FIRST AMENDMENT TO JOINT OPERATING AGREEMENT EXHIBIT 10.04
This FIRST AMENDMENT TO JOINT OPERATING AGREEMENT (this
"Amendment") is dated January 22, 2001, by and among The Denver
Post Corporation, a Delaware corporation ("Denver Post"), Eastern
Colorado Production Facilities, Inc., a Delaware corporation
("Eastern Colorado" and together with Denver Post, the "Post
Entities"), Denver Newspaper Agency LLP, a Delaware limited
liability partnership (the "LLP") and The Denver Publishing
Company, a Colorado corporation ("Denver Publishing").
RECITALS
WHEREAS, the Post Entities, Denver Post Production
Facilities LLC, a Delaware limited liability company (the
"LLC"), and Denver Publishing previously entered into that
certain Joint Operating Agreement (the "Original Agreement"),
dated as of May 11, 2000, pursuant to which the parties agreed
to combine certain newspaper properties into a single business
operation in the form of a Delaware limited liability company;
WHEREAS, the LLC has been converted into a Delaware limited
liability partnership, and in connection therewith, changed its
name to "The Denver Newspaper Agency LLP"; and
WHEREAS, the parties now desire to amend the Original
Agreement to reflect that the business operations described
therein shall be conducted in the form of a Delaware limited
liability partnership and not a Delaware limited liability
company, and to make certain changes as set forth herein.
NOW, THEREFORE, in consideration of the Original Agreement and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Amendment.
(a) The Original Agreement is hereby amended by (i)
substituting "The Denver Newspaper Agency LLP, a Delaware
limited liability partnership" for any and all references to
"Denver Post Production Facilities LLC, a Delaware limited
liability company," (ii) substituting "the LLP" for any and
all references to "the LLC" and (iii) removing any and all
references to the LLC changing its name to "The Denver
Newspaper Agency LLP." This Section 1(a) is intended to
reflect in the Original Agreement the conversion of Denver
Post Production Facilities LLC into Denver Newspaper Agency
LLP and, notwithstanding anything else to the contrary in this
Section 1(a), shall be applied consistently with such intent.
(b) The Original Agreement is hereby amended by adding
the clause", as amended by that certain First Amendment to
Contribution and Sale Agreement, dated January 22, 2001, by and
among the Post Entities, Denver Publishing, and the LLP,"
after any reference therein to "The Denver Newspaper Agency
Contribution and Sale Agreement."
(c) The Original Agreement is hereby amended by
deleting all references to "Limited Liability Company
Operating Agreement" and replacing such references with
"Limited Liability Partnership Agreement."
(d) The Original Agreement is hereby amended by deleting
in its entirety the form of Denver Newspaper Agency Limited
Liability Company Operating Agreement attached as Exhibit B
to the Original Agreement and replacing such Exhibit B with
the form of Denver Newspaper Agency Limited Liability
Partnership Agreement attached as Exhibit A hereto.
(e) The Original Agreement is hereby amended by deleting
Section 1.13 in its entirety and replacing it with the
following:
" 1.13 Limitation on Assumption of Liabilities. On
the Effective Date, the LLP shall assume and be
responsible for only those liabilities or obligations of
Denver Post and Denver Publishing that are specifically
contemplated by this Agreement and The Denver Newspaper
Agency Contribution and Sale Agreement to be assumed by
the LLP and for no others. In addition to any
liabilities which may be defined as Denver Post Excluded
Liabilities or Denver Publishing Excluded Liabilities in
The Denver Newspaper Agency Contribution and Sale
Agreement, the liabilities to be assumed by the LLP on
the Effective Date shall not include any of the
following liabilities (all of which shall hereinafter
collectively be deemed "Excluded Liabilities"): All
intercompany indebtedness, all indebtedness for borrowed
money (other than capital leases related to the
operations of The Denver Post or Denver Rocky Mountain
News), all deferred tax liabilities of whatever nature,
all accrued income or franchise tax liabilities, all
liabilities for failure to perform or discharge in a
timely manner prior to the Effective Date any liability
to be assigned to the LLP as of the Effective Date
hereof, all liabilities arising from any breach
occurring prior to the Effective Date under any
contract, license or other instrument to be assigned to
the LLP as of the Effective Date, all liabilities
arising from any litigation pending or threatened as of
the Effective Date with respect to the operations of
Denver Post or Denver Publishing or any assets to be
transferred to the LLP as of the Effective Date, all
liabilities arising out of any violations occurring
prior to the Effective Date of any law or governmental
regulation applicable to the operations of Denver Post
or Denver Publishing or the assets being transferred to
the LLP as of the Effective Date, and any current
liabilities in the nature of accounts payable or other
accrued liabilities; provided, however, the current
liabilities shall exclude (i) the current portion of the
capital leases relating to the respective operations of
The Denver Post and Denver Rocky Mountain News and (ii)
the unfulfilled portion of the prepaid subscription
liabilities for each of The Denver Post and Denver Rocky
Mountain News, and, thus, each shall not be included in
the term "Excluded Liabilities".
Denver Post and Denver Publishing, respectively,
shall indemnify and hold the other party and the LLP
harmless against any and all damage, loss and cost
(including reasonable attorneys' fees) arising out of or
related to any Excluded Liability or any other liability
or obligation of the indemnifying party that is not to
be assumed by the LLP as of the Effective Date pursuant
to this Agreement or The Denver Newspaper Agency
Contribution and Sale Agreement."
(f) The Original Agreement is hereby amended by
deleting Exhibit C and Exhibit D in their entirety and
replacing them with Exhibit B attached hereto, with respect
to Exhibit C in the Original Agreement, and Exhibit C
attached hereto, with respect to Exhibit D in the Original
Agreement.
(g) Section 1.6(d) of the Original Agreement is hereby
amended by (i) deleting the word "and" immediately before
clause (d) of such Section 1.6(d), and (ii) adding the
following language before the period at the end of such clause
(d) of Section 1.6(d): "and (e) an amount equal to the
Excluded Payables (as such term is defined in The Denver
Newspaper Agency Limited Liability Partnership Agreement)
shall be treated as if such Excluded Payables had been assumed
by the LLP for all purposes of this Section 1.6."
2. Representations and Warranties. Each of the parties hereto
represents and warrants to each of the other parties hereto that
the following statements are true and correct as of the date
hereof:
(a) Such party has all requisite corporate or limited
liability company power and authority to execute and deliver
this Amendment; and
(b) The execution and delivery of this Amendment will not
conflict with, violate, or result in the breach of any term or
provision of, or immediately or with the giving of notice, the
passage of time, or both, constitute a default or event of
default under any agreement, indenture, deed of trust,
mortgage, instrument, order, law, decree or regulation to
which such person is a party.
3. Miscellaneous.
(a) This Amendment may be executed in any number of
counterparts, and each counterpart hereof shall be deemed to
be an original instrument, but all such counterparts shall
constitute but one Agreement.
(b) This Amendment shall bind and inure to the benefit of
the parties hereto, and their respective successors and
assigns.
(c) This Amendment shall be governed by and construed
and interpreted in accordance with the substantive laws of
the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date and year first
written above.
THE DENVER POST CORPORATION
By:
Name: Joseph J. Lodovic, IV
Title: Executive Vice President
and Chief Financial Officer
EASTERN COLORADO PRODUCTION
FACILITIES, INC.
By:
Name: Joseph J. Lodovic, IV
Title: Executive Vice President
and Chief Financial Officer
DENVER NEWSPAPER AGENCY LLP
By: The Denver Post Corporation
By:
Name: Joseph J. Lodovic, IV
Title: Executive Vice President
and Chief Financial Officer
By: The Denver Publishing Company
By:
Name:
Title:
THE DENVER PUBLISHING COMPANY
By:
Name:
Title:
Joint Operating Agreement
Among
The Denver Post Corporation,
Eastern Colorado Production Facilities, Inc.,
Denver Post Production Facilities LLC
And
The Denver Publishing Company
Dated as of
May 11, 2000
TABLE OF CONTENTS
ARTICLE 1
The LLC
1.1 Denver Post Production Facilities LLC. 2
1.2 Amendment and Restatement of Operating Agreement; Change
of Name; Additional Capital Contribution by Denver Post. 3
1.3 Sale of a Portion of Denver Post's Membership Interest in
LLC to Denver Publishing; Initial Capital Contribution
by Denver Publishing. 4
1.4 Form of Additional Capital Contribution of Denver Post. 5
1.5 Form of Initial Capital Contribution of Denver Publishing. 6
1.6 Valuation of Certain Capital Contributions; Adjustment. 7
1.7 Other Capital Contributions. 9
1.8 Failure to Make Payments. 10
1.9 Contracts, Leases, Permits and Commitments; Assumption. 10
1.10 Advertising Contracts. 12
1.11 Subscription Contracts. 13
1.12 Accounts Receivable. 13
1.13 Limitation on Assumption of Liabilities. 14
1.14 Delivery of Books and Records. 15
1.15 Use of Facilities and Properties. 15
1.16 Employees. 15
1.17 Newsprint Purchases. 18
1.18 Initial Activities of the LLC 19
ARTICLE 2
Activities of the LLC
2.1 Publication of Newspapers. 19
2.2 Property Used. 21
2.3 Editorial Independence. 22
2.4 News and Editorial Services and Expenses. 22
2.5 Office Space. 27
ARTICLE 3
Quality of Content and Budgets
3.1 Quality of Content. 27
3.2 Budgets. 28
ARTICLE 4
Duties of LLC, Including Distribution of Available Cash
4.1 Duties of LLC. 28
4.2 Allocation of Profits or Losses and Distributions of Cash. 29
4.3 Books and Records. 30
4.4 Financial Statements. 30
4.5 Auditors and Fiscal Year. 31
4.6 Tax Returns. 32
ARTICLE 5
Governance of LLC
5.1 Management Committee. 33
5.2 The President and Chief Executive Officer. 35
5.3 Certain Other Matters. 35
5.4 Compensation. 35
ARTICLE 6
Other Matters
6.1 Representations and Warranties. 35
6.2 Certain Action. 37
6.3 NPA Filing. 37
6.4 Announcements. 38
6.5 Interim Covenants. 39
ARTICLE 7
Duration; Termination
7.1 Term. 41
7.2 Termination of this Agreement; Dissolution of the LLC. 42
7.3 Termination at End of Term. 44
7.4 Transfers of Interests Under the Agreement and The Denver
Newspaper Agency Limited Liability Company Operating
Agreement. 45
ARTICLE 8
Costs and Liabilities
8.1 Responsibility for Costs. 46
8.2 Nature of Relationship. 47
8.3 Members' Individual Responsibilities. 47
8.4 LLC's Responsibility. 48
8.5 Force Majeure. 48
ARTICLE 9
Miscellaneous
9.1 Notices. 49
9.2 Non-Assignability. 50
9.3 Entire Understanding. 51
9.4 Headings. 51
9.5 Governing Law. 51
9.6 Modifications. 51
9.7 Severability. 51
9.8 Specific Performance. 52
9.9 No Third Party Beneficiaries. 52
EXHIBITS
Exhibit A Denver Newspaper Agency Contribution and Sale
Agreement
Exhibit B Denver Newspaper Agency Limited Liability
Company Operating Agreement
Exhibit C Denver Newspaper Agency License for Denver
Post Names and Denver Post Intangibles
Exhibit D Denver Newspaper Agency License for News
Names and News Intangibles
JOINT OPERATING AGREEMENT
This Joint Operating Agreement (hereinafter the "Agreement"
or "The Denver Newspaper Agency Joint Operating Agreement"),
dated as of May 11, 2000, is entered into by and among The Denver
Post Corporation, a Delaware corporation ("Denver Post"), The
Denver Publishing Company, a Colorado corporation ("Denver
Publishing") and Denver Post Production Facilities LLC, a
Delaware limited liability company.
Denver Post currently publishes The Denver Post each weekday
and weekend morning, in Denver, Colorado. Denver Publishing
currently publishes Denver Rocky Mountain News each weekday and
weekend morning, in Denver, Colorado. Both The Denver Post and
Denver Rocky Mountain News (each, hereinafter, a "Newspaper", and
both hereinafter, the "Newspapers") have substantial paid
circulations in the Denver, Colorado metropolitan area and
throughout the State of Colorado;
Although The Denver Post generates operating profits, Denver
Rocky Mountain News suffers substantial operating losses and is
currently in probable danger of financial failure;
The parties to this Agreement believe that the probable
failure of Denver Rocky Mountain News can be avoided and that
both Newspapers can be published profitably in the future
provided that (1) they enter into a joint newspaper operating
arrangement (a "JOA") pursuant to which their operating and
business functions (but not their news and editorial functions)
are appropriately combined, (2) both The Denver Post and Denver
Rocky Mountain News continue separately to be published each
weekday morning, (3) a special edition of Denver Rocky Mountain
News is published each Saturday morning containing editorial
pages from both Denver Rocky Mountain News and The Denver Post,
under a new, joint masthead and (4) a special edition of The
Sunday Denver Post is published each Sunday morning containing
editorial pages from both The Denver Post and Denver Rocky
Mountain News, under a new joint masthead;
Accordingly, the parties have agreed to enter into a joint
newspaper operating arrangement, which they believe meets the
requirements of and is entitled to the protection afforded by the
Newspaper Preservation Act, 15 U.S.C. 1801 et seq. ("NPA"). The
parties have determined that such an arrangement will serve not
only their best interests, but also those of their employees,
their subscribers, their advertisers and the communities which
they serve.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the
parties agree as follows:
ARTICLE 1
The LLC
1.1 Denver Post Production Facilities LLC.
Prior to the execution of this Agreement, Denver Post and its
wholly owned subsidiary, Eastern Colorado Production Facilities,
Inc., a Delaware corporation ("Eastern Colorado" and together
with Denver Post the "Post Entities")) caused to be formed under
the laws of the State of Delaware a limited liability company
named "Denver Post Production Facilities LLC" (the "LLC"). In
exchange for its and Eastern Colorado's membership interests
therein, Denver Post itself and on behalf of Eastern Colorado
transferred to the LLC the following assets (hereinafter,
collectively, "Denver Post Initial Capital Contribution"):
(a) all real property and all appurtenances thereto
and equipment thereon located at 4495 Fox Street, Denver,
Colorado (hereinafter, collectively the "Denver Post Production
Facility"); and,
(b) all furniture, fixtures, improvements, equipment,
machinery, parts, computer hardware, tools, printing presses and
other tangible property located at the Denver Post Production
Facility other than vehicles, leased personal property and
Inventory (as defined in the Contribution and Sale Agreement
appended as Exhibit A hereto).
1.2 Amendment and Restatement of Operating Agreement;
Change of Name; Additional Capital Contribution by Denver Post.
(a) As of the Effective Date, as hereinafter defined,
the Post Entities and the LLC shall jointly and severally cause
the LLC to change its name to "The Denver Newspaper Agency LLC,"
to amend and restate the LLC's operating agreement in the form
appended as Exhibit B hereto (hereinafter "The Denver Newspaper
Agency Limited Liability Company Operating Agreement"), and to
cause to be made to and received by the LLC an additional capital
contribution from Denver Post, hereinafter the "Denver Post
Additional Capital Contributions," in the form described in
Section 1.4 of this Agreement.
(b) Concurrently with the foregoing, Post Entities
shall also assign to the LLC, and the LLC shall assume and become
fully liable for, all of the liabilities relating to the
operation of The Denver Post and/or the Denver Post Contributed
Assets which are defined as "Denver Post Assumed Liabilities" in
Section 2.3 of The Denver Newspaper Agency Contribution and Sale
Agreement (hereinafter collectively also, the "Denver Post
Assumed Liabilities"). Upon the LLC's assumption of the Denver
Post Assumed Liabilities, Denver Post shall have no further
obligation or liability with respect thereto, and the LLC shall
pay and discharge all such assumed liabilities in full and in a
timely manner.
(c) As used in this Agreement, the "Effective Date"
shall be the first business day of the first month commencing
following the later of (i) the day on which the written consent
of the Attorney General of the United States becomes effective,
as provided in Section 4(b) of the NPA, and in Section 48.14 of
the Regulations under the NPA (28 CFR 48.1), and as contemplated
by Section 6.3 of this Agreement, provided that no injunction or
restraining order shall then be in effect which restrains or
prohibits the carrying out of this Agreement or the consummation
of any of the transactions contemplated hereby and all of the
material conditions for the closing of such transactions shall
then have been satisfied, or (ii) if such injunction or
restraining order is in effect, the first day on which it is
removed or eliminated without further right of appeal, and all
such conditions have been satisfied.
1.3 Sale of a Portion of Denver Post's Membership Interest
in LLC to Denver Publishing; Initial Capital Contribution by
Denver Publishing.
(a) Immediately following the implementation of the
various matters described and set forth in Section 1.2, Denver
Publishing shall (x) in exchange for a Percentage Interest equal
to Sixty Million Dollars ($60,000,000) divided by the then fair
market value of the net assets of the LLC, pay to Denver Post the
cash sum of Sixty Million Dollars ($60,000,000), hereinafter the
"Purchase Price" and (y) make an initial capital contribution to
the LLC, hereinafter the "Denver Publishing Initial Capital
Contribution," in the form set forth in Section 1.5 of this
Agreement such that after such contribution, the Percentage
Interests in the LLC shall be 50% for Denver Publishing, 49% for
Denver Post and 1% for Eastern Colorado.
(b) Concurrently with the foregoing, Denver Publishing
shall assign to the LLC, and the LLC shall, except as otherwise
provided in this Agreement, assume and become fully liable for,
all of the liabilities relating to the operations of Denver Rocky
Mountain News and/or the Denver Publishing Contributed Assets
which are defined as "Denver Publishing Assumed Liabilities" in
Section 3.3 of The Denver Newspaper Agency Contribution and Sale
Agreement (hereinafter collectively also, the "Denver Publishing
Assumed Liabilities"). Upon the LLC's assumption of the Denver
Publishing Assumed Liabilities, Denver Publishing shall have no
further obligation or liability with respect thereto, and the LLC
shall pay and discharge all such assumed liabilities in full and
in a timely manner.
1.4 Form of Additional Capital Contribution of Denver Post.
(a) Denver Post's Additional Capital Contribution
shall consist of the cash sum of One Million Dollars ($1,000,000)
and all of its rights, title, and interest not previously
contributed to the LLC in and to the specific properties and
assets currently used or held for use in connection with the
production and publication of The Denver Post which are defined
as the "Additional Denver Post Contributed Assets" in Section 2.1
of The Contribution and Sale Agreement of even date herewith
entered into by the parties hereto (hereinafter, "The Denver
Newspaper Agency Contribution and Sale Agreement" and also
hereinafter collectively the "Additional Denver Post Contributed
Assets"). A copy of The Denver Newspaper Agency Contribution and
Sale Agreement is appended as Exhibit B to this Agreement.
(b) The assets defined in Section 2.2 of The Denver
Newspaper Agency Contribution and Sale Agreement as "Denver Post
Excluded Assets" shall not constitute any part of the Additional
Denver Post Contributed Assets but shall remain the separate
property of Denver Post from and after the Effective Date.
Notwithstanding the foregoing, Denver Post shall grant to the LLC
a royalty-free license with respect to such of the Denver Post
Excluded Assets as are defined as the Denver Post Names and the
Denver Post Intangibles in Section 2.2 of The Denver Newspaper
Agency Contribution and Sale Agreement. Such license shall be in
the form attached hereto as Exhibit C, which shall be executed by
Denver Post and delivered to the LLC on the Effective Date.
1.5 Form of Initial Capital Contribution of Denver
Publishing.
(a) Denver Publishing's Initial Capital Contribution
shall consist of the cash sum of One Million Dollars ($1,000,000)
and all of its rights, title, and interest in and to the specific
properties and assets used or held for use in connection with the
production and publication of Denver Rocky Mountain News which
are defined as "Denver Publishing Contributed Assets" in Section
3.1 of The Denver Newspaper Agency Contribution and Sale
Agreement (hereinafter collectively also, the "Denver Publishing
Contributed Assets").
(b) The assets defined in Section 3.2 of The Denver
Newspaper Agency Contribution and Sale Agreement as "Denver
Publishing Excluded Assets" shall not constitute any part of the
Denver Publishing Contributed Assets but shall remain the
separate property of Denver Publishing from and after the
Effective Date. Notwithstanding the foregoing, Denver Publishing
shall grant to the LLC a royalty-free license with respect to
such of the Denver Publishing Excluded Assets as are defined as
the News Names and the News Intangibles in Section 3.2 of The
Denver Newspaper Agency Contribution and Sale Agreement. Such
license shall be in the form attached hereto as Exhibit D, which
shall be executed by Denver Publishing and delivered to the LLC
on the Effective Date.
1.6 Valuation of Certain Capital Contributions; Adjustment.
(a) Subject to the making of the True-Up Contribution
(as hereinafter defined), each of the parties to this Agreement
agrees, for all purposes with respect to this Agreement, The
Denver Newspaper Agency Limited Liability Company Operating
Agreement and The Denver Newspaper Agency Contribution and Sale
Agreement, that the fair market value of (i) Denver Post's and
Eastern Colorado's aggregate Initial and Additional Capital
Contributions and aggregate capital account balances and (ii) the
Purchase Price and Denver Publishing's Initial Capital
Contribution and capital account balance, shall be deemed to be
equal.
(b) To the extent that the aggregate value, determined
(except as hereinafter expressly provided) in accordance with
generally accepted accounting principles consistently applied, of
the working capital contributed to the LLC as of the Effective
Date by each of Post Entities and Denver Publishing as a
consequence of Post Entities' Additional Capital Contribution and
Denver Publishing's Initial Capital Contribution differs, the
party whose working capital contribution is the lesser in value
shall promptly following the final determination of such value
(as hereinafter provided) contribute to the LLC an additional
cash sum (the "True-Up Contribution") equal to the difference in
value of the parties' respective working capital contributions.
Once made, such True-Up Contribution shall be deemed to be part
of the capital contribution of the party making such True-Up
Contribution and aggregate capital contributions and aggregate
capital accounts of the Post Entities shall be deemed equal to
the capital contribution and capital account of Denver
Publishing.
(c) For purposes of determining the amount of any
required True-Up Contribution, the determination of the value of
the working capital contributed to the LLC as of the Effective
Date by each of Denver Post and Denver Publishing shall be
determined by the party making such contribution upon written
notice to the other parties to this Agreement and the LLC not
later than one hundred fifty (150) days following the Effective
Date.
(d) Except as expressly hereinafter provided, such
determination shall be similarly made with respect to both Denver
Post and Denver Publishing, on the basis of generally accepted
accounting principles consistently applied. Notwithstanding the
foregoing, for the purpose of such calculations (a) all newsprint
inventories of Denver Post and Denver Publishing shall be valued
at book value (without any corporate or other mark-up), (b)
current liabilities shall include the present value of all
capital leases relating to the respective operations of The
Denver Post and Denver Rocky Mountain News (provided, that for
such purpose The New York Times press lease relating to The
Denver Post shall not be considered a capital lease for this
purpose as long as the revenues derived by the LLC from the
future operations of this press (excluding current commercial
printing jobs currently printed elsewhere by Denver Post) equal
or exceed payments by the LLC for such years pursuant to such
lease), and (c) all trade accounts receivable shall be valued
based upon the actual collections of the LLC with respect thereto
during the 120 day period immediately following the Closing (with
no value being attributed to any receivables remaining unpaid 120
days following the Closing, provided that any sums thereafter
collected with respect to such receivables shall belong
exclusively to the party assigning such receivables to the LLC),
and (d) the unfulfilled portion of the prepaid subscription
liabilities for each of The Denver Post and Denver Rocky Mountain
News as of the Effective Date shall each be valued based upon a
value of Twenty-Five Cents ($0.25) for each copy of the weekday
and Saturday editions of each Newspaper and One Dollar ($1.00)
for each copy of each Sunday edition of each Newspaper due to be
delivered subsequent to the Effective Date.
(e) If either party objects to the other party's
determination of the amount of working capital it contributed to
the LLC, such objection shall be communicated in writing to all
of the other parties to this Agreement and the LLC within forty-
five (45) days of receipt of such determination. All such
objections shall be referred for final resolution to a firm or
firms of independent auditors chosen by mutual agreement of the
independent auditors of the parties. All of the parties to this
Agreement and the LLC shall receive written notification of the
independent auditor's final determination of the value of such
party's working capital contribution (determined in the manner
provided in this Agreement) within thirty (30) days of such
referral.
1.7 Other Capital Contributions.
In the event that the LLC shall subsequent to the Effective
Date require funds other than the capital contributions described
in Sections 1.4 and 1.5 of this Agreement for any authorized
business purpose, all such funds, unless obtained from outside
sources (subject to Section 5.1, hereof), shall be contributed by
Denver Post and Denver Publishing on identical terms and in equal
shares, when and as such additional contributions may be
authorized as provided in Sections 5.1 or 8.1(c) hereof.
1.8 Failure to Make Payments.
If (i) either Denver Post or Denver Publishing (a "Defaulting
Party") fails to make to the LLC any payment required hereunder,
or under the terms of either The Denver Newspaper Agency Limited
Liability Company Operating Agreement or The Denver Newspaper
Agency Contribution and Sale Agreement, including, but not
limited to, any properly authorized capital contribution, the
other party (the "Non-Defaulting Party") may lend the amount
thereof to the LLC on behalf of the Defaulting Party, or (ii) the
Defaulting Party breaches any of its other obligations to the
LLC, the other party may cure such breach. In any such event,
(x) no distributions shall thereafter be made to the Defaulting
Party by the LLC pursuant to Section 4.1(c) hereof or otherwise
until the full amount of such loan that was made or incurred by
the Non-Defaulting Party, plus interest from the date of default
to the date(s) of such repayment(s) at a rate per annum equal to
the rate announced from time to time by The Bank of New York as
its prime or reference rate has been paid in full to the Non-
Defaulting Party by the Defaulting Party and (y) and all such
distributions which are thus withheld by the LLC from the
Defaulting Party shall instead concurrently be paid by the LLC to
the Non-Defaulting Party in repayment of such party's loan.
1.9 Contracts, Leases, Permits and Commitments; Assumption.
On the Effective Date, Denver Post and Denver Publishing each
will make available to the LLC, by way of assignment or
otherwise, and will thereafter permit the LLC to assume and
perform, all contracts, leases, permits and commitments
(collectively, the "Contracts") relating to the operations of The
Denver Post or Denver Rocky Mountain News and/or the Denver Post
Contributed Assets or the Denver Publishing Contributed Assets
exclusive of: (a) those Contracts described in Section 1.4(b) or
Section 1.5(b) hereof, (b) those Contracts defined as Denver Post
Excluded Assets, Denver Post Excluded Liabilities, Denver
Publishing Excluded Assets or Denver Publishing Excluded
Liabilities in The Denver Newspaper Agency Contribution and Sale
Agreement, (c) any other Contracts which relate to the news
and/or editorial functions of The Denver Post or Denver Rocky
Mountain News (except as may otherwise be otherwise expressly
provided herein or in The Denver Newspaper Agency Contribution
and Sale Agreement), and (d) those advertising or subscription
Contracts described in Sections 1.10 or 1.11 hereof (hereafter
collectively, the "Excluded Contracts"). To the extent that any
one or more of the Contracts to be assigned to the LLC may be
assignable only with the consent or consents of third persons,
Denver Post and Denver Publishing agree to use all reasonable
efforts to procure such consent or consents, in cooperation with
the LLC, by the Effective Date or as soon thereafter as is
reasonably practicable. Except as may otherwise be provided in
Section 1.13 hereof, the LLC shall be responsible for, and shall
pay, any cancellation charges or other liabilities of Denver Post
or Denver Publishing under any Excluded Contract. Notwithstanding
the foregoing or any other provision of this Agreement, the LLC
shall not, by virtue of the foregoing, be required hereby, as of
or subsequent to the Effective Date, to assume or otherwise
perform any Contract (including, but not limited to any
collective bargaining agreement other than any such agreement
that requires assignment and assumption in connection with the
transactions contemplated hereby) if the Management Committee (by
Absolute Majority Vote) determines such assumption is not in the
LLC's best interest; provided, that any Contract which the
Management Committee determines not to assume shall be deemed an
Excluded Contract for the purpose of the preceding sentence.
1.10 Advertising Contracts.
In order to implement the Licenses granted pursuant to Exhibits
C and D hereto, Denver Post and Denver Publishing each will
deliver to the LLC (a) on the Effective Date (subject to any
required approval from the Attorney General), the advertising
information required by their respective Licenses, and (b) within
10 days after the Effective Date, a list of the amount of space
used, up to but not including the Effective Date, by each such
advertiser. The LLC will use such efforts as it deems reasonable
and appropriate to fulfill and complete such advertising
contracts and commitments requiring performance on or subsequent
to the Effective Date, and shall have the exclusive right to make
such modifications or short ratings or cancellations thereof as
it deems reasonable and appropriate and shall, except as
otherwise provided in Section 1.13 hereof, indemnify Denver Post
or Denver Publishing with respect to all liabilities arising
thereunder for all periods subsequent to the Effective Date. By
the Effective Date, each of Denver Post and Denver Publishing
shall independently develop standards for determining the
acceptability of advertising for subsequent publication in its
Newspaper (with Denver Publishing developing standards for the
Saturday Edition and Denver Post developing standards for the
Sunday Edition), and the LLC shall subsequent to the Effective
Date apply those standards in determining the acceptability of
advertising copy for subsequent publication in such Newspaper.
1.11 Subscription Contracts.
In order to implement the Licenses granted pursuant to Exhibits
C and D hereto, on the Effective Date (subject to any required
approval from the Attorney General), Denver Post and Denver
Publishing each will deliver and make available to the LLC all
subscription contracts then relating to The Denver Post and
Denver Rocky Mountain News, respectively. The LLC will
subsequent to the Effective Date use such efforts as it deems
reasonable and appropriate to fulfill and perform all such
subscription contracts for the regular weekday editions of The
Denver Post and Denver Rocky Mountain News, and may, if
necessary, use such efforts as it deems reasonable and
appropriate to fulfill and perform such contracts by delivering
subsequent to the Effective Date the Saturday Edition (as defined
in Section 2.1 hereof), to all subscribers who will accept the
same in substitution for the pre-Effective Date Saturday edition
of The Denver Post and the Sunday Edition (as defined in Section
2.1 hereof) to all subscribers who will accept the same in
substitution for the pre-Effective Date Sunday edition of Denver
Rocky Mountain News.
1.12 Accounts Receivable.
Between the date hereof and the Effective Date, Denver Post and
Denver Publishing shall use all reasonable efforts, consistent
with past practices, to collect their respective advertising,
circulation and other trade accounts receivable arising out of
the publication of The Denver Post, and Denver Rocky Mountain
News ("Accounts Receivable"). On and after the Effective Date,
the LLC shall have the sole right to collect all Accounts
Receivable, and to use such methods with respect to such
collection, including settlement, compromise or litigation, as
the LLC shall determine.
1.13 Limitation on Assumption of Liabilities.
On the Effective Date, the LLC shall assume and be responsible
for only those liabilities or obligations of Denver Post and
Denver Publishing that are specifically contemplated by this
Agreement and The Denver Newspaper Agency Contribution and Sale
Agreement to be assumed by the LLC and for no others. In
addition to any liabilities which may be defined as Denver Post
Excluded Liabilities or Denver Publishing Excluded Liabilities in
The Denver Newspaper Agency Contribution and Sale Agreement, the
liabilities to be assumed by the LLC on the Effective Date shall
not include any of the following liabilities (all of which shall
hereinafter collectively be deemed "Excluded Liabilities"): All
intercompany indebtedness, all indebtedness for borrowed money
(other than capital leases related to the operations of The
Denver Post or Denver Rocky Mountain News), all deferred tax
liabilities of whatever nature, all accrued income or franchise
tax liabilities, all liabilities for failure to perform or
discharge in a timely manner prior to the Effective Date any
liability to be assigned to the LLC as of the Effective Date
hereof, all liabilities arising from any breach occurring prior
to the Effective Date under any contract, license or other
instrument to be assigned to the LLC as of the Effective Date,
all liabilities arising from any litigation pending or threatened
as of the Effective Date with respect to the operations of Denver
Post or Denver Publishing or any assets to be transferred to the
LLC as of the Effective Date and all liabilities arising out of
any violations occurring prior to the Effective Date of any law
or governmental regulation applicable to the operations of Denver
Post or Denver Publishing or the assets being transferred to the
LLC as of the Effective Date.
Denver Post and Denver Publishing, respectively, shall
indemnify and hold the other party and the LLC harmless against
any and all damage, loss and cost (including reasonable
attorneys' fees) arising out of or related to any Excluded
Liability or any other liability or obligation of the
indemnifying party that is not to be assumed by the LLC as of the
Effective Date pursuant to this Agreement or The Denver Newspaper
Agency Contribution and Sale Agreement.
1.14 Delivery of Books and Records.
As of the Effective Date, Denver Post and Denver Publishing
each will deliver to the LLC such of their books, records, and
files (not including general books of account) and circulation
and advertising accounts receivables ledgers and accounts payable
ledgers relating to The Denver Post or Denver Rocky Mountain
News, whether or not heretofore expressly referred to herein, as
may be reasonably required in connection with the collection of
accounts receivable and the payment of assumed liabilities and
the production, marketing, and circulation of the newspapers to
be produced, marketed, and circulated hereunder by the LLC.
1.15 Use of Facilities and Properties.
Upon and subsequent to the Effective Date the properties and
assets theretofore or thereupon contributed to the LLC by Denver
Post and Denver Publishing shall be retained and used in
connection with the joint operating arrangement contemplated
hereby, except as the Management Committee shall by Absolute
Majority Vote determine otherwise.
1.16 Employees.
(a) Commencing as of the Effective Date, The President
and Chief Executive Officer of the LLC shall determine the
staffing levels required for the LLC's operations and shall
retain employees to perform non-news and non-editorial
operations, including those employees and former employees of The
Denver Post and Denver Rocky Mountain News, as the President and
Chief Executive Officer shall deem reasonably necessary,
appropriate or desirable to perform the LLC's operations. The
President and Chief Executive Officer shall select those persons
which he or she in his or her reasonable judgment determines to
be qualified persons, including persons from the staffs of The
Denver Post and Denver Rocky Mountain News, consistent with such
legal and contractual obligations which may apply to the LLC, and
shall not be obligated by this Agreement or any other agreement
entered into by and between Denver Post and Denver Publishing to
choose an equal number of employees from, or any specific number
of employees from, The Denver Post and Denver Rocky Mountain
News. Each Newspaper shall continue, however, to be responsible
for the selection, hiring, and employment of the employees used
in its own news and editorial operations.
(b) To the extent that the President and Chief
Executive Officer does offer employment to persons then employed
by The Denver Post or Denver Rocky Mountain News, it is
contemplated that such employment will be offered upon terms
substantially comparable to those applicable to their employment
by The Denver Post or Denver Rocky Mountain News.
(c) Upon the hiring of any such employee of The Denver
Post or Denver Rocky Mountain News, the LLC alone shall on and
after the Effective Date be solely responsible for all
obligations and incurred costs (whether arising under collective
bargaining agreements, individual employment agreements, employee
benefit or welfare plans, severance policies or arrangements or
otherwise) relative to the future employment, termination or
retirement of such employees.
(d) The LLC shall also be solely responsible for
indemnifying both Denver Post and Denver Publishing in full with
respect to any WARN Act, severance or other liability which
arises as a consequence of the LLC's failure to offer employment
as of the Effective Date to any person then employed by The
Denver Post or Denver Rocky Mountain News (other than news or
editorial staff employees) upon terms substantially comparable to
those applicable to their employment by The Denver Post or Denver
Rocky Mountain News.
(e) Upon and subsequent to the Effective Date, Denver
Post and Denver Publishing shall remain independently responsible
for all obligations and incurred costs relating to all persons
thereafter employed relative to the news and editorial staffs of
The Denver Post or Denver Rocky Mountain News. To the extent
such costs are in the first instance paid by the LLC, the LLC
shall be reimbursed for such costs by Denver Post and Denver
Publishing, respectively, in connection with the monthly
distribution to such parties of Net Available Cash From
Operations, as set forth in Article 4 of this Agreement.
(f) Subject to arrangements made by Denver Post and
Denver Publishing prior to the Effective Date and the authority
of the Management Committee, from and after the Effective Date,
the President and Chief Executive Officer shall, commencing as of
the Effective Date, have sole and exclusive authority to handle
all labor relations matters with respect to all non-news and non-
editorial employees of the LLC. All labor relations matters with
respect to employees in the news and editorial departments of The
Denver Post and Denver Rocky Mountain News shall be handled by
(and shall be within the authority of) Denver Post and Denver
Publishing, as the case may be.
(g) (i) It is the intention of Denver Post and Denver
Publishing that those persons who have been employees of
Denver Post, Denver Publishing or their respective
Affiliates and who become employees of the LLC in connection
with the transactions contemplated hereby shall receive
employee benefits substantially comparable to those they
would have received if they had remained with their prior
employer. The parties will endeavor to design and implement
employee benefits plans and arrangements that shall
accomplish this result, subject to collective bargaining
requirements. After consultation with the Management
Committee, the President and Chief Executive Officer will
have the authority to cause to be adopted benefit plans and
arrangements that will in his or her reasonable judgment
accomplish this result.
(ii) Denver Post and Denver Publishing shall not
(nor shall they permit any of their respective Affiliates
to) pay (or defer to the account of) any officer or other
employee of the LLC (including, without limitation, the
President and Chief Executive Officer) any form of
compensation, remuneration or reimbursement, with respect to
any period on or after the date of such officer's or
employee's employment by the LLC, without the consent of the
other Member.
1.17 Newsprint Purchases.
Commencing as of the Effective Date, each of Denver Post and
Denver Publishing shall for each fiscal year of the LLC be
responsible for providing to the LLC at its cost (as hereinafter
defined) one-half of the newsprint needs of the LLC as reasonably
forecast and determined by the LLC's President and Chief
Executive Officer. For such purposes, Denver Post's and Denver
Publishing's costs shall be deemed to be the average price paid
for Denver deliveries by each entity (without any corporate mark-
up) pursuant to newsprint contracts or otherwise. If Denver Post
and/or Denver Publishing shall for any reason be unable to
fulfill such obligations, the President and Chief Executive
Officer shall secure such additional newsprint as he determines
may be needed from whatever source he deems appropriate.
1.18 Initial Activities of the LLC.
The activities of the LLC prior to the Effective Date shall
include the provision of publishing services to the Post Entities
and planning for implementation of the joint newspaper operating
arrangement contemplated by this Agreement and shall be limited
to activities that do not require the prior written consent of
the Attorney General. Prior to the Effective Date, nothing in
this Agreement, the Limited Liability Company Operating Agreement
or The Denver Newspaper Agency Contribution and Sale Agreement
shall limit competition between Denver Post and Denver Publishing
or their Affiliates or business ventures or activities Denver
Post and Denver Publishing or their Affiliates may legally pursue
together.
ARTICLE 2
Activities of the LLC
The parties agree as follows with respect to the activities
of the LLC and their own activities from and after the Effective
Date:
2.1 Publication of Newspapers.
(a) The LLC shall at its expense print, produce,
distribute, and market (both as to circulation and advertising)
The Denver Post (in broadsheet format) each weekday and Sunday
morning and Denver Rocky Mountain News (in tabloid format with
such news sections in broadsheet format as Denver Publishing
chooses to include, consistent with current practices) each
weekday morning and (in tabloid format with conversion to
broadsheet format as soon as reasonably practicable from a
production standpoint in the judgment of the Management Committee
acting by Absolute Majority Vote) each Saturday morning, and
shall otherwise jointly or separately exploit as it determines
appropriate the advertising and/or news content of either or both
publications, by mail, private delivery and/or such other
technologies as the LLC may from time to time determine
appropriate, subject to any separate agreements which may have
been entered into prior to the Effective Date (as hereinafter
defined) by and between Denver Post and Denver Publishing. The
Saturday and Sunday editions of the Newspapers published by the
LLC shall contain editorial pages and selected features from each
of Denver Rocky Mountain News and The Denver Post. The Saturday
edition shall be published under a joint masthead to which Denver
Post and Denver Publishing shall mutually agree (the "Saturday
Edition"). The Sunday edition shall be published under a joint
masthead to which Denver Post and Denver Publishing shall also
mutually agree (the "Sunday Edition").
(b) The LLC shall control, supervise, manage, and
perform all operations (other than news/editorial operations)
involved in printing, producing, distributing, and marketing the
Newspapers; shall determine the edition times after consultation
with the respective editors of such Newspapers; shall purchase
materials, supplies, and national supplements as appropriate;
shall solicit and sell advertising space in such Newspapers;
shall, subsequent to the Effective Date, collect all accounts
receivable, whether such accounts receivable come into existence
prior to, on or after the Effective Date; shall establish
circulation and advertising rates (but not advertising
acceptability standards) for such Newspapers; and shall make all
determinations and decisions and do any and all acts and things
necessarily connected with the foregoing activities.
Additionally, the cost of performing these functions shall be
borne by the LLC.
(c) The LLC will promote circulation and advertising
to enhance or improve the circulation and advertising sales of
each Newspaper and to allow each Newspaper to achieve its full
market potential.
(d) The LLC shall distribute such TMC product relative
to the Denver market as it determines appropriate.
(e) The LLC may also engage in any non-news and non-
editorial activities that would be appropriate for a single
newspaper publisher, including but not limited to commercial
printing and all other activities determined by the Management
Committee to be consistent with the LLC's principal business
purpose. Non-news and non-editorial activities with respect to
any Newspapers published within the State of Colorado by Denver
Post, Denver Publishing or their Affiliates other than The Denver
Post or Denver Rocky Mountain News shall, to the extent permitted
by law, include such joint advertising sales, joint subscription
sales, joint delivery or other services as the LLC may from time
to time determine to be appropriate, upon terms mutually
agreeable to both Denver Post and Denver Publishing.
2.2 Property Used.
In producing and carrying on the businesses of the Newspapers
under this Agreement, the LLC shall print such Newspapers and
conduct all operations under this Agreement, except the
operations of the news and editorial departments of the two
Newspapers, with the LLC's equipment and from the LLC's plant or
plants, or from the plant or plants of independent contractors
selected by the LLC. The LLC may also utilize the Licenses
granted to it to the extent necessary to carry on the activities
of the LLC pursuant to this Agreement.
2.3 Editorial Independence.
Preservation of the editorial independence of each Newspaper is
the essence of this Agreement. To this end, subsequent to the
Effective Date, the news and editorial material for editions of
The Denver Post shall be gathered, prepared, and laid out by
Denver Post and the news and editorial material for editions of
Denver Rocky Mountain News shall be gathered, prepared, and laid
out by Denver Publishing. The Denver Post's and Denver Rocky
Mountain News' news and editorial staffs and news and editorial
policies shall be independent of each other and of the LLC.
Without limiting the generality of the foregoing, Denver Post and
Denver Publishing each shall have the exclusive right to
determine the editorial format, dress, layout, and news and
feature content of editions of its Newspaper published subsequent
to the Effective Date. All personnel responsible for the news
and editorial content of The Denver Post shall be employees of
Denver Post and shall be subject to the direction and authority
of Denver Post, and all personnel responsible for the news and
editorial content of Denver Rocky Mountain News shall be
employees of Denver Publishing and shall be subject to the
direction and authority of Denver Publishing.
2.4 News and Editorial Services and Expenses.
(a) Commencing as of the Effective Date, each
Newspaper shall maintain an adequate staff of news, editorial,
and photographic employees, and shall furnish the LLC complete
news and editorial services necessary and appropriate for the
publication of such Newspaper in the manner provided in this
Agreement. Each Newspaper, in furnishing news and editorial copy
and like materials to the LLC for publication, shall conform to
the mechanical standards and limitations which prevail at the
time of production in the plant or plants used by the LLC for the
printing of such Newspaper, including press times established by
the LLC.
(b) In order to equitably distribute between Denver
Post and Denver Publishing the cost of producing the news for its
Newspaper, and in consideration of evolutionary changes
(attributable to market demand) in the number of pages of various
editions of the Newspapers, the LLC shall credit Denver Post and
Denver Publishing for supplying news to fill basic newsholes (the
"Newshole") as follows:
(i) The President and Chief Executive Officer
shall specify annually a news to advertising ratio for the
Monday through Friday editions in the aggregate (the "Weekly
Ratio") which shall be the same for both The Denver Post and
Denver Rocky Mountain News; and,
(ii) The President and Chief Executive Officer
shall also specify annually separate and discrete news to
advertising ratios for the special edition of Denver Rocky
Mountain News to be published on Saturday (the "Saturday
Ratio") and the special edition of The Denver Post to be
published on Sunday (the "Sunday Ratio").
(c) During the Term of this Agreement, the Newshole
for each Newspaper shall be equivalent from week to week to that
for the other Newspaper after adjustment for format (broadsheet
or tabloid). Denver Post or Denver Publishing may elect to
publish pages of news content in excess of its Newshole, provided
that (1) the LLC has the production capacity to produce the pages
as scheduled, and (2) the Member which elects to publish excess
pages of news content shall be charged for the cost of production
equal to a rate set annually by the President and Chief Executive
Officer based on average set-up costs per page (the "Basic Page
Charge") multiplied by the number of excess pages of news
content, plus the average cost of newsprint, ink, labor, and
other variable costs per page (the "Variable Page Charge")
multiplied by the number of pages to be inserted and multiplied
by the number of copies printed in which the extra news content
pages are inserted (the "Total Excess Page Charge"). There shall
be a Basic Page Charge and a separate Variable Page Charge for
those editions of the Newspapers which are published in
broadsheet and tabloid format, which shall be comparable for both
The Denver Post and Denver Rocky Mountain News.
(d) The President and Chief Executive Officer shall
specify annually allocations of editorial color and color pages
to The Denver Post and Denver Rocky Mountain News (the "Color
Allocations") in the same proportions that the color pages
published by The Denver Post and Denver Rocky Mountain News
individually have to the total of color pages published in The
Denver Post and Denver Rocky Mountain News collectively during
the prior fiscal year.
(e) Denver Post or Denver Publishing may elect to
publish pages using color in excess of their Color Allocations,
provided that (1) the LLC has the production capacity to produce
the pages using excess color as scheduled, and (2) the Member
which elects to use excess color shall be charged for the cost of
production equal to a rate set separately for broadsheet and
tabloid editions of the Newspapers, determined on a comparable
basis annually by the President and Chief Executive Officer based
on average set up costs per page (the "Basic Color Charge")
multiplied by the number of pages on which the excess color is to
be used plus the average cost of ink, labor, and other variable
costs per page (the "Variable Color Charge") multiplied by the
number of pages on which the excess color is to be used and
multiplied by the number of copies printed in which the extra
color is used (the "Total Excess Color Charge"). The Basic Color
Charge and the Variable Color Charge shall be comparable for both
The Denver Post and Denver Rocky Mountain News.
(f) Denver Post or Denver Publishing may elect to
publish any special news section in excess of its Newshole
provided that (i) the LLC has the production capacity to produce
the pages for each section as scheduled and (ii) the party
electing to publishing any such special section shall be charged
for the cost of production thereof in excess of the Total Excess
Page Charge and the Total Excess Color Charge that such party is
required to bear under this Agreement.
(g) Except as adjusted by the charges contemplated in
Sections 2.4(c) and (e), all Editorial Expense (as defined
hereafter) of the news and editorial functions of The Denver Post
shall be borne by Denver Post and all Editorial Expense of the
news and editorial functions of Denver Rocky Mountain News shall
be borne by Denver Publishing. The term "Editorial Expense" as
used in this Agreement (except as may otherwise expressly be
provided herein or otherwise by Denver Post and Denver Publishing
with respect to the Saturday and/or Sunday editions of the
Newspapers) shall mean all costs and expenses associated with the
news and editorial departments of The Denver Post, or Denver
Rocky Mountain News, as the case may be, including but not
limited to: (i) compensation, retirement, pension, health and
death benefits, worker's compensation insurance, and group
insurance of news and editorial employees; (ii) severance pay of
news and editorial employees; (iii) travel and other expenses of
news and editorial employees; (iv) press association assessments
and charges; (v) charges for news services, photo services and
supplies, and editorial wire services; (vi) charges for the right
to publish news and editorial features, comics, and other news
and editorial material of every kind and character; (vii) the
cost of news and editorial materials, printing, stationery,
office supplies, and postage for the news and editorial
departments; (viii) donations and dues; (ix) telegraphic,
telephone, and long-distance telephone charges of such news and
editorial departments; the cost and expense of maintaining the
operation of a newspaper "morgue"; and (x) professional fees;
provided, however, that (a) the term "Editorial Expense" shall
not include the cost of unfurnished office space provided by the
LLC pursuant to Section 2.5 hereof, which shall be provided at
the sole cost and expense of the LLC, and (b) equipment that is
an integral part of the production process even though located in
the news and editorial departments of a Newspaper.
Notwithstanding the foregoing, the following Editorial Expenses
for the Saturday and Sunday editions of the Newspapers shall be
the sole responsibility of the LLC and if paid in the first
instance by Denver Post or Denver Publishing shall be promptly
reimbursed by the LLC: (i) the cost of all comics in the
Saturday and Sunday Newspapers, it being the anticipation of the
parties that such Newspapers will have a substantially expanded
comics section; (ii) all costs associated with the Sunday
television book (such book to bear the same joint masthead as the
Sunday Edition); (iii) the costs of weekly stock listings or
other weekly business data included in any Saturday or Sunday
publications; and (iv) the cost of magazine supplements such as
Parade or U.S. Today.
2.5 Office Space.
The LLC shall provide each of Denver Post and Denver Publishing
with comparably furnished, separate office space in Denver,
Colorado which shall be adequate for the separate use of the news
and editorial departments of The Denver Post and Denver Rocky
Mountain News, as the case may be. Such office space shall
include appropriately furnished office space for the news and
editorial executives of each Newspaper. Such office space,
together with utility services (other than telephone or other
voice or data transmission charges), shall be provided at the
expense of the LLC, and no rent or other similar charge shall be
paid for such space by Denver Post or Denver Publishing or
charged by the LLC.
ARTICLE 3
Quality of Content and Budgets
The parties agree that from and after the Effective Date:
3.1 Quality of Content.
Denver Post and Denver Publishing shall use all reasonable
efforts to maintain the status of their respective publications
as leading newspapers in the Denver area and throughout the state
of Colorado. Denver Post and Denver Publishing shall seek to
insure that the editorial quality of each of their respective
publications meets the highest journalistic standards. Each of
Denver Post and Denver Publishing shall be solely responsible for
the news and editorial content of its Newspaper.
3.2 Budgets.
No later than 45 days before the beginning of each fiscal year,
the President and Chief Executive Officer shall submit capital,
operating and cash flow budgets (collectively, the "Budgets")
covering the next succeeding fiscal year of the LLC to the
Management Committee. The Operating Budget will incorporate the
Weekly Ratio, Saturday Ratio, Sunday Ratio, Basic Page Charge,
Variable Page Charge, Color Allocation, Basic Color Charge, and
Variable Color Charge, as authorized for that fiscal year. The
President and Chief Executive Officer shall seek and receive an
approval of all of the Budgets and any amendments thereto in
their entirety by an Absolute Majority Vote of the Management
Committee prior to the implementation of them.
ARTICLE 4
Duties of LLC, Including Distribution of Available Cash
4.1 Duties of LLC.
The LLC agrees that from and after the Effective Date, it will:
(a) manage and operate all of the departments of the
publishing businesses for The Denver Post and Denver Rocky
Mountain News (excluding the news and editorial departments) and
set and establish the respective advertising and subscription
rates (but not advertising acceptability standards) of The Denver
Post and Denver Rocky Mountain News from time to time;
(b) receive and collect all of the receipts and income
relating to The Denver Post and Denver Rocky Mountain News, and
from such income pay all operating expenses incidental to the
publication of the Newspapers (except for news and editorial
expenses, other than as herein expressly provided) in the manner
and to the extent provided in this Agreement and The Denver
Newspaper Agency Limited Liability Company Operating Agreement;
(c) subject to Section 1.8 hereof and any applicable
provisions of The Denver Newspaper Agency Limited Liability
Company Operating Agreement, distribute to Denver Post and Denver
Publishing at least monthly, or at more frequent intervals as may
be directed by the President and Chief Executive Officer, Net
Available Cash From Operations, as defined in The Denver
Newspaper Agency Limited Liability Company Operating Agreement;
(d) collect any amounts required to be collected by it
pursuant to Section 1.7 hereof; and,
(e) account monthly to Denver Post and Denver
Publishing for all revenues and expenditures, and keep Denver
Post and Denver Publishing regularly informed of its affairs and
business.
4.2 Allocation of Profits or Losses and Distributions of
Cash.
(a) Commencing with the Effective Date, Profits and
Losses, as defined in The Denver Newspaper Agency Limited
Liability Company Operating Agreement, shall be allocated among
the Members in accordance with the provisions of The Denver
Newspaper Agency Limited Liability Company Operating Agreement.
(b) Commencing with the Effective Date, distributions
of Net Available Cash From Operations shall, subject to the
provisions of Section 1.8 hereof, be distributed to the Members
in accordance with The Denver Newspaper Agency Limited Liability
Company Operating Agreement.
(c) The LLC shall be reimbursed by the Members for the
Total Excess Page Charges and the Total Excess Color Charges
pursuant to Sections 2.4(c) and 2.4(e) that may be due by them
and for all Editorial Expenses of either party which the LLC in
the first instance may have paid on their behalf, including but
not limited to salaries and related benefits for their respective
news and editorial staffs. In either case the LLC will account
for these items before computing Profits or Losses.
4.3 Books and Records.
Accurate, full, and complete books of accounts and records,
wherein all transactions of the LLC shall be entered, shall be
kept at the principal office of the LLC for the account of the
LLC in accordance with generally accepted accounting principles
consistently applied (except as otherwise agreed by Denver Post
and Denver Publishing) and, additionally, in accordance with the
Code and regulations promulgated thereunder. Commencing with the
Effective Date, Denver Post, Denver Publishing, and their
respective representatives shall have the right to inspect,
audit, copy or reproduce, each at its own expense, the books and
records of the LLC.
4.4 Financial Statements.
Commencing with the Effective Date, the President and Chief
Executive Officer shall cause to be delivered to Denver Post and
to Denver Publishing the following financial statements and
reports of the LLC prepared, in each case, in accordance with
generally accepted accounting principles consistently applied
(except as may be otherwise agreed by Denver Post and Denver
Publishing):
(a) promptly upon their availability and in any event
within four (4) business days after the end of each month,
unaudited statements of income or loss and cash flows and an
unaudited balance sheet for the interim period through such month
and the monthly period then ended and for the fiscal year-to-
date, in reasonable detail, such statements of income or loss and
cash flows for such period and for the fiscal year-to-date to
include (1) a comparison of the fiscal year-to-date and the
interim and monthly periods then ended with the corresponding
periods for the fiscal year immediately preceding, if any, and
(2) a comparison of actual to budgeted cash flows and income or
loss;
(b) promptly upon their availability and in any event
within four (4) business days after the end of each quarterly
period in each fiscal year, an unaudited balance sheet and
unaudited statements of income or loss and cash flows for the
quarterly period then ended and for the fiscal year-to-date, in
reasonable detail, such statement to include (1) a comparison of
the fiscal year-to-date and the interim and quarterly periods
then ended with the corresponding periods of the fiscal year
immediately preceding, if any, and (2) a comparison of actual to
budgeted cash flows and income or loss;
(c) promptly upon their availability and in any event
within four (4) business days after the end of each fiscal year,
an unaudited balance sheet and unaudited statements of income or
loss and cash flows for the fiscal year then ended, all in
reasonable detail, such statements to include (i) a comparison of
the current fiscal year with the fiscal year immediately
preceding, if any, and (ii) a comparison of actual to budgeted
cash flows and income or loss;
(d) promptly upon their availability and in any event
within fourteen (14) days after the end of each fiscal year, an
unaudited balance sheet of the LLC as at the end of such fiscal
year, and unaudited statements of income or loss and cash flows
for such fiscal year, all in reasonable detail, such balance
sheet and statements of income or loss and cash flows to include
a comparison of the current fiscal year with the fiscal year
immediately preceding, if any; and
(e) promptly upon their availability and in any event
within sixty (60) days after the end of each fiscal year, an
audited balance sheet of the LLC as at the end of such fiscal
year, and audited statements of income or loss and cash flows for
such fiscal year, all in reasonable detail and accompanied by an
opinion thereon of the LLC's independent certified public
accountants, such balance sheet and statements of income or loss
and cash flows to include a comparison of the current fiscal year
with the fiscal year immediately preceding, if any.
4.5 Auditors and Fiscal Year.
Commencing with the Effective Date, the independent auditors of
the LLC shall be selected by Denver Publishing and Denver Post on
a four-year rotating basis and shall be one of the five largest
accounting firms in the United States (the "Big Five").
Commencing with the Effective Date, the independent auditors of
the LLC shall be the independent auditors of Denver Publishing,
and such auditors shall serve through the end of the fourth
fiscal year of the LLC following the Effective Date. At least
six months before the end of each four-year period, the Member
who may choose the auditors for the next four-year period shall
give notice to the LLC and the other Member(s) of its election to
select independent auditors for the LLC. Any selection of
auditors hereunder shall be limited to the Big Five firm or firms
then serving as the independent auditors of Denver Post or Denver
Publishing. Failure to give such notice shall be deemed an
election to retain the auditors then engaged by the LLC. The LLC
shall keep its books on a calendar-year basis.
4.6 Tax Returns.
Commencing with the Effective Date, Tax returns for the LLC
shall be dealt with in the manner prescribed in The Denver
Newspaper Agency Limited Liability Company Operating Agreement.
ARTICLE 5
Governance of LLC
5.1 Management Committee.
As of and subsequent to the Effective Date, the
business and affairs of the LLC shall be managed by a committee
(the "Management Committee") to be composed of four (4) members,
two (2) of which shall be appointed collectively by Denver Post
and Eastern Colorado and shall be the Chief Executive Officer and
Chief Financial Officer of Denver Post (or their designees), and
two (2) of which shall be appointed by Denver Publishing and
shall be the Chief Executive Officer and Chief Financial Officer
of The E. W. Scripps Company, an Ohio corporation and parent of
Denver Publishing (or their designees). Commencing as of the
Effective Date, a single member of the Management Committee shall
be selected, as hereinafter provided, to serve as Chairman of the
Management Committee for a four (4) year term or until the
selection of his successor. The Chairman of the Management
Committee shall preside over all meetings of the Management
Committee and shall perform such other functions and
responsibilities as the members of the Management Committee may
from time to time appropriately delegate to such person under the
terms of the Limited Liability Company Operating Agreement or
otherwise. The initial Chairman of the Management Committee
shall, as of the Effective Date, be selected by those members of
the Management Committee appointed by Denver Post and Eastern
Colorado, and thereafter the members of the Management Committee
appointed by Denver Publishing and by Denver Post and Eastern
Colorado, respectively, shall alternate selecting such Chairman
every four (4) years. Commencing as of the Effective Date, the
Management Committee (acting by Absolute Majority Vote) shall
appoint annually a President and Chief Executive Officer of the
LLC, reporting to it, to serve for a term of one year and until
his or her successor is elected. The President and Chief
Executive Officer shall, in consultation with the Management
Committee, oversee all activities of the LLC, consistent with the
terms of this Agreement, the Limited Liability Company Operating
Agreement and the NPA, in accordance with annual operating and
capital budgets approved by the Management Committee. The
Management Committee (acting by Absolute Majority Vote) may
remove the President and Chief Executive Officer at any meeting
and elect his or her successor. In the case of a deadlock with
respect to any matter to be acted upon by the Management
Committee (other than the election or removal of a President and
Chief Executive Officer and such other matters reserved solely
for decision by an Absolute Majority Vote of the Management
Committee or by the Members unanimously under the Limited
Liability Company Operating Agreement and therein designated as
"Reserved Matters," hereafter collectively, the "Reserved
Matters"), the President and Chief Executive Officer of the LLC
shall be empowered to break such deadlock. Any deadlock
concerning any Reserved Matter shall be resolved in the manner
provided in The Denver Newspaper Agency Limited Liability Company
Operating Agreement.
5.2 The President and Chief Executive Officer.
Commencing as of the Effective Date, the President and Chief
Executive Officer shall, in consultation with the Management
Committee, have general charge and supervision of the business of
the LLC, but shall have no duties or authority with respect to
the news and editorial functions of The Denver Post and Denver
Rocky Mountain News.
5.3 Certain Other Matters.
Commencing as of the Effective Date, the President and Chief
Executive Officer shall conduct the business of the LLC pursuant
to the terms hereof as a stand-alone, independent, joint venture
of the Members. Subject to legal and contractual obligations,
the President and Chief Executive Officer shall select qualified
managers, executives, and personnel, and shall supervise the
facilities and equipment used by the LLC and the operating
systems and procedures of the LLC with respect to advertising,
circulation, production, finance, personnel, and promotion. The
President and Chief Executive Officer shall at all times act
independently and disinterestedly as between Post Entities and
Denver Publishing and in the best interests of the LLC.
5.4 Compensation.
The cost (including compensation) of the President and Chief
Executive Officer and his or her staff shall be paid by the LLC.
ARTICLE 6
Other Matters
6.1 Representations and Warranties.
Each of the LLC, Denver Post, Eastern Colorado and Denver
Publishing hereby represents and warrants to each other that:
(a) It is a corporation or limited liability company
(as hereinbefore indicated) which is duly incorporated and in
good standing under the laws of its jurisdiction of incorporation
and is qualified to do business in Colorado.
(b) The consummation of the transactions provided for
herein, in the Licenses, in The Denver Newspaper Agency
Contribution and Sale Agreement and in The Denver Newspaper
Agency Limited Liability Company Operating Agreement, will not
conflict with, or result in a default under, or a violation of,
any provision of its charter, by-laws or operating agreement (as
applicable) or any agreement or instrument to which it is, or on
the Effective Date may be, a party or by which it is, or on the
Effective Date may be, bound.
(c) The execution and delivery by it of this
Agreement, The Denver Newspaper Agency Contribution and Sale
Agreement, the Licenses and The Denver Newspaper Agency Limited
Liability Company Operating Agreement have been duly and validly
authorized by all necessary corporate action on its part; and
this Agreement, The Denver Newspaper Agency Contribution and Sale
Agreement, the Licenses, and The Denver Newspaper Agency Limited
Liability Company Operating Agreement have been duly executed and
delivered by it.
(d) Subject to obtaining the written consent referred
to in Section 6.3 hereof, this Agreement, the Licenses, The
Denver Newspaper Agency Limited Liability Company Operating
Agreement and The Denver Newspaper Agency Contribution and Sale
Agreement constitute its valid and binding obligation, and no
approval or consent is necessary for the execution, delivery and
performance by it of this Agreement, The Denver Newspaper Agency
Contribution and Sale Agreement, the Licenses or The Denver
Newspaper Agency Limited Liability Company Operating Agreement,
except for such as have heretofore been obtained and are in full
force and effect.
(e) It has no knowledge of facts that would materially
adversely affect the value of any material asset (or the assets
in the aggregate) to be transferred by it or its Affiliates to
the LLC.
As used in this Agreement, "Affiliate" means, with respect to any
party, (i) any entity directly or indirectly controlling,
controlled by or under common control with such party, (ii) any
entity owning or controlling ten percent or more of the
outstanding voting securities of such party, (iii) any officer or
director of such party or any entity owning an interest as a
general partner in such party, or (iv) any entity that is a
general partner, trustee or holder of ten percent or more of the
voting securities of any entity described in clauses (i) through
(iii) of this sentence. As used herein, the term "entity" shall
mean any individual, partnership, corporation, trust or other
business organization.
6.2 Certain Action.
Each party agrees to take all actions reasonably necessary
and/or appropriate to carry out and effectuate the intent,
purposes, and provisions of this Agreement and The Denver
Newspaper Agency Limited Liability Company Operating Agreement
and to cooperate with the others in every reasonable and proper
way that will promote the successful operation of the joint
operating arrangement under this Agreement and The Denver
Newspaper Agency Limited Liability Company Operating Agreement.
6.3 NPA Filing.
As soon as practicable after the date hereof, an application
shall be filed by Denver Post and Denver Publishing with the
Department of Justice, and other appropriate procedures shall be
implemented, to secure as soon as possible the written consent of
the Attorney General of the United States as provided in Section
4(b) of the NPA. Each party shall support the application fully
in every reasonable respect and shall cooperate in and coordinate
with respect to the taking of all appropriate steps to secure
approval of the application. Whether or not the Attorney General
determines to give such written consent, this Agreement and The
Denver Newspaper Agency Limited Liability Company Operating
Agreement shall not terminate earlier than May 1, 2005 so long as
either Denver Post or Denver Publishing elects to continue the
process of seeking agency or judicial review. For purposes of
the application, Denver Post and Denver Publishing shall each
promptly designate "contact persons" for such coordination and
consultation as is appropriate and proper and shall each give the
other parties prompt written notice of such designation in the
manner provided in Section 9.1 hereof. Furthermore, Denver Post
and Denver Publishing shall make available, through their
authorized representatives, such information as is necessary and
appropriate in obtaining the Attorney General's approval of the
application. All information which Denver Post, Denver
Publishing or the LLC secure as a result of such access shall be
held in confidence, shall not (except as legally required) be
disclosed without the consent of the party from which the
information is obtained, and shall not be used for competitive
purposes. All documents which Denver Post, Denver Publishing or
the LLC obtain as a result of such access shall be returned or
destroyed in the event the transactions contemplated by this
Agreement are not consummated.
6.4 Announcements.
Except as required by law, no party hereto will make any public
announcement concerning this Agreement and the transactions
contemplated hereby prior to the first mutually agreed upon
announcement thereof without the consent of the other parties and
then only upon the maximum advance notice to the other parties
which is practicable under the circumstances.
6.5 Interim Covenants.
(a) Each of Post Entities and Denver Publishing
covenants and agrees that from the date hereof to and including
the Effective Date it shall, with respect to its Newspaper,
continue to carry on its business in the ordinary course. The
LLC hereby covenants and agrees that from the date hereof to and
including the Effective Date, it shall carry on its business in
the ordinary course consistent with the course of conduct
heretofore and hereafter by Denver Post with respect to its
Newspaper. From the date hereof to and including the Effective
Date, neither the Post Entities nor Denver Publishing, with
respect to its Newspaper, or the LLC with respect to its business
will:
(i) engage in any transaction materially
affecting it, its assets or Liabilities, except in the
normal and ordinary course of that entity's business;
(ii) 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;
(iii) fail to use reasonable efforts to
preserve intact its present organization, keep available the
services of its employees, preserve its relationships with
customers, suppliers and others having business dealings
with it, to the end that its goodwill and ongoing business
will not be materially impaired prior to the Closing;
(iv) sell, lease, transfer or agree to sell,
lease or transfer any material asset of its Newspaper or
relating to a Newspaper, except in the ordinary course of
business;
(v) adopt or modify any pension, profit-sharing
or other compensation plan (except as required by law or
except for changes which would not affect the level of
benefits) or enter into any contract of employment or permit
any increases or changes in the compensation of employees of
its Newspaper (including bonuses), except in accordance with
past practices and in the ordinary course, or except as a
result of collective bargaining heretofore or hereafter
undertaken in the ordinary course, except to the extent
required by law and except for retention arrangements made
with employees of its Newspaper as a result of or in
connection with the transactions contemplated by this
Agreement;
(vi) enter into or amend any material contract or
commitment, waive any material right or enter into any other
material transaction, other than in the ordinary course; or
(vii) enter into any agreement to take any
actions specified in this Section 6.5.
(b) Each party will promptly notify the others in
writing upon becoming aware of any order or decree or any
complaint praying for an order or decree restraining or enjoining
the consummation of this Agreement or the transactions
contemplated hereby, or upon receiving any notice from any
governmental department, court, agency or commission of its
intention to institute an investigation into, or institute a suit
or proceeding to restrain or enjoin the consummation of this
Agreement or such transactions, or to nullify or render
ineffective this Agreement or such transactions if consummated.
(c) This Agreement is subject to such obligations and
duties as may be imposed on any party by statute, regulation,
contract or law; and no party shall be liable for any damages to
any other party, or any other person, for reasonable actions
taken in compliance with such obligations. In the event that any
court, administrative agency or tribunal, by order, determination
or administrative action, requires a party to take actions in
compliance with obligations and duties that may be imposed by
statute, regulation, contract or law as a condition or
precondition to the undertakings herein, or determines to
initiate proceedings or does initiate proceedings to compel such
actions of a party, then such party may take such actions as
reasonably are required for compliance with such obligations and
duties, or to discharge, adjust or settle such orders,
determinations, administrative action or proceedings, it being
agreed and understood that the parties will use all reasonable
efforts to oppose the imposition of any such order,
determination, administrative action or proceeding.
(d) Each of Post Entities and Denver Publishing, shall
conscientiously endeavor to perform on a timely basis all
obligations required to be performed by it under all contracts
and leases relating to its Newspaper.
ARTICLE 7
Duration; Termination
7.1 Term.
Unless renewed as provided in this Section 7.1 or terminated
pursuant to Section 7.2, this Agreement and The Denver Newspaper
Agency Limited Liability Company Operating Agreement shall
continue for a term ending at the close of business on the last
day of the fiftieth full fiscal year following the Effective
Date, whereupon this Agreement and The Denver Newspaper Agency
Limited Liability Company Operating Agreement shall expire and
terminate. This Agreement shall automatically renew for
succeeding renewal periods of 25 years each, unless either Denver
Post or Denver Publishing notifies the other in writing at least
five years before the end of the then current period (including
renewal periods), of the election of the party giving the notice
to terminate this Agreement. If such notice is given, this
Agreement shall terminate at the end of the initial period or the
then current renewal period during which the notice is given.
7.2 Termination of this Agreement; Dissolution of the LLC.
(a) Prior to the Effective Date, this Agreement shall
terminate on May 1, 2005, if the Effective Date shall not have
occurred on or before such date, or upon such earlier date, if
any, as the parties hereto may mutually agree upon in writing.
(b) After the Effective Date, this Agreement shall
terminate only as hereinafter provided in this Section 7.2.
(c) After the Effective Date, no Member shall cause
the LLC to be dissolved except as provided herein and in The
Denver Newspaper Agency Limited Liability Company Operating
Agreement. After the Effective Date, the LLC shall continue
until dissolved as herein and thereafter provided. The LLC
shall, subject to the provisions of subsection (e) hereof and to
all applicable provisions of The Denver Newspaper Agency Limited
Liability Company Operating Agreement, be dissolved upon the
occurrence of any of the following:
(i) expiration of the term of this Agreement, as
set forth in Section 7.1 hereof or of the Limited Liability
Company Operating Agreement;
(ii) at the written election of a Member if any
Member willfully or persistently commits one or more
material breaches of this Agreement or The Denver Newspaper
Agency Limited Liability Company Operating Agreement, or
otherwise so conducts itself in matters relating to the LLC
business that it is not reasonably practicable to carry on
the business of the LLC; provided, however, that such
election may be made only if the electing Member has given
written notice to the other Members of such breaches or
conduct and such breaches or conduct have not been
substantially cured within 90 days after such notice has
been given.
(iii) if the LLC experiences a net loss from
its operations, before depreciation and amortization, as
determined in accordance with generally accepted accounting
principles consistently applied, for any three consecutive
fiscal years, then, at any time within six months following
the end of any such three consecutive fiscal years, any
Member may give the others written notice of its intention
to terminate this Agreement, and thereafter this Agreement
shall (subject to the provisions of subsection (e) hereof)
terminate three years after the end of such three
consecutive fiscal years, or earlier if mutually agreed by
Denver Post and Denver Publishing.
(d) No termination of this Agreement or dissolution of
the LLC shall be construed to release any Member from liability
at law or in equity to the other Members or the LLC arising out
of any breach of the terms of this Agreement or The Denver
Newspaper Agency Limited Liability Company Operating Agreement.
(e) As soon as practicable after the termination of
this Agreement by lapse of time or otherwise, the LLC shall
liquidate as provided in Section 7.3 and all applicable
provisions of The Denver Newspaper Agency Limited Liability
Company Operating Agreement.
7.3 Termination at End of Term.
Upon the termination of this Agreement and The Denver Newspaper
Agency Limited Liability Company Operating Agreement, by lapse of
time or otherwise:
(a) Denver Post and Denver Publishing will meet with
each other and use their best efforts to develop a just and
equitable plan for discontinuing and dissolving the LLC and
distributing its assets in kind between Post Entities and Denver
Publishing (after collection of all receivables and payment of
all indebtedness and liabilities of the LLC and all costs of
dissolution and liquidation), in accordance with the Members'
respective Percentage Interests in the LLC, so as to enable
Denver Post and Denver Publishing to resume separate publication
of The Denver Post and Denver Rocky Mountain News, respectively,
as independent businesses (a "Distribution Plan"). If Denver
Post and Denver Publishing agree on a Distribution Plan, the
assets of the LLC shall be distributed in accordance with the
Distribution Plan, all Licenses shall automatically expire and
terminate, and the LLC shall thereupon be dissolved. Except as
provided in the Distribution Plan and upon effective distribution
of assets by the LLC pursuant thereto, neither Denver Post,
Eastern Colorado nor Denver Publishing shall have any separate
right, title or interest in or to any asset of the LLC.
(b) If Denver Post and Denver Publishing are unable to
agree upon a Distribution Plan, all receivables of the LLC shall
be collected and the business affairs and assets of the LLC shall
in accordance with all applicable terms of The Denver Newspaper
Agency Limited Liability Company Operating Agreement be
liquidated as promptly as possible in an orderly and businesslike
manner. The proceeds shall be applied and distributed in
accordance with the terms of The Denver Newspaper Agency Limited
Liability Company Operating Agreement in the following order:
(1) To the payment and discharge of all of the
LLC's debts and liabilities (other than those to Post
Entities and Denver Publishing), including the establishment
of any necessary reserves;
(2) To the payment of any debts and liabilities
to Post Entities and Denver Publishing, including, but not
limited to those arising pursuant to Section 1.8 hereof;
and,
(3) To Denver Post, Eastern Colorado, and Denver
Publishing, or their successors, in accordance with their
respective Percentage Interests.
7.4 Transfers of Interests Under the Agreement and The
Denver Newspaper Agency Limited Liability Company Operating
Agreement.
After the Effective Date, the transfer of the rights of any
party under this Agreement or The Denver Newspaper Agency Limited
Liability Company Operating Agreement or as a Member of the LLC
shall be governed exclusively by the provisions regarding such
transfer set forth in The Denver Newspaper Agency Limited
Liability Company Operating Agreement.
ARTICLE 8
Costs and Liabilities
8.1 Responsibility for Costs.
(a) Costs for the Application to and Proceedings with
the Department of Justice. Each Member shall be responsible for
its own costs, expenses and liabilities which are directly part
of the application to and proceedings with the Department of
Justice. Each of Post Entities (collectively) and Denver
Publishing shall be responsible for one-half of all costs and
expenses of the LLC with respect to such application and
proceedings, including, but without limitation, cost of the hired
economists, accountants, or other experts needed for such
application and proceedings.
(b) Costs for Certain Challenges to the Transactions
Contemplated by this Agreement. Each Member shall be responsible
for its own costs and expenses (including, without limitation,
costs of investigation and preparation) incurred in the defense
of any suit, action or proceeding initiated or threatened by any
governmental authority or any person or entity seeking to
prohibit, enjoin or restrain the transactions contemplated by
this Agreement, or seeking damages in connection with these
transactions or otherwise attempting to challenge the full
implementation of the joint operating arrangement provided in
this Agreement including, without limitation, legal fees and
other costs and expenses incurred in connection with any such
matter. Each of Post Entities, on the one hand, and Denver
Publishing, on the other, shall be responsible for one-half of
all costs and expenses of the LLC incurred in the defense of such
suits, actions or proceedings.
(c) Certain Other Costs and Taxes. 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,
all taxes, attorneys', accountants' and other professional fees
and expenses. All applicable sales, use and real estate transfer
taxes, and all title insurance and survey costs shall be paid by
the LLC.
8.2 Nature of Relationship.
Nothing contained in this Agreement shall constitute the
parties hereto as alter egos or joint employers or as having any
relationship other than as specifically provided herein and in
The Denver Newspaper Agency Limited Liability Company Operating
Agreement. Denver Post, Eastern Colorado and Denver Publishing
each will retain and be responsible for (and will indemnify the
other Members and the LLC against) all of its respective debts,
obligations, liabilities, and commitments which are not
transferred to and assumed by the LLC pursuant to this Agreement.
8.3 Members' Individual Responsibilities.
(a) The entire cost and expense of defending, settling
or paying and discharging any liability or other claim on account
of any article, feature, advertisement, editorial or other item
published in or excluded from The Denver Post or Denver Rocky
Mountain News as a result of any act done or omitted to be done
by the news and editorial departments of The Denver Post or
Denver Rocky Mountain News shall be borne by Denver Post or
Denver Publishing, as the case may be. Each of Denver Post and
Denver Publishing agrees to indemnify and hold the LLC, the other
Members, each of such Member's Affiliates, its and their
directors, officers and employees harmless against any such
liability, cost or expense incurred by such party.
(b) Except as may otherwise be specifically provided
in this Agreement, no Member shall be charged with or held
responsible for any claims arising before or after the Effective
Date hereof by reason of any act or omission on the part of any
other Member, and the responsible Member shall defend, settle,
pay or discharge any such matter, and shall indemnify and hold
harmless the other Members against any such matter, and from any
liability, cost or expense arising therefrom.
8.4 LLC's Responsibility.
After the Effective Date, the entire cost and expense of
defending, settling or paying and discharging any liability or
other claim on account of (a) any article, feature,
advertisement, editorial or other item published in or excluded
from The Denver Post or Denver Rocky Mountain News as a result of
any act done or omitted to be done by the LLC or (b) any other
act done or omitted to be done by the LLC under this Agreement or
The Denver Newspaper Agency Limited Liability Company Operating
Agreement shall be borne by the LLC, except as otherwise
expressly provided herein or therein. The LLC shall indemnify
and hold each of Denver Post, Eastern Colorado and Denver
Publishing and its Affiliates, directors, officers and employees
harmless against any such liability, cost or expense incurred by
any of them.
8.5 Force Majeure.
No party shall be liable to the others for any failure or delay
in performance under this Agreement or The Denver Newspaper
Agency Limited Liability Company Operating Agreement occasioned
by war, riot, act of God or public enemy, strike, labor dispute,
shortage of any supplies, failure of suppliers or workers or
other cause beyond the control of the party required to perform,
and such failure or delay shall not be considered a default
hereunder, but this Section 8.5 shall not excuse any party from
its obligation to pay any sum of money which such party is
otherwise required to pay pursuant to this Agreement or The
Denver Newspaper Agency Limited Liability Company Operating
Agreement.
ARTICLE 9
Miscellaneous
9.1 Notices.
Each notice or other communication given pursuant to this
Agreement or The Denver Newspaper Agency Limited Liability
Company Operating Agreement shall be deemed to have been duly
given when hand delivered or three days after being deposited in
the United States mail, certified, postage prepaid, return
receipt requested, and addressed to the party to be notified at
such party's address as set forth below:
If to Denver Publishing to: Denver Rocky Mountain News
c/o The E.W. Scripps Company
312 Walnut Street, 28th Floor
Cincinnati, Ohio 45202
Attn: Daniel J. Castellini
Senior Vice President and
Chief Financial Officer
Telecopier: (513) 977-3729
With a Copy to: Baker & Hostetler LLP
312 Walnut Street, Suite 2650
Cincinnati, OH 45202
Attn: William Appleton, Esq.
Telecopier: (513) 929-0303
If to either or both c/o MediaNews Group, Inc.
of the Post Entities 1560 Broadway, Suite 2100
(or to the LLC prior Denver, CO 80202
to the Effective Date) Attn: Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
Telecopier: (303) 820-1929
With a Copy to: Verner, Liipfert, Bernhard,
McPherson and Hand, Chartered
901 15th Street, N.W., Suite 700
Washington, DC 20005-2301
Attn: Howell E. Begle, Jr., Esq.
Telecopier: (202) 371-6279
The LLC shall on the Effective Date by notice to the other
parties given in accordance with this Section 9.1 designate an
address for receipt on or after such date of notices and
communications hereunder. All such notices to the LLC shall on
or after such date be to the attention of the President and Chief
Executive Officer, with copies to Post Entities and Denver
Publishing at the addresses then designated by them for the
receipt of such notices pursuant to this Section 9.1. Any party
may change its address or the individual to whom notice is to be
directed hereunder by notice to the other parties given in
accordance with this Section 9.1.
9.2 Non-Assignability.
This Agreement shall be binding upon and shall inure to the
benefit of each of the parties hereto and their permitted
successors and assigns, but any attempt by any party to assign
any of its rights or to delegate any of its duties hereunder
shall be subject to Section 7.4.
9.3 Entire Understanding.
This Agreement (including the Exhibits) and The Denver
Newspaper Agency Contribution and Sale Agreement embody the
entire understanding and agreement of the parties on the subject
matter herein and therein contained and supersedes any and all
prior agreements, arrangements, and understandings relative to
the subject matter hereof and thereof.
9.4 Headings.
Titles, captions or headings contained in this Agreement are
inserted only as a matter of convenience and for reference and in
no way define, limit, extend or describe the scope of this
Agreement or the intent of any provisions hereto.
9.5 Governing Law.
This Agreement shall be construed and enforced in accordance
with the internal laws of the State of Colorado.
9.6 Modifications.
This Agreement shall be amended only by an agreement in writing
and signed by the party against whom enforcement or discharge is
sought.
9.7 Severability.
Each provision of this Agreement shall be considered severable
from the rest and if any provision of this Agreement or its
application to any person, entity or circumstance shall be held
invalid and contrary to any existing or future law or
unenforceable to any extent, the remainder of this Agreement and
the application of any other provision to any person, entity or
circumstance shall not be affected thereby and shall be
interpreted and enforced to the greatest extent permitted by law
so as to give effect to the original intent of the parties
hereto.
9.8 Specific Performance.
In addition to any other remedies the parties may have, each
party shall have the right to enforce the provisions of this
Agreement through injunctive relief or by a decree or decrees of
specific performance.
9.9 No Third Party Beneficiaries.
Nothing in this Agreement, express or implied, shall give to
anyone other than the parties hereto and their respective
permitted successors and assigns any benefit, or any legal or
equitable right, remedy or claim, under or in respect of this
Agreement.
IN WITNESS WHEREOF, the parties have signed in multiple
counterparts this Agreement by their respective duly authorized
signatories as of the day and year above written.
THE DENVER POST CORPORATION
By:
Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
EASTERN COLORADO PRODUCTION
FACILITIES, INC.
By:
Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
DENVER POST PUBLISHING FACILITIES LLC
By:
Joseph J. Lodovic, IV
Executive Vice President and
Chief Financial Officer
THE DENVER PUBLISHING COMPANY
By:
Daniel J. Castellini
Senior Vice President and
Chief Financial Officer