 YEAR 2000 COMPLIANCE. Except as described in Section 6.20 of
the Disclosure Schedule:
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the Donrey
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage, retrieval, accessing,
comparison, sorting, manipulation, processing or other use of dates or
date-based, date-dependent or date-related data, including but not limited to
century recognition, day-of-the-week recognition, leap years, date values and
interfaces of date functionalities, and (iii) will not be adversely affected
by the advent of the year 2000, the advent of the twenty-first century or the
transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (i) through (iii) are referred to
herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the Donrey Newspapers receives data from or communicates
with any component or system external to itself (whether or not such external
component or system is any DR Partners' or any third party's) that is not
itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the Donrey
Newspapers and/or Donrey Assets permit the DR Partners' or a third party to
make all modifications, bypasses, debugging, work-arounds, repairs,
replacements, conversions or corrections necessary to permit the System to
operate compatibly, in conformance with their respective specifications, and
to be Year 2000 Compliant; and,
40
(d) DR Partners has not incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the Donrey Assets
and/or Donrey Newspapers as a result of not being Year 2000 Compliant.
6.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 6.21(a) of the Donrey Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports, (ii) the most recent publisher's
statements submitted to ABC for each of the Donrey Newspapers which is
audited by ABC, and (iii) the most recent internal Donrey circulation
reports. From the date of the latter of the foregoing, the paid circulation
of each such newspaper has not fallen, after taking into account seasonal
variations, below the circulation levels reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by DR Partners to the ABC with respect
to any of the Donrey Newspapers for the periods covered by such publisher's
statements and audit reports have been true and complete in all material
respects.
(c) Since January 1, 1998, DR Partners has not taken any
action which was designed to result in a material reduction in circulation of
any Donrey Newspapers.
(d) Except as set forth in Section 6.21(d) of the Donrey
Newspapers Disclosure Schedule, since January 1, 1998, DR Partners has not
made any material change in its policies for the pricing of circulation for
any Donrey Newspapers.
6.22 ADVERTISING. Except as set forth in Section 6.22 of the Donrey
Newspapers Disclosure Schedule, since January 1, 1998, none of the Donrey
Newspapers received any written notice of any cancellation, non-renewal or
material modification of any agreements or relationships with any of its top
10 (by dollar amount) retail, preprint or classified advertisers for the
twelve months ended October 31, 1998, nor has any Donrey Newspapers made any
material change in its policies for the pricing of advertising and, no
advertiser described above has provided written notice of their intent to (A)
cancel previously scheduled or contracted for advertising for the period
following the Closing, or (B) terminated or modified significantly their
relationship with any of the Donrey Newspapers.
6.23 INVENTORY. All of the Inventory of the Donrey Newspapers is in
the physical possession and control of the Donrey Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
Donrey Newspapers' business as currently conducted.
41
6.24 RELATIONSHIP WITH AFFILIATES.
Section 6.24 of the Donrey Newspapers Disclosure Schedule sets
forth every business relationship (other than normal employment relationships
and other than as may pertain to the Donrey Excluded Assets) between the DR
Partners, on the one hand, and any affiliates, officers or directors of DR
Partners, on the other hand, which is related to any of the Donrey
Newspapers. None of said parties (other than DR Partners) owns any assets
which are used in the business of the Donrey Newspapers, as currently
conducted, except for Donrey Excluded Assets, or as reflected in Section 6.24
of the Donrey Newspapers Disclosure Schedule.
6.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the Donrey Newspapers were true and correct in all material
respects at the time of their filing.
6.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of DR
Partners, DR Partners has disclosed to the MediaNews Parties and Gannett all
liabilities existing on the date hereof in excess of $100,000 relating to the
Donrey Newspapers or the Donrey Assets.
VII. REPRESENTATIONS, WARRANTIES
AND COVENANTS OF GANNETT
Subject to the understanding that, with respect to the following
representations and warranties, such representations and warranties as made
by Gannett relate solely to the Gannett Newspapers and/or Gannett Assets and
not to any other assets or publications of Gannett or its Affiliates, Gannett
hereby represents, warrants and covenants to DR Partners and the MediaNews
Parties:
7.1 ORGANIZATION OF MWSB AND SUN. Each of MWSB and Sun is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite power and
authority to own, operate or lease its assets and properties, to conduct its
business as currently conducted and is duly licensed, permitted or qualified
to do business, and is in good standing, in each jurisdiction in which the
operation of its business makes such licensing, permitting or qualification
necessary.
7.2 AUTHORITY. Each of MWSB and Sun has all requisite power and
authority to execute and deliver this Agreement and the other documents
contemplated hereby (the "ANCILLARY AGREEMENTS"), to carry out its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby. Each of MWSB and Sun has obtained all
necessary corporate and shareholder approvals for the execution and delivery
of this Agreement and the Ancillary Agreements, the performance of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby
42
and thereby. This Agreement has been, and upon their execution by MWSB and
Sun, each of the Ancillary Agreements to which either is a party will be,
duly executed and delivered by MWSB and/or Sun and (assuming due
authorization, execution and delivery by the other parties hereto and
thereto) constitutes each of MWSB's and Sun's legal, valid and binding
obligation, enforceable against it in accordance with its terms, except to
the extent that enforcement may be limited by or subject to any bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, or similar Laws
now or hereafter in effect relating to or limiting creditors' rights
generally and subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
7.3 NON-CONTRAVENTION. Except as set forth in Section 7.3 of the
Gannett Newspapers Disclosure Schedule, none of the execution and delivery of
this Agreement or the Ancillary Agreements by MWSB or Sun, the performance of
its obligations hereunder or thereunder, or the consummation of the
transactions contemplated hereby and thereby will conflict with the charter,
by-laws, or other organizational documents of MWSB or Sun, will, with or
without notice, the passage of time or both, constitute a breach or violation
of, be in conflict with, constitute or create a default under, or result in
the creation or imposition of any Liens under (a) any contract, indenture,
agreement, instrument, mortgage, lease or commitment to which MWSB or Sun is
a party or by which either is or any of its properties is bound, or to which
either is subject or (b) any law or statute or any judgment, decree, order,
regulation or rule of any court or governmental or regulatory authority
relating to either or to the business and operations of either as currently
conducted.
7.4 SOLVENCY. Neither MWSB or Sun is currently insolvent, as such
term is defined in Title 11 of the United States Bankruptcy Code or any state
statute relating to insolvency, and none of the execution and delivery of
this Agreement or the Ancillary Agreements by MWSB or Sun, the performance of
its obligations hereunder or thereunder, or the consummation by it of the
transactions contemplated hereby and thereby will render either insolvent.
7.5 FINANCIAL STATEMENTS. Gannett has delivered to DR Partners and
the MediaNews Parties (i) a balance sheet for Gannett relating to the Gannett
Newspapers and a statement of income for Gannett relating to the Gannett
Newspapers, as of December 27, 1998 and for the fiscal year then ended and
(ii) a balance sheet and statement of income for Gannett relating to the
Gannett Newspapers as of January 31, 1999 and for the five week period then
ended relating to the Gannett Newspapers (collectively, the "GANNETT
FINANCIAL STATEMENTS"). The Gannett Financial Statements fairly present the
financial condition and results of operations of the Gannett Newspapers as of
the dates and for the periods to which they relate, in accordance with
generally accepted accounting principles, consistently applied, except (x) to
the extent that certain year end adjustments, which are not individually or
in the aggregate material, may not be reflected on the January 31, 1999
financial statements, (y) for information ordinarily contained in footnotes
to audited financial statements and (z) as may be set forth in Section 7.5 of
the Gannett Newspapers Disclosure Schedule.
43
7.6 COMPLIANCE WITH LAWS. Each of MWSB and Sun has conducted and
continues to conduct, in all respects, the respective business and operations
of the Gannett Newspapers in accordance with all laws, statutes, rules,
regulations, judgments, orders or decrees of any court or governmental or
regulatory authority applicable to any of the Gannett Newspapers and/or each
of MWSB and Sun is not in relation to the Gannett Newspapers and/or Gannett
Assets in violation of any such laws, statutes, rules, regulations,
judgments, orders or decrees. Copies of all notices of violation of any of
the foregoing which either MWSB or Sun has received within the past 3 years
are attached to Section 7.6 of the Gannett Disclosure Schedule, and all
violations alleged in such notices have been corrected.
7.7 PERMITS. Each of MWSB and Sun has all permits, licenses,
franchises, orders, certificates and approvals (collectively, "PERMITS") of
any federal, state or local regulatory or administrative agency, authority or
court relating to the Gannett Newspapers, necessary to the conduct of its
respective business as currently conducted, or to the use of the Gannett
Assets as currently utilized. Each of MWSB and Sun is in compliance with all
Gannett Permits.
7.8 LITIGATION, ETC. Except as set forth in Section 7.8 of the
Gannett Newspapers Disclosure Schedule, there are no judicial or
administrative actions, suits, proceedings or investigations, pending or, to
the knowledge of MWSB or Sun, threatened against any of the Gannett
Newspapers, their respective businesses or the Gannett Assets, or which
question the validity of this Agreement or challenge any of the transactions
contemplated hereby, or the use of the Gannett Assets, or the conduct of the
Gannett Newspapers, as currently conducted, after the Closing Date by the
Partnership.
7.9 EMPLOYEES.
(a) Except as set forth in Section 7.9 of the Gannett
Newspapers Disclosure Schedule, none of the employees of any of the Gannett
Newspapers is covered by any collective bargaining agreement, no collective
bargaining agreement is currently being negotiated and no attempt is
currently being made or has been made during the past three years to organize
any employees of any of the Gannett Newspapers to form or enter into a labor
union or similar organization.
(b) Section 7.9 of the Gannett Newspapers Disclosure
Schedule sets forth a true and complete list of all employee benefit plans
and all bonus, stock option, stock purchase, incentive, deferred
compensation, retiree medical or life insurance, supplemental retirement,
severance or other employee benefit plans, programs or arrangements, and all
material employment or compensation agreements (collectively, "PLANS"), in
each case for the benefit of, or relating to, current employees and former
employees of any of the Gannett Newspapers, other than those which are
Excluded Gannett Assets. Gannett has made available to DR Partners and the
MediaNews Parties, with respect to each Gannett
44
Newspapers Plan, a copy of the plan document, summary plan description and
the most recent annual report and Internal Revenue Service determination
letter.
(c) All employee benefit plans, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA")
(the "EMPLOYEE BENEFIT PLANS"), maintained by MWSB or Sun or any Affiliate
with respect to any employees of any of the Gannett Newspapers, as determined
under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986
(the "CODE") ("ERISA AFFILIATE"), and which provide benefit to employees of
any of the Gannett Newspapers comply in all material respects with and are
and have been operated in substantial accordance with each applicable
provision of ERISA, the Code (including, without limitation, the requirements
of Code Section 401(a) to the extent any of such plans which is an employee
pension benefit plan (within the meaning of Section 3(a) of ERISA) is
intended to conform to that section), other Federal statutes, and the
regulations and rules promulgated pursuant thereto or in connection therewith.
(d) Each Employee Benefit Plan which is an employee welfare
benefit plan (within the meaning of Section 3(1) of ERISA) and which is a
group health plan (within the meaning of Section 5000(b)(1) of the Code) and
which provides benefits to employees of any of the Gannett Newspapers
complies in all material respects with and has been and operated
substantially in accordance with each of the requirements of Section 162(i)
of the Code as in effect for years beginning prior to 1989, Section 4980B of
the Code for years beginning after December 31, 1988, and Part 6 of Subtitle
B of Title I of ERISA ("COBRA"). There are no pending or, to the knowledge of
MWSB or Sun, threatened claims, suits or other proceedings by any employee or
former employee of any of the Gannett Newspapers or by the beneficiary,
dependent or representative of any such person, involving the failure of any
group health plan ever maintained with respect to the employees of any of the
Gannett Newspapers to comply with the health care continuation requirements
of COBRA.
(e) Neither MWSB or Sun or any Affiliate with respect to any
employees of any of the Gannett Newspapers nor any ERISA Affiliate has
incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC")
as a result of the voluntary or involuntary termination of an employee
pension benefit plan pertaining to employees of the Newspaper which is
subject to Title IV of ERISA. There is currently no active filing by MWSB,
Sun or any ERISA Affiliate with the PBGC (and no proceeding has been
commenced by the PBGC) to terminate any employee pension benefit plan
pertaining to employees of any of the Gannett Newspapers which is subject to
Title IV of ERISA, and which has been maintained or funded, in whole or in
part, by MWSB, Sun or any ERISA Affiliate.
45
7.10 OWNERSHIP AND TRANSFER OF GANNETT ASSETS. Except as described
in Section 7.10 of the Gannett Newspapers Disclosure Schedule, MWSB and/or
Sun has good and marketable title to, or in the case of leased or subleased
Gannett Assets so indicated therein, valid and subsisting leasehold interests
in, all of the Gannett Assets, free and clear of all Liens other than
Permitted Gannett Liens, and will as of the Closing have, the unrestricted
right to transfer, assign, convey and deliver to the Partnership all right,
title and interest in and to the Gannett Assets.
7.11 EQUIPMENT. All of the Equipment included in the Gannett
Assets, including, without limitation, all press units together with all
accouterments, attachments and accessories thereto (such as formers, folders,
splicers, inserters, operator consoles and the like), is in good operating
condition and repair, ordinary wear and tear excepted, and other than the
Gannett Excluded Assets, constitute all of the Equipment currently used or
held for use in connection with the business of the Gannett Newspapers as
currently conducted.
7.12 CONTRACTS, LEASES AND OTHER INSTRUMENTS. All contracts,
subscriptions, leases and other instruments which relate to any of the
Gannett Assets and/or Gannett Newspapers are in full force and binding upon
MWSB, Sun or any Affiliate which is party thereto. Except as set forth in
Section 7.12 of the Gannett Newspapers Disclosure Schedule, (i) no default by
MWSB or Sun has occurred thereunder, (ii) to the knowledge of either, no
default by other contracting parties has occurred thereunder, (iii) to the
knowledge of either, no event, occurrence or condition exists which, with the
lapse of time, the giving of notice, or both, or the happening of any further
event or condition, would become a default by either thereunder, and (iv) to
the knowledge of either, none of the other contracting parties has given
notice of repudiation of any of its obligations thereunder.
7.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 27, 1998,
the business of the Gannett Newspapers has been conducted only in the
ordinary course and consistent with past practices, in all material respects,
and, without limitation of the foregoing, except as may be necessary or
appropriate to the consummation of the transactions contemplated by this
Agreement and the Ancillary Agreements, or as set forth in Section 7.13 of
the Gannett Newspapers Disclosure Schedule, neither MWSB or Sun has with
respect to the Gannett Newspapers and/or Gannet Assets (except with respect
to the Excluded Gannett Assets or the Excluded Gannett Liabilities), since
December 27, 1998:
(a) suffered any material damage, destruction or loss to any
of its material assets or properties whether or not covered by insurance;
(b) sold, assigned or otherwise transferred any of its
material assets or properties or imposed or suffered to exist any Lien upon
any of its assets or properties;
46
(c) canceled or compromised any material debts or claims
other than for fair value and in the ordinary course of business, except for
trade receivables written off in the ordinary course of business in
accordance with past practices;
(d) managed its Accounts Receivable, accounts payable and
Inventories other than in accordance with past practices;
(e) permitted any insurance policy pertaining to its
assets, operations or employees to be canceled or lapse;
(f) incurred any indebtedness for borrowed money other than
to discharge obligations incurred in the ordinary course of business pursuant
to existing credit agreements;
(g) entered into or adopted any employment or severance
agreement with any officer of such entity;
(h) merged with, entered into a consolidation agreement with
or acquired an interest in any person, or acquired a substantial portion of
the assets or business of any person, or otherwise acquired any material
assets;
(i) made any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(j) made any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000;
(k) entered into any material agreement, arrangement or
transaction with any of its officers, directors, shareholders, or members (or
with any relative, beneficiary, spouse or affiliate of such person);
(l) made any express or deemed election or settled or
compromised any Liability with respect to taxes;
(m) granted any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(n) entered into any contract for the acquisition of
newsprint or any other contract having a value in excess of $200,000 annually;
(o) entered into any agreement to take any actions specified
in this Section 7.13, except for this Agreement or taken any action which, if
taken after the effective date of this Agreement, would constitute a breach
of any covenant set forth in Section 8.3 hereof; and,
47
(p) suffered or been threatened with any material adverse
change in the business, operations, assets, liabilities, financial condition
or prospects of any of the Gannett Newspapers, or with respect to the paid
circulation of any of such newspapers, including, without limiting the
generality of the foregoing, the existence or threat of any labor dispute, or
any material adverse change in, or loss of, any relationship between any of
such newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers, suppliers or key employees).
7.14 TAXES. Except as set forth in Section 7.14 of the Gannett
Newspapers Disclosure Schedule or except as a consequence of the transactions
contemplated by this Agreement and the Ancillary Agreements, (a) all returns
and reports in respect of taxes required to be filed with respect to the
Gannett Newspapers and/or Gannett Assets have been timely filed or will be
timely filed for any period ending on or before the Closing Date, (b) all
such returns and reports are true, correct and complete in all material
respects and disclose all taxes due and payable for the periods covered
therein and properly report each item required to be reported on such return,
(c) all taxes required to be shown on such returns or otherwise due have been
timely paid or will be paid when due, (d) no deficiency for any amount of tax
has been asserted or assessed by any governmental or taxing authority against
MWSB, Sun or any Affiliate relating to any of the Gannett Newspapers and/or
Gannett Assets, (e) no adjustment relating to such returns has been proposed
formally or informally by any governmental or taxing authority and no basis
exists for any such adjustment, (f) there are no pending or, to the knowledge
of MWSB or Sun, threatened actions or proceedings for the assessment or
collection of taxes against either with respect to any of the Gannet
Newspapers or Gannett Assets, (g) no tax Lien has been filed on any of the
Gannett Assets and (h) neither MWSB or Sun has been included or is includible
in any other consolidated return for any taxable period for which the statute
of limitations has not expired. Neither MWSB or Sun has extended the time
for any governmental or taxing authority to assess any tax with respect to
either relating to any of the Gannett Newspapers and/or Gannett Assets. On
the Gannett January 31, 1999 Balance Sheet, reserves and allowances have been
provided which are adequate to satisfy all Liabilities for taxes relating to
the Gannett Assets and the Gannett Newspapers for the period covered thereby.
7.15 BROKERS, FINDERS, ETC. Neither MWSB, Sun nor any Affiliate has
dealt with any person or entity who is or may be entitled to a broker's
commission, finder's fee, investment banker's fee or similar payment for
arranging the transaction contemplated hereby or introducing the parties to
each other.
7.16 NO MISSTATEMENTS OR OMISSIONS. No representation or warranty
made in this Agreement by Gannett is false or misleading as to any material
fact, or omits to state a material fact required to make any of the
statements made herein not misleading in any material respect.
48
7.17 ENVIRONMENTAL. Except as set forth in Section 7.17 of the
Gannet Newspapers Disclosure Schedule:
(a) The Gannett Assets and the Gannett Newspapers are in
compliance with all applicable Environmental Laws and Environmental Permits
and all issues raised in each notice, citation, inquiry or complaint which
MWSB or Sun has received in the past three years alleging any violation of or
liability or potential liability under any applicable Environmental Law or
Environmental Permit pertaining to the Gannett Assets and/or the Gannett
Newspapers have been corrected or otherwise addressed to the satisfaction of
regulatory authorities acting pursuant to Environmental Laws. MWSB and/or
Sun possesses all Environmental Permits which are required for the operation
of the Gannett Newspapers as currently conducted, and are in compliance with
the provisions of all such Environmental Permits.
(b) There has not been any storage, treatment, generation,
transportation or Release of any Hazardous Materials by MWSB or Sun at or
from the Gannett Real Estate or, to the knowledge of MWSB or Sun at any
Facility to which MWSB or Sun sent Hazardous Materials relating to the
Gannett Newspapers, in a quantity reportable under, or in violation of, or
which may give rise to any obligation or the incurrence of any damages under,
any applicable Environmental Laws.
(c) All Containers which have been heretofore removed from
the Gannett Real Estate or such other real property were removed and
disposed of in compliance with all applicable Environmental Laws.
(d) No Lien or deed notice or restriction has been recorded
under any Environmental Law with respect to any property or facility owned,
operated, leased, managed, controlled or used by MWSB or Sun with respect to
any of the Gannett Newspapers.
(e) No Gannett Real Estate or Facility relating to any of
the Gannett Newspapers which is to be owned or used by the Partnership is
listed on the National Priorities List or on the Comprehensive Environmental
Response, Compensation and Liability Information System list, both
promulgated under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), or on any state or local list of sites requiring
removal, remedial response or corrective action pursuant to any environmental
law.
(f) Without in any way limiting the generality of the
foregoing:
(i) there is no friable asbestos contained in or
forming part of any building, building component, structure, office space or
equipment owned, operated, leased, managed or controlled by MWSB or Sun with
respect to any of the Gannett Newspapers or located on the Gannett Real
Estate;
(ii) no polychlorinated biphenyls are used or stored
on the Gannett Estate; and,
49
(iii) there are no locations included within the
Gannett Real Estate at which any Hazardous Material generated, used, owned or
controlled by MWSB or Sun or its agents or affiliates have been disposed of
or Released into the Environment.
7.18. GANNETT REAL ESTATE.
(a) All real property currently owned or leased by the MWSB
or Sun (the "GANNETT REAL ESTATE") is identified and described in Section
7.18 of the Gannett Newspapers Disclosure Schedule. Except as set forth in
Schedule 7.18 of the Gannett Newspapers Disclosure Schedule, MWSB or Sun
holds fee simple title to all of the Gannett Real Estate, subject only in the
case of Gannett Real Estate which is owned by MWSB or Sun to real estate
taxes not delinquent and to covenants, conditions, restrictions and easements
of record which are set forth in such Section 7.18. Except as set forth in
such Section 7.18 the Gannett Real Estate which is owned by MWSB or Sun is
not subject to any leases or tenancies. None of the improvements comprising
the Gannett Real Estate, nor the business conducted by MWSB or Sun thereon as
currently conducted, are in violation of any use or occupancy restriction,
limitation, condition or covenant of record or any zoning or building law,
code or ordinance or public utility easement.
(b) Except as identified in Schedule 7.18, there are no
challenges or appeals pending regarding the amount of the taxes on, or the
assessed valuation of any of the Gannett Real Estate which is owned by MWSB
or Sun, and no special arrangements or agreements exist with any governmental
authority with respect thereto.
(c) Except as identified in Schedule 7.18, there is no Tax
assessment (in addition to the normal, annual general real estate Tax
assessment) pending or, to MWSB's or Sun's knowledge, threatened with respect
to any portion of the Gannett Real Estate owned by MWSB or Sun.
(d) Except as identified in Schedule 7.18, there are no
condemnation proceedings pending or, to MWSB's or Sun's knowledge, threatened
with respect to any portion of the Gannett Real Estate owned by MWSB or Sun.
(e) All of the Gannett Real Estate is served by utilities
adequate to operate such facility at its current rate of production, and to
MWSB's or Sun's knowledge, none of the utility companies servicing any such
facility has threatened MWSB or Sun with any reduction in service. All of
said utilities are installed and operating and all installation and
connection charges have been paid in full.
(f) The continued maintenance and operation of all of the
Gannett Real Estate, as currently maintained and operated, is not dependent
on facilities located at other property, and the continued maintenance and
operations of any other property is not dependent on facilities located on
any of the Gannett Real Estate; no building or other improvement not part of
such Gannett Real Estate relies on any of the Gannett Real Estate or any
interest therein to fulfill any governmental requirement; and no building or
other
50
improvement on any of the Gannett Real Estate relies on any property not
included within the Gannett Real Estate to fulfill any governmental
requirement.
7.19. GANNETT INTELLECTUAL PROPERTY.
(a) All of the (i) trademarks, service marks, slogans, trade
names, trade dress and the like (collectively with the associated goodwill of
each, "TRADEMARKS") together with all registrations and pending applications
to register any such rights; (ii) common law Trademarks; (iii) proprietary
formulations, manufacturing methods, know-how and trade secrets; (iv) patents
on and pending applications to patent any technology or design; (v)
registrations of and applications to register copyrights; and (vi) licenses
of rights in computer software, Trademarks, patents, copyrights, Internet
URLs, unpatented formulations, manufacturing methods and other know-how,
currently used or held for use in the Gannett Newspapers and/or comprising
part of the Gannett Assets are referred to herein collectively as the
"GANNETT INTELLECTUAL PROPERTY".
(b) (i) Except as set forth in Section 7.19 of the Gannett
Newspapers Disclosure Schedule, MWSB and/or Sun is the owner of or duly
licensed to use all of the Gannett Intellectual Property necessary for the
conduct of the Business as now conducted and operated; (ii) to MWSB's or
Sun's knowledge, no other firm, corporation, association or person claims the
right to use in connection with similar or closely related goods and in the
same geographic area, any xxxx which is identical or confusingly similar to
any of the Trademarks; (iii) neither MWSB or Sun has knowledge of any claim
with respect to, and has no reason to believe that any third party asserts
ownership rights in, any of the Gannett Intellectual Property; (iv) neither
MWSB or Sun has knowledge of any claim and has no reason to believe that its
use of any Gannett Intellectual Property infringes any right of any third
party; (v) neither MWSB or Sun has any knowledge that any third party is
infringing any of its rights in any of the Gannett Intellectual Property;
(vi) other than as set forth in Section 7.19 of the Gannett Newspapers
Disclosure Schedule, neither MWSB or Sun is under no obligation to pay any
royalties or similar payments in connection with any license of Gannett
Intellectual Property; and (vii) except as set forth in Section 7.19 of the
Gannett Newspapers Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement will not result in the impairment of the
Partnership's right to use any of the Gannett Intellectual Property necessary
for the conduct of the Business as now conducted and operated nor infringe
upon the rights of any third party.
7.20 YEAR 2000 COMPLIANCE. Except as described in Section 7.20 of
the Disclosure Schedule:
(a) Each system which includes software, hardware, databases
or embedded control systems (microprocessor controlled, robotic or other
device) (collectively, a "SYSTEM"), that constitutes any part of, or is used
in connection with the use, operation or enjoyment of, any of the Gannett
Assets (i) is designed (or has been modified) to be used prior to and after
January 1, 2000, (ii) will operate without error arising from the creation,
recognition, acceptance, calculation, display, storage,
51
retrieval, accessing, comparison, sorting, manipulation, processing or other
use of dates or date-based, date-dependent or date-related data, including
but not limited to century recognition, day-of-the-week recognition, leap
years, date values and interfaces of date functionalities, and (iii) will not
be adversely affected by the advent of the year 2000, the advent of the
twenty-first century or the transition from the twentieth century through the
year 2000 and into the twenty-first century (collectively, items (i) through
(iii) are referred to herein as "YEAR 2000 COMPLIANT");
(b) No System that is utilized in the business, finances or
operations of any of the Gannett Newspapers receives data from or
communicates with any component or system external to itself (whether or not
such external component or system is MWSB's, Sun's or any third party's) that
is not itself Year 2000 Compliant;
(c) All licenses for the use of any system-related software,
hardware, databases or embedded control system relating to any of the Gannett
Newspapers and/or Gannett Assets permit MWSB, Sun or a third party to make
all modifications, bypasses, debugging, work-arounds, repairs, replacements,
conversions or corrections necessary to permit the System to operate
compatibly, in conformance with their respective specifications, and to be
Year 2000 Compliant; and,
(d) Neither MWSB or Sun has incurred, nor does it have any
reason to believe that it may in the future incur, any expenses arising from
or related to the failure of any System relating to any of the Gannett Assets
and/or Gannett Newspapers as a result of not being Year 2000 Compliant.
7.21 CIRCULATION. With respect to circulation matters:
(a) Attached to Section 7.21(a) of the Gannett Newspapers
Disclosure Schedule are true and complete copies of (i) the most recently
completed ABC annual audit reports and (ii) the most recent publisher's
statements submitted to ABC for each of the Gannett Newspapers which is
audited by ABC. From the date of the latter of the foregoing, the paid
circulation of each such newspaper has not fallen, after taking into account
seasonal variations, below the circulation levels reported therein.
(b) All representations contained in such publisher's
statements and all materials submitted by MWSB or Sun to the ABC with respect
to any of the Gannett Newspapers for the periods covered by such publisher's
statements and audit reports have been true and complete in all material
respects.
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(c) Since January 1, 1998, neither MWSB or Sun has taken any
action which was designed to result in a material reduction in circulation of
any Gannett Newspapers.
(d) Since January 1, 1998, neither MWSB nor Sun has made any
material change in its policies for the pricing of circulation for any
Gannett Newspapers.
7.22 ADVERTISING. Except as set forth in Section 7.22 of the
Gannett Newspapers Disclosure Schedule, since January 1, 1998, none of the
Gannett Newspapers received any written notice of any cancellation,
non-renewal or material modification of any agreements or relationships with
any of its top 10 (by dollar amount) retail, preprint or classified
advertisers for the twelve months ended December 27, 1998, nor has any
Gannett Newspapers made any material change in its policies for the pricing
of advertising and, no advertiser described above has provided written notice
of their intent to (A) cancel previously scheduled or contracted for
advertising for the period following the Closing, or (B) terminated or
modified significantly their relationship with any of the Gannett Newspapers.
7.23 INVENTORY. All of the Inventory of the Gannett Newspapers is
in the physical possession and control of Gannett Newspapers at their or
their suppliers' facilities or in transit from suppliers. Such Inventory is
of a quality readily usable and/or saleable in the normal course of the
Gannett Newspapers' business as currently conducted.
7.24 RELATIONSHIPS WITH AFFILIATES. Section 7.25 of the Gannett
Newspapers Disclosure Schedule sets forth every business relationship (other
than normal employment relationships and other than as may pertain to the
Gannett Excluded Assets) between MWSB or Sun, on the one hand, and any
Affiliates, officers or directors of either, on the other hand, which is
related to any of the Gannett Newspapers. None of said parties (other than
MWSB or Sun) owns any assets which are used in the business of the Gannett
Newspapers, as currently conducted, except for Gannett Excluded Assets, or as
reflected in Section 7.25 of the Gannett Newspapers Disclosure Schedule.
7.25 SECOND CLASS MAIL. All reports filed with the United States
Postal Service in connection with, and second class mail postal permits
applicable to, the Gannett Newspapers were true and correct in all material
respects at the time of their filing.
7.26 NO UNDISCLOSED LIABILITIES. To the best knowledge of MWSB or
Sun, Gannett has disclosed to DR Partners and the MediaNews Parties all
liabilities existing on the date hereof in excess of $100,000 relating to the
Gannett Newspapers or the Gannett Assets.
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VIII. ADDITIONAL AGREEMENTS
8.1 CONDUCT OF THE BUSINESS OF THE MEDIANEWS PARTIES. The
MediaNews Parties covenant and agree that, between the date hereof and the
Closing Date, the MediaNews Parties shall conduct their business and
operations only in the ordinary course and consistent with past practices.
In addition, the MediaNews Parties shall take all reasonable measures as may
be necessary to ensure that each and every representation and warranty of the
MediaNews Parties set forth in Article V of this Agreement be true in all
material respects as if originally made as of the Closing Date, and that
neither they nor their Affiliates, without the prior written approval of DR
Partners, and Gannett, or except as may reasonably be required to effectuate
the various intentions of the parties set forth in this Agreement, or to
effectuate the transactions contemplated by this Agreement with respect to
the MediaNews Newspapers and/or the MediaNews Assets, will:
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the MediaNews Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or compromise any debts or claims other than
for fair value and in the ordinary course of business except for trade
receivables written off in the ordinary course of business and in accordance
with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill and
ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements;
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
54
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$1,000,000 without informing DR Partners and Gannett;
(m) make any express or deemed election or settles or
compromises any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract (other than for the acquisition
of newsprint) having a value in excess of $200,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the MediaNews Newspapers, or with respect to
the paid circulation of any of such newspapers, including, without limiting
the generality of the foregoing, the existence or threat of any labor
dispute, or any material adverse change in, or loss of, any relationship
between any of such newspapers and any of their material customers
(including, without limitation, advertisers, subscribers and dealers),
suppliers or key employees); and,
(q) enter into any agreement to take any actions specified
in this Section 8.1.
8.2 CONDUCT OF THE BUSINESS OF DR PARTNERS. DR Partners covenants
and agrees that, between the date hereof and the Closing Date, DR Partners
shall conduct its business and operations only in the ordinary course and
consistent with past practices. In addition, DR Partners shall take all
reasonable measures as may be necessary to ensure that each and every
representation and warranty of DR Partners set forth in Article VI of this
Agreement be true in all material respects as if originally made as of the
Closing Date, and that neither it nor its Affiliates, without the prior
written approval of the MediaNews Parties and Gannett, or except as may
reasonably be required to effectuate the various intentions of the parties
set forth in this Agreement, or to effectuate the transactions contemplated
by this Agreement, with respect to the Donrey Newspapers and/or the Donrey
Assets, will:
55
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the Donrey Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or. compromise any debts or claims other than
for fair value and in the ordinary course of business except for trade
receivables written off in the ordinary course of business and in accordance
with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of. its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill
and ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements; and
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000 without first notifying the MediaNews Parties and Gannett;
56
(m) make any express or deemed election or settle or
compromise any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract for the acquisition of newsprint
or any other contract having a value in excess of $100,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the Donrey Newspapers, or with respect to
the paid circulation of any of such newspapers, including, without limiting
the generality of the foregoing, the existence or threat of any labor
dispute, or any material adverse change in, or loss of, any relationship
between any of such newspapers and any of their material customers
(including, without limitation, advertisers, subscribers and dealers),
suppliers or key employees).
(q) enter into any agreement to take any actions specified
in this Section 8.2.
8.3 CONDUCT OF THE BUSINESS OF GANNETT. Gannett covenants and
agrees that, between the date hereof and the Closing Date, each of MWSB and
Sun shall conduct its business and operations only in the ordinary course and
consistent with past practices. In addition, Gannett shall take all
reasonable measures as may be necessary to ensure that each and every
representation and warranty of Gannett set forth in Article VII of this
Agreement be true in all material respects as if originally made as of the
Closing Date, and that neither MWSB or Sun, nor any of their Affiliates,
without the prior written approval of the MediaNews Parties and DR Partners,
or except as may reasonably be required to effectuate the various intentions
of the parties set forth in this Agreement, or to effectuate the transactions
contemplated by this Agreement, with respect to the Gannett Newspapers and/or
the Gannett Assets, will:
(a) engage in any transaction affecting it, its assets or
Liabilities, except in the normal and ordinary course of that entity's
business;
(b) fail to use reasonable efforts to prevent any event or
transaction from occurring which materially adversely affects that entity's
business, operations, assets, Liabilities, financial condition or future
prospects;
(c) enter into, terminate, materially amend or modify any
material contract included within the Gannett Assets;
(d) sell, assign or otherwise transfer any of its material
assets, impose or suffer to exist any material additional Lien upon any of
its material assets, or cancel or compromise any debts or claims other than
for fair value and in the ordinary course of
57
business except for trade receivables written off in the ordinary course of
business and in accordance with past practices;
(e) manage its accounts receivable, accounts payable and
inventories other than in accordance with past practices;
(f) permit any insurance policy pertaining to its assets,
operations or employees to be canceled or lapse;
(g) fail to use reasonable efforts to preserve intact the
entity's present organization, keep available the services of. its employees,
preserve its relationships with its customers, suppliers and others having
business dealings with that entity, to the end that the entity's goodwill
and ongoing business will not be impaired prior to the Closing;
(h) incur any debt for borrowed money subsequent to the date
of this Agreement and prior to the Closing, other than to discharge
obligations of that entity incurred in the ordinary course of its business
pursuant to existing credit agreements;
(i) enter into or adopt any employment or severance
agreement with any officer of such entity;
(j) merge with, enter into a consolidation agreement with or
acquire an interest in any person, or acquire a substantial portion of the
assets or business of any person, or otherwise acquire any material assets;
(k) make any material change in any method of accounting or
accounting practice used by such entity other than changes required by
generally accepted accounting principles;
(l) make any capital expenditure or commitment for any
capital expenditure, except in the ordinary course of business, in excess of
$500,000 without first notifying the MediaNews Parties and DR Partners;
(m) make any express or deemed election or settle or
compromise any Liability with respect to taxes;
(n) grant any raises to its employees which on average are
greater than 4 percent of such employees' prior pay rate;
(o) enter into any contract for the acquisition of newsprint
or any other contract having a value in excess of $100,000 annually;
(p) except as may arise as a result of general economic
conditions affecting the newspaper industry as a whole, suffer any material
adverse change in the business, operations, assets, liabilities, financial
condition or prospects of any of the Gannett Newspapers, or with respect to
the paid circulation of any of such newspapers, including, without limiting
the generality of the foregoing, the existence or threat of any labor
dispute, or any material adverse change in, or loss of, any relationship
between any of such
58
newspapers and any of their material customers (including, without
limitation, advertisers, subscribers and dealers), suppliers or key
employees); and,
(q) enter into any agreement to take any actions specified
in this Section 8.3.
8.4 ACCESS TO INFORMATION.
(a) From the date hereof until the Closing, upon reasonable
notice, each of the MediaNews Parties shall, and shall cause each of the
officers, employees, auditors and agents of the MediaNews Parties to, (i)
afford the officers employees and authorized agents and representatives of DR
Partners and Gannett reasonable access, during normal business hours, (i) to
the offices, personnel, properties, books and records of the MediaNews
Parties relating to the MediaNews Assets and (ii) furnish to the officers,
employees and authorized agents and representatives of DR Partners and
Gannett such additional financial and operating data and other information
regarding the assets, properties, goodwill and business of the MediaNews
Parties relating to the MediaNews Assets as DR Partners or Gannett may from
time to time reasonably request; PROVIDED, HOWEVER, that such investigation
shall not unreasonably interfere with any of the business or operations of
the MediaNews Parties.
(b) From the date hereof until the Closing, upon reasonable
notice, DR Partners shall, and shall cause each of the officers, employees,
auditors and agents of DR Partners to, (i) afford the officers, employees and
authorized agents and representatives of the MediaNews Parties and Gannett
reasonable access, during normal business hours, to the offices, personnel,
properties, books and records of DR Partners relating to the Donrey Assets
and (ii) furnish to the officers, employees and authorized agents and
representatives of the MediaNews Parties and Gannett such additional
financial and operating data and other information regarding the assets,
properties, goodwill and business of DR Partners relating to the Donrey
assets as the MediaNews Parties or Gannett may from time to time reasonably
request; PROVIDED, HOWEVER, that such investigation shall not unreasonably
interfere with any of the business or operations of DR Partners.
(c) From the date hereof until the Closing, upon reasonable
notice, Gannett shall, and shall cause each of the officers, employees,
auditors and agents of MWSB and Sun to, (i) afford the officers, employees
and authorized agents and representatives of the MediaNews Parties and DR
Partners reasonable access, during normal business hours, to the offices,
personnel, properties, books and records of MWSB and Sun relating to the
Gannett Assets and (ii) furnish to the officers, employees and authorized
agents and representatives of the MediaNews Parties and DR Partners such
additional financial and operating data and other information regarding the
assets, properties, goodwill and business of MWSB and Sun relating to the
Gannett assets as the MediaNews Parties or DR Partners may from time to time
reasonably request; PROVIDED, HOWEVER, that such investigation shall not
unreasonably interfere with any of the business or operations of MWSB or Sun.
59
8.5 NOTICE OF DEVELOPMENTS.
(a) Prior to the Closing Date, the MediaNews Parties shall
promptly notify DR Partners and Gannett in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of the MediaNews Parties in this Agreement or which
could have the effect of making any representation or warranty of the
MediaNews Parties in this Agreement materially untrue or incorrect in any
respect and (ii) all other material developments affecting the assets,
Liabilities or obligations, business, financial condition, operations,
results of operations, customer or supplier relations, employee relations,
projections or prospects of the MediaNews Parties relating to the MediaNews
Assets.
(b) Prior to the Closing Date, DR Partners shall promptly
notify the MediaNews Parties and Gannett in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of DR Partners in this Agreement or which could have the
effect of making any representation or warranty of DR Partners in this
Agreement materially untrue or incorrect in any respect and (ii) all other
material developments affecting the assets, Liabilities or obligations,
business, financial condition, operations, results of operations, customer or
supplier relations, employee relations, projections or prospects of DR
Partners relating to the Donrey Assets.
(c) Prior to the Closing Date, Gannett shall promptly notify
the MediaNews Parties and DR Partners in writing of (i) all events,
circumstances, facts and occurrences arising subsequent to the date of this
Agreement which could result in any material breach of a representation or
warranty or covenant of Gannett in this Agreement or which could have the
effect of making any representation or warranty of Gannett in this Agreement
materially untrue or incorrect in any respect and (ii) all other material
developments affecting the assets, Liabilities or obligations, business,
financial condition, operations, results of operations, customer or supplier
relations, employee relations, projections or prospects of Gannet relating to
the Gannett Assets.
8.6 AUTHORIZATIONS AND CONSENTS.
(a) Each party hereto shall use its reasonable best efforts
to obtain all authorizations, consents, orders and approvals of all
governmental and regulatory authorities and officials and of all third
parties that may be or become necessary for the performance of its
obligations under this Agreement (including, without limitation, any
approvals required for the transfer to the Partnership of any of the
MediaNews Permits, the Donrey Permits, the Gannett Permits or any contract,
lease or other instrument included within the MediaNews Assets, Donrey Assets
or Gannett Assets) and will cooperate fully with the other parties in
promptly seeking to obtain all such authorizations, consents, orders and
approvals. The parties hereto will not take any action that will have the
effect of delaying, impairing or impeding the receipt of any required
authorizations, consents, orders or approvals.
60
(b) Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign
any contract, lease, license or other agreement to which the MediaNews
Parties, DR Partners or Gannett is a party, or any claim or right or any
benefit arising thereunder or resulting therefrom, if an attempted assignment
thereof, without the consent of a third party thereto, would constitute a
breach or other contravention thereof. The MediaNews Parties, DR Partners and
Gannett will use reasonable efforts to obtain the consent of the other
parties to any such contract, lease, license or other agreement for the
assignment thereof to the Partnership. If such consent is not obtained prior
to the Closing, or if an attempted assignment thereof would be ineffective or
would adversely affect the rights of the Partnership thereunder so that the
Partnership would not in fact receive all such rights, the MediaNews Parties,
DR Partners and/or Gannett, as the case may be, and the Partnership will
cooperate to achieve a mutually agreeable arrangement under which the
Partnership would obtain the benefits and assume the obligations thereunder
from and after the Closing Date in accordance with this Agreement, including
subcontracting, sublicensing or subleasing to the Partnership, or under which
the MediaNews Parties, DR Partners and/or Gannett, as the case may be, would
enforce for the benefit of the Partnership, with the Partnership assuming the
MediaNews Parties, DR Partners and/or Gannett, as the case may be,
obligations thereunder and any and all rights of the MediaNews Parties, DR
Partners and/or Gannett, as the case may be, against a third party thereto.
The MediaNews Parties, DR Partners and/or Gannett, as the case may be, will
pay promptly to the Partnership when received all monies received by it after
the Closing Date under any such contract, lease, license or other agreement
or any claim or right of any benefit arising thereunder to the extent that
the Partnership would be entitled thereto pursunt hereto.
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8.7 EMPLOYEES.
(a) As of the Closing Date, the Partnership will offer
employment to all persons employed immediately prior to thereto at all of the
MediaNews Newspapers, at all of the Donrey Newspapers and at all of the
Gannett Newspapers, at substantially the same levels of compensation at which
such persons were previously employed by the MediaNews Parties, DR Partners
or Gannett. As promptly as is practical following the Closing Date, however,
it is contemplated that the Partnership's Management Committee will commence
a comprehensive review of the employee benefit and welfare plans in effect
with respect to the various newspapers then owned by the Partnership, with a
view to standardizing, to the maximum extent feasible and/or desirable, by
the first anniversary of the Closing Date, the employee benefits to be
provided subsequent to the Closing to all employees of the Partnership.
These standardized arrangements will include, but not be limited to, as soon
as the Partnership deems it practical to do so, the adoption of a Partnership
401(k) or functionally similar plan capable of receiving rollover deposits.
It is not contemplated that the Partnership will adopt a defined benefit or
any other form of pension plan. In connection with such employee benefit and
welfare plans as are adopted by the Partnership, all employees of the
MediaNews, Donrey and Gannett Newspapers employed by the Partnership
subsequent to the Closing will receive appropriate credit for prior service,
will not be subject to any pre-existing condition limitation regarding health
insurance benefits on their behalf and will be credited with such vacation
and sick leave benefits as were accrued as of the Closing Date (provided the
value thereof was not paid to such employees as part of the final payroll
payments described in subsection(b) hereof).
(b) Each of DR Partners, the MediaNews Parties and Gannett
shall cause to be paid, in a timely manner and consistent with past
practices, all accrued payroll (including any accrued commissions and benefit
plan contributions) and shall thereafter pay, file or deposit when due all
accrued payroll taxes and related tax returns attributable to work performed
prior to the Closing Date or resulting from termination prior to or as of the
Closing Date, with respect to all persons employed by each such party as of
or prior to the Closing Date. It is anticipated that payroll checks shall be
paid not later than five (5) days after the Closing Date.
8.8 SATISFACTION OF LIABILITIES. Except as otherwise expressly
provided herein, the MediaNews Parties shall pay, perform and discharge when
due all the Excluded MediaNews Liabilities and any Liabilities incurred by
the MediaNews Parties in connection with this Agreement. Except as otherwise
expressly provided herein, DR Partners shall pay, perform and discharge when
due all the Excluded Donrey Liabilities and any Liabilities incurred by DR
Partners in connection with this Agreement. Except as otherwise expressly
provided herein, Gannett shall pay, perform and discharge when due all of the
Excluded Gannett Liabilities and any Liabilities incurred by Gannett in
connection with this Agreement.
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8.9 CONFIDENTIALITY.
(a) Each of the MediaNews Parties shall, and shall cause its
agents, representatives, Affiliates, employees, officers and directors to:
(i),treat and hold as confidential (and not disclose, provide access to any
person to or use to the detriment of DR Partners, Gannett or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to DR Partners, Gannett or their
Affiliates (ii) in the event that any MediaNews Party or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide DR Partners and Gannett
with prompt written notice of such requirement so that DR Partners and/or
Gannett may seek a protective order or other remedy or waive compliance with
this Section 8.9, and (iii) in the event that such protective order or other
remedy is not obtained, or DR Partners and/or Gannett waives compliance with
this Section 8.9, furnish only that portion of such confidential information
which is legally required to be provided and exercise its best efforts to
obtain assurances that confidential treatment will be accorded such
information; PROVIDED, HOWEVER, that this sentence shall not apply to any
information that, at the time of disclosure, (i) is available publicly and
was not disclosed in breach of this Agreement by any of the MediaNews
Parties, their agents, representatives, Affiliates, employees, officers or
directors (ii) was already known to any party hereto when such information
was received from the other (iii) is subsequently disclosed by a third party
which has a right to make such disclosure or (iv) is required to be disclosed
by law.
(b) DR Partners shall, and shall cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat
and hold as confidential (and not disclose, provide access to any person to,
or use to the detriment of the MediaNews Parties, Gannett or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to the MediaNews Parties, (ii) in the
event that DR Partners or any such agent, representative, Affiliate,
employee, officer or director becomes legally compelled to disclose any such
information, provide the MediaNews Parties and Gannett with prompt written
notice of such requirement so that the MediaNews Parties and/or Gannett may
seek a protective order or other remedy or waive compliance with this Section
8.9, and (iii) in the event that such protective order or other remedy is not
obtained, or the MediaNews Parties and/or Gannett waive compliance with this
Section 8.9, furnish only that portion of such confidential information which
is legally required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such information;
PROVIDED, HOWEVER, that this sentence shall not apply to any information
that, at the time of disclosure, (i) is available publicly and was not
disclosed in breach of this Agreement by DR Partners, its agents,
representatives, Affiliates employees, officers or directors, (ii) was
already known to any party hereto when such information was received from the
other (iii) is subsequently disclosed by a third party which has a right to
make such disclosure or (iv) is required to be disclosed by law.
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(c) Gannett shall, and shall cause its agents,
representatives, Affiliates, employees, officers and directors to: (i) treat
and hold as confidential (and not disclose, provide access to any person to,
or use to the detriment of the MediaNews Parties, DR Partners or their
Affiliates) all information relating to trade secrets, processes, product
development, price, customer lists, pricing and marketing plans, policies and
strategies, details of client and consultant contracts, operations methods,
product development techniques, business acquisition plans, and all other
confidential information with respect to the MediaNews Parties, DR Partners
or their Affiliates, (ii) in the event that MWSB, Sun or any such agent,
representative, Affiliate, employee, officer or director becomes legally
compelled to disclose any such information, provide the MediaNews Parties and
DR Partners with prompt written notice of such requirement so that the
MediaNews Parties and/or DR Partners may seek a protective order or other
remedy or waive compliance with this Section 8.8, and (iii) in the event that
such protective order or other remedy is not obtained, or the MediaNews
Parties and/or DR Partners waive compliance with this Section 8.8, furnish
only that portion of such confidential information which is legally required
to be provided and exercise its best efforts to obtain assurances that
confidential treatment will be accorded such information; PROVIDED, HOWEVER,
that this sentence shall not apply to any information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by Gannett, its agents, representatives, Affiliates employees,
officers or directors, (ii) was already known to any party hereto when such
information was received from the other (iii) is subsequently disclosed by a
third party which has a right to make such disclosure or (iv) is required to
be disclosed by law.
(d) Effective as of the date of execution of this Agreement,
the Confidentiality Agreement dated August 24, 1998 between DR Partners and
MediaNews Group, Inc. and the Confidentiality Agreement between DR Partners
and Gannett, Inc. dated September 17, 1998 shall be superseded in all
respects relating to matters occurring on or after such date by the
provisions of this Section 8.3(c).
8.10 CONTINUATION OF ARRANGEMENTS WITH AFFILIATES.
(a) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by a
MediaNews Party, Donrey and/or Gannett shall request that any of the
relationships described in Section 5.25 of the MediaNews Newspapers
Disclosure Schedule which benefited such newspaper prior to the Closing Date
be continued in effect, upon terms comparable to these applicable prior to
the Closing Date, the MediaNews Parties undertake to cause such request to be
honored, to the extent feasible, provided that the MediaNews Parties shall be
reimbursed the cost of those services. Any relationship listed in such
Section 5.25 that Donrey and/or Gannett reasonably requests be canceled shall
be canceled as soon as a commercially reasonable substitute can be put in
place. Any relationship as to which Donrey and/or Gannett does not
specifically request cancellation within 15 days of the date of this
Agreement may continue.
(b) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by DR
Partners, West Coast
64
MediaNews and/or Gannett shall request that any relationship described in
Section 6.25 of the Donrey Newspapers Disclosure Schedule which benefited
such newspaper prior to the Closing Date be continued in effect, upon terms
comparable to these applicable prior to the Closing Date, DR Partners
undertakes to cause such request to be honored, to the extent feasible,
provided that DR Partners shall be reimbursed the cost of those services.
Any relationship listed in such Section 6.25 that the MediaNews Parties
and/or Gannett reasonably request be canceled shall be canceled as soon as a
commercially reasonable substitute can be put in place. Any relationship as
to which the MediaNews Parties and/or do not specifically request
cancellation within 15 days of the date of this Agreement may continue.
(c) As of and following the Closing Date, if as to any
newspaper then owned by the Partnership which was previously owned by
Gannett, West Coast MediaNews and/or DR Partners shall request that any
relationship described in Section 7.25 of the Gannett Newspapers Disclosure
Schedule which benefited such newspaper prior to the Closing Date be
continued in effect, upon terms comparable to these applicable prior to the
Closing Date, Gannett undertakes to cause such request to be honored, to the
extent feasible, provided that Gannett shall be reimbursed the cost of those
services. Any relationship listed in such Section 7.25 that the MediaNews
Parties and/or Gannett reasonably request be canceled shall be canceled as
soon as a commercially reasonable substitute can be put in place. Any
relationship as to which the MediaNews Parties and/or DR Parties do not
specifically request cancellation within 15 days of the date of this
Agreement may continue.
IX. CONDITIONS TO CLOSING
9.1 CONDITIONS TO OBLIGATIONS OF THE MEDIANEWS PARTIES. The
obligation of the MediaNews Parties to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of DR Partners and Gannett contained in this
Agreement shall be true and correct in all material respects as of the
Closing, with the same force and effect as if made as of the Closing and all
the covenants contained in this Agreement to be complied with by DR Partners
and Gannett on or before the Closing shall have been complied with in all
material respects, and the MediaNews Parties shall have received certificates
of DR Partners and Gannett to such effect signed by a general partner of DR
Partners and by a duly authorized officer of Gannett.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) (collectively, an "ORDER", which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any proceeding for any
such Order be pending or threatened)
65
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, or by any third party,
pending or threatened, seeking money damages; PROVIDED that the rights
granted by this Section 9.1(b) shall not apply if any of the MediaNews
Parties shall have directly or indirectly solicited or encouraged any such
action.
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All
filings required to be made prior to the Closing with governmental and
regulatory authorities, and all, consents, approvals, permits and
authorizations required to be obtained prior to the Closing from governmental
and regulatory authorities in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been made or obtained, as the case may be.
(d) FORMATION OF DONREY. The MediaNews Parties and their
counsel shall be reasonably satisfied that Donrey shall have been properly
formed and organized and shall have all necessary power and authority to
consummate the transactions contemplated by this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY DR PARTNERS AND
GANNETT. DR Partners and Gannett shall have fully and faithfully discharged
its various obligations pursuant to Sections 4.4(b) and 4.4(c) of this
Agreement.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
9.2 CONDITIONS TO OBLIGATIONS OF DR PARTNERS. The obligation of DR
Partners to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of each of the MediaNews Parties and Gannett
contained in this Agreement shall be true and correct in all material
respects as of the Closing, with the same force and effect as if made as of
the Closing, and all the covenants contained in this Agreement to be complied
with by each of the MediaNews Parties and Gannett on or before the Closing
shall have been complied with in all material respects, and DR Partners shall
have received a certificate of each of the MediaNews Parties and Gannett to
such effect signed by a duly authorized officer of such party.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order, which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any Order be pending)
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, pending or threatened,
seeking money damages; PROVIDED that the rights granted by this Section
9.2(b) shall not apply if DR Partners shall have directly or indirectly
solicited or encouraged any such action.
66
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Closing with governmental and regulatory
authorities, and all consents, approvals, permits and authorizations required
to be obtained prior to the Closing from governmental and regulatory
authorities in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby, shall have been
made or obtained, as the case may be.
(d) FORMATION OF WEST COAST MEDIANEWS. DR Partners and
their counsel shall be reasonably satisfied that West Coast MediaNews shall
have been properly formed and organized and shall have all necessary power
and authority to consummate the transactions contemplated by this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY THE MEDIANEWS PARTIES
AND GANNETT. The MediaNews Parties and Gannett shall have fully and
faithfully discharged their various obligations pursuant to Sections 4.4(a)
and 4.4(c) of this Agreement.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF GANNETT. The obligation of
Gannett to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES; COVENANTS. The
representations and warranties of each of the MediaNews Parties and DR
Partners contained in this Agreement shall be true and correct in all
material respects as of the Closing, with the same force and effect as if
made as of the Closing, and all the covenants contained in this Agreement to
be complied with by each of the MediaNews Parties and DR Partners on or
before the Closing shall have been complied with in all material respects,
and Gannett shall have received a certificate of each of the MediaNews
Parties and DR Partners to such effect signed by a duly authorized officer of
such party.
(b) NO ORDER. No governmental or regulatory authority or
other agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Order, which is in
effect restricting, preventing or prohibiting consummation of the
transactions contemplated by this Agreement (nor shall any Order be pending)
nor shall there be any proceeding initiated by any such governmental or
regulatory authority, agency, commission or court, pending or threatened,
seeking money damages; PROVIDED that the rights granted by this Section
9.3(b) shall not apply if Gannett shall have directly or indirectly solicited
or encouraged any such action.
(c) OTHER GOVERNMENTAL AND REGULATORY CONSENTS. All filings
required to be made prior to the Closing with governmental and regulatory
authorities, and all consents, approvals, permits and authorizations required
to be obtained prior to the Closing from governmental and regulatory
authorities in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby (including any
67
consent or other communications which Gannett may in its sole judgment
believe may be necessary or appropriate from the Justice Department or the
Federal Trade Commission prior to the consummation of such transactions),
shall have been made or obtained, as the case may be.
(d) FORMATION OF WEST COAST MEDIANEWS AND DONREY. Gannett
and its counsel shall be reasonably satisfied that West Coast MediaNews and
Donrey shall have been properly formed and organized and shall have all
necessary power and authority to consummate the transactions contemplated by
this Agreement.
(e) DELIVERY OF CERTAIN DOCUMENTS BY THE MEDIANEWS PARTIES
AND DR PARTNERS. The MediaNews Parties and DR Partners shall have fully and
faithfully discharged their various obligations pursuant to Sections 4.4(a)
and 4.4(b) of this Agreement, including, but not limited to their obligations
with respect to the USA TODAY printing agreement in the form attached as
Exhibit V to this Agreement. In addition, the Partnership shall have
delivered to Gannett a commitment, in such form as may be mutually acceptable
to Gannett and the Partnership, to cause the continued use of USA WEEKEND at
all newspapers owned by the Partnership which currently use USA WEEKEND.
(f) EXECUTION OF ASSUMPTION AGREEMENT. The Partnership
shall have executed the Assumption Agreement.
X. TERMINATION OF AGREEMENT
10.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of DR Partners, the
MediaNews Parties and Gannett; or
(b) by any of DR Partners, the MediaNews Parties or Gannett,
if the Closing shall not have occurred on or prior to April 1, 1999;
PROVIDED, HOWEVER, that the right to terminate this Agreement under this
Section 10.1(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Closing to occur on or prior to such
date; or
(c) by any of the MediaNews Parties, DR Partners or Gannett,
if it has become impossible for any condition to the terminating party's
obligation to consummate the transactions contemplated hereby to be
satisfied, PROVIDED that such condition has become impossible to satisfy
other than as a result of the failure of such party to perform its
obligations under this Agreement; or
(d) by the MediaNews Parties, if a material adverse change
shall have occurred relative to the assets, liabilities, operations or
business prospects of any of the
68
Donrey Newspapers, or Gannett Newspapers, or relative to the Donrey Assets or
Gannett Assets considered as a whole, subsequent to the date of execution of
this Agreement; or
(e) by DR Partners, if a material adverse change shall have
occurred relative to the assets, liabilities, operations or business
prospects of any of the MediaNews Newspapers or Gannett Newspapers, or
relative to the MediaNews Assets or Gannett Assets considered as a whole,
subsequent to the date of execution of this Agreement; or
(f) by Gannett, if a material adverse change shall have
occurred relative to the assets, liabilities, operations or business
prospects of any of the MediaNews Newspapers or Donrey Newspapers, or
relative to the MediaNews Assets or Donrey Assets considered as a whole,
subsequent to the date of execution of this Agreement.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 10.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto except
(i) as set forth in Section 11.2 hereof and (ii) nothing herein shall relieve
either party from Liability for any wilful breach hereof.
10.3 WAIVER. At any time prior to the Closing, any party hereto may
(a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein.
XI. INDEMNIFICATION
11.1 GENERAL. From and after the Closing, the parties shall
indemnify each other as provided in this Article XI. For the purposes of
this Article XI each of the parties shall be deemed to have remade all of its
representations and warranties contained in this Agreement at the Closing
with the same effect as if originally made at the Closing, provided that any
representation or warranty which by its terms is made with respect to a
specific date will at Closing be understood to continue to be made with
respect to such specific date. As used in this Agreement, the term "DAMAGES"
shall mean all liabilities, demands, claims, actions or causes of action,
regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including, without limitation: reasonable attorneys', accountants',
investigators', and experts' fees and expenses sustained or incurred in
connection with the defense or investigation of any such claim.
11.2 INDEMNIFICATION OBLIGATIONS. Notwithstanding any other
provision of this Agreement, each party (an "INDEMNIFYING PARTY") shall
defend, indemnify, save and keep harmless the other parties, the Partnership
and their respective successors and permitted
69
assigns (collectively, the "INDEMNIFIED PARTIES") against and from any and
all Damages sustained or incurred by any of them resulting from or arising
out of or by virtue of:
(a) any breach of any representation or warranty made by the
Indemnifying Party in this Agreement or in any closing document delivered to
the Indemnified Parties in connection with this Agreement, except, in the
case of any breach of any representation or warranty made by Gannett in
Article VII hereof, to the extent such breach is effectively cured by the
delivery by Gannett to each of the other parties hereto of one or more
revisions to Section 7.3 through Section 7.25 of its Disclosure Schedule
within fifteen days of the date of the Closing, so long as any such Section
of Gannett's Disclosure Schedule, as so revised, does not, upon such
revision, contain exceptions or limitations which will have a proportionately
greater adverse financial impact upon the Partnership than the limitations or
exceptions disclosed in either of the comparable sections of the MediaNews
Parties or DR Partners Disclosure Schedules in the form delivered prior to
the Closing;
(b) any breach by the Indemnifying Party of, or failure by
the Indemnifying Party to comply with, any of its covenants or obligations
under this Agreement (including, without limitation, their obligations under
this Article XI);
(c) the failure to discharge when due any of the
Indemnifying Party's Excluded Liabilities, or any claim against the
Indemnified Parties with respect to any of the Indemnifying Party's Excluded
Liabilities, or
(d) any liability arising out of the Indemnifying Party's
ownership or operation of such party's Newspapers or Assets which are the
subject of this Agreement, other than those Liabilities which are reflected
on the Final Working Capital Statements described in Section 4.5(b) of this
Agreement.
In no event, however, shall: (a) the MediaNews Parties be obligated to
indemnify the Partnership with respect to any breaches of any representation
or warranty under Section 11.2(a) hereof (except for breach of
representations and warranties under Section 5.20 hereof) until the aggregate
amount of all Damages sustained or incurred by the Partnership for which the
MediaNews Parties would by virtue of the foregoing be responsible exceeds
$550,000, and then the MediaNews Parties' liability therefor shall be limited
only to the amount of such excess; (b) DR Partners be obligated to indemnify
the Partnership with respect to any breach of any representation or warranty
under Section 11.2(a) hereof (except for breaches of representations under
Section 6.20 hereof) until the aggregate amount of all Damages sustained or
incurred by the Partnership for which DR Partners would by virtue of the
foregoing be responsible exceeds $300,000, and then DR Partners' liability
therefor shall only be limited to the amount of such excess and (c) Gannett
be obligated to indemnify the Partnership with respect to any breach of any
representation or warranty under Section 11.2(a) hereof (except for breaches
of representations and warranties under Section 7.20 hereof) until the
aggregate amount of all Damages sustained or incurred by the Partnership for
which Gannett would by virtue of the foregoing be responsible exceeds
$150,000, and then Gannett's liability therefore shall be limited only to the
amount of such excess. In addition, no party shall be liable to indemnify
the other
70
parties with respect to any breach of which such other party(ies) had actual
knowledge prior to the Closing.
Any indemnification obligation arising under this Article XI shall be
discharged by a capital contribution by the Partner owing such obligation to
the Partnership in the amount of the Damages relating thereto. From the
date of determination of such obligation (which shall be the date agreed by
the parties or the date of a final binding determination by a mediator or the
date of a final, non-appealable determination by a court of competent
jurisdiction, as applicable) to the date such capital contribution is made in
immediately available funds, the amount of such obligations shall accrue
interest at a rate of 9 percent per annum, which interest shall be charged to
the capital account of the Partner owing such obligation.
11.3 EXCLUSIVE REMEDY. The sole and exclusive remedy of Indemnified
Parties with respect to any and all claims relating to the subject matter of
this Agreement shall be pursuant to the indemnification provisions set forth
in this Article XI.
11.4 THIRD PARTY CLAIMS. Promptly following the receipt of notice
of any claim for Damages or for equitable relief which are asserted or
threatened by a party other than the parties hereto, their successors or
permitted assigns (a "THIRD PARTY CLAIM"), the party receiving the notice of
the Third Party Claim shall (a) notify the other parties in writing at the
address set forth in Section 12.6 hereof of its existence setting forth with
reasonable specificity the facts and circumstances of which such party has
received notice and (b) if the party giving such notice is an Indemnified
Party, specifying the basis hereunder upon which the Indemnified Party's
claim for indemnification is asserted. No failure to give notice of a claim
shall affect the indemnification obligations of the Indemnifying Party
hereunder, except to the extent that the Indemnifying Party can demonstrate
that such failure materially prejudiced such Indemnifying Party's ability to
successfully defend the matter giving rise to the claim. The Indemnified
Party shall tender the defense of a Third Party Claim to the Indemnifying
Party.
The Indemnified Party shall not have the right to defend or settle such Third
Party Claim. The Indemnified Party shall have the right to be represented by
counsel at its own expense in any such contest, defense, litigation or
settlement conducted by the Indemnifying Party. The Indemnifying Party shall
lose its right to defend and settle the Third Party Claim if it shall fail to
diligently contest the Third Party Claim. So long as the Indemnifying Party
has not lost its right and/or obligation to defend and settle as herein
provided, the Indemnifying Party shall have the right to contest, defend and
litigate the Third Party Claim and shall have the right, in its discretion
exercised in good faith, and upon the advice of counsel, to settle any such
matter, either before or after the initiation of litigation, at such time and
upon such terms as it deems fair and reasonable; provided that in any event
the Indemnifying Party shall consult with the Indemnified Party with respect
to settling such matter which decision shall be made by mutual agreement of
the Indemnifying Party and the Indemnified Party, not to be unreasonably
withheld by either. All expenses (including without limitation attorneys'
fees) incurred by the Indemnifying Party in connection with the foregoing
shall be paid by the Indemnifying Party. Notwithstanding the foregoing, in
connection with any
71
settlement negotiated by an Indemnifying Party, no Indemnified Party shall be
required by an Indemnifying Party to (w) enter into any settlement that does
not include as an unconditional term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a release from all liability in respect
of such claim or litigation, (x) enter into any settlement that attributes by
its terms liability to the Indemnified Party, (y) consent to the entry of any
judgment that does not include as a term thereof a full dismissal of the
litigation or proceeding with prejudice or (z) enter into any settlement
which would, or could reasonably be expected to, result in or relate to
either a material nonmonetary obligation or restriction of any kind
whatsoever being imposed upon the Indemnified Party (whether with respect to
the conduct of the Indemnifying Party's Newspapers or otherwise) or Damages
other than Damages which are indemnifiable under this Article XI; PROVIDED,
HOWEVER, that the Indemnifying Party may enter into the settlements described
in (w) and (y) above if (1) such settlement is not in any way materially
damaging or harmful to the Partnership's Newspapers or the Indemnified
Parties, as the case may be, and (2) the Indemnifying Party agrees to remain
liable to the Indemnified Party for indemnification with respect to such
claim indefinitely thereafter. No failure by an Indemnifying Party to
acknowledge in writing its indemnification obligations under this Article XI
shall relieve it of such obligations to the extent they exist. If an
Indemnified Party is entitled to indemnification against a Third Party Claim,
and the Indemnifying Party fails to accept the defense of a Third Party Claim
tendered pursuant to this Section 11.4, the Indemnifying Party shall lose its
right to contest, defend, litigate and settle such a Third Party Claim;
provided that the Indemnifying Party shall be entitled to participate, at its
expense, with counsel of its choice, and any settlement shall be approved by
the Indemnifying Party, such approval not to be unreasonably withheld, the
Indemnified Party shall have the right, without prejudice to its right of
indemnification hereunder, in its discretion exercised in good faith and upon
the advice of counsel, to contest, defend and litigate such Third Party
Claim, and subject to the preceding sentence may settle such Third Party
Claim, either before or after the initiation of litigation. If, pursuant to
this Section 11.4, the Indemnified Party so defends or (except as hereinafter
provided) settles a Third Party Claim, for which it is entitled to
indemnification hereunder, as hereinabove provided, the Indemnified Party
shall be reimbursed by the Indemnifying Party for the reasonable attorneys'
fees and other expenses of defending the Third Party Claim which is incurred
from time to time, forthwith following the presentation to the Indemnifying
Party of itemized bills for said attorneys' fees and other expenses.
11.5 OTHER INDEMNIFICATION CLAIMS. The Indemnified Party shall give
the Indemnifying Party prompt notice of any Indemnification Claim (other than
a Third Party Claim) specifying the basis hereunder upon which the
Indemnified Party's claim for indemnification is asserted. No failure to
give notice of a claim shall affect the indemnification obligations of the
Indemnifying Party hereunder, except to the extent that the Indemnifying
Party can demonstrate that such failure materially prejudiced such
Indemnifying Party's ability to successfully defend or otherwise respond to
the matter giving rise to the claim. In respect of any Indemnification Claim
other than a Third Party Claim, the Partnership shall provide the
Indemnifying Party with the opportunity and all appropriate access to the
applicable facilities, personnel, books and records to conduct (under the
Indemnifying Party's control) necessary to respond to such Indemnification
Claim.
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XII. GENERAL
12.1 LIABILITY FOR COVENANTS, REPRESENTATIONS AND WARRANTIES AFTER
CLOSING. Except as provided in Article XI of this Agreement, from and after
the Closing no party to this Agreement shall have any Liability whatsoever
for breach of the covenants, representations and warranties set forth in this
Agreement.
12.2 TRANSACTIONAL COSTS/EXPENSES. Except as otherwise expressly
herein provided, each party shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the consummation of
the transactions contemplated hereby, including, without limitation,
attorneys', accountants, and other professional fees and expenses. The
Partnership shall, however, reimburse the MediaNews Parties and DR Partners
and Gannett for all applicable sales, use and real estate transfer taxes, and
all title insurance and related real estate settlement costs incurred in
connection with the transfer of the MediaNews Assets, the Donrey Assets and
the Gannett Assets to the Partnership.
12.3 ENTIRE AGREEMENT. This Agreement, together with the Schedules
and Exhibits hereto and the Ancillary Agreements, contain the entire
understanding of the parties and supersede all prior agreements and
understandings relating to the subject matter hereof and this Agreement shall
not be amended except by a written instrument hereafter signed by all of the
parties hereto.
12.4 ASSIGNMENT; NO THIRD PARTY BENEFICIARY RIGHTS. None of the
parties hereto may assign its rights or delegate its obligations under this
Agreement without the written consent of the other parties hereto. This
Agreement and all of the provisions hereof shall be binding upon and inure
only to the benefit of the parties hereto and their respective heirs,
executors, personal representatives and successors, and no other person,
including, but not limited to, any employee or creditor of any party hereto
or any affiliate thereof, shall have any rights or obligations hereunder.
12.5 FURTHER ACTION. Each of the parties hereto shall use all
reasonable efforts to do, or cause to be done, all things necessary, proper
or advisable under applicable law to carry out the provisions of this
Agreement and shall execute and deliver such documents and other papers as
may be required to carry out the provisions of this Agreement.
12.6 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery -in
person, by courier service, by cable, by telecopy, by telegram, by telex or
by registered or certified mail (postage prepaid, return
73
receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to the MediaNews Parties:
c/o MediaNews Group, Inc
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, XX
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx, Bernhard, XxXxxxxxx & Hand, Chartered
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attn: Xxxxxx Xxxxx, Esq.
Telecopy: 000-000-0000
if to DR Partners
c/o Stephens Group, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attn: Xxx Xxxx and Xxxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
if to Gannett
c/o Gannett Co., Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx, Executive Vice President
and Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Gannett Co., Inc.
0000 Xxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
12.7 GOVERNING LAW AND VENUE. The validity and construction of this
Agreement and all ancillary agreements shall be governed by the internal laws
(and not the principles
74
of conflict of laws) of the State of Delaware. Subject to the provisions of
the Partnership Agreement with respect to the resolution by the parties
thereto of disputes thereunder pursuant to the mediation provisions therein
set forth, any legal action or proceeding with respect to this Agreement or
the Ancillary Agreements may be brought in the courts of the State of
Delaware and, by execution and delivery of this Agreement, each of the
MediaNews Parties, DR Partners and Gannett hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the MediaNews Parties, DR Partners and Gannett
hereby waives, and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation or enforcement of this Agreement or any
ancillary agreement, that it is not subject thereto or that such action, suit
or proceeding may not be brought or is not maintainable in said courts or
that this Agreement or any ancillary agreement may not be enforced in or by
said courts or that its property is exempt or immune from execution, that the
suit, action or proceeding is brought in an inconvenient forum, that the
venue of the suit, action or proceeding is improper or (provided that process
shall be served in any manner referred to in the following sentence) that
service of process upon such party is ineffective. Each of the MediaNews
Parties DR Partners and Gannett agrees that service of process in any such
action, suit or proceeding against it with respect to this Agreement may be
made upon it in any manner permitted by the laws of the State of Delaware or
the federal laws of the United States or as follows: (i) by personal service
or by certified or registered mail to the party's designated agent for such
service in such state, or (ii) by certified or registered mail to the party
at its address set frth above. Service of process in any manner referred to
in the preceding sentence shall be deemed, in every respect, effective
service of process upon such party.
12.8 MEDIATION. Each party agrees that, in the event of any dispute
among the parties regarding the interpretation or application of this
Agreement, it will follow the following procedures:
(a) it will give each other party written notice of the
matter in dispute;
(b) it will negotiate reasonably and in good faith with the
other parties in order to resolve such dispute for a period of not less than
fifteen (15) business days following receipt of the notice in (a);
(c) if the dispute has not been resolved by negotiation
pursuant to (b), it will cooperate with the other parties to submit the
dispute to an independent mediator (to be selected by the unanimous consent
of the parties, which shall only be withheld on the basis of good faith
concerns about the independence or adequacy of expertise of the proposed
mediator) who shall have ten (10) business days after the matter is fully
submitted to him or her to propose a settlement of the dispute; and,
(d) if any party refuses, in its sole and unreviewable
discretion to accept the proposed resolution of the mediator, it shall give
prompt written notice of such refusal to the other parties and, at any time
following receipt of any such notice, any party shall be free to pursue any
legal, equitable or other remedies available to it regarding the matter in
dispute.
75
Notwithstanding the foregoing, no party shall be required to pursue the
notice, negotiation or mediation steps set forth above if it determines,
reasonably and in good faith, the delay involved in such procedure would
cause irreparable, material harm to it or its interests.
12.9 WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives
trial by jury in any action, proceeding or counterclaim brought by or against
it on any matters whatsoever, in contract or in tort, arising out of or in
any way connected with this Agreement.
12.10 SEVERABILITY. If any one or more of the provisions contained
in this Agreement or any document executed in connection herewith shall be
invalid, illegal or unenforceable in any respect under any applicable law,
the validity, legality and enforceability of the remaining provisions
contained herein shall not (to the full extent permitted by law) in any way
be affected or impaired.
12.11 ATTORNEYS' FEES. In any action, proceeding or counterclaim
arising out of or in any way connected with this Agreement, the prevailing
parties shall be entitled to recover reasonable attorneys' fees and
disbursements incurred in connection therewith.
12.12 HEADINGS. The headings of Sections and Subsections are for
reference only and shall not limit or control the meaning thereof.
12.13 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.14 PUBLIC ANNOUNCEMENTS. No party hereto will (and each such
party will cause its Affiliates not to) issue any press release or otherwise
make any public statement with respect to the transactions contemplated
hereby without the prior written consent of the other parties, except as and
to the extent that such party or any of its Affiliates determines in good
faith that it is so obligated by applicable securities or other laws, in
which case such party shall give notice to the other parties in advance of
such party's or its Affiliate's intent to make such announcement or issue
such press release and the parties hereto shall use all reasonable efforts to
cause a mutually agreeable release or announcement to be issued.
12.15 COMPETITION. Each of the parties hereto or their Affiliates
may now or in the future compete with each other in areas other than the area
of operation of the Partnership. Nothing in this Agreement shall be deemed
to limit, nor shall limit, in any way such competition.
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IN WITNESS WHEREOF, and intending to be legally bound thereby,
GSN, Alameda, V & P, IMP, DR Partners MWSB and Sun have caused this Agreement
to be duly executed and delivered by their respective duly authorized
officers or general partners, as the case may be, as of the date and year
first above written.
GARDEN STATE NEWSPAPERS, INC. DR PARTNERS
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
ALAMEDA NEWSPAPERS, INC. MEDIA WEST - SBC, INC.
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
INTERNET MEDIA PUBLISHING, INC. THE SUN COMPANY OF
SAN BERNARDINO, CALIFORNIA
By: By:
-------------------------- --------------------------
Name: Name:
------------------------ ------------------------
Title: Title:
----------------------- -----------------------
V & P PUBLISHING, INC.
By:
--------------------------
Name:
------------------------
Title:
-----------------------
77
EXHIBIT A
DEFINED TERMS
"ABC" means the Audit Bureau of Circulations, Inc.
"Accounts Receivable" shall have the meaning specified in Section 1.1.
"Affiliate" means any person or entity which controls a party to this Agreement,
which that party controls, or which is under common control with that
party. "Control" means the power, direct or indirect, to direct or cause
the direction of the management and policies of a person or entity
through voting securities, contracts or otherwise.
"Agreement" shall have the meaning specified in the introductory paragraph to
this Agreement.
"ALTA" means American Land Title Association.
"Ancillary Agreement" shall have the meaning specified in Section 5.2
"Assignment Agreement" shall have the meaning specified in Section 4.4(i).
"Assumed Donrey Liabilities" shall have the meaning specified in Section 2.3.
"Assumed MediaNews Liabilities" shall have the meaning specified in Section 1.3.
"Assumption Agreement" shall have the meaning specified in Section 4.4(ii).
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C. Sec. 9601 ET SEQ..
"Closing" shall have the meaning specified in Section 4.3.
"Closing Date" shall have the meaning specified in Section 4.3.
"COBRA" shall have the meaning specified in Section 5.9.
"Code" shall have the meaning specified in Section 5.9.
"Containers" means (a) underground storage tanks (as defined in RCRA) and
(b) above-ground storage tanks which have a capacity of 100 gallons or
more.
"Damages" shall have the meaning specified in Section 11.1.
"Disclosure Schedule" shall have the meaning set forth in Section 4.1.
"Donrey Assets" shall have the meaning set forth in Section 2.1.
"Donrey Financial Statements" shall have the meaning specified in Section 6.5.
"Donrey Intellectual Property" shall have the meaning specified in Section 6.19.
"Donrey Newspapers LLC" shall have the meaning specified in Section 2.1
"Donrey Real Estate" shall have the meaning specified in Section 6.18.
"DR Partners' Records" shall have the meaning specified in Section 2.1.
"Employee Benefit Plans" shall have the meaning specified in Section 5.9(c).
"Environment" means any surface water, groundwater, drinking water supply, land
surface or subsurface strata, or ambient air, including, without
limitation, any indoor location.
"Environmental Laws" means all Federal, state and local statutes, regulations,
ordinances, rules, regulations and written government agency policies,
all court orders and decrees and arbitration awards, and the common law,
which pertain to environmental matters or contamination of any type
whatsoever. Environmental Laws include, without limitation, those
relating to: manufacture, processing, use, distribution, treatment,
storage, disposal, generation, transportation or cleanup of Hazardous
Materials; air, surface or ground water or noise pollution; Releases;
protection of wildlife, endangered species, wetlands, and natural
resources; Containers; health and safety of employees and other persons;
and notification requirements relating to the foregoing.
"Environmental Permits" means governmental licenses, permits, registrations,
approvals, agreements and consents which are required under or are issued
pursuant to Environmental Laws.
"Equipment" shall have the meaning specified in Section 1.1.
"ERISA" shall have the meaning specified in Section 5.9.
"ERISA Affiliate" shall have the meaning specified in Section 5.9.
"Excluded Donrey Assets" shall have the meaning specified in Section 2.2.
"Excluded Donrey Liabilities" shall have the meaning specified in Section 2.4.
"Excluded MediaNews Assets" shall have the meaning specified in section 1.2.
"Excluded MediaNews Liabilities" shall have the meaning specified in Section
1.4.
"Facility" means any facility as defined in CERCLA.
"FIRPTA" shall have the meaning specified in Section 4.4.
"GAAP" shall mean generally accepted accounting principles in effect at the date
when applied, consistent with prior periods.
"Hazardous Materials" means petroleum, petroleum products, petroleum
distillates, pesticides, asbestos, polychlorinated biphenyls, radioactive
materials and substances, radon and any materials or substances which are
regulated under or defined as, or otherwise included in the definition,
of "hazardous materials", "hazardous substances", "solid wastes",
"recyclable materials", "hazardous wastes", "special wastes", "toxic
substances" or "toxic pollutants" in any applicable Environmental Law.
"Indemnification Claims" means Third Party Claims plus other claims for Damages
or for equitable relief which are asserted or threatened by the parties
hereto, their successors and permitted assigns, against any Indemnified
Party, or to which an Indemnified Party is subject.
"Indemnified Party" means a party entitled to indemnification under this
Agreement.
"Indemnifying Party" means a party from whom indemnification is sought under
this Agreement.
"Inventory" shall have the meaning specified in Section 1.1.
"Liabilities" shall have the meaning specified in Section 1.3.
"Liens" shall mean any lien, security interest, mortgage, restriction, pledge,
option, lease or sublease, claim, easement, encroachment or encumbrance.
"MediaNews Financial Statements" shall have the meaning specified in section 5.5
"MediaNews Intellectual Property" shall have the meaning specified in Section
5.19.
"MediaNews Assets" shall have the meaning specified in Section 1.1.
"MediaNews Newspapers" shall have the meaning specified in Section 1.1.
"MediaNews Parties" shall have the meaning specified in Section 1.1.
"MediaNews Parties' Records" shall have the meaning specified in Section 1.1.
"Media News Real Estate" shall have the meaning specified in Section 5.18.
"Multi-employer Plan" shall have the meaning assigned to such term in ERISA.
"Newspaper" shall have the meaning assigned to such term in the Recitals hereto.
"Partnership Agreement" shall have the meaning specified in Section 4.1(a).
"PBGC" shall have the meaning specified in Section 5.9.
"Permits" shall have the meaning specified in Section 5.7.
"Permitted Donrey Liens" shall have the meaning specified in Section 2.1.
"Permitted MediaNews Lines" shall have the meaning specified in Section 1.1.
"Plans" shall have the meaning specified in Section 5.9(b).
"Prepaids" shall have the meaning specified in Section 1.1.
"RCRA" means the Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6902
ET SEQ.
"Release" means any spill, discharge, leak, emission, escape, injection,
dumping, disposal or other release or threatened release of any Hazardous
Materials into the environment, whether or not notification or reporting
to any governmental agency was or is required, including, without
limitation, any Release which is subject to CERCLA.
"System" shall have the meaning specified in Section 5.20.
"Tax" or "Taxes" shall mean all taxes and other charges imposed by any
governmental authority and accruing prior to the Closing, together with
any interest or any penalty related thereto.
"Tax Assets" shall mean all Taxes receivable from a governmental authority and
all Tax refunds receivable from a governmental authority (including
prepaid Taxes).
"Third Party Claims" shall mean any claims for Damages or for equitable relief
which are asserted or threatened by a party other than the parties
hereto, their successors and permitted assigns, against any Indemnified
Party or to which
an Indemnified Party is subject.
"Trademark" or "Trademarks" shall have the meaning specified in Section 5.9.
"West Coast Media News LLC" shall have the meaning specified in Section 1.1.
"Working Capital Statements" shall have the meaning specified in Section 4.5(a).
"Year 2000 Compliant" shall have the meaning specified in Section 5.20.
