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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
PULITZER INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 43-1819711
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
900 North Tucker Boulevard, St. Louis, 63101
Missouri
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (314) 340-8000
Securities to be registered pursuant to Section 12(b) of the Act:
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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
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<S> <C>
Common Stock, $0.01 par value per share New York Stock Exchange, Inc.
</TABLE>
Securities to be registered pursuant to Section 12(g) of the Act:
Not applicable
(Title of Class)
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ITEM 1. BUSINESS.
INTRODUCTION
Pulitzer Inc. ("New Pulitzer") was organized as a corporation in 1998 and
is a wholly-owned subsidiary of Pulitzer Publishing Company ("Pulitzer").
Pulitzer is engaged in newspaper publishing and television and radio
broadcasting.
On May 25, 1998, Pulitzer, New Pulitzer and Hearst-Argyle Television, Inc.
("Hearst-Argyle") entered into an Agreement and Plan of Merger pursuant to which
Hearst-Argyle will acquire Pulitzer's television and radio broadcasting
operations (collectively, the "Broadcasting Business"). The Broadcasting
Business consists of nine network-affiliated television stations and five radio
stations owned and operated by Pulitzer Broadcasting Company, a wholly-owned
subsidiary of Pulitzer, and its wholly-owned subsidiaries. The Broadcasting
Business will be acquired by Hearst-Argyle through the merger (the "Merger") of
Pulitzer into Hearst-Argyle. Pulitzer's newspaper publishing and related new
media businesses will continue as "New Pulitzer," which will be distributed in a
tax-free "spin-off" to Pulitzer stockholders (the "Spin-off") prior to the
Merger. The Merger and Spin-off are collectively referred to as the
"Transactions."
In connection with the Transactions, New Pulitzer will amend and restate
its Certificate of Incorporation to: (i) recapitalize its capital structure to
provide for common stock, par value $0.01 per share (the "Common Stock"), Class
B common stock, par value $0.01 per share (the "Class B Common Stock"), and
preferred stock, par value $0.01 per share (the "Preferred Stock" and together
with the Common Stock and Class B Common Stock, the "New Pulitzer Stock"); and
(ii) provide for substantially the same stockholder voting rights and other
terms and provisions as currently provided for in the Restated Pulitzer
Certificate of Incorporation, as amended. Prior to the Spin-off, New Pulitzer
will issue to Pulitzer: (i) that number of shares of Common Stock equal to the
number of shares of Pulitzer common stock then outstanding; and (ii) that number
of shares of Class B Common Stock equal to the number of shares of Pulitzer
Class B common stock then outstanding. Pulitzer will then distribute these
shares of New Pulitzer Common Stock and Class B Common Stock to its stockholders
in the Spin-off.
The closing of the Transactions is expected to occur prior to the end of
1998, subject to certain conditions and rights, including termination and
"top-up" rights described in the Joint Proxy Statement/Prospectus included in
Hearst-Argyle's registration statement on Form S-4 filed with the Securities and
Exchange Commission on , 1998. All information herein assumes
consummation of the Transactions.
Pulitzer's historical basis in its newspaper publishing and related new
media assets and liabilities will be carried over to New Pulitzer. The
Transactions will be recorded as a reverse-spin transaction and, accordingly,
New Pulitzer's results of operations for periods prior to the consummation of
the Transactions will be identical to the historical results previously reported
by Pulitzer. Because the Broadcasting Business represents an entire business
segment that will be divested, its results are reported as discontinued
operations for all periods presented. Results of the remaining newspaper
publishing and related new media businesses are reported as continuing
operations.
The Board of Directors of New Pulitzer intends to continue to pay the same
quarterly dividend per share as Pulitzer. Future dividends will depend upon,
among other things, New Pulitzer's earnings, financial condition, cash flows,
capital requirements and other relevant considerations, including the
limitations under any credit agreement or other agreement to which New Pulitzer
may become a party in the future.
Following the consummation of the Transactions, New Pulitzer will continue
the newspaper publishing and related new media operations of Pulitzer. Set forth
below is a general description of the newspaper publishing and related new media
businesses of Pulitzer that will continue to operate through New Pulitzer.
GENERAL
Pulitzer is engaged in newspaper publishing and related "new media"
business. Its newspaper operations consist of two major metropolitan dailies:
the St. Louis Post-Dispatch (the "Post-Dispatch"), the only major daily
newspaper serving the St. Louis metropolitan area; and The Arizona Daily Star
(the "Star"), serving the
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Tucson metropolitan area. Each of these publications also operates electronic
news, information and communication web sites on the Internet. In addition,
Pulitzer's Pulitzer Community Newspaper group (the "PCN Group") includes 12
dailies which serve smaller markets, primarily in the West and Midwest, as well
as a number of weekly and bi-weekly publications.
The Pulitzer Publishing Company was founded by the first Joseph Pulitzer in
1878 to publish the original St. Louis Post-Dispatch and has operated
continuously since that time under the direction of the Pulitzer family. Michael
E. Pulitzer, a grandson of the founder, currently serves as Chairman of the
Board, President and Chief Executive Officer of Pulitzer and holds the same
positions in New Pulitzer.
The following table sets forth certain historical financial information
regarding Pulitzer's continuing operations for the periods and at the dates
indicated.
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<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996(2) 1995 1994(3) 1993(3)
---- ------- ---- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Operating revenues -- net............ $357,969 $309,096 $269,388 $304,779 $290,146
======== ======== ======== ======== ========
Operating income (loss):
Publishing operations.............. $ 66,994 $ 46,549 $ 37,895 $ 45,192 $ 34,362
St. Louis Agency adjustment........ (19,450) (13,972) (12,502) (14,706) (10,660)
General corporate expense.......... (6,007) (5,532) (4,666) (3,871) (3,692)
-------- -------- -------- -------- --------
Total...................... $ 41,537 $ 27,045 $ 20,727 $ 26,615 $ 20,010
======== ======== ======== ======== ========
Depreciation and amortization........ $ 13,007 $ 8,660 $ 4,307 $ 6,128 $ 6,938
======== ======== ======== ======== ========
Operating margins(1)................. 18.7% 15.1% 14.1% 14.8% 11.8%
Assets............................... $464,311 $427,182 $333,641 $293,868 $248,930
======== ======== ======== ======== ========
</TABLE>
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(1) Operating margins represent publishing operating income compared to
operating revenues. Publishing operating income used in margin calculations
excludes the St. Louis Agency adjustment (see "-- Publishing -- Agency
Agreements.") and general corporate expense (which are both recorded as
operating expenses for financial reporting purposes).
(2) The year 1996 included a partial year of operations of Scripps League
Newspapers, Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.)
following its acquisition on July 1, 1996.
(3) On December 22, 1994, Pulitzer sold its Chicago publishing subsidiary; the
subsidiary's operating results are included in the above amounts for 1994
and 1993.
OPERATING STRATEGY
Pulitzer's long-term operating strategy for its media assets has been, and
New Pulitzer's long-term operating strategy will be, to maximize each property's
growth and profitability through maintenance of editorial excellence, leadership
in locally-responsive news, and prudent control of costs. Management believes
that editorial excellence and leadership in locally-responsive news will, over
the long-term, allow New Pulitzer to maximize its market share in each of its
respective markets. Experienced local managers implement Pulitzer's strategy in
each media market, with centralized Pulitzer management providing oversight and
guidance in all areas of planning and operations.
Pulitzer complements its internal growth strategies with a disciplined and
opportunistic acquisition strategy that is focused on acquiring media properties
that Pulitzer believes are a good fit with its operating strategy, possess
attractive growth potential and meet Pulitzer's objectives for after-tax cash
flow. Management believes that Pulitzer's reputation, financial position, cash
flow and conservative capital structure, among other factors, will assist New
Pulitzer in pursuing acquisitions. New Pulitzer intends to seek out acquisition
opportunities, with particular emphasis on small-to medium-sized markets.
New Pulitzer believes that cost controls are an important tool in the
management of media properties which are subject to significant fluctuations in
advertising volume. New Pulitzer believes that prudent control
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of costs will permit it to respond quickly when positive operating conditions
offer opportunities to expand market share and profitability and, alternatively,
when deteriorating operating conditions require cost reductions to protect
profitability. Pulitzer's disciplined budgeting process is one of the key
elements in controlling costs. Pulitzer employs, and New Pulitzer will continue
to employ, production technology in all of its media operations in order to
minimize production costs and produce an attractive and timely news product for
its readers.
Pulitzer's newspaper operations are geographically diverse, placing
Pulitzer in the Midwest, Southwest and Western regions of the United States. Due
to the close relationship between economic activity and advertising volume, New
Pulitzer believes that geographic diversity will provide New Pulitzer with
valuable protection from regional economic variances.
PUBLISHING
New Pulitzer intends to continue the tradition of reporting and editorial
excellence that has resulted in Pulitzer's receiving 17 Pulitzer Prizes* over
the years.
Pulitzer publishes two major metropolitan daily newspapers, the St. Louis
Post-Dispatch and The Arizona Daily Star. Both daily newspapers have weekly
total market coverage sections that provide advertisers with market saturation,
and both offer alternative delivery systems that provide advertisers with either
targeted or total market coverage.
The PCN Group's 12 daily community newspapers have a combined average daily
circulation of approximately 165,000. The smaller markets served by these
newspapers and their locations will provide New Pulitzer with further
diversification and participation in several higher growth areas of the western
United States. A strong focus on local reporting and editorial excellence is
also considered the key to long-term success in these markets.
Pulitzer's publishing revenues are derived primarily from advertising and
circulation, which averaged approximately 87 percent of Pulitzer's total
publishing revenue over the last five years. Advertising rates and rate
structures and resulting revenues vary among publications based, among other
things, on circulation, type of advertising, local market conditions and
competition. The following table provides a breakdown of Pulitzer's publishing
revenues for the past five years.
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YEARS ENDED DECEMBER 31,
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1997 1996(1) 1995 1994(2) 1993(2)
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(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Advertising:
Retail............................. $107,916 $ 91,373 $ 78,362 $ 88,450 $ 85,860
General............................ 10,466 10,123 7,645 7,830 7,154
Classified......................... 109,435 90,443 75,925 84,738 75,670
-------- -------- -------- -------- --------
Total......................... 227,817 191,939 161,932 181,018 168,684
Circulation.......................... 87,611 81,434 76,349 77,941 78,661
Other................................ 42,541 35,723 31,107 45,820 42,801
-------- -------- -------- -------- --------
Total......................... $357,969 $309,096 $269,388 $304,779 $290,146
======== ======== ======== ======== ========
</TABLE>
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(1) Revenue amounts for 1996 included a partial year of operations of Scripps
League Newspapers, Inc. (subsequently renamed Pulitzer Community Newspapers,
Inc.) following its acquisition on July 1, 1996.
(2) On December 22, 1994, Pulitzer sold its Chicago publishing subsidiary; the
subsidiary's operating revenues are included in the above amounts for 1994
and 1993.
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* Pulitzer Prizes are awarded annually at Columbia University by the Pulitzer
Prize Board, an independent entity affiliated with the Columbia University
School of Journalism, founded by the first Joseph Pulitzer.
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ST. LOUIS POST-DISPATCH
Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a long
history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. St. Louis is currently the 17th largest metropolitan
statistical area in the United States with a population of approximately 2.6
million.
Over the past several years, Pulitzer has taken a number of steps designed
to strengthen the market position of the Post-Dispatch. In 1997, the
Post-Dispatch completed an extensive redesign intended to make the newspaper
more accessible and relevant to readers, and Pulitzer is continuing to make
investments to enhance its news coverage capabilities and strengthen its
circulation and advertising operations.
The Post-Dispatch operates under an Agency Agreement, dated March 1, 1961,
as amended (the "St. Louis Agency Agreement"), between Pulitzer and The Herald
Company, Inc. (the "Herald Company") pursuant to which Pulitzer performs all
activities relating to the day-to-day operations of the newspaper, but pursuant
to which it must share one-half of the agency's operating income or one-half of
the agency's operating loss with the Herald Company (the "St. Louis Agency").
The following table sets forth for the past five years certain circulation and
advertising information for the Post-Dispatch and operating revenues for the St.
Louis Agency, all of which are included in Pulitzer's consolidated financial
statements. See "Agency Agreements."
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YEARS ENDED DECEMBER 31,
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1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Post-Dispatch:
Circulation (1):
Daily (including Saturday)...... 319,887 319,203 323,137 335,819 341,797
Sunday.......................... 530,442 540,434 545,882 555,488 564,761
Advertising linage (in thousands of
inches):
Retail............................. 841 819 880 912 913
General............................ 91 101 75 75 62
Classified......................... 1,003 1,007 1,057 1,039 977
-------- -------- -------- -------- --------
Total...................... 1,935 1,927 2,012 2,026 1,952
Part run........................... 607 792 594 591 481
-------- -------- -------- -------- --------
Total inches............... 2,542 2,719 2,606 2,617 2,433
======== ======== ======== ======== ========
Operating revenues (in thousands):
Advertising........................ $147,770 $137,054 $130,600 $125,704 $116,951
Circulation........................ 63,216 63,858 64,862 61,207 62,345
Other(2)........................... 24,276 23,231 24,404 23,490 22,387
-------- -------- -------- -------- --------
Total...................... $235,262 $224,143 $219,866 $210,401 $201,683
======== ======== ======== ======== ========
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(1) Amounts based on ABC Publisher's Statements for the twelve-month periods
ended September 30.
(2) Primarily revenues from preprinted inserts.
The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. Pulitzer's commitment to the ongoing
enhancement of its operating systems has enabled the Post-Dispatch to offer a
continually improving product to both readers and advertisers while also
realizing substantial savings in labor cost. New Pulitzer believes the
Post-Dispatch has adequate facilities to sustain up to at least a 35 percent
increase in daily circulation without incurring significant capital
expenditures. The Post-Dispatch is in the process of upgrading and modifying its
systems to make them "Year-2000" compatible, and expects to achieve full
compliance during 1999.
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The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 76 percent of circulation for the daily Post-Dispatch and
approximately 55 percent of circulation for the Sunday edition during 1997.
THE ARIZONA DAILY STAR
Founded in 1877, the Star is published in Tucson, Arizona, by Pulitzer's
wholly-owned subsidiary, Star Publishing Company. Following the consummation of
the Transactions, Star Publishing Company will be a wholly-owned subsidiary of
New Pulitzer. The Star, a morning and Sunday newspaper, and the Tucson Citizen
(the "Citizen"), an afternoon newspaper owned by Gannett Co., Inc. ("Gannett"),
are southern Arizona's leading dailies. The Star and the Citizen are published
through an agency operation (the "Tucson Agency") pursuant to an Agency
Agreement, dated March 28, 1940, as amended and restated (the "Tucson Agency
Agreement"), and have a combined weekday circulation of approximately 140,000.
Tucson is currently the 69th largest metropolitan statistical area in the United
States with a population of approximately 781,000.
The Tucson Agency operates through TNI Partners, an agency partnership
which is owned half by Pulitzer and half by Gannett. TNI Partners is responsible
for all aspects of the business of the two newspapers other than editorial
opinion and gathering and reporting news. Revenues and expenses are generally
shared equally by the Star and the Citizen. Unlike the St. Louis Agency,
Pulitzer's consolidated financial statements include only its share of the
combined operating revenues and operating expenses of the two newspapers. See
"Agency Agreements."
As a result of the Tucson Agency, the financial performance of Pulitzer's
Star Publishing Company subsidiary is directly affected by the operations and
performance of both the Star and the Citizen.
The following table sets forth certain information concerning circulation
and combined advertising linage of the Star and the Citizen and Pulitzer's share
of the operating revenues of the Star and the Citizen for the past five years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
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1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Circulation(1):
Star daily.............................. 96,101 96,198 97,134 98,050 96,926
Citizen daily........................... 44,009 46,062 47,240 48,272 49,560
Star Sunday............................. 175,659 178,820 180,170 179,652 175,321
Combined advertising linage (in thousands
of inches):
Full run (all zones)
Retail............................... 1,587 1,499 1,565 1,565 1,675
General.............................. 51 45 49 50 45
Classified........................... 1,713 1,684 1,682 1,608 1,462
------- ------- ------- ------- -------
Total........................... 3,351 3,228 3,296 3,223 3,182
Part run............................. 264 201 171 116 98
------- ------- ------- ------- -------
Total inches.................... 3,615 3,429 3,467 3,339 3,280
======= ======= ======= ======= =======
Operating revenues (in thousands):
Advertising............................. $34,302 $31,765 $31,332 $28,459 $25,562
Circulation............................. 11,023 11,194 11,487 11,434 11,065
Other(2)................................ 7,712 7,139 6,703 5,833 5,298
------- ------- ------- ------- -------
Total........................... $53,037 $50,098 $49,522 $45,726 $41,925
======= ======= ======= ======= =======
</TABLE>
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(1) Amounts for 1995 based on ABC Publisher's Statement for the 53 week period
ended December 31. All other years based on ABC Publisher's Statements for
the 52 week periods ended December 31.
(2) Primarily revenues from preprinted inserts.
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In 1997, the Star's daily edition accounted for approximately 69 percent of
the combined daily circulation of the Tucson Agency publications. The Star's
daily and Sunday editions accounted for approximately 60 percent of the agency's
total advertising linage.
The Star and the Citizen are printed at TNI Partners' modern, computerized
facility equipped with two, eight-unit Metro offset presses. The writing,
editing and composing functions have been computerized, increasing efficiency
and reducing workforce requirements.
PULITZER COMMUNITY NEWSPAPERS, INC.
On July 1, 1996, Pulitzer acquired for approximately $216 million all the
stock of Scripps League Newspapers, Inc. (subsequently renamed Pulitzer
Community Newspapers, Inc.), a privately owned publisher of community newspapers
which serve smaller markets, primarily in the West and Midwest. The PCN Group
now includes 12 daily newspapers which publish morning or afternoon editions
during the week and, generally, morning editions on the weekend. Home delivery
through independent contract carriers accounts for the significant portion of
each newspaper's circulation. With circulations ranging from approximately
33,000 to 3,000, the 12 daily newspapers in the PCN Group, ranked in order of
daily circulation, are:
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The Daily Herald....................................... Provo, Utah
Santa Maria Times...................................... Santa Maria, California
The Napa Valley Register............................... Napa, California
The World.............................................. Coos Bay, Oregon
The Hanford Sentinel................................... Hanford, California
The Arizona Daily Sun.................................. Flagstaff, Arizona
The Daily Chronicle.................................... De Kalb, Illinois
The Daily Journal...................................... Park Hills, Missouri
The Garden Island...................................... Lihue, Hawaii
The Ravalli Republic................................... Hamilton, Montana
The Daily News......................................... Rhinelander, Wisconsin
Daily Press Leader..................................... Farmington, Missouri
</TABLE>
In addition, the PCN Group operates weekly newspapers in Petaluma,
California and Fredericktown, Missouri and two weekly newspaper groups in
conjunction with the properties in Hanford and Santa Maria, California.
The smaller markets served by the PCN Group are attractive because they
generally have desirable demographic characteristics and above-average growth
rates. Collectively, the PCN Group markets exceed U.S. averages in such key
measures as annual household growth rate, average household income and average
household wealth; in addition, the average median home value in these markets is
nearly double the U.S. median average.
Further, these markets, which are often not served by major metropolitan
media, tend to be characterized by less media competition, which gives New
Pulitzer an opportunity to sustain and expand market shares.
For the year ended December 31, 1997, the PCN Group had consolidated
operating revenues of approximately $69.7 million, of which advertising,
preprints and circulation accounted for approximately 66 percent, 12 percent and
19 percent, respectively. For the six-month period ended December 31, 1996, the
PCN Group had consolidated operating revenues of approximately $34.9 million, of
which advertising, preprints and circulation accounted for approximately 67
percent, 11 percent and 18 percent, respectively.
Pulitzer has recently made a significant investment in new computer systems
which handle typesetting, editing and web publishing, as well as financial and
statistical reporting, for its PCN Group properties. The standardized systems,
which are "Year-2000" compatible, permit centralized maintenance and support.
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RELATED "NEW MEDIA" OPERATIONS
Pulitzer has developed "new media" operations that are designed to enhance,
complement and add value to its traditional newspaper publishing businesses by
providing subscriber and advertiser services through various forms of electronic
distribution, including electronic publishing, voice services delivered by
phone, and electronic dissemination of information via the world wide
web/Internet. Pulitzer's objective in these operations is to develop and expand
its ability to provide advertisers access to a large and attractive online
audience.
Pulitzer is an Internet service provider as a central element of its
strategy in both St. Louis and Tucson. Full access to each newspaper's
"electronic publication" web site, as well as full Internet access, is provided
on a subscription basis. The Star's service, StarNet (www.azstarnet.com), began
operations in May, 1995 and had approximately 11,200 subscribers as of June 30,
1998. The service provided by the Post-Dispatch, POSTnet (www.stlnet.com),
started in January 1996 and had approximately 13,400 subscribers as of June 30,
1998. The web sites provide access to current and archive material, including
news, editorials and classified advertising, from each newspaper, as well as
interactive Internet-specific enhancements such as message boards and chat
rooms. Pulitzer is currently developing enhanced online services featuring the
three major classified advertising categories -- automotive, real estate and
help wanted.
In addition, Pulitzer is a founding member of PAFET, a consortium of five
newspaper companies that is pursuing a program of research and investment
designed to help its members understand and participate in the opportunities and
challenges that the new media provide for newspaper properties.
ACQUISITION STRATEGY
One of Pulitzer's primary growth strategies has been a disciplined and
opportunistic acquisition program. In evaluating acquisition opportunities,
Pulitzer requires that candidates must: (i) be in businesses related to
Pulitzer's core publishing competencies; (ii) have strong cash flows; (iii)
reflect its preference for small-to medium-sized markets that possess good
growth or economic characteristics and, where possible, offer a clustering
opportunity with respect to present or future properties; (iv) provide an
opportunity for its disciplined management approach to add value; and (v) offer
an attractive return on investment. Management of New Pulitzer intends to pursue
a similar growth strategy.
AGENCY AGREEMENTS
Newspapers in approximately 15 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers servicing
the same market to share certain printing and other facilities and to pool
certain revenues and expenses in order to decrease aggregate expenses and
thereby allow the continuing operation of multiple newspapers serving the same
market. The Newspaper Preservation Act of 1970 permits joint operating
agreements between newspapers under certain circumstances without violation of
the Federal antitrust laws.
St. Louis Agency. An agency operation between Pulitzer and the Herald
Company is conducted under the provisions of the St. Louis Agency Agreement. For
many years, the Post-Dispatch was the afternoon and Sunday newspaper serving St.
Louis, and the Globe-Democrat was the morning paper and also published a weekend
edition. Although separately owned, from 1961 through February 1984, the
publication of both the Post-Dispatch and the Globe-Democrat was governed by the
St. Louis Agency Agreement. From 1961 to 1979, the two newspapers controlled
their own news, editorial, advertising, circulation, accounting and promotion
departments and Pulitzer managed the production and printing of both newspapers.
In 1979, Pulitzer assumed full responsibility for advertising, circulation,
accounting and promotion for both newspapers. In February 1984, after a number
of years of unfavorable financial results at the St. Louis Agency, the Globe-
Democrat was sold by the Herald Company and the St. Louis Agency Agreement was
revised to eliminate any continuing relationship between the two newspapers and
to permit the repositioning of the daily Post-Dispatch as a morning newspaper.
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Following the renegotiation of the St. Louis Agency Agreement at the time
of the sale of the Globe-Democrat, the Herald Company retained the contractual
right to half the profits or losses (as defined) of the operations of the St.
Louis Agency, which from February 1984 forward consisted solely of the
publication of the Post-Dispatch. The St. Louis Agency Agreement generally
provides for the Herald Company to share half the cost of, and to share in a
portion of the proceeds from the sale of, capital assets used in the production
of the Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper.
The consolidated financial statements of Pulitzer include all the operating
revenues and expenses of the St. Louis Agency. An agency adjustment is provided
as an operating expense which reflects that portion of the operating income of
the St. Louis Agency allocated to the Herald Company. Under the St. Louis Agency
Agreement, for fiscal 1997, 1996, 1995, 1994, and 1993, Pulitzer paid the Herald
Company $19,450,000, $13,972,000, $12,502,000, $14,706,000, and $10,660,000,
respectively, for the Herald Company's share of the operating income of the St.
Louis Agency. As a result of such agency adjustment, Pulitzer is, and during the
term of the St. Louis Agency New Pulitzer will continue to be, entitled to half
the profits (as defined) from the operations of the St. Louis Agency, the amount
of which cannot be determined until the end of each fiscal year.
The current term of the St. Louis Agency Agreement runs through December
31, 2034, following which either party may elect to renew the agreement for
successive periods of 30 years each.
Tucson Agency. The Tucson Agency Agreement has, since 1940, governed the
joint operations of the Star and Citizen. For financial reporting purposes, the
operations of the Tucson Agency are reflected in Pulitzer's consolidated
financial statements differently from the operations of the St. Louis Agency.
The consolidated financial statements of Pulitzer include only Pulitzer's share
of the combined revenues, operating expenses and income of the Star and Citizen.
TNI Partners, as agent for Pulitzer and Gannett, is responsible for advertising
and circulation, printing and delivery and collection of all revenues of the
Star and the Citizen. The Board of Directors of TNI Partners presently consists
of three directors chosen by Pulitzer and three chosen by Gannett. Budgetary,
personnel and other non-news and editorial policy matters, such as advertising
and circulation policies and rates or prices, are determined by the Board of
Directors of TNI Partners. Each newspaper is responsible for its own news and
editorial content. Revenues and expenses are recorded by TNI Partners, and the
resulting profit is generally split 50-50 between Pulitzer and Gannett. Both
partners have certain administrative costs which are borne separately. As a
result of the Tucson Agency, the Star and the Citizen benefit from increases and
can be adversely affected by decreases in each other's circulation.
The Tucson Agency Agreement runs through June 1, 2015, and contains renewal
provisions for successive periods of 25 years each.
COMPETITION
Pulitzer's publications compete for readership and advertising revenues in
varying degrees with other metropolitan, suburban, neighborhood and national
newspapers and other publications as well as with television, radio, cable,
Internet, online services and other new media technologies, direct mail, yellow
page directories, billboards and other news and advertising media. Competition
for advertising is based upon circulation levels, readership demographics, price
and advertiser results, while competition for circulation is generally based
upon the content, journalistic quality and price of the publication. In St.
Louis and its surrounding suburban communities, the Post-Dispatch's closest
print competition for circulation and advertising revenues includes paid
suburban daily newspapers as well as a chain of community newspapers and
shoppers. These community newspapers and shoppers target selected geographic
markets throughout the St. Louis metropolitan area.
Due to the agency relationship existing in Tucson, the Star and the Citizen
cannot be viewed as competitors for advertising or circulation revenues. The
Star and the Citizen compete primarily against other media and against
Phoenix-area and suburban, neighborhood and national newspapers and other
publications.
8
<PAGE> 10
EMPLOYEE RELATIONS
The Post-Dispatch has contracts with substantially all of its production
unions, with expiration dates ranging from February 1999 through February 2010.
In addition, the Post-Dispatch has a multi-year contract with the St. Louis
Newspaper Guild which expires in January 2003. All of the Post-Dispatch labor
contracts contain no strike provisions.
TNI Partners has a one-year contract, expiring December 31, 1998, with
Tucson Graphic Communications Union Local No. 212, covering certain pressroom
employees. Historically, this contract has been renewed for a one-year term each
January 1. Pulitzer expects such a renewal for 1999.
RAW MATERIALS
Pulitzer's newspaper operations are significantly impacted by the cost of
newsprint which accounted for approximately 20 percent of total 1997 operating
expenses. During 1997, Pulitzer used approximately 100,900 metric tons of
newsprint in its production process at a total cost of approximately $56.8
million. Consumption at the Post-Dispatch represented approximately 72,600
metric tons of Pulitzer's total newsprint usage in 1997. In the last five years,
Pulitzer's average cost per ton of newsprint has varied from a low of $452 per
metric ton in 1994 to a high of $675 per metric ton in 1995. For the first half
of 1998, Pulitzer's average cost for newsprint was approximately $600 per metric
ton, compared to approximately $540 per metric ton in 1997. For the third
quarter of 1998, Pulitzer's cost of newsprint will be in the range of $575 per
metric ton. However, on September 1, 1998, most of Pulitzer's suppliers
increased the price of newsprint to approximately $615 per metric ton. This
price increase will begin to impact Pulitzer's newsprint costs in the fourth
quarter of 1998. In the second half of 1997, Pulitzer's average cost of
newsprint was approximately $585 per metric ton.
The Post-Dispatch obtains the newsprint necessary for its operations from
five separate mills, three of which are located in Canada and two in the United
States. The Post-Dispatch has guaranteed the future supply of certain volume
levels through long-term agreements with two of its newsprint suppliers.
Pulitzer believes that the absence of long-term agreements with the remaining
three newsprint suppliers will not affect Pulitzer's ability to obtain newsprint
at competitive prices.
Pulitzer acquired five newsprint contracts with the purchase of the PCN
Group in 1996. Combined with the tonnage purchased for the Post-Dispatch,
Pulitzer has been able to leverage its pricing power to obtain the best price
available for the PCN Group, and to assure adequate supplies for all locations.
TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the Citizen.
Gannett purchases newsprint on behalf of TNI Partners under various contractual
arrangements and agreements. Newsprint is also purchased on the spot market.
EMPLOYEES
At July 31, 1998, Pulitzer's publishing operations had approximately 2,200
full-time employees. In St. Louis, a majority of the approximately 1,200
full-time employees engaged in publishing are represented by unions. Pulitzer
considers its relationship with its employees to be good.
9
<PAGE> 11
ITEM 2. FINANCIAL INFORMATION.
SELECTED FINANCIAL DATA
Selected Historical Financial Data of Pulitzer. The following table sets
forth selected consolidated historical financial data for each of the five years
in the period ended December 31, 1997 and for the six-month periods ended June
30, 1998 and 1997 for Pulitzer. Such data have been derived from, and should be
read in conjunction with, Pulitzer's consolidated financial statements and notes
thereto included in Item 13 of this Registration Statement on Form 10. Unless
otherwise noted, the data exclude the Broadcasting Business which is reported as
a discontinued business operation.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED OR AS OF JUNE 30, FOR THE YEARS ENDED OR AS OF DECEMBER 31,
------------------------ --------------------------------------------------------
1998 1997 1997 1996(F) 1995(H) 1994 1993
---- ---- ---- ------- ------- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT
DATA:
Operating revenues -- net... $184,444 $176,140 $357,969 $309,096 $269,388 $304,779 $290,146
-------- -------- -------- -------- -------- -------- --------
OPERATING EXPENSES:
Operations.................. 74,526 70,044 145,730 139,259 125,811 130,219 128,220
Selling, general and
administrative............ 68,396 64,893 132,238 114,628 101,375 123,240 120,629
General corporate expense... 2,640 2,756 6,007 5,532 4,666 3,871 3,689
St. Louis Agency
adjustment................ 10,863 10,429 19,450 13,972 12,502 14,706 10,660
Depreciation and
amortization.............. 6,823 6,736 13,007 8,660 4,307 6,128 6,938
-------- -------- -------- -------- -------- -------- --------
Total operating
expenses................ 163,248 154,858 316,432 282,051 248,661 278,164 270,136
-------- -------- -------- -------- -------- -------- --------
Operating income............ 21,196 21,282 41,537 27,045 20,727 26,615 20,010
Interest income............. 2,156 2,501 4,642 4,509 5,196 1,966 1,085
Gain on sale of
properties(a)............. 2,791
Net other expense(b)........ (1,176) (560) (1,203) (5,870) (2,319) (1,461) (1,011)
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before
provision for income taxes
and cumulative effects of
changes in accounting
principles................ 22,176 23,223 44,976 25,684 23,604 29,911 20,084
Provision for income
taxes..................... 9,497 9,894 19,226 10,892 9,149 11,204 7,884
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before
cumulative effects of
changes in accounting
principles................ 12,679 13,329 25,750 14,792 14,455 18,707 12,200
Discontinued operations, net
of tax(c)................. 23,987 18,847 40,278 42,708 34,867 21,203 11,185
Cumulative effects of
changes in accounting
principles, net of
tax(d).................... (719) (72)
-------- -------- -------- -------- -------- -------- --------
Net income................ $ 36,666 $ 32,176 $ 66,028 $ 57,500 $ 49,322 $ 39,191 $ 23,313
======== ======== ======== ======== ======== ======== ========
PER SHARE DATA(E)(G):
BASIC EARNINGS PER SHARE OF
STOCK:
Continuing operations before
cumulative effects of
changes in accounting
principles................ $ 0.57 $ 0.60 $ 1.17 $ 0.67 $ 0.66 $ 0.86 $ 0.60
Discontinued operations..... 1.08 0.86 1.82 1.95 1.60 0.98 0.55
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED OR AS OF JUNE 30, FOR THE YEARS ENDED OR AS OF DECEMBER 31,
------------------------ --------------------------------------------------------
1998 1997 1997 1996(F) 1995(H) 1994 1993
---- ---- ---- ------- ------- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative effects of
changes in accounting
principles................ (0.03)
-------- -------- -------- -------- -------- -------- --------
Earnings per share.......... $ 1.65 $ 1.46 $ 2.99 $ 2.62 $ 2.26 $ 1.81 $ 1.15
======== ======== ======== ======== ======== ======== ========
Weighted average number of
shares outstanding........ 22,289 22,054 22,110 21,926 21,800 21,655 20,371
======== ======== ======== ======== ======== ======== ========
DILUTED EARNINGS PER SHARE OF
STOCK:
Continuing operations before
cumulative effects of
changes in accounting
principles................ $ 0.56 $ 0.60 $ 1.15 $ 0.66 $ 0.65 $ 0.86 $ 0.59
Discontinued operations..... 1.06 0.84 1.79 1.92 1.58 0.97 0.54
Cumulative effects of
changes in accounting
principles................ (0.03)
-------- -------- -------- -------- -------- -------- --------
Earnings per share.......... $ 1.62 $ 1.44 $ 2.94 $ 2.58 $ 2.23 $ 1.80 $ 1.13
======== ======== ======== ======== ======== ======== ========
Weighted average number of
shares outstanding........ 22,685 22,396 22,452 22,273 22,097 21,822 20,609
======== ======== ======== ======== ======== ======== ========
Dividends per share of
common stock and Class B
common stock.............. $ 0.30 $ 0.26 $ 0.52 $ 0.46 $ 0.41 $ 0.35 $ 0.32
======== ======== ======== ======== ======== ======== ========
CONSOLIDATED BALANCE SHEET
DATA:
Working capital............. $106,342 $ 86,471 $ 75,830 $ 78,928 $112,989 $ 82,412 $ 52,765
Total assets................ 499,677 427,367 464,311 427,182 333,641 293,868 248,930
Stockholders' equity........ 341,871 275,513 310,777 249,937 198,771 155,019 122,143
</TABLE>
- -------------------------
(a) In 1994, the gain on the sale of Pulitzer's Chicago publishing subsidiary
added $1,051 (after tax) to net income ($0.05 per share).
(b) In 1996, a joint venture investment of $2,700 was written off resulting in
an after-tax charge of $1,600 or $0.07 per share.
(c) Discontinued operations represents net income from operations of the
Broadcasting Business without allocation of any general corporate expense.
(d) Effective January 1, 1994, Pulitzer adopted the provisions of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." Effective January 1, 1993, Pulitzer adopted the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," which recalculated deferred income taxes at
the lower 34% federal statutory rate as opposed to the higher tax rates
which were in effect when the deferred income taxes originated.
(e) In 1996, shares outstanding, dividends per share and earnings per share were
adjusted for 1996 and restated for 1995, 1994 and 1993 to reflect the impact
of a four-for-three stock split (payable in the form of a 33 1/3% Pulitzer
common stock and Pulitzer Class B common stock dividend) declared by
Pulitzer on September 12, 1996.
(f) The year 1996 included a partial year of operation of Scripps League
Newspapers, Inc. (subsequently renamed Pulitzer Community Newspapers, Inc.)
following its acquisition on July 1, 1996.
(g) In 1994, shares outstanding, dividends per share and earnings per share were
adjusted for 1994 and restated for 1993 to reflect the impact of a
five-for-four stock split (payable in the form of a 25% Pulitzer common
stock and Pulitzer Class B common stock dividend) declared by Pulitzer on
January 4, 1995.
(h) Pulitzer's fiscal year ends on the last Sunday of the calendar year, which
in 1995 resulted in a 53-week year.
Unaudited Pro Forma Condensed Financial Position of New Pulitzer. The
following unaudited pro forma condensed statement of consolidated financial
position as of June 30, 1998 gives effect to the Transactions and is presented
as if the Transactions had occurred on June 30, 1998. Separate pro forma
statements of income have not been presented for the year ended December 31,
1997 and six months ended June 30, 1998 as there is
11
<PAGE> 13
no pro forma impact to restated income from continuing operations. The pro forma
information is based on the historical consolidated financial statements of
Pulitzer, which reflect the operations of the Broadcasting Business as
discontinued operations. The pro forma information is presented for illustrative
purposes only and may not be indicative of the results that would have been
obtained had the Transactions actually occurred on the dates assumed nor is it
necessarily indicative of the future consolidated results of operations.
The unaudited pro forma condensed statement of consolidated financial
position should be read in conjunction with the historical consolidated
financial statements and the related notes thereto of Pulitzer, included in Item
13 of this Registration Statement on Form 10.
12
<PAGE> 14
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED STATEMENT OF
CONSOLIDATED FINANCIAL POSITION
AS OF JUNE 30, 1998
<TABLE>
<CAPTION>
PULITZER PRO FORMA NEW PULITZER
HISTORICAL ADDITIONS (DEDUCTIONS) PRO FORMA
---------- ---------------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.............................. $ 101,408 $ 700,000 (a) $512,478
(190,845)(b)
(15,900)(b)
(35,400)(c)
5,000 (d)
1,160 (e)
(485)(f)
0 (g)
(45,290)(h)
(7,170)(i)
Accounts receivable -- net............................. 35,950 35,950
Other.................................................. 11,487 11,487
--------- --------- --------
Total Current Assets................................. 148,845 411,070 559,915
--------- --------- --------
Properties -- net........................................ 79,500 79,500
Intangibles -- net....................................... 182,488 182,488
Receivable from The Herald Company....................... 38,136 38,136
Net assets of Pulitzer Broadcasting Business............. 30,538 (700,000)(a)
190,845 (b)
(5,000)(d)
(1,160)(e)
485 (f)
484,292 (k)
Other assets............................................. 20,170 (1,600)(c) 48,729
30,159 (j)
--------- --------- --------
Total Assets......................................... $ 499,677 $ 409,091 $908,768
========= ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Current Liabilities................................ $ 42,503 $ -- $ 42,503
Postretirement and postemployment benefit obligations.... 89,129 89,129
Other long-term liabilities.............................. 26,174 4,540 (h) 35,144
4,430 (i)
Commitments and contingencies(n).........................
Stockholders' Equity:
Common stock........................................... 70 70
Class B common stock................................... 271 (117)(l) 154
Additional paid-in capital............................. 140,037 484,292 (k) 399,473
(37,000)(c)
0 (g)
(187,856)(l)
Retained earnings........................................ 389,466 (15,900)(b) 342,295
(49,830)(h)(m)
(11,600)(i)(m)
30,159 (j)
Treasury stock........................................... (187,973) 187,973 (l)
--------- --------- --------
Total Stockholders' Equity........................... 341,871 400,121 741,992
--------- --------- --------
Total Liabilities and Equity......................... $ 499,677 $ 409,091 $908,768
========= ========= ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Statement of Consolidated Financial
Position
13
<PAGE> 15
NOTES TO UNAUDITED PRO FORMA CONDENSED STATEMENT OF CONSOLIDATED FINANCIAL
POSITION
(a) To record the borrowing of $700 million of new debt by Pulitzer. This new
debt will be assumed by Hearst-Argyle in the Merger.
(b) To record the prepayment of Pulitzer's existing debt ($185.2 million) and
related interest payable ($5.6 million), which is included in "Net Assets of
Pulitzer Broadcasting Business." In connection with the debt prepayment, a
prepayment penalty based on current interest rates and remaining years to
maturity will be payable to the lender. For purposes of this pro forma, a
prepayment penalty of $15.9 million was computed assuming a prepayment date
of August 4, 1998. This will be reflected as an extraordinary charge in
Pulitzer's financial statements in the period incurred. The actual
prepayment penalty may be higher or lower depending primarily on interest
rate levels on the date of the debt prepayment.
(c) To record the payment of estimated professional fees of $37 million related
to the Spin-off and Merger. These fees will be recorded as a reduction in
the contribution to New Pulitzer at the time of the Spin-off and Merger. As
of June 30, 1998, approximately $1.6 million of fees had been paid and
recorded as a deferred charge in "Other Assets."
(d) To record Hearst-Argyle's acquisition, separate from the Merger, of
Pulitzer's investment in the Arizona Diamondbacks Major League Baseball
franchise for $5 million. The investment is included in "Net Assets of
Pulitzer Broadcasting Business."
(e) To record the estimated working capital adjustment related to the Merger.
Pursuant to the Agreement and Plan of Merger, a cash payment is required by
either Hearst-Argyle or Pulitzer for the difference between $41 million and
the working capital balance of the Pulitzer Broadcasting Business on the
date of the Merger. Based upon Pulitzer Broadcasting Business' working
capital balance of approximately $42.2 million as of June 30, 1998, a
payment of approximately $1.2 million would be due Pulitzer from
Hearst-Argyle. The actual working capital adjustment may be higher or lower
depending on Pulitzer Broadcasting Business' working capital balance on the
date of the Merger. For tax purposes, a payment by either Pulitzer or
Hearst-Argyle to the other will be treated as having been made immediately
prior to the Spin-off and thus may reduce or increase Pulitzer's taxable
gain upon the Spin-off (see note (g) below).
(f) To record a cash payment to Hearst-Argyle related to Pulitzer's supplemental
executive pension plan. Pursuant to the Agreement and Plan of Merger, the
required cash payment is equal to the estimated liability for certain
broadcasting executives under the supplemental pension plan net of a
deferred tax benefit. The pro forma adjustment was computed based upon June
30, 1998 liability estimates and net of a U.S. federal and state income tax
benefit of 39%. The actual cash payment due to Hearst-Argyle may be higher
or lower depending on the final actuarial calculation of the broadcasting
liabilities on the date of the Merger.
(g) To the extent a gain is generated by the Spin-off and Merger, a
corporate-level income tax will be due. The gain is measured by the excess,
if any, of the fair market value of the New Pulitzer Stock distributed by
Pulitzer to its stockholders in the Spin-off over Pulitzer's adjusted tax
basis in such New Pulitzer Stock immediately prior to the distribution. For
purposes of this pro forma, the fair market value of the New Pulitzer Stock
was estimated as the difference between the closing price of Pulitzer common
stock on July 31, 1998 ($84.81) and the fair market value for the Pulitzer
Broadcasting Business of $51.20 per share, as indicated by the value ($1.15
billion) Hearst-Argyle is exchanging for Pulitzer's common stock and Class B
common stock (22,461,763 shares at July 31, 1998). Using a fair market value
of $33.61 (the excess of $84.81 over $51.20) per common share for the New
Pulitzer Stock, no gain (or tax) would result from the Spin-off and the
Merger because the adjusted tax basis of the New Pulitzer Stock would be
approximately $33.79 per share. However, if the fair market value of the New
Pulitzer Stock were $40 per share, for example, the estimated tax related to
the gain would be approximately $55 million. The actual gain and related
income tax will depend on the fair market value of, and Pulitzer's adjusted
tax basis in, the New Pulitzer Stock at the time of the Spin-off.
14
<PAGE> 16
(h) To record the redemption of all outstanding Pulitzer stock options, whether
or not vested, at the time of the Merger. The cash-out value will be equal
to the difference between the option exercise price and the average daily
closing price of Pulitzer common stock for the ten trading days immediately
prior to the date of the Merger. The pro forma adjustment was computed using
data as of July 31, 1998 including 981,076 options outstanding, a weighted
average exercise price of $34.02 and a closing price of $84.81 for
Pulitzer's common stock. Payment of approximately $4.5 million of the
approximate total $49.8 million cash-out value will be deferred and has been
recorded in "Other Long-term Liabilities." The actual cash-out value may be
higher or lower depending on the closing price of Pulitzer's common stock on
the ten trading days prior to the Merger and the shares of Pulitzer common
stock underlying stock options then outstanding.
(i) To record estimated management bonuses due upon the closing of the Merger.
Payment of approximately $4.4 million of the total estimated $11.6 million
in bonuses will be deferred and has been recorded in "Other Long-term
Liabilities."
(j) To record changes in deferred tax assets, assuming a U.S. federal and state
income tax rate of 39%, due to the impact of the following adjustments:
<TABLE>
<S> <C>
Prepayment penalty (note (b))............................... $15,900
Stock option cash-out (note (h))............................ 49,830
Management bonuses (note (i))............................... 11,600
</TABLE>
(k) To record the divestiture of the net liabilities of the Pulitzer
Broadcasting Business.
(l) To record the elimination of Pulitzer common stock and Pulitzer Class B
common stock held in treasury, as such shares will be cancelled without the
payment of consideration therefor in connection with the Spin-off.
(m) In connection with the Spin-off and the Merger, Pulitzer will incur one-time
charges, related to the adjustments described in notes (h) and (i) above,
which will be included in Pulitzer's statement of consolidated income at the
closing of the transactions.
(n) In connection with the September 1986 purchase of Pulitzer Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment
to the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as
defined herein). A "Gross-Up Transaction" was defined to mean, among other
transactions, (i) any merger, in any transaction or series of related
transactions, of more than 85 percent of the voting securities or equity of
Pulitzer pursuant to which holders of Pulitzer common stock receive
securities other than Pulitzer common stock and (ii) any recapitalization,
dividend or distribution, or series of related recapitalizations, dividends
or distributions, in which holders of Pulitzer common stock receive
securities (other than Pulitzer common stock) having a Fair Market Value (as
defined herein) of not less than 33 1/3 percent of the Fair Market Value of
the shares of Pulitzer common stock immediately prior to such transaction.
The amount of the additional payment, if any, would equal (x) the product of
(i) the amount by which the Transaction Proceeds (as defined herein) exceeds
the Imputed Value (as defined herein) multiplied by (ii) the applicable
percentage (i.e., 50 percent for the period from May 13, 1996 through May
12, 2001) multiplied by (iii) the number of shares of Pulitzer common stock
issuable upon conversion of the shares of Pulitzer Class B common stock
owned by the 1986 Selling Stockholders, adjusted for, among other things,
stock dividends and stock splits; less (y) the sum of any additional
payments previously received by the 1986 Selling Stockholders; provided,
however, that in the event of any recapitalization, dividend or
distribution, the amount by which the Transaction Proceeds exceeds the
Imputed Value shall not exceed the amount paid or distributed pursuant to
such recapitalization, dividend or distribution in respect of one share of
Pulitzer common stock. The term "Transaction Proceeds" was defined to mean,
in the case of a merger, the aggregate Fair Market Value (as defined herein)
of the consideration received pursuant thereto by the holder of one share of
common stock, and, in the case of a recapitalization, dividend or
distribution, the aggregate Fair Market Value of the amounts paid or
distributed in respect of one share of Pulitzer common stock plus the
aggregate Fair Market Value of one share of Pulitzer common stock following
such transaction. The "Imputed Value" for one share of
15
<PAGE> 17
common stock on a given date was defined to mean an amount equal to $28.82
compounded annually from May 12, 1986 to such given date at the rate of 15
percent per annum, the result of which is $154.19 at May 12, 1998. There was
no specific provision for adjustment of the $28.82 amount, but if it were
adjusted to reflect all stock dividends and stock splits of Pulitzer since
September 30, 1986, it would now equal $15.72, which if compounded annually
from May 12, 1986 at the rate of 15 percent per annum would now equal
$84.11. "Fair Market Value," in the case of any consideration other than
cash received in a Gross-Up Transaction, was defined to mean the fair market
value thereof as selected by a valuation firm selected by Pulitzer and a
valuation firm selected by the 1986 Selling Stockholders, or, if the two
valuation firms do not agree on the fair market value, the fair market value
of such consideration as determined by a third valuation firm selected by
the two other valuation firms. Any such agreement or determination shall be
final and binding on the parties. As a result of the foregoing, the amount
of additional payments, if any, that may be payable by New Pulitzer with
respect to the Merger and the distribution of New Pulitzer Stock in the
Spin-off (the "Distribution") cannot be determined at this time. However, if
the Distribution were determined to be a Gross-Up Transaction and if the
Fair Market Value of the Transaction Proceeds with respect to the Merger and
the Distribution were determined to exceed the Imputed Value, then the
additional payments to the 1986 Selling Stockholders would equal
approximately $5.9 million for each $1.00 by which the Transaction Proceeds
exceed the Imputed Value. Accordingly, depending on the ultimate resolution
of the meaning and application of various provisions of the Gross-Up
Transaction agreements, including the determination of Imputed Value and
Fair Market Value of the Transaction Proceeds, in the opinion of Pulitzer's
management, the amount of an additional payment, if any, could be material
to the consolidated financial statements of Pulitzer.
16
<PAGE> 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Statements in this Registration Statement on Form 10 concerning New
Pulitzer's business outlook or future economic performance; anticipated
profitability, revenues, expenses or other financial items, together with other
statements that are not historical facts, are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, industry
cyclicality, the seasonal nature of the business, changes in pricing or other
actions by competitors or suppliers, and general economic conditions, as well as
other risks detailed in either Pulitzer's or New Pulitzer's filings with the
Securities and Exchange Commission including this Registration Statement on Form
10.
GENERAL
Pulitzer's operating revenues are significantly influenced by a number of
factors, including overall advertising expenditures, the appeal of newspapers in
comparison to other forms of advertising, the performance of Pulitzer in
comparison to its competitors in specific markets, the strength of the national
economy and general economic conditions and population growth in the markets
served by Pulitzer.
Pulitzer's business tends to be seasonal, with peak revenues and profits
generally occurring in the fourth and, to a lesser extent, second quarters of
each year as a result of increased advertising activity during the Christmas and
spring holiday periods. The first quarter is historically the weakest quarter
for revenues and profits.
RECENT EVENTS
On May 25, 1998, Pulitzer, New Pulitzer and Hearst-Argyle entered into an
Agreement and Plan of Merger (the "Merger Agreement") pursuant to which
Hearst-Argyle will acquire Pulitzer's Broadcasting Business, subject to the
satisfaction or waiver of certain closing conditions enumerated in the Merger
Agreement. Following the consummation of the Transactions, New Pulitzer will
continue to engage in the newspaper publishing and related new media businesses
formerly conducted by Pulitzer.
Pulitzer's historical basis in its non-broadcasting assets and liabilities
will be carried over to New Pulitzer. The Merger, the Spin-off and the related
transactions will be recorded as a reverse-spin transaction, and, accordingly,
New Pulitzer's results of operations for periods reported prior to the
consummation of the Transactions will represent the historical results of
operations previously reported by Pulitzer. Because the Broadcasting Business
represents an entire business segment that will be divested, its results are
reported as discontinued operations in Pulitzer's Consolidated Financial
Statements. (See the Notes to the Consolidated Financial Statements included in
Item 13 of this Registration Statement on Form 10.)
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH 1997
Continuing Operations -- Publishing
Operating revenues for the first six months of 1998 increased 4.7 percent
compared to the corresponding period in the prior year. The gain primarily
reflected higher advertising revenues.
Newspaper advertising revenues increased $7.4 million (6.6 percent) in the
first six months of 1998 compared to the corresponding period in the prior year.
The current year increase resulted from advertising gains at the St. Louis
Post-Dispatch ("Post-Dispatch"), The Arizona Daily Star ("Star") and the
Pulitzer Community Newspaper group ("PCN Group"). For the first half of 1998,
full run advertising volume increased 1.4 percent at the Post-Dispatch and 3.5
percent at Star. In the fourth quarter of 1997 and the first quarter of 1998,
varying rate increases were implemented at the Post-Dispatch, Star and most of
the PCN Group properties.
17
<PAGE> 19
Circulation revenues for the first half of 1998 experienced only slight
fluctuations from the corresponding period of the prior year, declining 0.4
percent for the six-month period.
Other publishing revenues increased $1 million (5.3 percent) in the first
six months of 1998, reflecting higher preprint revenues and Internet subscriber
fees.
Operating expenses (including selling, general and administrative expenses,
general corporate expense and depreciation and amortization), excluding the St.
Louis Agency adjustment, for the first six months of 1998 increased 5.5 percent
compared to the corresponding period in the prior year. The current year
increase was attributable to higher overall personnel costs ($3.1 million),
higher newsprint costs ($2.5 million), and increases in promotion costs
($572,000).
Operating income for the first half of 1998 declined slightly to $21.2
million (0.4 percent) as higher newsprint and personnel costs offset advertising
revenue gains.
Interest income for the first six months of 1998 declined $345,000 (13.8
percent) due to a lower average balance of invested funds.
Net other expense for first six months of 1998 increased $616,000 due to a
one-time charge of $869,000 related to the sale of the Haverhill Gazette on June
1, 1998.
The effective income tax rate for first six months of 1998 was 42.8 percent
compared with 42.6 percent in the corresponding prior year period. Pulitzer
expects that its effective tax rate related to continuing operations will be in
the 42 to 43 percent range for the full year of 1998 (exclusive of any
non-recurring items related to the Spin-off and Merger).
Income from continuing operations for the first six months of 1998
decreased 4.9 percent to $12.7 million, or $0.56 per diluted share, compared
with $13.3 million, or $0.60 per diluted share, a year ago. The decline
reflected higher personnel and newsprint costs and the after-tax loss on the
sale of the Haverhill Gazette of $531,000 ($0.02 per diluted share).
Fluctuations in the price of newsprint significantly impact the results of
Pulitzer's newspaper operations, where newsprint expense accounts for
approximately 20 percent of total operating costs. For the first half of 1998,
Pulitzer's average cost for newsprint was approximately $600 per metric ton,
compared to approximately $540 per metric ton in 1997. For the third quarter of
1998, Pulitzer's cost of newsprint will be in the range of $575 per metric ton.
However, on September 1, 1998, most of Pulitzer's suppliers increased the price
of newsprint to approximately $615 per metric ton. This price increase will
begin to impact Pulitzer's newsprint costs in the fourth quarter of 1998. In the
second half of 1997, Pulitzer's average cost of newsprint was approximately $585
per metric ton.
Discontinued Operations -- Pulitzer's Broadcasting Business
Broadcasting operating revenues for first six months of 1998 increased 7.6
percent, over the comparable 1997 period. Local and national spot advertising
increased 7 percent and 9.7 percent, respectively, for the first six months of
1998. The current year comparison reflects the impact of increased political
advertising of approximately $4.2 million in the first six months of 1998.
Broadcasting operating expenses (including selling, general and
administrative expenses and depreciation and amortization) for the first six
months of 1998 increased to $73.5 million (2.6 percent) compared to the prior
year period. The increase was primarily attributable to higher overall personnel
costs of $2.6 million for the first six months of 1998.
Broadcasting operating income in the first six months of 1998 increased
16.8 percent to $46.3 million. The increase resulted from higher advertising
revenues.
Interest expense declined $1.8 million in the first six months of 1998 due
to lower average debt levels. Pulitzer's average debt level for the first six
months of 1998 decreased to $185.3 million from $239.9 million in the
corresponding period of the prior year. Pulitzer's average interest rate for the
first six months of 1998 increased to 7.5 percent from 7.3 percent in the prior
year period. The lower average debt level and higher
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average interest rate in the first half of 1998 reflected the payment of
variable rate credit agreement borrowings during the last three quarters of
1997.
The effective income tax rate for the first six months of 1998 was 39.1
percent, unchanged from the corresponding period in the prior year. Pulitzer
expects that the effective tax rate related to broadcasting operations will be
approximately 39 percent for the full year of 1998.
Income from discontinued operations for the first six months of 1998
increased 27.3 percent to $24 million, or $1.06 per diluted share, compared with
$18.8 million, or $0.84 per diluted share, a year ago. The gains reflected
increases in broadcasting advertising revenues.
1997 COMPARED WITH 1996
Continuing Operations -- Publishing
Operating revenues for the year ended December 31, 1997 increased 15.8
percent to $358 million from $309.1 million in 1996. The revenue comparison was
affected by the acquisition of Scripps League Newspapers, Inc. ("Scripps League"
which was subsequently renamed Pulitzer Community Newspapers, Inc.) on July 1,
1996. On a comparable basis, excluding the PCN Group from the first six months
of 1997, publishing revenues increased 4.9 percent. The comparable increase
reflected higher advertising revenues in 1997.
Newspaper advertising revenues, on a comparable basis, increased $13.8
million, or 7.2 percent, in 1997. A significant portion of the current year
increase resulted from higher classified and retail advertising revenue at both
the St. Louis Post-Dispatch and The Arizona Daily Star. Full run advertising
volume (linage in inches) increased 0.4 percent at the Post-Dispatch and 3.8
percent at Star for 1997. Varying rate increases were implemented at the
Post-Dispatch and most of the PCN Group properties in the first quarter of 1997
while Star increased advertising rates in the fourth quarters of 1996 and 1997.
Circulation revenues, on a comparable basis, decreased approximately
$390,000, or 0.5 percent, in 1997. The decline reflected slight fluctuations in
paid circulation and average rates at the Post-Dispatch and Star in 1997
compared to the prior year.
Other publishing revenues, on a comparable basis, increased $1.8 million,
or 5.1 percent, in 1997, resulting primarily from higher preprint revenue at the
Post-Dispatch.
Operating expenses (including selling, general and administrative expenses,
general corporate expense and depreciation and amortization), excluding the St.
Louis Agency adjustment, increased to $297 million in 1997 from $268.1 million
in 1996, an increase of 10.8 percent. Prior year operating expenses included
approximately $1.8 million of non-recurring costs related to the acquisition of
Scripps League. On a comparable basis, excluding the PCN Group from the first
six months of 1997 and the non-recurring costs from 1996, operating expenses
increased 0.9 percent. Major increases in comparable expenses were overall
personnel costs of $7.7 million, promotion expense of $1.6 million, and
circulation distribution expenses of $1.5 million. Partially offsetting these
increases were declines in newsprint expense of $6 million and purchased
supplement costs of $3.1 million.
Operating income for fiscal 1997 increased 53.6 percent to $41.5 million in
1997 from $27 million in 1996. On a comparable basis, excluding the PCN Group
from the first six months of 1997 and the non-recurring costs from 1996,
operating income increased 25.4 percent. The 1997 increase resulted primarily
from higher advertising revenues and lower newsprint costs.
Net other expense (non-operating) decreased $4.7 million in 1997 compared
to 1996. The decrease resulted from a 1996 non-recurring charge of approximately
$2.7 million for the write-down in value of a joint venture investment and lower
joint venture losses in 1997.
The effective income tax rate for 1997 increased to 42.7 percent, from 42.4
percent in the prior year, due to an additional $2.1 million of nondeductible
goodwill amortization related to the Scripps League acquisition.
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For the year ended December 31, 1997, income from continuing operations was
$25.8 million, or $1.15 per diluted share, compared with $14.8 million, or $0.66
per diluted share, in the prior year. Comparability of the earnings results was
affected by the joint venture write-off in 1996 ($1.6 million after-tax) and
non-recurring costs related to the Scripps League acquisition ($1.1 million
after-tax) in 1996. Excluding the non-recurring items, 1996 income from
continuing operations would have been $17.6 million, or $0.78 per diluted share.
The 46.6 percent gain, on a comparable basis, reflected higher advertising
revenues and lower newsprint costs.
Fluctuations in the price of newsprint significantly impact the results of
Pulitzer's newspaper operations, where newsprint expense accounts for
approximately 20 percent of the segment's total operating costs. During the
first three quarters of 1997, Pulitzer benefitted from newsprint prices below
prior year levels. However, as a result of 1997 price increases and declining
prices in late 1996, Pulitzer's 1997 fourth quarter newsprint expense increased
over the comparable prior year period. For the full year of 1997, Pulitzer's
newsprint cost and metric tons consumed, after giving effect to the St. Louis
Agency adjustment, were approximately $36.5 million and 64,600 tons,
respectively.
Discontinued Operations -- Pulitzer's Broadcasting Business
Broadcasting Business operating revenues for 1997 increased 0.9 percent to
$227 million from $225 million in 1996. For the year, a 1.6 percent increase in
national spot advertising and a 6.1 percent increase in network compensation
were partially offset by a 0.5 percent decline in local spot advertising. The
modest increases in 1997 advertising revenues reflected the impact of decreased
political advertising of approximately $12 million in 1997 compared to 1996. In
addition, Pulitzer's five NBC affiliated television stations benefited from
significant Olympic related advertising in the prior year third quarter.
Broadcasting Business operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 2.2 percent
to $144.8 million in 1997 from $141.7 million in 1996. The increase was
attributable to higher overall personnel costs of $3.2 million and higher
depreciation and amortization of $1 million. These increases were partially
offset by decreases in program rights costs of $493,000, promotion costs of
$333,000 and license fees of $246,000.
Broadcasting Business operating income in 1997 decreased 1.3 percent to
$82.2 million from $83.2 million in the prior year. The 1997 decrease reflected
the modest overall revenue gain, resulting primarily from the effect of
significant political and Olympic related advertising revenue in the prior year.
Interest expense increased $2.5 million in 1997 compared to 1996 due to
higher average debt levels in 1997. Pulitzer's average debt level for 1997
increased to $220 million from $186.9 million in the prior year due to new
long-term borrowings. Pulitzer's average interest rate for 1997 was unchanged
from the prior year rate of 7.3 percent.
The effective income tax rate for 1997 was 39.1 percent, unchanged from the
prior year.
For the year ended December 31, 1997, income from discontinued operations
decreased 5.7 percent to $40.3 million, or $1.79 per diluted share, compared
with $42.7 million, or $1.92 per diluted share, in 1996. The decline reflected
the lower broadcasting advertising revenues and higher interest expense in 1997.
1996 COMPARED WITH 1995
Continuing Operations -- Publishing
Operating revenues for the year ended December 31, 1996 increased 14.7
percent to $309.1 million from $269.4 million in 1995. The revenue comparison
was affected by the acquisition of the PCN Group on July 1, 1996. In addition,
the revenue comparison was affected by an extra week of operations in 1995;
fiscal 1995 contained 53 weeks versus 52 weeks in fiscal 1996. On a comparable
basis, (i.e., excluding the PCN Group from 1996 and the extra week from 1995),
operating revenues increased 3.5 percent. The comparable increase reflected
higher advertising revenues in 1996.
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Newspaper advertising revenues, on a comparable basis, excluding the PCN
Group from 1996 and the extra week from 1995, increased $9.5 million, or 6
percent, in 1996. The significant portion of the current year increase resulted
from higher classified advertising revenue at the Post-Dispatch. Increases in
advertising rates for most categories and higher volume for zoned advertising
were the primary factors in the 1996 revenue increase. In the fourth quarter of
1996 and the first quarter of 1997, varying rate increases were implemented at
the Post-Dispatch, Star and most of the PCN Group properties.
Circulation revenues, on a comparable basis, excluding the PCN Group from
1996 and the extra week from 1995, increased approximately $100,000, or 0.2
percent, in 1996. The Post-Dispatch and Star experienced only slight
fluctuations in paid circulation and average rates in 1996 compared to the prior
year.
Operating expenses (including selling, general and administrative expenses,
general corporate expense and depreciation and amortization), excluding the St.
Louis Agency adjustment, increased to $268.1 million in 1996 from $236.2 million
in 1995, an increase of 13.5 percent. On a comparable basis, excluding the PCN
Group from 1996 and the extra week from 1995, operating expenses increased 2.4
percent. Major increases in comparable expenses were promotion expense of $1.5
million, overall personnel costs of $955,000 and circulation distribution
expenses of $611,000. Partially offsetting these increases were declines in
newsprint expense of $1.1 million and inducement costs of $798,000.
Operating income for fiscal 1996 increased 30.5 percent to $27 million from
$20.7 million in 1995. On a comparable basis, excluding the PCN Group from 1996
and the extra week from 1995, operating income from the publishing segment
increased 10.1 percent. The increase resulted from higher advertising revenues
on a comparable basis.
Interest income for fiscal 1996 declined $687,000, due to both lower
average balances of invested funds and lower interest rates in 1996.
Pulitzer's 1996 non-operating expenses included a non-recurring charge of
approximately $2.7 million ($1.6 million after-tax) for the write-down in value
of a joint venture investment.
The effective income tax rate related to continuing operations for 1996
increased to 42.4 percent from 38.8 percent in the prior year, due to
approximately $2.1 million of nondeductible goodwill amortization related to the
Scripps League acquisition.
For the year ended December 31, 1996, income from continuing operations was
$14.8 million, or $0.66 per diluted share, compared with $14.5 million, or $0.65
per diluted share, in the prior year. Comparability of the earnings results was
affected by the joint venture write-off in 1996 and the non-recurring costs
related to the Scripps League acquisition ($1.1 million after tax) in 1996.
Excluding the non-recurring items from 1996, income from continuing operations
would have been $17.6 million, or $0.78 per diluted share. The gain, on a
comparable basis, reflected the higher advertising revenues in 1996.
Discontinued Operations -- Pulitzer's Broadcasting Business
Broadcasting Business operating revenues for 1996 increased 10.9 percent to
$225 million from $202.9 million in 1995. On a comparable basis, excluding the
extra week from 1995, operating revenues increased 12.9 percent. Local spot
advertising increased 14.2 percent and national spot advertising increased 14.7
percent. The 1996 increases reflected strong Olympic-related advertising at
Pulitzer's five NBC affiliated stations and significant political advertising of
$13.2 million, an increase of $10.3 million.
Broadcasting Business operating expenses (including selling, general and
administrative expenses and depreciation and amortization) increased 3.5 percent
to $141.7 million in 1996 from $137 million in 1995. On a comparable basis,
excluding the extra week from 1995, operating expenses increased 4.5 percent.
This increase was primarily attributable to higher overall personnel costs of
$4.2 million and higher national advertising commissions of $951,000.
Broadcasting Business operating income in 1996 increased 26.2 percent to
$83.2 million from $65.9 million in the prior year. On a comparable basis,
excluding the extra week from 1995, operating income from the
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broadcasting segment increased 30.9 percent. The 1996 gain resulted from the
significant increases in both local and national advertising revenues.
Interest expense increased $3.4 million in 1996 compared to 1995 due to
higher debt levels in the second half of 1996. New long-term borrowings added
approximately $4.8 million to 1996 interest expense. Pulitzer's average debt
level for 1996 increased to $186.9 million from $133.2 million in the prior
year. Pulitzer's average interest rate for 1996 decreased slightly to 7.3
percent from 7.5 percent in the prior year.
The effective income tax rate related to discontinued operations for 1996
was 39.1 percent compared to 37.4 percent in the prior year. The prior year rate
was affected by the settlement of a state tax examination which reduced income
tax expense by approximately $900,000 in 1995. Excluding the non-recurring tax
settlement from the prior year, the effective income tax rate for 1995 would
have been 39.1 percent.
For the year ended December 31, 1996, income from discontinued operations
increased 22.5 percent to $42.7 million, or $1.92 per diluted share, compared
with $34.9 million, or $1.58 per diluted share, in 1995. Excluding the positive
income tax adjustment from 1995, income from discontinued operations would have
increased 25.7 percent in 1996. The 1996 gain, on a comparable basis, reflected
the significant increase in advertising revenues which offset operating expense
and interest expense increases.
LIQUIDITY AND CAPITAL RESOURCES
Pursuant to the Merger Agreement, Pulitzer's existing long-term debt will
be repaid with new long-term borrowings prior to the Merger. In addition, the
new borrowings will be assumed by Hearst-Argyle at the time of the Merger.
Accordingly, all of Pulitzer's long-term debt balances are allocated to the
Broadcasting Business and included in "Net Assets of the Broadcasting Business"
in the consolidated statements of financial position (see Pulitzer's
Consolidated Financial Statements included in Item 13 of this Registration
Statement on Form 10). Outstanding debt, inclusive of the short-term portion of
long-term debt, as of June 30, 1998, was $185.2 million compared to $185.4
million at December 31, 1997. Pulitzer's borrowings consist primarily of
fixed-rate senior notes with The Prudential Insurance Company of America (the
"Prudential Senior Note Agreements"). Under a variable rate credit agreement
with The First National Bank of Chicago, as Agent, for a group of lenders,
Pulitzer has a $50 million line of credit available through June, 2001 (the
"FNBC Credit Agreement"). No amount is currently borrowed under the FNBC Credit
Agreement.
The Prudential Senior Note Agreements and the FNBC Credit Agreement require
Pulitzer to maintain certain financial ratios, place restrictions on the payment
of dividends and prohibit new borrowings, except as permitted thereunder.
Borrowings pursuant to the Prudential Senior Note Agreements will be repaid with
new long-term borrowings prior to the Merger, and the Prudential Senior Note
Agreements and FNBC Credit Agreement will be terminated. Pulitzer's new
borrowings will be assumed by Hearst-Argyle at the time of the Merger.
Accordingly, New Pulitzer will have no long-term borrowings immediately after
the Spin-off and Merger. (See the Unaudited Pro Forma Condensed Statement of
Consolidated Financial Position included in Item 2 of this Registration
Statement on Form 10.)
As of June 30, 1998, commitments for capital expenditures were
approximately $11.6 million, relating to normal capital equipment replacements
(including Year 2000 projects in-process) and the cost of a building project for
the Louisville, Kentucky broadcasting property. Capital expenditures to be made
in fiscal 1998 are estimated to be in the range of $25 to $30 million.
Commitments for film contracts and license fees at broadcasting locations as of
June 30, 1998 were approximately $29.7 million. In addition, as of June 30,
1998, Pulitzer had capital contribution commitments of approximately $8.2
million related to investments in two limited partnerships.
At June 30, 1998, Pulitzer had working capital of $106.3 million and a
current ratio of 3.50 to 1. This compares to working capital of $75.8 million
and a current ratio of 2.96 to 1 at December 31, 1997.
Pulitzer from time to time considers acquisitions of newspaper and other
properties when favorable investment opportunities are identified. In the event
an investment opportunity is identified, management
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expects that it would be able to arrange financing on terms and conditions
satisfactory to Pulitzer and New Pulitzer.
Pulitzer and New Pulitzer generally expect to generate sufficient cash from
operations to cover ordinary capital expenditures, film contract and license
fees, working capital requirements, debt installments and dividend payments.
Spin-off and Merger
Prior to the Spin-off and Merger, Pulitzer intends to borrow $700 million
which will provide sufficient funds to pay the existing Company debt and the
costs of the Spin-off and Merger discussed below. Pursuant to the Merger
Agreement, Hearst-Argyle will assume the new debt following the consummation of
the Spin-off and Merger. (See Pulitzer's Consolidated Financial Statements
included in Item 13 of this Registration Statement on Form 10.)
In connection with the Spin-off and Merger, Pulitzer will incur new
long-term borrowings, prepay existing Company debt and make several one-time
payments near the dates of the Spin-off and Merger. Pulitzer will incur a
prepayment penalty related to the prepayment of existing Company debt with
Prudential. Based upon current interest rates, the prepayment penalty would be
approximately $15.9 million. Professional fees to be incurred related to the
Spin-off and Merger are estimated in the range of $37 million. Management
bonuses to be paid at the date of the Merger are estimated at approximately
$11.6 million. Pursuant to the Merger Agreement, Pulitzer will cash-out all
outstanding stock options at the date of the Merger. Based upon outstanding
options and Pulitzer's common stock market price as of July 31, 1998, payments
to employee option holders of approximately $49.8 million would have been
required. It is anticipated that a portion of the option cash-out and bonus
payments will be deferred at the time of the Merger and paid at a future date.
Pulitzer expects to realize tax benefits related to the long-term debt
prepayment penalty, option cash-out payments and bonus payments. The preceding
amounts represent estimates based upon current information available to
management of Pulitzer. The final actual amounts will likely differ from the
estimates.
To the extent a gain is generated by the Spin-off and Merger, a
corporate-level income tax will be due. The gain is measured by the excess, if
any, of the fair market value of the New Pulitzer Stock distributed by Pulitzer
to its stockholders in the Spin-off over Pulitzer's adjusted tax basis in such
New Pulitzer Stock immediately prior to the distribution. On July 31, 1998, the
fair market value of New Pulitzer Stock would be estimated as the difference
between the closing price of Pulitzer's common stock on July 31, 1998 ($84.81)
and the fair market value for the Broadcasting Business of $51.20 per share, as
indicated by the value ($1.15 billion) Hearst-Argyle is exchanging for
Pulitzer's common stock and Class B common stock (22,461,763 shares at July 31,
1998). Using a fair market value of $33.61 (the excess of $84.81 over $51.20)
per common share for the New Pulitzer Stock, no gain (or tax) would result from
the Spin-off and the Merger because the adjusted tax basis of the New Pulitzer
Stock would be approximately $33.79 per share. However, if the fair market value
of the New Pulitzer Stock were $40 per share, for example, the estimated tax
related to the gain would be approximately $55 million. The actual gain and
related income tax will depend on the fair market value of, and Pulitzer's
adjusted tax basis in, the New Pulitzer Stock at the time of the Spin-off.
In connection with the September 1986 purchase of Pulitzer's Class B common
stock from certain selling stockholders (the "1986 Selling Stockholders"),
Pulitzer agreed, under certain circumstances, to make an additional payment to
the 1986 Selling Stockholders in the event of a Gross-Up Transaction (as defined
herein). A "Gross-Up Transaction" was defined to mean, among other transactions,
(i) any merger, in any transaction or series of related transactions, of more
than 85 percent of the voting securities or equity of Pulitzer pursuant to which
holders of Pulitzer common stock receive securities other than Pulitzer common
stock and (ii) any recapitalization, dividend or distribution, or series of
related recapitalizations, dividends or distributions, in which holders of
Pulitzer common stock receive securities (other than Pulitzer common stock)
having a Fair Market Value (as defined herein)of not less than 33 1/3 percent of
the Fair Market Value of the shares of Pulitzer common stock immediately prior
to such transaction. The amount of the additional payment, if any, would equal
(x) the product of (i) the amount by which the Transaction Proceeds (as defined
herein) exceeds the Imputed Value (as defined herein) multiplied by (ii) the
applicable percentage
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(i.e., 50 percent for the period from May 13, 1996 through May 12, 2001)
multiplied by (iii) the number of shares of Pulitzer common stock issuable upon
conversion of the shares of Pulitzer Class B common stock owned by the 1986
Selling Stockholders, adjusted for, among other things, stock dividends and
stock splits; less (y) the sum of any additional payments previously received by
the 1986 Selling Stockholders; provided, however, that in the event of any
recapitalization, dividend or distribution, the amount by which the Transaction
Proceeds exceeds the Imputed Value shall not exceed the amount paid or
distributed pursuant to such recapitalization, dividend or distribution in
respect of one share of Pulitzer common stock.
The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Pulitzer common stock,
and, in the case of a recapitalization, dividend or distribution, the aggregate
Fair Market Value of the amounts paid or distributed in respect of one share of
Pulitzer common stock plus the aggregate Fair Market Value of one share of
Pulitzer common stock following the transaction. The "Imputed Value" for one
share of Pulitzer common stock on a given date was defined to mean an amount
equal to $28.82 compounded annually from May 12, 1986 to such given date at the
rate of 15 percent per annum, the result of which is $154.19 at May 12, 1998.
There was no specific provision for adjustment of the $28.82 amount, but if it
were adjusted to reflect all stock dividends and stock splits of Pulitzer since
September 30, 1986, it would now equal $15.72, which if compounded annually from
May 12, 1986 at the rate of 15 percent per annum would now equal $84.11.
"Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as selected by a valuation firm selected by Pulitzer and a valuation
firm selected by the 1986 Selling Stockholders, or, if the two valuation firms
do not agree on the fair market value, the fair market value of such
consideration as determined by a third valuation firm selected by the two other
valuation firms. Any such agreement or determination shall be final and binding
on the parties.
As a result of the foregoing, the amount of additional payments, if any,
which may be payable by New Pulitzer with respect to the Merger and the
distribution of New Pulitzer Stock in the Spin-off (the "Distribution") cannot
be determined at this time. However, if the Distribution were determined to be a
Gross-Up Transaction and if the Fair Market Value of the Transaction Proceeds
with respect to the Merger and the Distribution were determined to exceed the
Imputed Value, then the additional payments to the 1986 Selling Stockholders
would equal approximately $5.9 million for each $1.00 by which the Transaction
Proceeds exceed the Imputed Value. Accordingly, depending on the ultimate
resolution of the meaning and application of various provisions of the Gross-Up
Transaction agreements, including the determination of Imputed Value and Fair
Market Value of the Transaction Proceeds, in the opinion of Pulitzer's
management, the amount of an additional payment, if any, could be material to
the consolidated financial statements of Pulitzer.
Pursuant to the Merger Agreement, New Pulitzer will indemnify Hearst-Argyle
against losses related to: (i) on an after tax basis, certain tax liabilities,
including (A) any transfer tax liability attributable to the Spin-off, (B) with
certain exceptions, any tax liability of Pulitzer or any subsidiary of Pulitzer
attributable to any tax period (or portion thereof) ending on or before the
closing date of the Merger, including tax liabilities resulting from the
Spin-off, and (C) any tax liability of New Pulitzer or any subsidiary of New
Pulitzer; (ii) liabilities and obligations under any employee benefit plans not
assumed by Hearst-Argyle; (iii) any liabilities for payments made pursuant to a
Gross-Up Transaction; and (iv) certain other matters as set forth in the Merger
Agreement.
Information Systems and the Year 2000
The Year 2000 Issue is the result of information systems being designed
using two digits rather than four digits to define the applicable year. As the
year 2000 approaches, such information systems may be unable to accurately
process certain date-based information.
In 1995, Pulitzer began reviewing and preparing its computer systems for
the Year 2000. Generally, at Pulitzer's newspaper publishing locations, the
following categories of computer systems were identified for
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assessment of Year 2000 compliance: pre-press systems, press systems, post-press
systems, business systems, network systems, desktop PC systems,
telecommunication systems and building systems. Significant sub-systems within
these categories which were identified as non-compliant during the assessment
phase consisted of aging hardware and software which would have required
replacement in the near term irrespective of the Year 2000 Issue. Consequently,
Pulitzer adopted a Year 2000 strategy which will replace its significant non-
compliant systems with new compliant systems prior to December 31, 1999.
Pulitzer's strategy for achieving Year 2000 compliance was developed using
a five phase plan as follows: (i) educate and plan; (ii) assess; (iii) replace
and renovate; (iv) validate/test; and (v) implement. As of June 30, 1998,
Pulitzer has completed the planning and assessment phases and is in the process
of replacing, testing and implementing new compliant systems (with some systems
already implemented). Pulitzer and New Pulitzer expect to have substantially all
of the Year 2000 system changes implemented by December 31, 1998 at the Star,
March 31, 1999 at the Post-Dispatch and September 30, 1999 at the PCN Group.
Pulitzer's current estimate of capital expenditures for new hardware and
software to address Year 2000 issues, as well as to replace aging systems, is
approximately $11.6 million for its newspaper publishing locations. At June 30,
1998, approximately $5.8 million of the total capital expenditure estimate
remains to be spent through the projected implementation dates. These amounts do
not include either the internal staff costs of Pulitzer's information technology
department or the cost of minor Year 2000 system modifications, both of which
are recorded as expense in the period incurred. Year 2000 modification costs for
minor system issues are not expected to be significant. The Year 2000 related
capital expenditures have been considered in Pulitzer's normal capital budgeting
process and will be funded through operating cash flows.
In addition to addressing internal system issues, Pulitzer is communicating
with its major suppliers (including, but not limited to, newsprint, ink,
telecommunication services and utilities) and selected customers to obtain
assurance of their preparedness for the Year 2000. In general, questionnaires
are being used to identify potential Year 2000 issues at these third parties
which may impact Pulitzer's business operations and require a remedy.
As of June 30, 1998, Pulitzer believes that its plan for achieving Year
2000 compliance will be fully implemented by September 30, 1999 and,
consequently, the development of contingency plans for Year 2000 issues has not
been undertaken at this time. The possible need for contingency plans will be
monitored, and, if necessary, such plans will be developed as Pulitzer proceeds
with the implementation of its overall Year 2000 plan.
The preceding discussion relates to Pulitzer's continuing publishing
operations only. Pulitzer does not expect to incur significant costs to address
Year 2000 issues at its broadcasting locations prior to the Merger, which is
anticipated to close by year-end 1998.
Digital Television
Pulitzer's Orlando television station, WESH, is required to construct
digital television facilities in order to broadcast digitally by November 1,
1999 and comply with Federal Communications Commission ("FCC") rules. The
deadline for constructing digital facilities at Pulitzer's other television
stations is May 1, 2002. Pulitzer is currently considering available options to
comply with the FCC's timetable but does not expect to incur significant capital
expenditures to construct digital facilities prior to the Merger.
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ITEM 3. PROPERTIES.
The corporate headquarters of New Pulitzer is located at 900 North Tucker
Boulevard, St. Louis, Missouri. The general character, location and approximate
size of the principal physical properties used by Pulitzer for its publishing
business segment at July 31, 1998, are set forth below. Leases on the properties
indicated as leased by Pulitzer expire at various dates through April 2007.
New Pulitzer believes that all of Pulitzer's owned and leased properties
used in connection with its publishing business segment are in good condition,
well maintained and adequate for New Pulitzer's current and immediately
foreseeable operating needs.
<TABLE>
<CAPTION>
APPROXIMATE AREA IN
SQUARE FEET
--------------------
GENERAL CHARACTER OF PROPERTY OWNED LEASED
----------------------------- ----- ------
<S> <C> <C>
Printing plants, business and editorial offices, and
warehouse space located in:
St. Louis, Missouri(1).................................... 585,600 138,700
St. Louis, Missouri....................................... 5,600
Tucson, Arizona(2)........................................ 265,000 41,800
Washington, D.C........................................... 2,250
Provo, Utah............................................... 22,900 9,600
Flagstaff, Arizona........................................ 23,200
DeKalb, Illinois.......................................... 15,900
Santa Maria, California................................... 20,800 2,200
Napa, California.......................................... 21,000
Hanford, California....................................... 16,500 3,600
Lihue, Hawaii............................................. 8,500 20,900
Coos Bay, Oregon.......................................... 15,200
Park Hills, Missouri...................................... 9,100
Rhinelander, Wisconsin.................................... 6,400
Hamilton, Montana......................................... 2,900
Petaluma, California...................................... 9,000
Farmington, Missouri...................................... 11,800
Fredericktown, Missouri................................... 1,800 650
</TABLE>
- -------------------------
(1) Property is subject to the provisions of the St. Louis Agency Agreement.
(2) The 265,000 square foot facility in Tucson, Arizona is used in the
production of the Star and the Citizen and is jointly owned with Gannett
pursuant to the Tucson Agency.
26
<PAGE> 28
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Pulitzer's common stock and Class B common stock as of September
30, 1998, (i) by each director of Pulitzer, (ii) by each person known by New
Pulitzer to own beneficially more than 5% of Pulitzer's common stock, (iii) by
the executive officers named in the Summary Compensation Table set forth in
"Item 6 -- Executive Compensation," and (iv) by all directors and officers of
Pulitzer as a group. Assuming that the Spin-off had occurred as of September 30,
1998, the information in the table below would also reflect the number of shares
of Common Stock and Class B Common Stock of New Pulitzer, and the respective
percentages thereof, beneficially owned by the persons named in such table.
<TABLE>
<CAPTION>
PERCENT OF
CLASS B AGGREGATE
COMMON STOCK COMMON STOCK VOTING POWER OF
-------------------- --------------------- COMMON STOCK
DIRECTORS, OFFICERS AND NUMBER NUMBER AND CLASS B
5% STOCKHOLDERS OF SHARES PERCENT OF SHARES PERCENT COMMON STOCK
----------------------- --------- ------- --------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Trustees of Pulitzer Voting Trust(1)....... -- --% 15,338,499 99.7% 95.3%
Emily Rauh Pulitzer(2)(3).................. -- -- 6,784,377 44.1 42.2
Michael E. Pulitzer(2)(4).................. -- -- 3,804,746 24.7 23.6
David E. Moore(2)(5)....................... 182 * 3,989,159 25.9 24.8
James M. Snowden, Jr.(6)................... 10,333 * -- -- **
William Bush(7)............................ 1,667 * -- -- **
Alice B. Hayes(8).......................... 6,667 * -- -- **
Ronald H. Ridgway(2)(9).................... 163,908 2.3 -- -- **
Ken J. Elkins(2)(10)....................... 171,925 2.4 -- -- **
Nicholas G. Penniman IV(2)(11)............. 101,111 1.4 -- -- **
C. Wayne Godsey(12)........................ 38,023 * -- -- **
John C. Kueneke(13)........................ 5,295 * -- -- **
Gabelli Funds, Inc.(14).................... 595,009 8.6 -- -- **
One Corporate Center
Rye, New York 10580-1434
Nicholas Company, Inc.(15)................. 415,466 6.0
701 North Water Street
Milwaukee, Wisconsin 53202
Oak Value Capital Management, Inc.(16)..... 682,123 9.9
3100 Tower Boulevard
Durham, North Carolina 27707
Morgan Stanley Dean Witter & Co.(17)....... 711,899 10.06
1585 Broadway
New York, New York 10036
All directors and officers as a group (13
persons)(2)(18).......................... 516,790 7.3% 14,578,282 94.8% 90.9%
</TABLE>
- -------------------------
* Represents less than 1% of the outstanding Pulitzer common stock.
** Represents less than 1% of the aggregate voting power of Pulitzer common
stock and Class B common stock.
(1) The Trustees of the Pulitzer Voting Trust are Michael E. Pulitzer, David E.
Moore, Emily Rauh Pulitzer, Ken J. Elkins, Nicholas G. Penniman IV, Ronald
H. Ridgway and Cole C. Campbell. The Pulitzer Voting Trust and each of the
individual Trustees may be reached at 900 North Tucker Boulevard, St.
Louis, Missouri 63101.
27
<PAGE> 29
(2) Excludes shares which may be deemed to be beneficially owned solely as a
trustee of the Pulitzer Voting Trust.
(3) Includes 6,761,517 shares held in trusts, and 22,860 shares held in a
private operating foundation. These shares are beneficially owned by Mrs.
Pulitzer.
(4) Includes 3,693,490 shares held in trusts, and 47,483 shares held in a
private foundation. These shares are beneficially owned by Mr. Pulitzer.
Also includes 333 shares owned by, and 63,440 shares held in a trust for
the benefit of, the wife of Michael E. Pulitzer. Mr. Pulitzer disclaims
beneficial ownership of these shares.
(5) Includes 366 shares of Class B common stock and 182 shares of common stock
beneficially owned by the wife of David E. Moore. Mr. Moore disclaims
beneficial ownership of these shares. Also includes 800,000 shares held in
trust. These shares are beneficially owned by Mr. Moore.
(6) Includes 6,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 days of the date hereof.
(7) Consists of 1,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 days of the date hereof.
(8) Consists of 6,667 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1994 Stock Option Plan which are exercisable
within 60 day as of the date hereof.
(9) Includes 134,998 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(10) Includes 153,998 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(11) Includes 76,111 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(12) Includes 36,890 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(13) Includes 4,888 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
(14) This figure is based on information set forth in Amendment No. 8 to
Schedule 13D dated September 24, 1997, filed by Gabelli Funds, Inc., and
its investment adviser, GAMCO, with the Securities and Exchange Commission.
The Schedule 13D, as amended, states that (i) Gabelli Funds, Inc. has the
sole power to vote, or direct the vote of, and the sole power to dispose or
direct the disposition of 92,000 of such shares, and (ii) GAMCO has the
sole power to vote, or direct the vote of, 463,011 of such shares, and the
sole power to dispose or direct the disposition of, 501,676 of such shares,
and (iii) Gabelli Asset Management Company International Advisory Services
Ltd. has the sole power to vote, or direct the vote of, and the sole power
to dispose or direct the disposition of, 1,333 of such shares.
(15) This figure is based on information set forth in Amendment No. 2 to
Schedule 13G dated January 22, 1998, filed by Nicholas Company, Inc.,
investment advisor to Nicholas Fund, Inc., with the Securities and Exchange
Commission. The Schedule 13G states that (i) Nicholas Fund, Inc., has the
sole power to vote, or direct the vote of such shares, and (ii) that
Nicholas Company, Inc. has the sole power to dispose or direct the
disposition of such shares.
(16) This figure is based on information set forth in Amendment 2 to Schedule
13G dated January 31, 1998, filed by Oak Value Capital Management, Inc.
with the Securities and Exchange Commission. The Schedule 13G states that
Oak Value Capital Management, Inc. has the sole power to vote, or direct
the vote of 598,629 shares, and the sole power to dispose or direct the
disposition of 682,123 shares.
28
<PAGE> 30
(17) This figure includes 662,400 shares which Morgan Stanley Asset Management
Inc. has the shared power to dispose or direct the disposition of and is
based on information set forth in the joint Schedule 13G, dated September
10, 1998, filed by Morgan Stanley Dean Witter & Co. and Morgan Stanley
Asset Management Inc., a wholly-owned subsidiary of Morgan Stanley Dean
Witter & Co., with the Securities and Exchange Commission. The joint
Schedule 13G states that (i) Morgan Stanley Dean Witter & Co. has the
shared power to vote or direct the vote of 511,499 shares, and the shared
power to dispose or direct the disposition of 711,899 shares and (ii)
Morgan Stanley Asset Management Inc. has the shared power to vote or direct
the vote of 462,000 shares, and the shared power to dispose or direct the
disposition of 662,400 shares.
(18) Includes 438,497 shares which may be acquired upon the exercise of options
granted under the Pulitzer 1986 Employee Stock Option Plan and the Pulitzer
1994 Stock Option Plan which are exercisable within 60 days of the date
hereof.
VOTING TRUST
It is contemplated that the beneficial owners of more than 90% of
Pulitzer's Class B common stock currently outstanding, representing more than
88% of the combined voting power of Pulitzer's outstanding common stock and
Class B common stock will enter into an agreement to be effective immediately
following the consummation of the Spin-off (the "New Pulitzer Voting Trust
Agreement") providing for the creation of a new voting trust (the "New Pulitzer
Voting Trust") and will deposit their shares of New Pulitzer Class B Common
Stock into that trust. A description of the terms and provisions of the New
Pulitzer Voting Trust Agreement is set forth in "Item 11. -- Description of
Registrant's Securities to be Registered -- New Pulitzer Voting Trust
Agreement." The Pulitzer Voting Trust will be terminated immediately prior to
the Merger.
29
<PAGE> 31
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
MANAGEMENT
The following table sets forth certain information concerning New
Pulitzer's executive officers and directors.
<TABLE>
<CAPTION>
POSITIONS WITH
NAME, AGE AND CLASS NEW PULITZER
- ------------------- --------------
<S> <C>
CLASS C DIRECTORS
David E. Moore; 75(1)............. Director
Ken J. Elkins; 60................. Director
Nicholas G. Penniman IV; 60....... Director; Senior Vice President -- Newspaper Operations
CLASS A DIRECTORS
Emily Rauh Pulitzer; 65(1)........ Director
Alice B. Hayes; 60................ Director
James M. Snowden, Jr.; 55......... Director
CLASS B DIRECTORS
Michael E. Pulitzer; 68(1)........ Director, Chairman of the Board, President and Chief
Executive Officer
Ronald H. Ridgway; 60............. Director, Senior Vice President -- Finance
William Bush; 51.................. Director
OTHER EXECUTIVE OFFICERS
James V. Maloney; 49.............. Secretary
</TABLE>
- -------------------------
(1) Michael E. Pulitzer is a cousin of David E. Moore and a brother-in-law of
Emily Rauh Pulitzer.
DAVID E. MOORE, lifelong journalist, founded Harrison Independent
(Westchester County, NY), Connecticut Business Journal in association with
Westchester Business Journal, and International Business magazine. Mr. Moore
remains chairman of International Business Network, Inc., an electronic gateway
service, and serves as a director of Pulitzer. It is contemplated that following
the consummation of the Transactions, Mr. Moore will enter into a consulting
agreement with New Pulitzer. The terms of this consulting agreement will be
substantially similar to Mr. Moore's existing consulting agreement with Pulitzer
and will include an agreement by New Pulitzer to use its best efforts to cause
Mr. Moore to be a member of its Board of Directors.
KEN J. ELKINS, has served as Pulitzer's Senior Vice
President -- Broadcasting Operations since April 1986 and prior thereto, from
April 1984 through March 1986, served as Pulitzer's Vice President --
Broadcasting Operations. Mr. Elkins is a director of Pulitzer and Commerce Bank
of St. Louis.
NICHOLAS G. PENNIMAN IV, has served as New Pulitzer's Senior Vice
President -- Newspaper Operations since May 1998 and has served as Pulitzer's
Senior Vice President -- Newspaper Operations since April 1986. Prior to that
time, Mr. Penniman served as Pulitzer's Vice President -- Newspaper Operations
and General Manager of the Post Dispatch from April 1984 through March 1986 and
as Assistant General Manager of the Post-Dispatch from January 1978 through
March 1984. Mr. Penniman is a director of Pulitzer and also serves as Publisher
of the Post-Dispatch.
EMILY RAUH PULITZER is the widow of Joseph Pulitzer, Jr. Mrs. Pulitzer was
a curator of the St. Louis Art Museum from 1964 through 1973. She currently
serves certain St. Louis and national charitable, civic and arts organizations
and as a director of Pulitzer. It is contemplated that following the
consummation of the Transactions, Mrs. Pulitzer will enter into a consulting
agreement with New Pulitzer. The terms of this consulting agreement will be
substantially similar to Mrs. Pulitzer's existing consulting agreement with
Pulitzer and will include an agreement by New Pulitzer to use its best efforts
to cause Mrs. Pulitzer to be a member of its Board of Directors.
30
<PAGE> 32
ALICE B. HAYES has been President of the University of San Diego since July
1995. From July 1989 through May 1995, Dr. Hayes was Executive Vice President
and Provost of St. Louis University, St. Louis, Missouri, and for over five
years prior thereto held various academic positions at Loyola University of
Chicago. Dr. Hayes serves as a director of Pulitzer.
JAMES M. SNOWDEN, JR. has been an Executive Vice President of Huntleigh
Securities Corporation ("Huntleigh") since November 6, 1995. Mr. Snowden was a
Vice President of A.G. Edwards & Sons, Inc. from June 1984 through November 3,
1995 and was a director of A.G. Edwards & Sons, Inc. from March 1988 through
February 1994. Mr. Snowden serves as a director of Pulitzer. Pulitzer has
retained, and New Pulitzer intends to retain in the future, Huntleigh as a
financial advisor in connection with such financial matters as it deems
appropriate.
MICHAEL E. PULITZER was elected Chairman of the Board of New Pulitzer in
May, 1998, and has served as its President and Chief Executive Officer since May
1998. Mr. Pulitzer was elected Chairman of the Board of Pulitzer on June 11,
1993, and has served as its President and Chief Executive Officer since April
1986. Mr. Pulitzer served as Vice Chairman of the Board of Pulitzer from April
1984 through March 1986 and as President and Chief Operating Officer of Pulitzer
from April 1979 through March 1984. It is contemplated that following the
consummation of the Transactions, Mr. Pulitzer will enter into an employment
agreement with New Pulitzer. Pursuant to the terms of this employment agreement,
New Pulitzer will agree to use its best efforts to cause Mr. Pulitzer to be a
member of its Board of Directors.
RONALD H. RIDGWAY, has served as Senior Vice President -- Finance of New
Pulitzer since May 1998 and as Pulitzer's Senior Vice President -- Finance since
March, 1986. Prior thereto, Mr. Ridgway served as Pulitzer's Vice
President -- Finance from April 1984 through March 1986, as Treasurer from April
1979 through March 1986, and as Secretary and Assistant Treasurer from January
1978 through March 1979. Mr. Ridgway serves as a director of Pulitzer.
WILLIAM BUSH has been a partner in the law firm of Fulbright & Jaworski
L.L.P. (and its predecessor firm, Reavis & McGrath) since 1977. He is the
partner in charge of the New York office and a member of the Executive Committee
of the firm. Pulitzer has retained, and New Pulitzer intends to retain in the
future, Fulbright & Jaworski L.L.P. as attorneys in connection with such legal
matters as it deems appropriate. Mr. Bush serves as a director of Pulitzer.
JAMES V. MALONEY has served as Secretary of New Pulitzer since May 1998 and
has served as Secretary of Pulitzer since January 1984 and was appointed
Pulitzer's Director of Shareholder Relations in June 1987.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of Pulitzer has, and after the Spin-off the New
Pulitzer Board of Directors will have, an Audit Committee, Compensation
Committee, Executive Committee, Finance Committee, Nominating Committee and
Planning Committee. The functions of each of these committees are described and
the members of each are listed below. The functions of these committees will not
change as a result of the Spin-off, and it is expected that the members of the
New Pulitzer committees following the Spin-off will be the same, with certain
exceptions, as those currently serving on the Pulitzer committees.
The Audit Committee of Pulitzer consists of the two directors who are
determined to be independent directors under the corporate responsibility
requirements for companies listed on the New York Stock Exchange. The Audit
Committee is responsible to the Board of Directors for overseeing and reviewing
audit results and monitoring the effectiveness of internal audit functions.
James M. Snowden, Jr. and Alice B. Hayes currently serve as members of this
Committee of Pulitzer.
The Compensation Committee of Pulitzer consists of Michael E. Pulitzer, who
is Chairman, President and Chief Executive Officer of Pulitzer, and three
directors who are not officers of Pulitzer. The Board of Directors may at its
discretion appoint a fourth person, who, if he is not a director, shall be an
advisory member of the Compensation Committee. The Compensation Committee
renders advice with respect to compensation matters and administers, among other
things, Pulitzer's equity and incentive compensation
31
<PAGE> 33
plans. In addition to Michael E. Pulitzer, David E. Moore, William Bush and
James M. Snowden, Jr. currently serve as members of this Committee of Pulitzer.
The Executive Committee of Pulitzer consists of the four directors who hold
the positions of President, Senior Vice President -- Finance, Senior Vice
President -- Newspaper Operations and Senior Vice President -- Broadcasting
Operations and one or more directors who are not officers of Pulitzer. The
Executive Committee exercises the power and authority of the Board of Directors
during the period between Board meetings, subject to certain limitations.
Michael E. Pulitzer, Ronald H. Ridgway, Nicholas G. Penniman IV, Ken J. Elkins
and David E. Moore currently serve as members of this Committee of Pulitzer.
The Finance Committee of Pulitzer consists of the three directors who hold
the positions of President, Senior Vice President -- Finance and Senior Vice
President -- Newspaper Operations and, in the discretion of the Board of
Directors, a fourth person, designated by resolution adopted by a majority of
the whole Board of Directors, who, if he is not a director, shall be an advisory
member. The Finance Committee may exercise, in general, the authority of the
Board with respect to approval or disapproval of contracts obligating Pulitzer
for more than $50,000 but not more than $500,000 ($1,000,000 with respect to the
Post-Dispatch). Michael E. Pulitzer, Ronald H. Ridgway and Nicholas G. Penniman
IV currently serve as members of this Committee of Pulitzer.
The Nominating Committee of Pulitzer consists of two or more directors who
are designated by resolution adopted by a majority of the whole Board. The
Nominating Committee recommends qualified candidates to the Board of Directors
and/or the stockholders for election as directors of Pulitzer. Michael E.
Pulitzer, David E. Moore and James M. Snowden, Jr. currently serve as members of
this Committee of Pulitzer.
The Planning Committee of Pulitzer consists of the four directors who hold
the positions of President, Senior Vice President -- Finance, Senior Vice
President -- Newspaper Operations and Senior Vice President -- Broadcasting
Operations and, in the discretion of the Board of Directors, up to six
additional persons, designated by resolution adopted by a majority of the whole
Board of Directors, each of whom, if he or she is not a director, shall be an
advisory member. The Planning Committee may consider and develop short and
long-term plans and strategies for Pulitzer for presentation to the Board of
Directors for consideration and appropriate action. Michael E. Pulitzer, Ronald
H. Ridgway, Nicholas G. Penniman IV, Ken J. Elkins, William Bush, David E.
Moore, Alice B. Hayes, Emily Rauh Pulitzer and James M. Snowden, Jr. currently
serve as members of this Committee of Pulitzer.
DIRECTOR COMPENSATION
Compensation for non-employee directors of Pulitzer is set at $5,000 per
year. In addition, each non-employee director receives $750 for each meeting of
the Pulitzer Board of Directors or any of its committees he or she attends in
person or by telephone, a $1,000 travel allowance if he or she attends in
person, and a per diem payment of $150 for each day he or she stays overnight in
St. Louis or elsewhere in connection with any meeting of the Board of Directors
or any of its Committees. It is expected that New Pulitzer will compensate
directors following the Spin-off substantially in accordance with the foregoing
practices.
It is anticipated that New Pulitzer will adopt a stock option plan that is
substantially similar to the Pulitzer Publishing Company 1994 Stock Option Plan.
It is therefore anticipated that New Pulitzer will grant options to purchase a
set number of shares of Common Stock to each non-employee director (other than
directors who beneficially own 1% or more of any class of capital stock of New
Pulitzer) following each Annual Meeting of Stockholders. The exercise price per
share would be equal to the fair market value per share of the Common Stock on
the date of grant, and unless sooner terminated, each option would expire ten
years after the date of grant. At present, Dr. Hayes and Messrs. Bush and
Snowden are the only non-employee directors who would be eligible to receive
these annual option grants.
David E. Moore, a director of Pulitzer and member of the Compensation
Committee, is party to a consulting agreement with Pulitzer, dated October 21,
1986, pursuant to which Mr. Moore provides, at the request of the President,
managerial advice regarding the business operations of Pulitzer and its
subsidiaries
32
<PAGE> 34
and general business advice regarding long-term strategic planning. For his
services under the agreement, Mr. Moore was paid $131,200 in 1997, and Mr. Moore
will be paid $140,000 in 1998. The consulting agreement provides for automatic
renewals unless terminated by either party not later than December 1 of any
calendar year.
Emily Rauh Pulitzer, a director of Pulitzer, is party to a consulting
agreement with Pulitzer, dated January 26, 1998, pursuant to which Mrs. Pulitzer
provides, at the request of the Chairman, advice regarding the business
operations of Pulitzer and its subsidiaries, particularly their newspaper
operations, and general advice regarding long-term strategic planning. For her
services under the agreement, Pulitzer paid Mrs. Pulitzer $43,733.33 on March
11, 1998 for September through December of 1997, and Mrs. Pulitzer will be paid
$140,000 for the 1998 fiscal year. The consulting agreement provides for
automatic renewals unless terminated by either party not later than December 1
of any calendar year.
It is contemplated that in connection with the Spin-off and Merger, Mr.
Moore and Mrs. Pulitzer's consulting agreements with Pulitzer will be terminated
and that following the consummation of the Transactions, New Pulitzer will enter
into a substantially similar consulting agreement with each of Mr. Moore and
Mrs. Pulitzer.
33
<PAGE> 35
ITEM 6. EXECUTIVE COMPENSATION.
Prior to the Spin-off, Pulitzer's executive officers will not have received
any compensation from New Pulitzer for serving as executive officers thereof.
New Pulitzer has entered into employment agreements with Messrs. Cole C.
Campbell, Terrance C.Z. Egger and James V. Maloney that become effective upon
consummation of the Merger. Messrs. Campbell and Egger are currently employed in
management positions in Pulitzer's newspaper operations and Mr. Maloney is
currently employed as a corporate officer of Pulitzer. Each of these agreements
is for a term of three years, and each agreement includes salary and bonus
opportunities that are substantially similar to what is currently provided by
Pulitzer, except that the agreement with Mr. Egger includes a provision for a
restricted stock grant that would vest if his employment with New Pulitzer
continues until the end of the three-year term.
Following the consummation of the Transactions, it is anticipated that the
Board of Directors of New Pulitzer, acting upon the recommendation of outside
compensation consultants, will approve the terms and conditions of new
employment agreements to be made by New Pulitzer with Messrs. Michael E.
Pulitzer, Nicholas G. Penniman IV and Ronald H. Ridgway (collectively, the "New
Pulitzer Senior Executives"). It is anticipated that Mr. Pulitzer's agreement
will be for a term of seven years and that Mr. Pulitzer will serve as Chief
Executive Officer and Chairman of the Board of Directors of New Pulitzer.
Initially, Mr. Pulitzer's salary and bonus opportunities would be substantially
the same as is currently provided to him by Pulitzer. It is also expected that
Mr. Pulitzer will become a participant in a new stock option plan to be adopted
by New Pulitzer and that the annual retirement pension payable to him under the
qualified and nonqualified pension and retirement plans of New Pulitzer will be
increased to approximately 50% (from 40%) of his final average compensation.
It is anticipated that the term of Mr. Penniman's employment agreement will
be approximately two years, and that the term of Mr. Ridgway's agreement will be
approximately three years. Mr. Penniman would serve as Senior Vice President -
Newspaper Operations, and Mr. Ridgway would serve as Senior Vice President -
Finance -- the same positions they currently hold with Pulitzer. Each
executive's salary and bonus opportunities would be substantially the same as is
currently provided to him by Pulitzer. It is anticipated that, upon completion
of the terms of their respective agreements, New Pulitzer will waive any early
retirement reduction factor that would otherwise apply to Messrs. Penniman and
Ridgway in determining the annual retirement pensions to which they would then
be entitled under the nonqualified pension plan of New Pulitzer (which is
expected to be similar to the Supplemental Executive Benefit Pension Plan
presently maintained by Pulitzer).
34
<PAGE> 36
The following Summary Compensation Table shows the compensation paid each
of the last three fiscal years of Pulitzer to the six most highly compensated
executive officers of Pulitzer for 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------ ------------------------ -------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
RESTRICTED
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
NAME AND COMPENSATION AWARDS SARS(2) PAYOUTS COMPENSATION(3)
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) (#) ($) ($)
------------------ ---- --------- -------- ------------ ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer........... 1997 $918,115 $554,972 $0 $ 0 0 $0 $37,951
Chairman of the Board, 1996 850,000 597,676 0 0 0 0 6,135
President and 1995 800,000 441,072 0 0 0 0 8,775
Chief Executive Officer
Ken J. Elkins................. 1997 420,000 206,273 0 0 35,000 0 26,716
Senior Vice President -- 1996 390,000 220,326 0 0 32,000 0 15,077
Broadcasting Operations 1995 364,000 204,589 0 51,081(1) 30,000 0 15,986
Nicholas G. Penniman IV....... 1997 324,435 167,779 0 0 17,500 0 14,617
Senior Vice President -- 1996 304,000 139,880 0 0 15,000 0 5,500
Newspaper Operations 1995 292,000 130,624 0 51,081(1) 16,667 0 6,452
Ronald H. Ridgway............. 1997 318,950 154,856 0 0 27,500 0 13,259
Senior Vice President -- 1996 281,000 158,505 0 0 20,000 0 5,464
Finance 1995 255,000 137,658 0 51,081(1) 20,000 0 6,413
John C. Kueneke............... 1997 233,000 87,496 0 0 8,000 0 3,945
Executive Vice President 1996 212,827 91,593 0 0 4,000 0 0
Pulitzer Broadcasting
Company 1995 0 0 0 0 0 0 0
C. Wayne Godsey............... 1997 233,000 84,349 0 0 8,000 0 5,260
Executive Vice President 1996 217,000 91,843 0 0 4,000 0 4,818
Pulitzer Broadcasting
Company 1995 201,552 95,551 0 0 12,000 0 5,100
</TABLE>
- -------------------------
(1) The grant was for 2,083 shares representing a value of $51,081 based on the
closing price of the Pulitzer common stock of $24.525 on the date of grant.
At December 31, 1997, the value of each of the grants was $131,880. All of
the stock vested upon grant, and dividends have been paid thereon. None of
the named executive officers holds restricted stock which did not fully vest
upon grant.
(2) Stock options have been adjusted for 1995 to reflect the impact of a common
stock and Class B common stock split, effected in the form of a 25% stock
dividend, declared by Pulitzer's Board of Directors on January 4, 1995 and a
common stock and Class B common stock split, effected in the form of a 33.3%
stock dividend, declared by Pulitzer's Board of Directors on September 12,
1996.
(3) Includes (i) Pulitzer's contributions to the Pulitzer Retirement Savings
Plan, in the amount of $5,350, $5,350, $5,350, $5,350, $3,945 and $5,260,
respectively, in the cases of Messrs. Pulitzer, Elkins, Penniman, Ridgway,
Kueneke and Godsey, (ii) income assessed which was related to split dollar
life insurance of $32,601, $11,866, $9,267, and $7,908, respectively, in the
cases of Messrs. Pulitzer, Elkins, Penniman, and Ridgway and (iii)
Pulitzer's payment of an annual auto allowance to Ken J. Elkins of $9,500 in
1997, 1996 and 1995.
35
<PAGE> 37
Stock Compensation. Pulitzer presently maintains three different equity
incentive compensation plans: (i) a stock option plan, (ii) a restricted stock
plan and (iii) a broad-based employee stock purchase plan. All three plans are
administered by the Compensation Committee of the Board of Directors of
Pulitzer. It is anticipated that New Pulitzer's Board of Directors will adopt
similar equity incentive compensation plans.
New Pulitzer's stock option plan would provide for the granting of options
to purchase shares of New Pulitzer Common Stock to key personnel at an exercise
price equal to the fair market value of the Common Stock on the option grant
date. Unlike Pulitzer's present plan, it is anticipated that Michael E. Pulitzer
will be eligible to receive stock option grants under the New Pulitzer plan. At
the time the Merger is consummated, all options previously granted under
Pulitzer's stock option plans will have been exercised, cancelled or cashed out.
New Pulitzer's restricted stock plan would provide for the issuance of
"restricted" shares of New Pulitzer Common Stock to key personnel. The shares
will be restricted in the sense that New Pulitzer would be entitled to recover
the shares issued to individuals whose employment or service with New Pulitzer
terminates before the specified vesting date(s). At the time of the consummation
of the Merger, all restricted shares issued under the corresponding Pulitzer
restricted stock plan will have become unrestricted or will have been
re-acquired by Pulitzer.
New Pulitzer's employee stock purchase plan would provide for the purchase
of shares of New Pulitzer Common Stock by participating employees at the end of
each of four quarterly plan cycles for a purchase price equal to 85% of the then
fair market value of the Common Stock. In general, all employees of New Pulitzer
and its subsidiary corporations would be eligible to become participants in this
plan. Stock purchases will be made with money withheld from pay at the election
of the participating employees. In contemplation of the Merger, participation in
Pulitzer's employee stock purchase plan was suspended at the end of the third
cycle for 1998 (i.e., as of September 30, 1998). Pulitzer common stock will be
purchased for participants who withheld pay under the plan during that quarterly
plan cycle.
The following table provides information on option grants in fiscal 1997 by
Pulitzer to the named executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E) (F) (G)
$ OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT END OF OPTION TERM
OPTIONS GRANTED TO EXERCISE ASSUMING ANNUAL STOCK
GRANTED EMPLOYEES PRICE PRICE APPRECIATION RATES OF:
(SHARES) IN FISCAL (PER EXPIRATION ----------------------------
NAME (1) 1997(2) SHARE) DATE 5%($) 10%($)
---- -------- ---------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer.......... 0 0% $ .00 -- $ 0 $ 0
Ken J. Elkins................ 35,000 16.6 58.81 12/18/07 1,294,563 3,280,463
Nicholas G. Penniman IV...... 17,500 8.3 58.81 12/18/07 647,281 1,640,231
Ronald H. Ridgway............ 27,500 13.0 58.81 12/18/07 1,017,156 2,577,506
John C. Kueneke.............. 8,000 3.8 58.81 12/18/07 295,900 749,820
C. Wayne Godsey.............. 8,000 3.8 58.81 12/18/07 295,900 749,820
</TABLE>
- -------------------------
(1) Each option becomes exercisable in one-third increments over a three-year
period on the anniversary date of the grants.
(2) Based on an aggregate of 211,231 stock options granted to all employees in
fiscal 1997.
The following table provides information on option/SAR exercises in
Pulitzer's fiscal 1997 by the named executive officers and the value of such
officers' unexercised options/SARs at December 31, 1997:
36
<PAGE> 38
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1997 OPTION VALUES
<TABLE>
<CAPTION>
EXERCISES DURING YEAR FISCAL YEAR-END
- --------------------------------------------------------- ------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS IN-THE-MONEY
ACQUIRED (SHARES) OPTIONS/SARS($)(1)
ON VALUE ------------------------------ ------------------------------
NAME EXERCISE REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael E. Pulitzer...... 0 $ 0 0 0 $ 0 $ 0
Ken J. Elkins............ 0 0 153,998 66,334 6,469,845 810,574
Nicholas G. Penniman
IV..................... 8,500 284,969 94,444 33,056 3,906,579 409,978
Ronald H. Ridgway........ 7,225 269,165 134,998 47,501 5,860,661 543,390
John C. Kueneke.......... 0 0 4,888 12,445 129,061 134,679
C. Wayne Godsey.......... 0 0 35,556 16,446 1,483,165 249,680
</TABLE>
- -------------------------
(1) Computed based upon the difference between the closing price of Pulitzer's
common stock on December 31, 1997, and the exercise price. Stock options and
stock prices have been adjusted to reflect the impact of a common stock and
a Class B common stock split, effected in the form of a 25% stock dividend,
declared by Pulitzer's Board of Directors on January 4, 1995 and a common
stock and Class B common stock split, effected in the form of a 33.3% stock
dividend, declared by Pulitzer's Board of Directors on September 12, 1996.
Pulitzer Retirement Savings Plan. Pulitzer maintains the Pulitzer
Retirement Savings Plan (the "Retirement Savings Plan") for the benefit of
eligible employees of Pulitzer and certain subsidiaries. The Retirement Savings
Plan is intended to be a qualified plan under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") and contains a qualified cash or
deferred arrangement as described in Section 401(k) of the Code. The Retirement
Savings Plan is funded through Pulitzer's contributions and participating
employees' elective 401(k) deferrals. Each participant's elective deferrals are
made through payroll deductions and are subject to the annual 401(k) limit
which, for 1998, is $10,000 and other legal limitations. Pulitzer makes annual
matching contributions (limited to 2% of pay) at the rate of 50% of an executive
officer's elective contributions. In addition, Pulitzer makes a $50 monthly
profit sharing contribution to each participating executive's Retirement Savings
Plan account.
New Pulitzer will assume sponsorship of Pulitzer's Retirement Savings Plan
in connection with the consummation of the Transactions. It is anticipated that
New Pulitzer will continue to maintain the Retirement Savings Plan on
substantially the same basis for the benefit of its eligible employees.
Following the Merger, the Retirement Savings Plan account balances of the
continuing Broadcasting Business employees and the liabilities for payment
thereof will be transferred to and assumed by a similar plan that is or will be
maintained by Hearst-Argyle and/or its affiliates.
Pulitzer's contributions under the Retirement Saving Plan for the accounts
of the six most highly compensated executive officers of Pulitzer are included
in the amount of cash compensation set forth opposite their names on the Summary
Compensation Table set forth on page 35.
Pulitzer Publishing Company Pension Plan. The Pulitzer Publishing Company
Pension Plan (the "Pension Plan") is a defined benefit plan that is intended to
be a qualified plan under Section 401(a) of the Code. Generally, the Pension
Plan provides retirement benefits to non-union employees of Pulitzer and all
employees of the Broadcasting Business. Pulitzer's executive officers are also
covered under the Pension Plan.
The Pension Plan provides for the payment of monthly retirement income to
participating employees. The amount of the monthly benefit, expressed as a
single life annuity beginning at normal retirement age (later of age 65 or the
completion of five years of participation), is approximately equal to the sum of
(i) 1.5% of "monthly earnings" for each year of service up to 25 years, (ii) 1%
of "monthly earnings" for each year of service beyond 25 years, (iii) .5% of
"monthly earnings" in excess of "covered compensation" for each year of service
up to a total of 35 years (subject to certain limitations), and (iv) the
benefit, if any, earned under a predecessor plan as of December 31, 1988.
Generally, monthly earnings means the monthly average of an
37
<PAGE> 39
employee's base earnings in the specified years, and covered compensation means
base compensation with respect to which social security benefits are earned.
Pension Plan benefits become vested upon completion of five years of service. A
covered employee may retire with reduced benefits after attaining age 55 and
completing five years of service.
New Pulitzer will assume sponsorship of the Pension Plan in connection with
the consummation of the Transactions. It is anticipated that New Pulitzer will
continue to maintain the Pension Plan after the Merger for the benefit of its
eligible employees. Following the Merger, the Pension Plan liabilities
attributable to continuing Broadcasting Business employees, together with
Pension Plan assets associated with those liabilities, will be transferred to
and assumed by a similar plan maintained or to be maintained by Hearst-Argyle
and/or its affiliates for the benefit of those employees.
As of December 31, 1997, total estimated annual retirement benefits for
Michael E. Pulitzer, Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway,
John C. Kueneke and C. Wayne Godsey under the Pension Plan, assuming they
continue in their current positions at their current levels of compensation and
retire at age 65 (or at the present date if older than 65), are $63,963,
$71,786, $70,322, $65,624, $46,644 and $64,124, respectively. The following
table shows the estimated annual pension payable under the Pension Plan to
persons retiring at age 65. The table reflects the fact that the benefits
provided by the Pension Plan's formula are subject to certain limitations under
the Code.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS FOR YEARS OF SERVICE INDICATED
ANNUAL COMPENSATION --------------------------------------------------------------------
AT RETIREMENT 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$150,000..... $30,361 $36,143 $40,506 $41,736 $42,447
200,000..... 41,260 49,228 55,304 57,205 58,412
250,000..... 45,685 60,887 70,102 72,673 74,377
300,000..... 45,665 60,887 76,109 87,331 90,342
350,000..... 45,665 60,887 76,109 87,331 98,553
400,000..... 45,665 60,887 76,109 87,331 98,553
450,000..... 45,665 60,887 76,109 87,331 98,553
500,000..... 45,665 60,887 76,109 87,331 98,553
</TABLE>
- -------------------------
This table reflects the fact that the benefit provided by the Pension Plan's
formula is subject to certain constraints under the Code. For 1988, the maximum
annual benefit is $130,000 under Code Section 415. Furthermore, under Code
Section 401(a)(17), the maximum annual compensation that may be reflected in
1998 is $160,000. These dollar limits are subject to cost of living increases in
future years.
Supplemental Executive Benefit Pension Plan. The Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan ("SERP") is an unfunded
defined benefit plan. The SERP provides for the payment of a minimum annual
retirement benefit to executive officers and other designated highly compensated
employees of Pulitzer, taking into account the employer provided benefits earned
by the participant under Pulitzer's Retirement Savings Plan and Pension Plan.
The retirement pension payable to a SERP participant, expressed as an annual
single life annuity beginning at the participant's normal retirement date (age
65 and 10 years of service), is equal to 40% of the participant's final
three-year average compensation multiplied by a fraction, the numerator of which
is the number of the participant's years of credited service, and the
denominator of which is 25. The amount of the benefit, as so determined, is
payable by Pulitzer to the extent it is not covered by the employer-provided
benefits payable to the participant under Pulitzer's Retirement Savings Plan and
Pension Plan. Participants become vested in their SERP benefits after the
completion of ten years of service with Pulitzer and its affiliates. Vested
participants who retire between age 55 and 65 may elect to begin receiving
reduced annual payments before they reach age 65 (their normal retirement age).
Subject to certain conditions, the SERP also provides for the payment of a 50%
survivor annuity to the surviving spouse of a deceased participant. The
estimated years of credited service for Michael E. Pulitzer, Ken J. Elkins,
Nicholas G. Penniman IV, Ronald H. Ridgway, John C. Kueneke and C. Wayne Godsey
under the SERP are 37 years, 36 years, 22 years, 26 years, 2 years and 10 years,
respectively.
38
<PAGE> 40
In connection with the Transactions, New Pulitzer will assume Pulitzer's
obligations under the SERP other than obligations accrued with respect to
employees of the Broadcasting Business who continue to be employed by
Hearst-Argyle and/or its affiliates after the consummation of the Transactions.
In connection with the assumption of the SERP obligations to Mr. Ken J. Elkins,
New Pulitzer will be required to waive the application of any early retirement
reduction factor if Mr. Elkins elects to begin receiving his SERP payments
before reaching age 65 but after reaching age 63. It is anticipated that New
Pulitzer will adopt a similar plan for the benefit of its executive officers and
other designated highly compensated employees. Benefits payable under the SERP
formula after the Merger to a New Pulitzer employee who was also a participant
in Pulitzer's SERP before the Merger will not be lower than the SERP benefits
earned by the employee under Pulitzer's SERP immediately prior to the Merger.
The following table shows the estimated annual pension benefits that would
be payable under the existing SERP formula, without regard to offsets for
employer-provided benefits payable under the Retirement Savings Plan and the
Pension Plan to persons retiring at age 65 in the specified compensation and
years-of-service classifications. The SERP benefit is the difference between the
total benefit shown in the following table and the employer-provided benefit
earned under the Pension Plan and the Retirement Savings Plan. As of December
31, 1997, total estimated annual retirement benefits for Michael E. Pulitzer,
Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway, John C. Kueneke and
C. Wayne Godsey under the SERP, assuming they continue in their current
positions at their current levels of compensation and retire at 65 (or at the
present date if older than 65), are $483,247, $156,723, $100,379, $91,008,
$20,316 and $43,354, respectively.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL PENSION BENEFITS
FOR YEARS OF SERVICE INDICATED
FINAL THREE-YEAR ---------------------------------------------------------------
AVERAGE COMPENSATION 15 YRS. 20 YRS. 25 YRS. 30 YRS. 35 YRS.
-------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$150,000..... $36,000 $48,000 $60,000 $60,000 $60,000
200,000..... 48,000 64,000 80,000 80,000 80,000
250,000..... 60,000 80,000 100,000 100,000 100,000
300,000..... 72,000 96,000 120,000 120,000 120,000
350,000..... 84,000 112,000 140,000 140,000 140,000
400,000..... 96,000 128,000 160,000 160,000 160,000
450,000..... 108,000 144,000 180,000 180,000 180,000
500,000..... 120,000 160,000 200,000 200,000 200,000
</TABLE>
Deferred Compensation Plan. Pulitzer presently maintains a deferred
compensation plan (the "Deferred Compensation Plan") pursuant to which its
senior executive officers are required to defer annual incentive compensation
the payment of which would not be currently deductible by Pulitzer because of
the $1 million executive compensation deduction limitation of Section 162(m) of
the Code. The Deferred Compensation Plan also permits eligible executives to
make elective deferrals of annual bonus awards. Amounts deferred under the
Deferred Compensation Plan are credited with interest based on the one-year
treasury bill rate in effect at the beginning of each year. The Deferred
Compensation Plan is not a qualified plan under Section 401(a) of the Code and
the obligations of Pulitzer under the Deferred Compensation Plan are unfunded.
To date, the only deferrals that have been made under the Deferred Compensation
Plan are mandatory deferrals of annual incentive compensation earned by Michael
E. Pulitzer.
New Pulitzer will assume the obligations to Michael E. Pulitzer under the
Deferred Compensation Plan. It is anticipated that the Board of Directors of New
Pulitzer will adopt a new deferred compensation plan and that New Pulitzer will
make contributions to a grantor trust equal to the amounts deferred under the
plan. It is anticipated that the amounts deferred under the new plan (including
the amount credited to Michael E. Pulitzer under Pulitzer's Deferred
Compensation Plan) would be credited with earnings based upon several
hypothetical investment alternatives that may be designated by the plan
participants. A substantial portion of Pulitzer's payment obligations to the
executive officers (including Mr. Ken J. Elkins) arising at the closing of the
Transactions, including, for example, transaction and retention incentive awards
and amounts payable for the cancellation of certain stock options, will be
assumed by New Pulitzer and deferred under New Pulitzer's
39
<PAGE> 41
deferred compensation plan. It is expected that the trust will be funded by New
Pulitzer soon after the closing of the Merger. All obligations of New Pulitzer
under the deferred compensation plan will be unsecured. Assets of the trust to
be maintained as part of the plan will be subject to the claims of creditors of
New Pulitzer in the event of its insolvency.
Split Dollar Life Insurance Agreements. In December 1996, Pulitzer entered
into so-called split dollar life insurance agreements in connection with life
insurance policies issued on the lives of Michael E. Pulitzer, Ken J. Elkins,
Nicholas G. Penniman IV and Ronald H. Ridgway. These agreements require Pulitzer
to make annual premium deposits under the policies and give Pulitzer an interest
in the policies equal to the greater of the aggregate amount contributed by
Pulitzer or the policy cash value built up over time. Pulitzer is entitled to
receive the value of its interest in each policy upon the death of the insured
executive or, if earlier, upon termination of the split dollar agreement
associated with that policy. Pulitzer has received a collateral assignment of
each of the policies covered by the split dollar agreements in order to secure
the payment of its interest therein. New Pulitzer will assume the obligations of
Pulitzer under and is anticipated to continue to maintain in force all four
split dollar agreements. The agreements would be amended accordingly.
Other Insurance Benefits. In 1986, the Board of Directors of Pulitzer
adopted an insurance benefit program for certain of its executive officers and
key employees to provide group life, accidental death and dismemberment and
long-term disability insurance coverage in addition to the group life and
accidental death and dismemberment insurance coverage maintained by Pulitzer for
its employees generally. The group life insurance benefit was increased to a
multiple of the executive's total annual compensation, but in no event may it
exceed $250,000. Upon retirement, the group life insurance coverage is reduced
to $50,000. The accidental death and dismemberment coverage equals the amount of
the group life insurance benefit and terminates upon retirement.
Long-term disability insurance coverage was instituted to provide a salary
replacement equal to 60% of total compensation, subject to a maximum monthly
benefit payment of $10,000. Benefits are payable after the ninetieth day of
total disability and continue for the duration of the disability or until age
65. Executives who become disabled after age 60 are entitled to reduced
benefits. Benefits are integrated with other sources of disability income, such
as Social Security Disability Income.
It is contemplated that New Pulitzer will provide certain of its employees,
executive officers and key employees with similar benefits programs.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Retention and Participation Agreements. In connection with the
Transactions, Pulitzer entered into agreements with Messrs. Michael E. Pulitzer,
Ken J. Elkins, Nicholas G. Penniman IV, Ronald H. Ridgway, C. Wayne Godsey and
John Kueneke (collectively, the "Pulitzer Executives") pursuant to which
Pulitzer agreed to pay each Pulitzer Executive a retention award on the earlier
of (a) January 1, 2000, or (b) the date of the closing of the Transactions,
provided the Pulitzer Executive remains in the continuous employ of Pulitzer
until such earlier date. The amounts of the retention awards are $900,000,
$600,000, $150,000, $450,000, $250,000 and $250,000, respectively. These
agreements also provide for transaction completion bonuses payable on or after
the closing of the Transactions. The amount of the transaction completion
bonuses are $1,000,000, $1,000,000, $150,000, $450,000, $375,000, and $375,000,
respectively. It is anticipated that Pulitzer's Compensation Committee will
award additional, discretionary transaction completion bonuses to each Pulitzer
Executive (except Messrs. Elkins, Godsey and Kueneke) and certain other
management personnel. The agreements for Messrs. Elkins, Godsey and Kueneke
provide for separation payments which, when added to other compensation, do not
exceed the severance deduction limitations of Section 280G of the Code. Each of
the agreements provides for full payment to the Pulitzer Executive's estate if
the Pulitzer Executive dies before the closing of the Transactions. Pulitzer has
entered into similar agreements with certain of its other corporate, newspaper
and new media officers and executives who will be entitled to receive
transaction completion bonuses aggregating approximately $984,000. Certain of
these individuals will also be entitled to receive, among other things,
retention awards aggregating approximately $289,000.
40
<PAGE> 42
James M. Snowden, Jr., a member of the Compensation Committee, is an
executive vice president of Huntleigh Securities Corporation ("Huntleigh").
Since November 6, 1995, Huntleigh has had a retainer relationship with Pulitzer
with respect to general financial advisory services. In addition, in December
1997, Pulitzer entered into an engagement letter with Huntleigh pursuant to
which Huntleigh has acted as a financial adviser to Pulitzer with respect to
various alternatives regarding Pulitzer's broadcasting operations. Pursuant to
this engagement letter, Pulitzer has paid Huntleigh $200,000 in financial
advisory fees. In addition, Pulitzer will be obligated to pay Huntleigh a fee of
$1.5 million upon consummation of the Spin-off and additional fees aggregating
approximately $9.9 million (based on the closing price of Hearst-Argyle Series A
Common Stock on September 2, 1998) upon consummation of the Merger. New Pulitzer
intends to retain Huntleigh in the future as a financial advisor in connection
with such financial matters as it deems appropriate. Pulitzer has agreed to
reimburse Huntleigh, and its affiliates, partners, directors, agents, employees
and control persons for certain legal and other expenses and to indemnify
Huntleigh against certain liabilities, including certain liabilities under the
federal securities laws.
For a discussion of David E. Moore and Emily Rauh Pulitzer's consulting
agreements with Pulitzer, see "Item 5. Directors and Executive
Officers -- Director Compensation."
Pursuant to the terms of the late Joseph Pulitzer Jr.'s employment
agreement, Pulitzer pays Emily Rauh Pulitzer, as the beneficiary of Joseph
Pulitzer Jr.'s deferred compensation balance, a monthly annuity of $15,000
(including interest). Pulitzer will assign this employment agreement to New
Pulitzer in the Spin-off and the annuity payments to Mrs. Pulitzer are expected
to terminate in 2003.
William Bush, a director of Pulitzer and New Pulitzer, is a partner in
Fulbright & Jaworski L.L.P. Pulitzer has retained, and New Pulitzer intends to
retain in the future, Fulbright & Jaworski L.L.P. as attorneys in connection
with such legal matters as it deems appropriate.
ITEM 8. LEGAL PROCEEDINGS.
Subsequent to the Scripps League acquisition, Barry H. Scripps commenced an
action against Edward W. Scripps, Betty Knight Scripps and Pulitzer Community
Newspapers, Inc. Barry H. Scripps is the child of Edward W. Scripps and Betty
Knight Scripps. Barry Scripps, a former minority shareholder and executive
employee of Scripps League, alleges that the defendant Betty Knight Scripps
formed and implemented a wrongful scheme to transfer the ownership of Scripps
League outside the Scripps family in violation of the Scripps League corporate
mission by (i) inducing the defendant Edward W. Scripps to breach their
life-long promises to Barry Scripps to retain the ownership of Scripps League
Newspapers in the family and ultimately turn over its management and control to
Barry Scripps; (ii) engineering an unlawful freeze-out of Barry Scripps as a
minority shareholder from Scripps League and its subsidiaries; and (iii)
tortiously causing Scripps League to breach its promise to Barry Scripps of
permanent employment. The claims asserted are for breach of promise against
Edward W. Scripps and Betty Knight Scripps, breach of employment contract
against Pulitzer Community Newspapers, Inc. as successor to Scripps League,
interference with contract against Betty Knight Scripps, breach of fiduciary
duty against Betty Knight Scripps, and promissory estoppel against Edward W. and
Betty Knight Scripps. Barry Scripps seeks (i) money damages, together with
interest and counsel fees in the amount to be proven at trial against Edward and
Betty Scripps; (ii) judgment rescinding each of the actions that Betty Knight
Scripps caused to be taken that allegedly froze out Barry Scripps as a
stockholder in Scripps League; and (iii) damages against Pulitzer Community
Newspapers, Inc. for loss of income plus interest and counsel fees in an amount
to be proven at trial for breach of the purported employment agreement. Edward
W. Scripps and Betty Knight Scripps, jointly and severally, agreed to indemnify
Pulitzer and its affiliates, officers, directors, stockholders, employees,
agents, successors and assigns at all times after the closing for any and all
losses arising from Barry Scripps' claims. On March 26, 1998, the Court issued
an order granting defendants' motion for summary judgment and dismissed all of
Barry Scripps' charges and claims against all defendants, and on April 29, 1998,
a final judgment was entered with respect to that order. Barry Scripps filed a
notice of appeal on May 21, 1998, and there has been no further action since
that date.
41
<PAGE> 43
Pulitzer has been involved, from time to time, in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. While the results of litigation cannot be predicted, management
of Pulitzer and New Pulitzer believe the ultimate outcome of such existing
litigation will not have a material adverse effect on the consolidated financial
statements of New Pulitzer and its subsidiaries.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
Prior to the Spin-off, New Pulitzer Common Stock and New Pulitzer Class B
Common Stock will not have traded in a public market. Pulitzer's common stock is
listed and traded on the New York Stock Exchange under the symbol "PTZ."
At September 30, 1998, there were approximately 376 record holders of
Pulitzer's common stock and 2 record holders of its class B common stock.
The following table sets forth, for the periods indicated, the range of
high and low sales prices and dividends paid by Pulitzer for each quarterly
period through September 30, 1998:
<TABLE>
<CAPTION>
1998 HIGH LOW DIVIDEND(1)
---- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $87.44 $57.44 $0.1500
Second Quarter..................................... 92.13 77.75 0.1500
Third Quarter...................................... 89.63 74.38 0.1500
</TABLE>
<TABLE>
<CAPTION>
1997 HIGH LOW DIVIDEND(1)
---- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $50.63 $43.38 $0.1300
Second Quarter..................................... 54.25 40.88 0.1300
Third Quarter...................................... 57.50 49.75 0.1300
Fourth Quarter..................................... 63.31 51.81 0.1300
</TABLE>
<TABLE>
<CAPTION>
1996(2) HIGH LOW DIVIDEND(1)
------- ---- --- -----------
<S> <C> <C> <C>
First Quarter...................................... $39.00 $33.38 $0.1125
Second Quarter..................................... 45.19 39.00 0.1125
Third Quarter...................................... 45.56 38.72 0.1125
Fourth Quarter..................................... 49.63 42.75 0.1200
</TABLE>
- -------------------------
(1) Through the first three quarters of 1998, Pulitzer paid cash dividends of
$0.45 per share of common stock and Class B common stock. In 1997 and 1996,
Pulitzer paid cash dividends of $0.5200 and $0.4575, respectively, per share
of common stock and Class B common stock. (For restrictions on dividends see
Note 7 to Audited Annual Consolidated Financial Statements included in Item
13 of this Registration Statement on Form 10.)
(2) The high and low sales prices and dividends per share have been restated for
1996 to reflect the impact of a four-for-three stock split, effected in the
form of a 33 1/3 a percent common stock and Class B common stock dividend,
declared by Pulitzer's Board of Directors on September 12, 1996.
Upon completion of the Transactions, the separate existence of Pulitzer
will cease. The shares of New Pulitzer's Common Stock issued in the Spin-off are
expected to be listed on the NYSE and to trade under the symbol "PTZ." The Board
of Directors of New Pulitzer intends to maintain the same quarterly dividend per
share as Pulitzer. Future dividends will depend upon, among other things, New
Pulitzer's earnings, financial condition, cash flows, capital requirements and
other relevant considerations, including limitations under any credit agreement
or other agreement to which New Pulitzer may become a party in the future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The following paragraph sets forth certain information with respect to all
securities sold by New Pulitzer within the past three years without registration
under the Securities Act of 1933, as amended (the "Securities
42
<PAGE> 44
Act"). The information includes the names of the purchasers, the dates of
issuance, the title and number of securities sold and the consideration received
by New Pulitzer for the issuance of these securities.
The following shares of Common Stock were issued by New Pulitzer without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Section 4(2) thereof, as transactions
by an issuer not involving a public offering:
1. In May 1998, New Pulitzer issued 100 shares of Common Stock to Pulitzer
for $10,000.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Pulitzer now owns all 100 issued and outstanding shares of Common Stock of
New Pulitzer. Prior to the Spin-off, Pulitzer will cause the Certificate of
Incorporation of New Pulitzer to be amended and restated (the "New Pulitzer
Charter") and to contain provisions substantially similar to Pulitzer's Restated
Certificate of Incorporation as proposed to be amended. The New Pulitzer Charter
will provide New Pulitzer with the authority to issue 100,000,000 shares of
Common Stock, 50,000,000 shares of Class B Common Stock and 25,000,000 shares of
Preferred Stock.
COMMON STOCK AND CLASS B COMMON STOCK
Dividends. Each share of Common Stock and Class B Common Stock of New
Pulitzer will be entitled to dividends if, as and when dividends may be declared
by the Board of Directors of New Pulitzer and paid. Under Delaware General
Corporation Law, New Pulitzer may declare and pay dividends only out of its
surplus, or in case there shall be no such surplus, out of its net profits for
the fiscal year in which the dividend is declared and/or the preceding year. No
dividends may be declared, however, if the capital of New Pulitzer has been
diminished by depreciation, losses or otherwise to an amount less than the
aggregate amount of capital represented by any issued and outstanding stock
having a preference on distribution. Dividends must be paid on both the Common
Stock and the Class B Common Stock at any time that dividends are paid on
either. Any dividend so declared and payable in cash, capital stock of New
Pulitzer (other than Common Stock or Class B Common Stock) or other property
will be paid equally, share for share, on the Class B Common Stock and Common
Stock, except under certain circumstances. Dividends and distributions payable
in shares of Class B Common Stock may be paid only on or to shares of Class B
Common Stock, and dividends and distributions payable in shares of Common Stock
may be paid only on or to shares of Common Stock. If a dividend or distribution
payable in Common Stock is made on the Common Stock, New Pulitzer must also make
a simultaneous dividend or distribution payable in Class B Common Stock on the
Class B Common Stock. If a dividend or distribution payable in Class B Common
Stock is made on the Class B Common Stock, New Pulitzer must also make a
simultaneous dividend or distribution payable in Common Stock on the Common
Stock. Pursuant to any such dividend or distribution, each share of Class B
Common Stock will receive a number of shares of Class B Common Stock equal to
the number of shares of Common Stock payable on each share of Common Stock.
Voting Rights. Each share of Common Stock will be entitled to one vote, and
each share of Class B Common Stock will be entitled to ten votes, on all
matters. Except as described below, the Common Stock and the Class B Common
Stock will vote together as a single class on all matters presented for a vote
of the stockholders, including the election of directors. The holders of a
majority of the outstanding shares of Common Stock or Class B Common Stock,
voting as separate classes, must approve certain amendments affecting shares of
such class. Specifically, if there is any proposal to amend the New Pulitzer
Charter in a manner that would increase or decrease the number of authorized
shares of Common Stock or Class B Common Stock, increase or decrease the par
value of the shares of Common Stock or Class B Common Stock or alter or change
the powers, preferences or special rights of the shares of Common Stock or Class
B Common Stock so as to affect them adversely, such an amendment must be
approved by a majority of the outstanding shares of the affected class, voting
separately as a class. In addition, any merger or consolidation in which each
share of Common Stock receives consideration that is not of the same type or is
less than the amount of the consideration to be received by each share of Class
B Common Stock must be approved by a
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majority of the outstanding shares of Common Stock, voting separately as a
class. Shares of Common Stock and Class B Common Stock do not have cumulative
voting rights.
Terms of Conversion. Each share of Class B Common Stock will be convertible
at any time, at the option of and without cost to the stockholder, into one
share of Common Stock. If at any time (i) the outstanding shares of Class B
Common Stock represent less than 20% of the combined voting power of issued and
outstanding shares of Common Stock and Class B Common Stock, or (ii) the Board
of Directors and the holders of a majority of the outstanding shares of Class B
Common Stock approve the conversion of all of the Class B Common Stock into
Common Stock, then each outstanding share of Class B Common Stock shall be
converted automatically into one share of Common Stock without any action by the
holder. In the event of such a conversion, certificates formerly representing
outstanding shares of Class B Common Stock will thereafter be deemed to
represent an equal number of shares of Common Stock.
Restrictions on Transfers of Class B Common Stock. The transfer of the
Class B Common Stock, except upon its conversion into Common Stock as described
above, will be restricted by the New Pulitzer Charter to Permitted Transferees
(as defined therein), which, in general, will include only the original holders
of such stock, their descendants, spouses and former spouses, entities
controlled by Permitted Transferees (such as trusts, corporations, partnerships
and charitable organizations) or by New Pulitzer's executive officers and New
Pulitzer's employee benefit plans. Stockholders who desire to sell their shares
of Class B Common Stock to other than Permitted Transferees may convert their
shares of Class B Common Stock into shares of Common Stock and sell the shares
of Common Stock, subject, however, to the limitations imposed by the proposed
New Pulitzer Voting Trust with respect to the shares of Class B Common Stock
that will be deposited thereunder.
Liquidation Rights. In the event of the liquidation, dissolution or winding
up of New Pulitzer, holders of the shares of Common Stock and Class B Common
Stock will be entitled to share equally, share for share, in the assets
available for distribution.
Other. Following the Spin-off, additional shares of Class B Common Stock
may only be issued upon stock splits of, or stock dividends on, the existing
Class B Common Stock. No stockholder of New Pulitzer will have preemptive or
other rights to subscribe for additional shares of New Pulitzer.
PREFERRED STOCK
The Board of Directors of New Pulitzer will be authorized to issue, by
resolution, without any action by the stockholders, up to 25,000,000 shares of
Preferred Stock and will have the authority to establish the designations,
dividend rights, dividend rate, conversion rights, voting rights, terms of
redemption, liquidation preference, sinking fund terms and all other preferences
and rights of any series of Preferred Stock.
ADDITIONAL PROVISIONS OF NEW PULITZER'S CHARTER
Following the Distribution, New Pulitzer will have a substantial number of
unissued and unreserved shares of Common Stock and unissued and undesignated
shares of Preferred Stock. These additional shares may be utilized for a variety
of corporate purposes, including future public offerings to raise additional
capital or to facilitate corporate acquisitions and could be utilized, under
certain circumstances, as a method of preventing or making more difficult a
takeover or change in control of New Pulitzer.
In addition, certain other charter provisions, which are described below,
may have the effect, alone or in combination with each other or with the
existence of authorized but unissued stock, of rendering more difficult or
discouraging an acquisition of New Pulitzer deemed undesirable by the Board of
Directors.
Classification of the Board of Directors. The Board of Directors of New
Pulitzer will consist initially of nine directors. The New Pulitzer Charter will
provide for a classified Board divided into three equal classes serving
staggered three-year terms. If at any time the size of the Board is changed, the
increase or decrease in the number of directors would be apportioned among the
three classes to make all classes as nearly equal as possible.
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<PAGE> 46
Business Combination Provision. The New Pulitzer Charter will require the
affirmative vote of the holders of at least 66 2/3% of the aggregate voting
power of all outstanding shares of New Pulitzer voting stock, voting together as
a single class, (with each share of Class B Common Stock entitled to ten votes)
as a condition for any merger (other than certain mergers with subsidiaries),
consolidation or sale of all or substantially all the property and assets of New
Pulitzer and for certain Business Combinations (as defined herein) with, or
proposed by or on behalf of, any Interested Stockholder (as defined herein)
unless such transaction shall have been approved by a majority of the entire
Board of Directors. This voting requirement will apply even though the Delaware
General Corporation Law requires a simple majority or no stockholder vote to
approve the transaction. An Interested Stockholder will be defined as any person
or group (other than New Pulitzer or any of its subsidiaries or employee benefit
plans) (i) that is, or was at any time within the two-year period immediately
prior to the date in question, the beneficial owner of 10% or more of the voting
stock of New Pulitzer, but excludes any person (including any Permitted
Transferee of such person) who, immediately prior to the effective time of the
Merger, will become such a beneficial owner, or (ii) is an assignee of, or has
otherwise succeeded to, any shares of New Pulitzer voting stock of which an
Interested Stockholder was the beneficial owner at any time within the two year
period immediately prior to the date in question, provided such assignment or
succession shall not have occurred in the course of a transaction or series of
transactions involving a public offering. The term "beneficial owner" will
include persons directly and indirectly owning or having the right to acquire or
vote shares. Under certain circumstances, an Interested Stockholder could
include persons or entities affiliated or associated with the Interested
Stockholder. A Business Combination will include: (i) a merger or consolidation
of New Pulitzer or any subsidiary with an Interested Stockholder or an affiliate
or associate of an Interested Stockholder; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition by New Pulitzer or a subsidiary
to or with, or proposed by or on behalf of, an Interested Stockholder or an
affiliate or associate of an Interested Stockholder of assets having an
aggregate fair market value equal to or greater than 1% of the total assets of
New Pulitzer; (iii) the issuance or transfer of stock or other securities of New
Pulitzer or of a subsidiary to, or proposed by or on behalf of, an Interested
Stockholder or an affiliate or associate of an Interested Stockholder in
exchange for cash or property (including stock or other securities) having an
aggregate fair market value equal to or greater than 1% of the total assets of
New Pulitzer; (iv) the adoption of any plan or proposal for the liquidation or
dissolution of New Pulitzer, or any spin-off or split-up of any kind of New
Pulitzer or any subsidiary, proposed by or on behalf of an Interested
Stockholder or an affiliate or associate of an Interested Stockholder; (v) any
reclassification of securities, recapitalization of New Pulitzer, or merger or
consolidation with a subsidiary or other transaction that has the effect,
directly or indirectly, of increasing the percentage of the outstanding stock of
any class of New Pulitzer or a subsidiary owned, directly or indirectly, by an
Interested Stockholder or an affiliate or an associate of an Interested
Stockholder; (vi) any other transaction with an Interested Stockholder or an
affiliate or an associate of an Interested Stockholder that requires the
approval of the stockholders under Delaware law; or (vii) any agreement,
contract or other arrangement providing for any one or more of the foregoing
actions.
The New Pulitzer Charter will provide that the Board of Directors, when
evaluating any offer of another party to make a tender or exchange offer for any
equity security of New Pulitzer, to merge or consolidate New Pulitzer with
another company or to purchase or otherwise acquire all or substantially all the
properties and assets of New Pulitzer, shall, in connection with the exercise of
its judgment in determining what is in the best interest of New Pulitzer and its
stockholders, give due consideration to the effect of such a transaction on the
editorial and publishing integrity and the character and quality of New
Pulitzer's newspaper operations, all other relevant factors, including, without
limitation, the social, legal and economic effects on the employees, customers,
suppliers and other affected persons, firms and companies and on the communities
and geographical areas in which New Pulitzer and its subsidiaries operate or are
located and on any of the businesses and properties of New Pulitzer or any of
its subsidiaries, as well as such other factors as the directors deem relevant.
Supermajority Voting Provision. The affirmative vote of the holders of
record of at least 66 2/3% of the aggregate voting power of all outstanding
voting stock, voting together as a single class, will be required for the
amendment or repeal of, or the adoption of any provision inconsistent with the
provisions of the New Pulitzer Charter relating to: (i) Business Combinations,
(ii) the specific voting rights of the Common Stock and
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<PAGE> 47
Preferred Stock and the required stockholder approval necessary to effect (A)
the consolidation or merger of New Pulitzer with or into another corporation or
of a corporation with or into New Pulitzer (other than with a corporation of
which at least 90% of the outstanding capital stock is owned by New Pulitzer)
and (B) the sale, lease or exchange of all or substantially all of New
Pulitzer's property and assets, (iii) the power, number, qualification,
classification, nomination and removal of directors, (iv) the terms of the
Common Stock and the Class B Common Stock, (v) the terms of the Preferred Stock,
(vi) meetings of stockholders, (vii) the indemnification of directors, officers,
employees and agents for liability incurred as a result of their activities on
behalf of New Pulitzer, (viii) the amendment of the New Pulitzer Charter or
By-laws or (ix) issuance of the Common Stock and the Preferred Stock. This
supermajority provision, however, will be inapplicable where the proposed
amendment is approved by a majority of the entire Board of Directors. The
By-laws will only be able to be amended by a majority of the entire Board of
Directors or by the affirmative vote of the holders of record of at least
66 2/3% of the aggregate voting power of all outstanding voting stock, voting
together as a single class.
Liability of Directors. The New Pulitzer Charter will limit a director's
liability for monetary damages for breach of fiduciary duty to the fullest
extent permitted by Delaware law, including breach of fiduciary duty of care and
a breach resulting from gross negligence, except in circumstances involving
certain wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law. The Delaware statute does not eliminate a director's
duty of care and has no effect on the availability of equitable remedies such as
injunction or rescission based upon a director's breach of the duty of care.
NEW PULITZER VOTING TRUST AGREEMENT
Immediately following the consummation of the Spin-off and pursuant to the
New Pulitzer Voting Trust Agreement, certain holders of New Pulitzer Class B
Common Stock, including David E. Moore, Emily Rauh Pulitzer and Michael E.
Pulitzer, individually or as trustees of certain holders of New Pulitzer Class B
Common Stock, will deposit their shares of New Pulitzer Class B Common Stock
into the New Pulitzer Voting Trust and will receive from the New Pulitzer Voting
Trust certificates (each, a "New Pulitzer Voting Trust Certificate") evidencing
their interests in the shares so deposited.
It is contemplated that the trustees of the New Pulitzer Voting Trust will
be Cole C. Campbell, David E. Moore, Nicholas G. Penniman IV, Emily Rauh
Pulitzer, Michael E. Pulitzer and Ronald H. Ridgway (collectively, the "New
Pulitzer Trustees"). It is contemplated that pursuant to the New Pulitzer Voting
Trust Agreement, the New Pulitzer Trustees will generally have all voting rights
with respect to the shares of New Pulitzer Stock subject to the New Pulitzer
Voting Trust; however, in connection with certain matters, including any
proposal for a merger, consolidation, recapitalization or dissolution of New
Pulitzer or disposition of all or substantially all New Pulitzer's assets, the
calling of a special meeting of stockholders and the removal of directors, the
New Pulitzer Trustees will not vote the shares of New Pulitzer Stock deposited
in the New Pulitzer Voting Trust except in accordance with written instructions
from the holders of the New Pulitzer Voting Trust Certificates. It is
contemplated that the New Pulitzer Voting Trust Agreement will also permit the
conversion of the New Pulitzer Class B Common Stock deposited in the New
Pulitzer Voting Trust into New Pulitzer Common Stock in connection with certain
permitted sales, including, without limitation, sales exempt from the
registration requirements of the Securities Act, which meet the volume and
manner of sale requirements of Rule 144 promulgated thereunder, and sales
pursuant to registered public offerings. It is contemplated that the New
Pulitzer Voting Trust will terminate with the written consent of holders of two-
thirds in interest of all outstanding New Pulitzer Voting Trust Certificates.
Unless extended or terminated by the parties thereto, the New Pulitzer Voting
Trust Agreement will expire on or about the tenth anniversary of the Spin-off.
NEW PULITZER REGISTRATION RIGHTS AGREEMENT
It is contemplated that upon consummation of the Transactions, New Pulitzer
will enter into a registration rights agreement (the "New Pulitzer Registration
Rights Agreement"), with certain holders of its Class B Common Stock, including
David E. Moore, Emily Rauh Pulitzer and Michael E. Pulitzer,
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<PAGE> 48
individually or as trustees or controlling persons of certain holders of New
Pulitzer Stock. Subject to certain terms and conditions, the New Pulitzer
Registration Rights Agreement will grant the parties thereto the right to cause
New Pulitzer to register under the Securities Act for sale to the public all or
part of the shares of New Pulitzer Common Stock issuable upon conversion of
their shares of New Pulitzer Class B Common Stock. The New Pulitzer Registration
Rights Agreement will also grant the parties thereto the right, subject to
certain terms and conditions, to include such shares of New Pulitzer Common
Stock in other registrations made by New Pulitzer. New Pulitzer will bear the
Registration Expenses (as defined therein) related to any such registrations.
TRANSFER AGENT
The transfer agent for the Common Stock of New Pulitzer will be First
Chicago Trust Company of New York.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware grants
corporations the power to indemnify their directors, officers, employees and
agents in accordance with the provisions set forth therein.
Article XI of the New Pulitzer Charter will provide for indemnification of
directors, officers, employees and agents of New Pulitzer to the fullest extent
provided by law and is set forth in its entirety as Exhibit 3.1.2 to this Form
10. New Pulitzer does not currently maintain any directors' and officers'
liability insurance. Sections 1, 2 and 10 of Article XI will include the basic
indemnification provisions and will provide as follows:
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an
action by or in the right of the Corporation) by reason of the fact that he
is or was a Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, against judgments and amounts paid in settlement and
expenses (including attorneys' fees), actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(2) Action By or on Behalf of the Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of
the fact that he is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of
all of the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
(10) A Director's liability to the Corporation for breach of duty to
the Corporation or its stockholders shall be limited to the fullest extent
permitted by Delaware law as now in effect or hereafter
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amended. In particular, no Director of the Corporation shall be personally
liable to the Corporation or any of its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for
any breach of the Director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, as the same exists or
hereafter may be amended, or (iv) for any transaction from which the
Director derived an improper personal benefit. If the Delaware General
Corporation Law hereafter is amended to authorize the further elimination
or limitation of the liability of directors, then the liability of a
Director of the Corporation, in addition to the limitation on personal
liability provided herein, shall be limited to the fullest extent permitted
by the amended Delaware General Corporation Law. Any repeal or modification
of this Article by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal
liability of a Director of the Corporation existing at the time of such
repeal or modification.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Financial Statements and Supplementary Data required by this Item are
filed as part of this Form 10. See Index to Financial Statement Information at
page F-1 of this Form 10.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements and Supplemental Schedule
(i) The consolidated financial statements of Pulitzer are filed as
part of this Registration Statement on Form 10. See Index to
Financial Statement Information at page F-1.
The report of Deloitte & Touche LLP, Independent Auditors, dated
February 6, 1998 (July 17,1998 as to Notes 1, 4 and 14), is filed
as part of this Registration Statement on Form 10. See Index to
Financial Statement Information at page F-1.
(ii) The consolidated supplemental schedule of Pulitzer is filed as
part of this Registration Statement on Form 10. See Index to
Financial Statement Information at page F-1.
The report of Deloitte & Touche LLP, Independent Auditors, dated
February 6, 1998 (July 17,1998 as to Notes 1, 4 and 14), is filed
as part of this Registration Statement on Form 10. See Index to
Financial Statement Information at page F-1.
(b) The following exhibits are filed as part of this Registration Statement
on Form 10:
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C> <C>
3.1.1 -- Certificate of Incorporation of Pulitzer Inc.
3.1.2* -- Amended and Restated Certificate of Incorporation of
Pulitzer Inc.
3.2.1 -- By-laws of Pulitzer Inc.
3.2.2* -- Amended and Restated By-laws of Pulitzer Inc.
4.1 -- Form of Pulitzer Inc. Common Stock Certificate.
9.1* -- Form of Pulitzer Inc. Voting Trust Agreement between the
holders of voting trust certificates and Michael E.
Pulitzer, Emily Rauh Pulitzer, Ronald H. Ridgway, Nicholas
G. Penniman IV, Ken J. Elkins, Cole C. Campbell and David
Moore.
10.1 -- Agreement, dated March 1, 1961, effective January 1, 1961,
between The Pulitzer Publishing Company, a Missouri
corporation, and the Globe-Democrat Publishing Company, as
amended on September 4, 1975, April 12, 1979 and December
22, 1983.
</TABLE>
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<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<S> <C> <C>
10.2.1 -- Amended and Restated Joint Operating Agreement, dated
December 22, 1988, between Star Publishing Company and
Citizen Publishing Company.
10.2.2 -- Partnership Agreement, dated December 22, 1988, between Star
Publishing Company and Citizen Publishing Company.
10.3 -- Agreement, dated as of May 12, 1986, among The Pulitzer
Publishing Company, Clement C. Moore, II, Gordon C. Weir,
William E. Weir, James R. Weir, Kenward G. Elmslie, Stephen
E. Nash and Manufacturers Hanover Trust Company, as
Trustees, and Christopher Mayer.
10.4 -- Letter Agreement, dated September 29, 1986, among The
Pulitzer Publishing Company, Trust Under Agreement Made by
David E. Moore, Frederick D. Pulitzer, Michael E. Pulitzer,
Jr., Robert S. Pulitzer, Joseph Pulitzer, IV, Joseph
Pulitzer, Jr., Michael E. Pulitzer, Stephen E. Nash and
Manufacturers Hanover Trust Company, as Trustees, Kenward G.
Elmslie, Gordon C. Weir, William E. Weir, James R. Weir,
Peter W. Quesada, T. Ricardo Quesada, Elinor P. Hempelmann,
The Moore Foundation, Inc., Mariemont Corporation, Z Press
Inc. and Clement C. Moore, II.
10.5 -- Letter Agreement, dated May 12, 1986, among The Pulitzer
Publishing Company, Peter W. Quesada, T. Ricardo Quesada,
Kate Davis Pulitzer Quesada and Elinor P. Hempelmann.
10.6 -- Agreement, dated as of September 29, 1986, among The
Pulitzer Publishing Company, Peter W. Quesada, T. Ricardo
Quesada, Kate Davis Pulitzer Quesada and Elinor Hempelmann.
10.7.1 -- Amendment, dated March 9, 1992, to the Pulitzer Publishing
Company Annual Incentive Compensation Plan.
10.7.2 -- The Pulitzer Publishing Company Annual Incentive
Compensation Plan.
10.7.3 -- Pulitzer Publishing Company Newspaper Operations Annual
Incentive Plan.
10.8.1 -- Amendment, dated September 16, 1997, to Pulitzer Retirement
Savings Plan.(v)
10.8.2 -- Amendment, dated January 28, 1997, to Pulitzer Retirement
Savings Plan.(iv)
10.8.3 -- Amendment, dated October 30, 1996, to Pulitzer Retirement
Savings Plan.(iv)
10.8.4 -- Amendment, dated July 31, 1996, to Pulitzer Retirement
Savings Plan.(iv)
10.8.5 -- Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan.(iv)
10.8.6 -- Amendment, dated October 25, 1995, to Pulitzer Retirement
Savings Plan.(ii)
10.8.7 -- Amendment, dated January 24, 1995, to Pulitzer Retirement
Savings Plan.(i)
10.8.8 -- Amended and Restated Pulitzer Retirement Savings Plan.(i)
10.9.1 -- Amendment, dated October 25, 1995, to Pulitzer Publishing
Company Pension Plan.(iv)
10.9.2 -- Amended and Restated Pulitzer Publishing Company Pension
Plan.(i)
10.10.1 -- Amendment, dated October 29, 1997, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.2 -- Amendment, dated June 23, 1992, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.3 -- Amendment, dated January 1, 1992, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.4 -- Amendment, dated January 18, 1990, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.5 -- Amendment, dated October 26, 1989, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.6 -- Amendment, dated November 6, 1987, to Pulitzer Publishing
Company Supplemental Executive Benefit Pension Plan.
10.10.7 -- Pulitzer Publishing Company Supplemental Executive Benefit
Pension Plan dated March 18, 1986.
10.11 -- Employment Agreement, dated October 1, 1986, between the
Pulitzer Publishing Company and Joseph Pulitzer, Jr.
</TABLE>
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<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S> <C>
10.12 -- Employment Agreement, dated January 1, 1986, between the
Pulitzer Publishing Company and Michael E. Pulitzer.
10.13 -- Pulitzer Publishing Company Senior Executive Deferred
Compensation Plan.(ii)
10.14 -- Letter Agreement, dated October 21, 1986, between Pulitzer
Publishing Company and David E. Moore.
10.15 -- Stock Purchase Agreement by and among Pulitzer Publishing
Company and Mr. Edward W. Scripps, Mrs. Betty Knight
Scripps, and the Edward W. Scripps and Betty Knight Scripps
Charitable Remainder Unitrust dated as of May 4, 1996.(iii)
10.16 -- Split Dollar Life Insurance Agreement, dated December 27,
1996, between Pulitzer Publishing Company and Richard A.
Palmer, Trustee of the Michael E. Pulitzer 1996 Life
Insurance Trust.(iv)
10.17 -- Split Dollar Life Insurance Agreement, dated December 31,
1996, between Pulitzer Publishing Company and Rose M.
Elkins, Trustee of the Kennie J. Elkins Insurance Trust.(iv)
10.18 -- Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Rebecca H.
Penniman and Nicholas G. Penniman V, Trustees of the
Nicholas G. Penniman IV Irrevocable 1996 Trust.(iv)
10.19 -- Split Dollar Life Insurance Agreement, dated December 30,
1996, between Pulitzer Publishing Company and Doris D.
Ridgway and Boatmen's Trust Company, Trustees of The Ronald
H. Ridgway Insurance Trust.(iv)
10.20 -- Letter Agreement, dated January 26, 1998, between Pulitzer
Publishing Company and Emily Rauh Pulitzer.(v)
10.21 -- Agreement and Plan of Merger by and among Pulitzer
Publishing Company, Pulitzer Inc. and Hearst-Argyle
Television, Inc., dated May 25, 1998.(vi)
10.22 -- Form of Contribution and Assumption Agreement by and between
Pulitzer Publishing Company and Pulitzer Inc.
10.23 -- Letter Agreement, dated May 25, 1998, by and among Pulitzer
Publishing Company, Pulitzer Inc. and Hearst-Argyle
Television, Inc.
10.24* -- Form of Letter Agreement between Pulitzer Inc. and Emily
Rauh Pulitzer.
10.25* -- Form of Letter Agreement between Pulitzer Inc. and David E.
Moore.
10.26* -- Form of Pulitzer Inc. Registration Rights Agreement.
10.27* -- Form of Pulitzer Inc. 1998 Key Employees' Restricted Stock
Purchase Plan.
10.28* -- Form of Pulitzer Inc. 1998 Stock Option Plan.
10.29* -- Form of Pulitzer Inc. 1998 Employee Stock Purchase Plan.
10.30* -- Form of Employment Agreement between Pulitzer Inc. and
Michael E. Pulitzer.
10.31* -- Form of Employment Agreement between Pulitzer Inc. and
Nicholas G. Penniman IV.
10.32* -- Form of Employment Agreement between Pulitzer Inc. and
Ronald H. Ridgway.
10.33* -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Michael E. Pulitzer.
10.34* -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and Ken J.
Elkins.
10.35* -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Nicholas G. Penniman IV.
10.36* -- Participation Agreement, dated May 25, 1998, by and between
Pulitzer Publishing Company and Ronald H. Ridgway.
</TABLE>
50
<PAGE> 52
<TABLE>
<CAPTION>
EXHIBIT NO.
- -----------
<C> <S> <C>
10.37* -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and C. Wayne
Godsey.
10.38* -- Participation and Severance Agreement, dated May 25, 1998,
by and between Pulitzer Publishing Company and John Kueneke.
21 -- Subsidiaries of Pulitzer Inc.
</TABLE>
- -------------------------
* To be filed by amendment.
(i) Incorporated by reference to Pulitzer Publishing Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1994.
(ii) Incorporated by reference to Pulitzer Publishing Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995.
(iii) Incorporated by reference to Pulitzer Publishing Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 1996.
(iv) Incorporated by reference to Pulitzer Publishing Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996.
(v) Incorporated by reference to Pulitzer Publishing Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997.
(vi) Incorporated by reference to Pulitzer Publishing Company's Current Report
on Form 8-K dated June 10, 1998.
51
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
PULITZER INC.
By: /s/ RONALD H. RIDGWAY
------------------------------------
Ronald H. Ridgway
Senior Vice President -- Finance
Dated: October 6, 1998
52
<PAGE> 54
INDEX TO FINANCIAL STATEMENT INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
Audited Annual Consolidated Financial Statements
Independent Auditors' Report................................ F-2
Statements of Consolidated Income for each of the Three
Years in the Period Ended December 31, 1997............... F-3
Statements of Consolidated Financial Position at December
31, 1997 and 1996......................................... F-4
Statements of Consolidated Stockholders' Equity for each of
the Three Years in the Period Ended December 31, 1997..... F-5
Statements of Consolidated Cash Flows for each of the Three
Years in the Period Ended December 31, 1997............... F-7
Notes to Consolidated Financial Statements for the Three
Years in the Period Ended December 31, 1997............... F-8
Consolidated Supplemental Financial Schedule
Independent Auditors' Report................................ F-29
Financial Schedule II for Each of the Three Years in the
Period Ended December 31, 1997............................ F-30
Unaudited Interim Consolidated Financial Statements
Statements of Consolidated Income for the Six-Month Periods
Ended June 30, 1998 and 1997.............................. F-31
Statements of Consolidated Financial Position at June 30,
1998 and December 31, 1997................................ F-32
Statements of Consolidated Cash Flows for the Six-Month
Periods Ended June 30, 1998 and 1997...................... F-33
Notes to Consolidated Financial Statements.................. F-34
</TABLE>
F-1
<PAGE> 55
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the accompanying statements of consolidated financial
position of Pulitzer Publishing Company and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
1997 and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 6, 1998
(July 17, 1998 as to
Notes 1, 4 and 14)
F-2
<PAGE> 56
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Operating Revenues -- Net:
Advertising............................................... $227,817 $191,939 $161,932
Circulation............................................... 87,611 81,434 76,349
Other..................................................... 42,541 35,723 31,107
-------- -------- --------
Total operating revenues............................. 357,969 309,096 269,388
-------- -------- --------
Operating Expenses Operations:
Operations................................................ 145,730 139,259 125,811
Selling, general and administrative....................... 132,238 114,628 101,375
General corporate expense................................. 6,007 5,532 4,666
St. Louis Agency adjustment (Note 3)...................... 19,450 13,972 12,502
Depreciation and amortization............................. 13,007 8,660 4,307
-------- -------- --------
Total operating expenses.......................... 316,432 282,051 248,661
-------- -------- --------
Operating income............................................ 41,537 27,045 20,727
Interest income............................................. 4,642 4,509 5,196
Net other expense........................................... (1,203) (5,870) (2,319)
-------- -------- --------
Income from continuing operations before provision for
income taxes.............................................. 44,976 25,684 23,604
Provision for income taxes (Note 10)........................ 19,226 10,892 9,149
-------- -------- --------
Income from continuing operations........................... 25,750 14,792 14,455
Income from discontinued operations, net of tax (Note 4).... 40,278 42,708 34,867
-------- -------- --------
Net income.................................................. $ 66,028 $ 57,500 $ 49,322
======== ======== ========
Basic earnings per share of stock (Note 13):
Income from continuing operations......................... $ 1.17 $ 0.67 $ 0.66
Income from discontinued operations....................... 1.82 1.95 1.60
-------- -------- --------
Earnings per share........................................ $ 2.99 $ 2.62 $ 2.26
======== ======== ========
Weighted average number of shares outstanding............. 22,110 21,926 21,800
======== ======== ========
Diluted earnings per share of stock (Note 13):
Income from continuing operations......................... $ 1.15 $ 0.66 $ 0.65
Income from discontinued operations....................... 1.79 1.92 1.58
-------- -------- --------
Earnings per share........................................ $ 2.94 $ 2.58 $ 2.23
======== ======== ========
Weighted average number of shares outstanding............. 22,452 22,273 22,097
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 57
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 62,749 $ 73,052
Trade accounts receivable (less allowance for doubtful
accounts of $1,626 and $1,585).......................... 35,002 32,310
Inventory................................................. 5,265 4,976
Prepaid expenses and other................................ 11,587 4,373
-------- --------
Total current assets.................................. 114,603 114,711
-------- --------
Properties:
Land...................................................... 5,991 5,350
Buildings................................................. 39,446 34,906
Machinery and equipment................................... 89,484 84,048
Construction in progress.................................. 4,042 336
-------- --------
Total................................................. 138,963 124,640
Less accumulated depreciation............................. 64,166 57,602
-------- --------
Properties -- net..................................... 74,797 67,038
-------- --------
Intangible and other assets:
Intangible assets -- net of amortization (Notes 5 and
6)...................................................... 185,124 190,371
Receivable from The Herald Company (Notes 3 and 9)........ 39,733 39,955
Net assets of Broadcasting Business (Note 4).............. 36,069
Other..................................................... 13,985 15,107
-------- --------
Total intangible and other assets..................... 274,911 245,433
-------- --------
Total..................................................... $464,311 $427,182
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.................................... $ 12,193 $ 9,631
Salaries, wages and commissions........................... 10,523 10,091
Income taxes payable...................................... 3,070 1,267
Pension obligations (Note 8).............................. 348 2,123
Acquisition payable....................................... 9,804 9,804
Other..................................................... 2,835 2,867
-------- --------
Total current liabilities............................. 38,773 35,783
-------- --------
Pension obligations (Note 8)................................ 21,165 19,266
-------- --------
Postretirement and postemployment benefit obligations (Note
9)........................................................ 89,350 89,634
-------- --------
Net liabilities of broadcasting business (Note 4)........... 28,767
-------- --------
Other long-term liabilities................................. 4,246 3,795
-------- --------
Commitments and contingencies (Note 14)
Stockholders' equity (Note 11):
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding -- none Common stock,
$.01 par value; 100,000,000 shares authorized;
issued -- 6,797,895 in 1997 and 6,498,215 in 1996....... 68 65
Class B common stock, convertible, $.01 par value;
50,000,000 shares authorized; issued -- 27,125,247 in
1997 and 27,214,842 in 1996............................. 271 272
Additional paid-in capital................................ 135,542 129,173
Retained earnings......................................... 362,828 308,283
-------- --------
Total................................................. 498,709 437,793
Treasury stock -- at cost; 24,660 and 22,811 shares of
common stock in 1997 and 1996, respectively, and
11,700,850 shares of Class B common stock in 1997 and
1996.................................................... (187,932) (187,856)
-------- --------
Total stockholders' equity............................ 310,777 249,937
-------- --------
Total..................................................... $464,311 $427,182
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 58
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B ADDITIONAL TOTAL
COMMON COMMON PAID-IN RETAINED TREASURY STOCKHOLDERS'
STOCK STOCK CAPITAL EARNINGS STOCK EQUITY
------ ------- ---------- -------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT JANUARY 1, 1995........ $44 $206 $ 122,070 $220,322 $(187,623) $155,019
Issuance of common stock grants.... 218 218
Common stock options exercised..... 2 2,327 2,329
Conversion of Class B common stock
to common stock.................. 1 (1)
Tax benefit from stock options
exercised........................ 924 924
Net income......................... 49,322 49,322
Cash dividends declared and paid
$.41 per share of common and
Class B common................... (8,828) (8,828)
Purchase of treasury stock......... (213) (213)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1995...... 47 205 125,539 260,816 (187,836) 198,771
Issuance of common stock grants.... 76 76
Common stock options exercised..... 1 2,166 2,167
Conversion of Class B common stock
to common stock.................. 1 (1)
Tax benefit from stock options
exercised........................ 1,476 1,476
Net income......................... 57,500 57,500
Cash dividends declared and paid
$.46 per share of common and
Class B common................... (10,033) (10,033)
Purchase of treasury stock......... (20) (20)
Four for three stock split in the
form of a 33.3 percent stock
dividend (Note 11)............... 16 68 (84)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1996...... 65 272 129,173 308,283 (187,856) 249,937
Issuance of common stock grants.... 70 70
Common stock options exercised..... 2 3,297 3,299
Conversion of Class B common stock
to common stock.................. 1 (1)
Common stock issued under Employee
Stock Purchase Plan.............. 322 322
Tax benefit from stock options
exercised........................ 2,680 2,680
Net income......................... 66,028 66,028
Cash dividends declared and paid
$.52 per share of common and
Class B common................... (11,483) (11,483)
Purchase of treasury stock......... (76) (76)
--- ---- ---------- -------- --------- --------
BALANCES AT DECEMBER 31, 1997...... $68 $271 $ 135,542 $362,828 $(187,932) $310,777
=== ==== ========== ======== ========= ========
</TABLE>
(Continued)
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 59
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B
COMMON STOCK COMMON STOCK
------------------ ------------------
HELD IN HELD IN
ISSUED TREASURY ISSUED TREASURY
------ -------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SHARE ACTIVITY:
BALANCES AT JANUARY 1, 1995................................ 4,444 (11) 20,609 (8,776)
Issuance of common stock grants............................ 6
Common stock options exercised............................. 119
Conversion of Class B common stock to common stock......... 135 (135)
Purchase of treasury stock................................. (6)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1995.............................. 4,704 (17) 20,474 (8,776)
Issuance of common stock grants............................ 2
Common stock options exercised............................. 140
Conversion of Class B common stock to common stock......... 84 (84)
Four for three split in the form of a 33.3 percent stock
dividend (Note 11)....................................... 1,568 (6) 6,825 (2,925)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1996.............................. 6,498 (23) 27,215 (11,701)
Issuance of common stock grants............................ 1
Common stock options exercised............................. 202
Conversion of Class B common stock to common stock......... 90 (90)
Common stock issued under Employee Stock Purchase Plan..... 7
Purchase of treasury stock................................. (2)
----- --- ------ -------
BALANCES AT DECEMBER 31, 1997.............................. 6,798 (25) 27,125 (11,701)
===== === ====== =======
</TABLE>
(Concluded)
See accompanying notes to consolidated financial statements.
F-6
<PAGE> 60
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Continuing operations
Cash flows from operating activities:
Income from continuing operations......................... $ 25,750 $ 14,792 $ 14,455
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation............................................ 7,175 5,623 4,090
Amortization............................................ 5,832 3,037 217
Deferred income taxes................................... (1,328) (1,100) (341)
Changes in assets and liabilities (net of the effects of
the purchase and sale of properties) which provided
(used) cash:
Trade accounts receivable............................. (2,692) (4,079) 1,433
Inventory............................................. (289) 3,017 (3,121)
Other assets.......................................... (3,652) 9,839 833
Trade accounts payable and other liabilities.......... 3,120 (2,490) (113)
Income taxes payable.................................. 1,803 (239) (3,713)
-------- --------- --------
Net cash provided by operating activities................... 35,719 28,400 13,740
-------- --------- --------
Cash flows from investing activities:
Capital expenditures...................................... (15,215) (6,433) (6,627)
Purchase of publishing properties, net of cash acquired... (203,306)
Investment in joint ventures and limited partnerships..... (3,292) (1,233) (1,887)
Sale of assets, net of cash sold.......................... 2,152
Decrease (increase) in notes receivable................... 4,979 (4,904) 1,875
-------- --------- --------
Net cash used in investing activities....................... (13,528) (213,724) (6,639)
-------- --------- --------
Cash flows from financing activities:
Dividends paid............................................ (11,483) (10,033) (8,828)
Proceeds from exercise of stock options................... 3,299 2,167 2,329
Proceeds from employee stock purchase plan................ 322
Purchase of treasury stock................................ (76) (20) (213)
-------- --------- --------
Net cash used in financing activities....................... (7,938) (7,886) (6,712)
-------- --------- --------
Cash provided by (used in) continuing operations............ 14,253 (193,210) 389
-------- --------- --------
Discontinued operations
Operating activities...................................... 57,766 62,379 55,214
Investing activities...................................... (17,617) (16,292) (18,057)
Financing activities...................................... (64,705) 119,795 (14,250)
-------- --------- --------
Cash (used in) provided by discontinued operations.......... (24,556) 165,882 22,907
-------- --------- --------
Net (decrease) increase in cash and cash equivalents........ (10,303) (27,328) 23,296
Cash and cash equivalents at beginning of year.............. 73,052 100,380 77,084
-------- --------- --------
Cash and cash equivalents at end of year.................... $ 62,749 $ 73,052 $100,380
======== ========= ========
Supplemental disclosure of cash flow information:
Cash paid (received) during the year for:
Interest paid........................................... $ 17,469 $ 9,716 $ 10,147
Interest received....................................... (4,574) (4,872) (4,805)
Income taxes............................................ 45,110 38,530 35,862
Income tax refunds...................................... (1,108) (195) (1,280)
Supplemental disclosure of noncash investing and financing
activity:
Increase (decrease) in minimum pension liability and
related intangible asset................................ $ 402 $ (1,059) $ (227)
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE> 61
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
1. BASIS OF PRESENTATION
On May 25, 1998, Pulitzer Publishing Company (the "Company"), Pulitzer
Inc., (a newly-organized wholly-owned subsidiary of the Company ("Newco")), and
Hearst-Argyle Television, Inc. ("Hearst-Argyle") entered into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Hearst-Argyle will
acquire the Company's Broadcasting Business (see Note 4) (the "Merger"). Prior
to the Spin-off (as defined below), the Company intends to borrow $700 million,
which may be secured by the assets of the Broadcasting Business. Out of the
proceeds of this new debt, the Company will pay the existing Company debt (see
Note 7) and any costs arising as a result of the Merger and related
transactions. Prior to the Merger, the balance of the proceeds of this new debt,
together with the Company's publishing assets and liabilities, will be
contributed by the Company to Newco pursuant to a Contribution and Assumption
Agreement (the "Contribution"). Pursuant to the Merger Agreement, Hearst-Argyle
will assume the new debt following the consummation of the Spin-off and Merger.
Immediately following the Contribution, the Company will distribute to each
holder of Company Common Stock one fully-paid and nonassessable share of Newco
Common Stock for each share of Company Common Stock held and to each holder of
Company Class B Common Stock one fully-paid and nonassessable share of Newco
Class B Common Stock for each share of Company Class B Common Stock held (the
"Distribution"). The Contribution and Distribution collectively constitute the
"Spin-off."
The Company's obligation to consummate the Spin-off and the Merger is
subject to the fulfillment of various regulatory approvals and approval by the
stockholders of both the Company and Hearst-Argyle. The controlling stockholders
of both Hearst-Argyle and the Company have agreed to vote in favor of the Merger
and related transactions. The Spin-off and Merger are anticipated to be
completed by year-end 1998.
Following the consummation of the Spin-off and Merger, Newco will be
engaged primarily in the business of newspaper publishing. For financial
reporting purposes, Newco is the continuing stockholder interest and will retain
the Pulitzer name.
Results of the Company's newspaper publishing and related new media
businesses are reported as continuing operations in the statements of
consolidated income. The results of the Company's Broadcasting Business are
reported as "Discontinued Operations" (see Note 4).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation -- The consolidated financial statements include the
accounts of the Company and its subsidiary companies, all of which are
wholly-owned. All significant intercompany transactions have been eliminated
from the consolidated financial statements.
Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year, which in 1995 resulted in a 14-week fourth quarter and a 53-week
year. In 1997 and 1996, the fourth quarter was 13 weeks and the year was 52
weeks. For ease of presentation, the Company has used December 31 as the
year-end.
Cash Equivalents -- For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.
Inventory Valuation -- Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. If the first-in, first-out cost method had been used,
inventory would have been $805,000 and $874,000 higher than reported at December
31, 1997 and 1996, respectively. Ink and other miscellaneous supplies are
expensed as purchased.
Program Rights -- Program rights represent license agreements for the right
to broadcast programs over license periods which generally run from one to five
years. The total cost of each agreement is recorded as an
F-8
<PAGE> 62
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
asset and liability when the license period begins and the program is available
for broadcast. Program rights covering periods greater than one year are
amortized over the license period using an accelerated method as the programs
are broadcast. In the event that a determination is made that programs will not
be used prior to the expiration of the license agreement, unamortized amounts
are then charged to operations. Payments are made in installments as provided
for in the license agreements. Program rights expected to be amortized in the
succeeding year and payments due within one year are classified as current
assets and current liabilities, respectively (see Note 4).
Property and Depreciation -- Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.
Intangible Assets -- Intangibles consisting of goodwill, FCC licenses and
network affiliations acquired subsequent to the effective date of Accounting
Principles Board Opinion No. 17 ("Opinion No. 17") are being amortized over
lives of either 15 or 40 years while all other intangible assets are being
amortized over lives ranging from 4 to 23 years Intangibles in the amount of
$1,520,000, related to acquisitions prior to the effective date of Opinion No.
17, are not being amortized because, in the opinion of management, their value
is of undeterminable duration. In addition, the intangible asset relating to the
Company's additional minimum pension liability under Statement of Financial
Accounting Standards No. 87 is adjusted annually, as necessary, when a new
determination of the amount of the additional minimum pension liability is made.
Long-Lived Assets -- The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, in
March 1995. This statement became effective for the Company's 1996 fiscal year.
The general requirements of this statement are applicable to the properties and
intangible assets of the Company and require impairment to be considered
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Management periodically evaluates the
recoverability of long-lived assets by reviewing the current and projected cash
flows of each of its properties. If a permanent impairment is deemed to exist,
any write-down would be charged to operations. For the periods presented, there
has been no impairment.
Employee Benefit Plans -- The Company and its subsidiaries have several
noncontributory pension plans covering a significant portion of their employees.
Benefits under the plans are generally based on salary and years of service. The
Company's liability and related expense for benefits under the plans are
recorded over the service period of active employees based upon annual actuarial
calculations. Plan funding strategies are influenced by tax regulations. Plan
assets consist primarily of government bonds and corporate equity securities.
The Company provides retiree medical and life insurance benefits under
varying postretirement plans at several of its operating locations. In addition,
the Company provides postemployment disability benefits to certain former
employee groups prior to retirement. The significant portion of these benefits
results from plans at the St. Louis Post Dispatch. The Company's liability and
related expense for benefits under the postretirement plans are recorded over
the service period of active employees based upon annual actuarial calculations.
The Company accrues postemployment disability benefits when it becomes probable
that such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid. All of the Company's
postretirement and postemployment benefits are funded on a pay-as-you-go basis.
Income Taxes -- Deferred tax assets and liabilities are recorded for the
expected future tax consequences of events that have been included in either the
financial statements or tax returns of the Company. Under this asset and
liability approach, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities by applying enacted statutory tax rates applicable to future
years in which the differences are expected to reverse.
F-9
<PAGE> 63
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock-Based Compensation Plans -- Effective January 1, 1996, the Company
adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation. The new
standard defines a fair value method of accounting for stock options and similar
equity instruments. Under the fair value method, compensation cost is measured
at the grant date based on the fair value of the award and is recognized over
the service period, which is usually the vesting period. Pursuant to the new
standard, companies are encouraged, but not required, to adopt the fair value
method of accounting for employee stock-based transactions. Companies are also
permitted to continue to account for such transactions under Accounting
Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock Issued to
Employees, but are required to disclose pro forma net income and, if presented,
earnings per share as if the company had applied the new method of accounting.
The accounting requirements of the new method are effective for all employee
awards granted after the beginning of the fiscal year of adoption, whereas the
disclosure requirements apply to all awards granted subsequent to December 31,
1994. The Company continues to recognize and measure compensation for its
restricted stock and stock option plans in accordance with the existing
provisions of APB 25.
Earnings Per Share of Stock -- Effective December 15, 1997, the Company
adopted Statement of Financial Accounting Standards No. 128, Earnings per Share
("SFAS 128"). This statement simplifies the standards for computing earnings per
share ("EPS"), making them comparable to international standards, and supersedes
Accounting Principles Board Opinion No. 15, Earnings Per Share ("APB 15"). SFAS
128 replaces the presentation of primary EPS with a presentation of basic EPS.
The statement also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation. As
required by SFAS 128, diluted EPS has been computed for all prior periods
presented to conform to the provisions of the new statement.
Basic earnings per share of stock is computed using the weighted average
number of common and Class B common shares outstanding during the applicable
period, adjusted for the stock splits described in Note 11. Diluted earnings per
share of stock is computed using the weighted average number of common and Class
B common shares outstanding and common stock equivalents. (see Note 13)
Use of Management Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires that
management make certain estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may also be affected by the
estimates and assumptions management is required to make. Actual results may
differ from those estimates.
Reclassifications -- Certain reclassifications have been made to the 1996
and 1995 consolidated financial statements to conform with the 1997
presentation.
3. AGENCY AGREEMENTS
An agency operation between the Company and The Herald Company is conducted
under the provisions of an Agency Agreement, dated March 1, 1961, as amended.
For many years, the St. Louis Post Dispatch (published by the Company) was the
afternoon and Sunday newspaper serving St. Louis, and the Globe-Democrat
(formerly published by The Herald Company) was the morning paper and also
published a weekend edition. Although separately owned, from 1961 through
February 1984, the publication of both the Post-Dispatch and the Globe-Democrat
was governed by the St. Louis Agency Agreement. From 1961 to 1979, the two
newspapers controlled their own news, editorial, advertising, circulation,
accounting and promotion departments and Pulitzer managed the production and
printing of both newspapers. In 1979, Pulitzer assumed full responsibility for
advertising, circulation, accounting and promotion for both newspapers. In
February 1984, after a number of years of unfavorable financial results at the
St. Louis Agency, the
F-10
<PAGE> 64
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Globe-Democrat was sold by The Herald Company and the St. Louis Agency Agreement
was revised to eliminate any continuing relationship between the two newspapers
and to permit the repositioning of the daily Post-Dispatch as a morning
newspaper. Following the renegotiation of the St. Louis Agency Agreement at the
time of the sale of the Globe-Democrat, The Herald Company retained the
contractual right to receive one-half the profits (as defined), and the
obligation to share one-half the losses (as defined), of the operations of the
St. Louis Agency, which from February 1984 forward consisted solely of the
publication of the Post-Dispatch. The St. Louis Agency Agreement also provides
for The Herald Company to share one-half the cost of, and to share in a portion
of the proceeds from the sale of, capital assets used in the production of the
Post-Dispatch. Under the St. Louis Agency Agreement, Pulitzer supervises,
manages and performs all activities relating to the day-to-day publication of
the Post-Dispatch and is solely responsible for the news and editorial policies
of the newspaper. The consolidated financial statements of the Company include
all the operating revenues and expenses of the St. Louis Agency relating to the
Post-Dispatch.
In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting
as agent for the Star (a newspaper owned by the Company) and the Citizen (a
newspaper owned by Gannett Co., Inc.), is responsible for printing, delivery,
advertising, and circulation of the Star and the Citizen. TNI collects all of
the receipts and income relating to the Star and the Citizen and pays all
operating expenses incident to the partnership's operations and publication of
the newspapers. Each newspaper is solely responsible for its own news and
editorial content. Net income or net loss of TNI is generally allocated equally
to the Star and the Citizen. The Company's consolidated financial statements
include its share of TNI's revenues and expenses.
4. DISCONTINUED OPERATIONS
Discontinued operations represent the Company's Broadcasting Business as
follows: Pulitzer Broadcasting Company, a wholly-owned subsidiary of the
Company, and its wholly-owned subsidiaries, WESH Television, Inc.; WDSU
Television, Inc.; and KCCI Television, Inc.; (collectively "Broadcasting" or
"Broadcasting Business"), own and operate nine network-affiliated television
stations and five radio stations. Broadcasting's television properties represent
market sizes from Omaha, Nebraska to Orlando, Florida and include operations in
the northeast, southeast, midwest and southwest. Three of Broadcasting's five
radio stations, representing the significant portion of its radio operations,
are located in Phoenix, Arizona.
F-11
<PAGE> 65
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The assets and liabilities of the Broadcasting Business are classified in
the Statements of Consolidated Financial Position as "Net Assets/Liabilities of
Broadcasting Business" and consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Trade accounts receivable (less allowance for doubtful
accounts of $785 and $991)................................ $ 50,880 $ 47,700
Program rights.............................................. 7,866 8,452
Other current assets........................................ 1,260 1,277
-------- --------
Total current assets................................... 60,006 57,429
-------- --------
Properties:
Land...................................................... 10,163 9,342
Buildings................................................. 44,769 43,827
Machinery and equipment................................... 135,629 125,806
Construction in progress.................................. 3,282 1,735
-------- --------
Total.................................................. 193,843 180,710
Less accumulated depreciation............................. 106,826 91,816
-------- --------
Properties -- net...................................... 87,017 88,894
-------- --------
Intangible assets:
FCC Licenses and network affiliations..................... 114,376 112,162
Goodwill.................................................. 6,960 6,960
Other intangibles......................................... 33,696 33,696
-------- --------
Total.................................................. 155,032 152,818
Less accumulated amortization............................. 52,539 44,884
-------- --------
Intangible assets -- net............................... 102,493 107,934
-------- --------
Other assets................................................ 7,172 6,021
-------- --------
Total assets of Broadcasting Business.................. 256,688 260,278
-------- --------
LIABILITIES
Trade accounts payable and accrued expenses................. 10,226 10,228
Current portion of long-term debt (Note 7).................. 12,705 14,705
Interest payable............................................ 5,677 7,177
Program contracts payable................................... 7,907 8,916
-------- --------
Total current liabilities.............................. 36,515 41,026
Long-term debt (Note 7)..................................... 172,705 235,410
Pension obligations (Note 8)................................ 5,544 4,149
Postretirement benefit obligations (Note 9)................. 2,556 2,618
Other long term liabilities................................. 3,299 5,842
Commitments and contingencies (Note 14)
-------- --------
Total liabilities of Broadcasting Business............. 220,619 289,045
-------- --------
Net Assets (Liabilities) of Broadcasting Business........... $ 36,069 $(28,767)
======== ========
</TABLE>
F-12
<PAGE> 66
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The net income from operations of the Broadcasting Business, without
allocation of any general corporate expense, is reflected in the Statements of
Consolidated Income as "Income from Discontinued Operations" and is summarized
as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Operating revenues.......................................... $227,016 $224,992 $202,939
Operating income............................................ 82,180 83,246 65,939
Interest expense............................................ 16,081 13,592 10,171
Income before provision for income taxes.................... 66,109 70,088 55,764
Provision for income taxes (Note 10)........................ 25,831 27,380 20,897
Net income.................................................. 40,278 42,708 34,867
Depreciation and amortization............................... 23,447 22,442 22,843
</TABLE>
5. ACQUISITION OF PROPERTIES
During 1996, the Company acquired in a purchase transaction all of the
stock of Scripps League Newspapers, Inc. ("Scripps League"), a privately owned
publisher of community newspapers serving smaller markets, primarily in the West
and Midwest. The purchase price of approximately $216 million (including
acquisition costs) includes all of the operating assets of the newspapers,
working capital of approximately $6 million and intangibles. The acquisition was
financed by long-term borrowings of $135 million (the balance of which has been
allocated to Broadcasting and is included in "Net Assets/Liabilities of
Broadcasting Business" in the Company's Statements of Consolidated Financial
Position (see Note 4)) and cash of approximately $81 million (approximately $69
million net of cash acquired). The results of the operations of Scripps League
for the period subsequent to June 30, 1996 are included in the Company's
Statements of Consolidated Income.
The following supplemental unaudited pro forma information shows the
results of operations of the Company for the years ended December 31, 1996 and
1995 adjusted for the acquisition of Scripps League, assuming such transaction
and the related debt financing had been consummated at the beginning of each
year presented. The unaudited pro forma financial information is not necessarily
indicative either of results of
F-13
<PAGE> 67
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
operations that would have occurred had the transaction occurred at the
beginning of each year presented or of future results of operations.
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
----------------------
1996 1995
---- ----
(IN THOUSANDS,
EXCEPT PER SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Operating revenues -- net................................... $341,923 $333,864
Operating income............................................ 30,414 27,957
Income from continuing operations........................... 14,771 15,161
Income from discontinued operations......................... 39,748 29,042
Net income.................................................. 54,519 44,203
Basic earnings per share of stock:
Continuing operations..................................... $ 0.67 $ 0.70
Discontinued operations................................... 1.82 1.33
-------- --------
Basic earnings per share.................................. $ 2.49 $ 2.03
======== ========
Diluted earnings per share of stock:
Continuing operations..................................... $ 0.66 $ 0.69
Discontinued operations................................... 1.79 1.31
-------- --------
Diluted earnings per share................................ $ 2.45 $ 2.00
======== ========
</TABLE>
In December 1996, the Company acquired in a purchase transaction the assets
of an AM radio station in Phoenix, Arizona for approximately $5,187,000.
6. INTANGIBLE ASSETS
Intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Goodwill.................................................... $171,395 $171,366
Intangible pension asset (Note 8)........................... 2,320 1,918
Other....................................................... 30,228 30,218
-------- --------
Total.................................................. 203,943 203,502
Less accumulated amortization............................... 18,819 13,131
-------- --------
Total intangible assets -- net......................... $185,124 $190,371
======== ========
</TABLE>
7. FINANCING ARRANGEMENTS
Pursuant to the Merger Agreement, the Company's existing long-term debt
will be repaid with new long-term borrowings prior to the Merger. In addition,
the new borrowings will be assumed by Hearst-Argyle at the time of the Merger.
Accordingly, all of the Company's long-term debt balances and related interest
expense are allocated to the Broadcasting Business and reported as discontinued
operations in the consolidated financial statements (see Notes 1 and 4).
F-14
<PAGE> 68
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Long-term debt included in "Net Assets/Liabilities of Broadcasting
Business" in the statements of consolidated financial position consists of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Credit Agreement......................................... $ -- $ 50,000
Senior notes maturing in substantially equal annual
installments:
8.8% due through 1997.................................. 14,500
6.76% due 1998-2001.................................... 50,000 50,000
7.22% due 2002-2005.................................... 50,000 50,000
7.86% due 2001-2008.................................... 85,000 85,000
Other.................................................. 410 615
-------- --------
Total............................................. 185,410 250,115
Less current portion................................... 12,705 14,705
-------- --------
Total long-term debt.............................. $172,705 $235,410
======== ========
</TABLE>
The Company's fixed-rate senior note borrowings are with The Prudential
Insurance Company of America ("Prudential"). The Senior Note Agreements with
Prudential provide for the payment of certain fees, depending on current
interest rates and remaining years to maturity, in the event of repayment prior
to the notes' scheduled maturity dates (as anticipated by the Spin-off and
Merger discussed in Note 1).
The credit agreement with The First National Bank of Chicago, as Agent, for
a group of lenders ("FNBC"), provides for a $50,000,000 variable rate revolving
credit facility ("Credit Agreement"). Loans may be borrowed, repaid and
reborrowed by the Company until the Credit Agreement terminates on July 2, 2001.
The Company has the option to repay any borrowings and terminate the Credit
Agreement, without penalty, prior to its scheduled maturity. As of December 31,
1997, the Company had no borrowings under the Credit Agreement.
The Credit Agreement allows the Company to elect an interest rate with
respect to each borrowing under the facility equal to a daily floating rate or
the Eurodollar rate plus 0.225 percent. As of December 31, 1996, the interest
rate on the Credit Agreement borrowings with FNBC was 5.875 percent.
The terms of the various senior note agreements contain certain covenants
and conditions including the maintenance of cash flow and various other
financial ratios, limitations on the incurrence of other debt and limitations on
the amount of restricted payments (which generally includes dividends, stock
purchases and redemptions).
Under the terms of the most restrictive borrowing covenants, in general,
the Company may pay annual dividends not to exceed the sum of $10,000,000, plus
75% of consolidated net earnings commencing January 1, 1993, less the sum of all
dividends paid or declared and redemptions in excess of sales of Company stock
after December 31, 1992. Pursuant to this calculation, approximately
$138,938,000 is available for distribution as dividends at December 31, 1997.
F-15
<PAGE> 69
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Approximate annual maturities of long-term debt for the five years
subsequent to December 31, 1997 are as follows:
<TABLE>
<S> <C>
Fiscal Year (In thousands):
1998...................................................... $ 12,705
1999...................................................... 12,705
2000...................................................... 12,500
2001...................................................... 23,125
2002...................................................... 23,125
Thereafter................................................ 101,250
--------
Total................................................ $185,410
========
</TABLE>
8. PENSION PLANS
The pension cost components for the Company's pension plans are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost for benefits earned during the
year.......................................... $ 3,966 $ 4,154 $ 3,834
Interest cost on projected benefit obligation... 8,470 8,185 8,057
Actual return on plan assets.................... (18,785) (12,507) (17,541)
Net amortization and deferrals.................. 10,001 4,833 11,365
-------- -------- --------
Net periodic pension cost....................... $ 3,652 $ 4,665 $ 5,715
======== ======== ========
</TABLE>
The Company's net periodic pension cost components disclosed above include
amounts related to Broadcasting employees who participate in two of the
Company's defined benefit pension plans. No detailed information regarding the
components of net periodic pension cost and funded status of the plans, as it
relates to Broadcasting is available. However, a portion of the Company's
pension cost has been allocated to Broadcasting's active employees and included
in "Discontinued Operations" in the Consolidated Statements of Income. Pension
cost allocated to Broadcasting, based on payroll costs, amounted to
approximately $1,395,000, $1,474,000 and $1,540,000 for 1997, 1996 and 1995,
respectively. Pursuant to the Merger Agreement, Broadcasting will retain the
ongoing liabilities related to its active employees. Future pension costs for
the Company and Broadcasting after the Spin-off are likely to be different when
compared to allocated historical amounts.
F-16
<PAGE> 70
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Company's pension plans is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation.............................. $117,854 $107,637
======== ========
Accumulated benefit obligation......................... $118,735 $108,380
======== ========
Projected benefit obligation............................. $128,690 $118,414
Plan assets at fair value................................ 119,353 104,046
-------- --------
Plan assets less than projected benefit obligation....... 9,337 14,368
Unrecognized transition obligation, net.................. (1,318) (1,539)
Unrecognized net gain.................................... 16,507 10,557
Unrecognized prior service cost.......................... 211 234
Additional minimum liability............................. 2,320 1,918
-------- --------
Pension obligations...................................... $ 27,057 $ 25,538
======== ========
</TABLE>
The portion of the Company's pension obligations allocated to Broadcasting
employees and included in "Net Assets/Liabilities of Broadcasting Business" in
the Statements of Consolidated Financial Position amounted to $5,544,000 and
$4,149,000 as of December 31, 1997 and 1996, respectively. Pursuant to the
Merger Agreement, actuarial calculations will be performed to separate
Broadcasting active employees from the pension plans as of the date of the
Merger. The pension obligations computed for Broadcasting active employees and a
proportionate share of pension plan assets will then be transferred to
Hearst-Argyle. Future pension obligations for Broadcasting, computed in separate
actuarial calculations, are likely to be different when compared to the
allocated historical amounts.
The projected benefit obligation was determined using assumed discount
rates of 7%, 7.5% and 7.25% at December 31, 1997, 1996 and 1995, respectively.
The expected long-term rate of return on plan assets was 8.5% for 1997, 1996 and
1995. For those plans that pay benefits based on final compensation levels, the
actuarial assumptions for overall annual rate of increase in future salary
levels was 4.5% for 1997 and 5% for both 1996 and 1995.
Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 1997, 1996
and 1995, were approximately $844,000, $781,000, and $731,000, respectively.
The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,899,000, $1,668,000
and $1,494,000 for 1997, 1996 and 1995, respectively. Contributions related only
to Broadcasting employees amounted to approximately $698,000, $626,000 and
$509,000 for 1997, 1996 and 1995, respectively.
F-17
<PAGE> 71
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
The net periodic postretirement benefit cost components related to
continuing operations are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost (for benefits earned during the
year)............................................ $ 839 $ 808 $ 805
Interest cost on accumulated postretirement benefit
obligation....................................... 4,493 4,532 5,614
Net amortization, deferrals and other components... (2,464) (2,236) (1,731)
------- ------- -------
Net periodic postretirement benefit cost........... $ 2,868 $ 3,104 $ 4,688
======= ======= =======
</TABLE>
The postretirement benefit cost for broadcasting active employees is
included in "Discontinued Operations" in the Statements of Consolidated Income.
The net periodic postretirement benefit cost components related to broadcasting
discontinued operations are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost (for benefits earned during the
year)............................................ $ 131 $ 118 $ 128
Interest cost on accumulated postretirement benefit
obligation....................................... 139 151 185
Net amortization, deferrals and other components... (74) (72) (56)
------- ------- -------
Net periodic postretirement benefit cost........... $ 196 $ 197 $ 257
======= ======= =======
</TABLE>
The Company funds its postretirement benefit obligation on a pay-as-you-go
basis and, for 1997, 1996 and 1995, made payments of $4,118,000, $4,207,000 and
$4,071,000, respectively.
The status of the Company's postretirement benefit plans is as follows:
<TABLE>
<CAPTION>
CONTINUING DISCONTINUED
OPERATIONS OPERATIONS
DECEMBER 31, DECEMBER 31,
------------------ ----------------
1997 1996 1997 1996
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Retirees and surviving beneficiaries...................... $39,549 $37,734
Actives eligible to retire................................ 13,644 12,732 $ 774 $ 784
Other actives............................................. 11,614 10,069 1,142 1,073
------- ------- ------ ------
Accumulated postretirement benefit obligation........... 64,807 60,535 1,916 1,857
Unrecognized prior service gain......................... 6,466 7,757 192 233
Unrecognized net gain................................... 14,903 18,876 448 528
------- ------- ------ ------
Accrued postretirement benefit cost..................... $86,176 $87,168 $2,556 $2,618
======= ======= ====== ======
</TABLE>
The preceding amounts related to continuing operations for the December 31,
1997 and 1996 accrued postretirement benefit cost and the 1997, 1996 and 1995
net periodic postretirement benefit expense have not been reduced for The Herald
Company's share of the respective amounts. However, pursuant to the St. Louis
Agency Agreement (see Note 3), the Company has recorded a receivable for The
Herald Company's share of the accrued postretirement benefit cost as of December
31, 1997 and 1996.
F-18
<PAGE> 72
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The preceding accrued postretirement benefit cost related to broadcasting
active employees is included in "Net Assets/Liabilities of Broadcasting
Business" in the Statements of Consolidated Financial Position. Pursuant to the
Merger Agreement, Broadcasting will retain the postretirement obligation and
costs related to active employees as of the date of the Merger.
For 1997 and 1996 measurement purposes, health care cost trend rates of 9%,
7% and 5% were assumed for indemnity plans, PPO plans and HMO plans,
respectively. For 1997, these rates were assumed to decrease gradually to 5%
through the year 2010 and remain at that level thereafter. For 1996, the
indemnity and PPO rates were assumed to decrease gradually to 5.5% through the
year 2010 and remain at that level thereafter. For continuing operations, a 1%
increase in the health care cost trend rate assumptions would have increased the
accrued postretirement benefit cost at December 31, 1997 by approximately
$1,129,000 and the 1997 annual net periodic postretirement benefit cost by
approximately $1,090,000.
Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6% for 1997, 1996 and 1995. The assumed discount rate
used in estimating the accumulated postretirement benefit obligation was 7%,
7.5% and 8% for 1997, 1996 and 1995, respectively.
The Company's postemployment benefit obligation, representing certain
disability benefits at the St. Louis Post Dispatch, was $3,174,000 and
$2,466,000 at December 31, 1997 and 1996, respectively.
10. INCOME TAXES
Provisions for income taxes (benefits) consist of the following:
<TABLE>
<CAPTION>
CONTINUING OPERATIONS DISCONTINUED OPERATIONS
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
---------------------------- -----------------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Current:
Federal.............................. $17,840 $ 9,363 $8,008 $23,549 $24,102 $20,344
State and local...................... 2,714 1,628 1,482 4,321 4,122 2,059
Deferred:
Federal.............................. (1,155) (84) (326) (1,723) (721) (1,315)
State and local...................... (173) (15) (15) (316) (123) (191)
------- ------- ------ ------- ------- -------
Total............................. $19,226 $10,892 $9,149 $25,831 $27,380 $20,897
======= ======= ====== ======= ======= =======
</TABLE>
Factors causing effective tax rates to differ from the statutory Federal
income tax rate were:
<TABLE>
<CAPTION>
CONTINUING OPERATIONS DISCONTINUED OPERATIONS
YEARS ENDED DECEMBER 31, YEARS ENDED DECEMBER 31,
-------------------------- ---------------------------
1997 1996 1995 1997 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Statutory rate.......................... 35% 35% 35% 35% 35% 35%
Favorable resolution of prior year state
tax issues............................ (2)
Amortization of intangibles............. 3 3
State and local income taxes, net of U.S
Federal income tax benefit............ 4 4 4 4 4 4
Other -- net............................ 1
-- -- -- -- -- --
Total.............................. 43% 42% 39% 39% 39% 37%
== == == == == ==
</TABLE>
F-19
<PAGE> 73
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company's deferred tax assets and liabilities, net, which have been
included in other assets in the Statements of Consolidated Financial Position
consisted of the following:
<TABLE>
<CAPTION>
CONTINUING DISCONTINUED
OPERATIONS OPERATIONS
DECEMBER 31, DECEMBER 31,
----------------- -----------------
1997 1996 1997 1996
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Deferred tax assets:
Pensions and employee benefits........................ $ 8,135 $ 7,018 $ 3,268 $ 2,557
Postretirement benefit costs.......................... 18,248 18,260 1,000 1,024
Other................................................. 1,007 1,429 554 681
------- ------- ------- -------
Total.............................................. 27,390 26,707 4,822 4,262
------- ------- ------- -------
Deferred tax liabilities:
Depreciation.......................................... 13,265 13,119 6,318 6,471
Amortization.......................................... 7,288 8,079 477 1,803
------- ------- ------- -------
Total.............................................. 20,553 21,198 6,795 8,274
------- ------- ------- -------
Net deferred tax asset (liability)...................... $ 6,837 $ 5,509 $(1,973) $(4,012)
======= ======= ======= =======
</TABLE>
The Company had no valuation allowance for deferred tax assets as of
December 31, 1997, 1996 and 1995.
11. STOCKHOLDERS' EQUITY
Each share of the Company's common stock is entitled to one vote and each
share of Class B common stock is entitled to ten votes on all matters. As of
December 31, 1997, holders of outstanding shares of Class B common stock
representing 95.5% of the combined voting power of the Company have deposited
their shares in a voting trust (the "Voting Trust"). Each share of the Company's
Class B common stock is convertible into one share of the Company's common stock
at the holder's option subject to the limitations imposed by the Voting Trust on
the shares of Class B common stock deposited thereunder. The Voting Trust
permits the conversion of the Class B common stock deposited in the Voting Trust
into common stock in connection with certain permitted transfers, including,
without limitation, sales which are exempt from the registration requirements of
the Securities Act of 1933, as amended, sales which meet the volume and manner
of sale requirements of Rule 144 promulgated thereunder and sales which are made
pursuant to registered public offerings.
The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the holders
of the Voting Trust Certificates. The Voting Trust may be terminated with the
written consent of holders of two-thirds in interest of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on January 16, 2001.
On September 12, 1996, the Board of Directors declared a four-for-three
stock split of the Company's common and Class B common stock payable in the form
of a 33.3% stock dividend. The dividend was distributed on November 1, 1996 to
stockholders of record on October 10, 1996. The Company's capital balances and
share amounts were adjusted in 1996 to reflect the split.
F-20
<PAGE> 74
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On January 4, 1995, the Board of Directors declared a five-for-four stock
split of the Company's common and Class B common stock payable in the form of a
25% stock dividend. The dividend was distributed on January 24, 1995 to
stockholders of record on January 13, 1995. Even though this stock split was
declared subsequent to December 31, 1994, the Company's capital balances and
share amounts were adjusted in 1994 to reflect the split.
12. COMMON STOCK PLANS
On May 11, 1994, the Company's stockholders adopted the Pulitzer Publishing
Company 1994 Stock Option Plan (the "1994 Plan"), replacing the Pulitzer
Publishing Company 1986 Employee Stock Option Plan (the "1986 Plan"). The 1994
Plan provides for the issuance to key employees and outside directors of
incentive stock options to purchase up to a maximum of 2,500,000 shares of
common stock. Under the 1994 Plan, options to purchase 1,667 shares of common
stock will be automatically granted to outside directors on the date following
each annual meeting of the Company's stockholders and will vest on the date of
the next annual meeting of the Company's stockholders. Total shares available
for issue to outside directors under this automatic grant feature are limited to
a maximum of 166,667. The issuance of all other options will be administered by
the Compensation Committee of the Board of Directors, subject to the 1994 Plan's
terms and conditions. Specifically, the exercise price per share may not be less
than the fair market value of a share of common stock at the date of grant. In
addition, exercise periods may not exceed ten years and the minimum vesting
period is established at six months from the date of grant. Option awards to an
individual employee may not exceed 250,000 shares in a calendar year.
Prior to 1994, the Company issued incentive stock options to key employees
under the 1986 Plan. As provided by the 1986 Plan, certain option awards were
granted with tandem stock appreciation rights which allow the employee to elect
an alternative payment equal to the appreciation of the stock value instead of
exercising the option. Outstanding options issued under the 1986 Plan have an
exercise term of ten years from the date of grant and vest in equal installments
over a three-year period.
F-21
<PAGE> 75
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock option transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
SHARES PRICE RANGE PRICE
------ ----------- --------
<S> <C> <C> <C>
Common Stock Options:
Outstanding, January 1, 1995............................. 1,198,371 $ 9.27 - $21.98 $16.69
Granted (weighted average value at grant date of
$13.99)............................................. 192,853 $30.47 - $34.41 $34.31
Canceled............................................... (39,632) $11.73 - $21.98 $16.69
Exercised.............................................. (158,304) $ 9.27 - $21.98 $14.71
---------
Outstanding, December 31, 1995........................... 1,193,288 $ 9.27 - $34.41 $19.80
Granted (weighted average value at grant date of
$16.01)............................................. 179,809 $41.91 - $46.25 $46.03
Canceled............................................... (2,146) $21.53 - $34.41 $28.77
Exercised.............................................. (140,096) $ 9.27 - $21.98 $15.47
---------
Outstanding, December 31, 1996........................... 1,230,855 $ 9.27 - $46.25 $24.11
Granted (weighted average value at grant date of
$20.23)............................................. 211,231 $45.63 - $58.81 $58.41
Canceled............................................... (14,235) $21.53 - $47.38 $38.91
Exercised.............................................. (201,920) $ 9.27 - $46.25 $16.34
---------
Outstanding, December 31, 1997........................... 1,225,931 $ 9.27 - $58.81 $31.13
=========
Exercisable at:
December 31, 1996...................................... 855,445 $ 9.27 - $34.41 $18.19
=========
December 31, 1997...................................... 849,565 $ 9.27 - $46.25 $22.21
=========
Shares Available for Grant at December 31, 1997.......... 1,712,004
=========
</TABLE>
Stock appreciation right transactions are summarized as follows:
<TABLE>
<CAPTION>
SHARES PRICE
------ -----
<S> <C> <C>
Common Stock Appreciation Rights:
Outstanding, January 1, 1995.............................. 37,584 $14.87
Canceled.................................................. (10,183) $14.87
Exercised................................................. (27,401) $14.87
-------
Outstanding, December 31, 1995, 1996 and 1997............. --
=======
</TABLE>
On May 11, 1994, the Company's stockholders also adopted the Pulitzer
Publishing Company 1994 Key Employees' Restricted Stock Purchase Plan (the "1994
Stock Plan"), which replaced the Pulitzer Publishing Company 1986 Key Employees'
Restricted Stock Purchase Plan ("1986 Stock Plan"). The 1994 Stock Plan provides
that an employee may receive, at the discretion of the Compensation Committee, a
grant or right to purchase at a particular price shares of common stock, subject
to restrictions on transferability. A maximum of 416,667 shares of common stock
may be granted or purchased by employees. In addition, no more than 83,333
shares of common stock may be issued to an employee in any calendar year.
F-22
<PAGE> 76
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Prior to 1994, the Company granted stock awards under the 1986 Stock Plan.
For grants awarded under both the 1994 and 1986 Stock Plans, compensation
expense is recognized over the vesting period of the grants. Stock Purchase Plan
transactions are summarized as follows:
<TABLE>
<CAPTION>
WEIGHTED
SHARES PRICE RANGE AVERAGE PRICE
------ ----------- -------------
<S> <C> <C> <C>
Common Stock Grants:
Outstanding, January 1, 1995........... 4,236 $20.25 - $21.38 $20.89
Granted................................ 8,880 $24.53 $24.53
Vested................................. (7,460) $20.25 - $24.53 $23.93
-------
Outstanding, December 31, 1995......... 5,656 $20.25 - $24.53 $22.60
Granted................................ 2,093 $36.70 $36.70
Vested................................. (1,864) $20.25 - $24.53 $22.12
-------
Outstanding, December 31, 1996......... 5,885 $20.25 - $36.70 $27.78
Granted................................ 1,468 $47.44 $47.44
Canceled............................... (1,393) $20.25 - $47.44 $33.13
Vested................................. (2,272) $20.25 - $36.70 $25.56
-------
Outstanding, December 31, 1997......... 3,688 $21.38 - $47.44 $34.95
=======
Shares Available for Grant at December
31, 1997............................... 400,776
=======
</TABLE>
As required by SFAS 123, the Company has estimated the fair value of its
option grants since December 31, 1994 by using the binomial options pricing
model with the following assumptions:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Expected Life (years).................................... 7 7 7
Risk-free interest rate.................................. 5.8% 6.4% 5.7%
Volatility............................................... 23.6% 22.5% 19.6%
Dividend yield........................................... 1.1% 1.2% 1.3%
</TABLE>
As discussed in Note 1, the Company accounts for its stock option grants in
accordance with APB 25, resulting in the recognition of no compensation expense
in the Statements of Consolidated Income. Had compensation expense been computed
on the fair value of the option awards at their grant date, consistent
F-23
<PAGE> 77
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with the provisions of SFAS 123, the Company's income from continuing operations
and earnings per share would have been reduced to the pro forma amounts below:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C> <C>
Income from continuing operations:
As reported............................................... $25,750 $14,792 $14,455
Pro forma................................................. 24,897 14,422 14,428
Income from discontinued operations:
As reported............................................... 40,278 42,708 34,867
Pro forma................................................. 39,590 42,398 34,860
Net Income:
As reported............................................... 66,028 57,500 49,322
Pro forma................................................. 64,487 56,820 49,288
Basic earnings per share from continuing operations:
As reported............................................... $1.17 $0.67 $0.66
Pro forma................................................. 1.13 0.66 0.66
Basic earnings per share from discontinued operations:
As reported............................................... 1.82 1.95 1.60
Pro forma................................................. 1.79 1.93 1.60
Basic earnings per share:
As reported............................................... 2.99 2.62 2.26
Pro forma................................................. 2.92 2.59 2.26
Diluted earnings per share from continuing operations:
As reported............................................... $1.15 $0.66 $0.65
Pro forma................................................. 1.11 0.65 0.65
Diluted earnings per share from discontinued operations:
As reported............................................... 1.79 1.92 1.58
Pro forma................................................. 1.76 1.90 1.58
Diluted earnings per share:
As reported............................................... 2.94 2.58 2.23
Pro forma................................................. 2.87 2.55 2.23
</TABLE>
Because the provisions of SFAS 123 have not been applied to options granted
prior to January 1, 1995, the pro forma compensation cost may not be
representative of compensation cost to be incurred on a pro forma basis in
future years.
On April 24, 1997, the Company's stockholders approved the adoption of the
Pulitzer Publishing Company 1997 Employee Stock Purchase Plan (the "Plan"). The
Plan allows eligible employees to authorize payroll deductions for the quarterly
purchase of the Company's common stock ("common stock") at a price generally
equal to 85 percent of the common stock's fair market value at the end of each
quarter. The Plan began operations as of July 1, 1997. In general, other than
Michael E. Pulitzer, all employees of the Company and its subsidiaries are
eligible to participate in the Plan after completing at least one year of
service. Subject to appropriate adjustment for stock splits and other capital
changes, the Company may sell a total of 500,000 shares of its common stock
under the Plan. Shares sold under the Plan may be authorized and unissued or
held by the Company in its treasury. The Company may purchase shares for resale
under the Plan.
F-24
<PAGE> 78
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. EARNINGS PER SHARE
Weighted average shares of common and Class B common stock and common stock
equivalents used in the calculation of basic and diluted earnings per share are
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1997 1996 1995
---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Weighted average shares outstanding (Basic EPS)....... 22,110 21,926 21,800
Stock option equivalents.............................. 342 347 297
------ ------ ------
Weighted average shares and equivalents (Diluted
EPS)................................................ 22,452 22,273 22,097
====== ====== ======
</TABLE>
Stock option equivalents included in the Diluted EPS calculation were
determined using the treasury stock method. Under the treasury stock method and
SFAS 128, outstanding stock options are dilutive when the average market price
of the Company's common stock exceeds the option price during a period. In
addition, proceeds from the assumed exercise of dilutive options along with the
related tax benefit are assumed to be used to repurchase common shares at the
average market price of such stock during the period.
14. COMMITMENTS AND CONTINGENCIES
At December 31, 1997, the Company and its subsidiaries had construction and
equipment commitments of approximately $9,220,000 related to continuing
operations and $4,559,000 related to discontinued operations. The Company's
commitment for broadcasting program contracts payable and license fees at
December 31, 1997 was approximately $30,025,000.
The Company is an investor in three limited partnerships requiring future
capital contributions. As of December 31, 1997, the Company's unfunded capital
contribution commitment related to these investments was approximately
$13,863,000.
The Company and its subsidiaries are defendants in a number of lawsuits,
some of which claim substantial amounts. While the results of litigation cannot
be predicted, management believes the ultimate outcome of such litigation will
not have a material adverse effect on the consolidated financial statements of
the Company and its subsidiaries.
In connection with the September 1986 purchase of the Company's Class B
common stock from certain selling stockholders (the "1986 Selling
Stockholders"), the Company agreed under certain circumstances to make an
additional payment to the 1986 Selling Stockholders in the event that a Gross-Up
Transaction occurred prior to May 13, 2001. A Gross-Up Transaction was defined
to mean, among other transactions, (i) any merger, in any transaction or series
of related transactions, of more than 85 percent of the voting securities or
equity of, the Company pursuant to which holders of common stock receive
securities other than the common stock of the Company and (ii) any
recapitalization, dividend or distribution, or series of related
recapitalizations, dividends or distributions, in which holders of common stock
receive securities (other than common stock) having a Fair Market Value of not
less than 33 1/3 percent of the Fair Market Value of the shares of common stock
immediately prior to such transaction. The amount of the additional payment, if
any, would equal (x) the product of (i) the amount by which the Transaction
Proceeds (as defined) exceeds the Imputed Value (as defined) multiplied by (ii)
the Applicable Percentage (i.e., 50 percent for the period from May 13, 1996
through May 12, 2001) multiplied by (iii) the number of shares of common stock
issuable upon conversion of the shares of Class B common stock owned by the
Selling Stockholders, adjusted for, among other things, stock dividends and
stock splits; less (y) the sum of any additional payments previously received by
the Selling Stockholders; provided, however, that in the event of any
recapitalization, dividend or distribution the amount by which the Transaction
Proceeds exceeds the Imputed Value shall not exceed the
F-25
<PAGE> 79
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amount paid or distributed pursuant to such recapitalization, dividend or
distribution in respect of one share of common stock.
The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value of the consideration received pursuant
thereto by the holder of one share of common stock, and, in the case of a
recapitalization, dividend or distribution, the aggregate Fair Market Value of
the amounts paid or distributed in respect of one share of common stock plus the
aggregate Fair Market Value of one share of the common stock following such
transaction. The "Imputed Value" for one share of common stock on a given date
was defined to mean an amount equal to $28.82 compounded annually from May 12,
1986 to such given date at the rate of 15 percent per annum, the result of which
is $154.19 at May 12, 1998. There was no specific provision for adjustment of
the $28.82 amount, but if it were adjusted to reflect all stock dividends and
stock splits of the Company since September 30, 1986, it would now equal $15.72,
which if compounded annually from May 12, 1986 at the rate of 15 percent per
annum would now equal $84.11.
Fair Market Value, in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as selected by a Valuation Firm selected by the Company and a Valuation
Firm selected by the Selling Stockholders, or, if the two Valuation Firms do not
agree on the fair market value, the fair market value of such consideration as
determined by a third Valuation Firm selected by the two other Valuation Firms.
Any such agreement or determination shall be final and binding on the parties.
As a result of the foregoing, the amount of additional payments, if any,
which may be payable by Newco with respect to the Merger and the Distribution
cannot be determined at this time. However, if the Distribution were determined
to be a Gross-Up Transaction and if the Fair Market Value of the Transaction
Proceeds with respect to the Merger and the Distribution were determined to
exceed the Imputed Value, then the additional payments to the Selling
Stockholders would equal approximately $5.9 million for each $1.00 by which the
Transaction Proceeds exceed the Imputed Value. Accordingly, depending on the
ultimate resolution of the meaning and application of various provisions of the
Gross-Up Transaction agreements, including the determination of Imputed Value
and Fair Market Value of the Transaction Proceeds, in the opinion of management,
the amount of an additional payment, if any, could be material to the
consolidated financial statements of the Company.
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has estimated the following fair value amounts for its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
Cash and Cash Equivalents, Accounts Receivable, Accounts Payable and
Program Contracts Payable -- The carrying amounts of these items are a
reasonable estimate of their fair value.
Long-Term Debt -- Interest rates that are currently available to the
Company for issuance of debt with similar terms and remaining maturities are
used to estimate fair value. The fair value estimates of the Company's long-term
debt as of December 31, 1997 and 1996 were $195,969,000 and $259,958,000,
respectively.
The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 1997 and 1996. Although
management is not aware of any facts that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of
F-26
<PAGE> 80
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
these financial statements since that date, and current estimates of fair value
may differ from the amounts presented herein.
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
Operating results for the years ended December 31, 1997 and 1996 by
quarters are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1997
Operating revenues -- net:..................... $85,835 $90,305 $87,506 $94,323 $357,969
Income from continuing operations.............. 6,230 7,099 5,913 6,508 25,750
Income from discontinued operations............ 6,265 12,582 8,310 13,121 40,278
Net income..................................... 12,495 19,681 14,223 19,629 66,028
Basic earnings per share of stock (Note 13):
Continuing operations........................ $ 0.28 $ 0.32 $ 0.27 $ 0.29 $ 1.17
Discontinued operations...................... 0.29 0.57 0.37 0.59 1.82
------- ------- ------- ------- --------
Earnings per share........................... $ 0.57 $ 0.89 $ 0.64 $ 0.88 $ 2.99
======= ======= ======= ======= ========
Weighted average shares outstanding.......... 22,029 22,081 22,151 22,185 22,110
======= ======= ======= ======= ========
Diluted earnings per share of stock (Note 13):
Continuing operations........................ $ 0.28 $ 0.32 $ 0.26 $ 0.29 $ 1.15
Discontinued operations...................... 0.28 0.56 0.37 0.58 1.79
------- ------- ------- ------- --------
Earnings Per Share........................... $ 0.56 $ 0.88 $ 0.63 $ 0.87 $ 2.94
======= ======= ======= ======= ========
Weighted Average Shares Outstanding.......... 22,378 22,413 22,489 22,526 22,452
======= ======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER TOTAL
------- ------- ------- ------- -----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
1996
Operating revenues -- net:..................... $66,189 $68,521 $84,817 $89,569 $309,096
Income from continuing operations.............. 2,565 2,980 4,247 5,000 14,792
Income from discontinued operations............ 7,676 13,205 8,717 13,110 42,708
Net income..................................... 10,241 16,185 12,964 18,110 57,500
Basic earnings per share of stock (Note 13):
Continuing operations........................ $ 0.12 $ 0.14 $ 0.19 $ 0.23 $ 0.67
Discontinued operations...................... 0.35 0.60 0.40 0.59 1.95
------- ------- ------- ------- --------
Earnings Per Share........................... $ 0.47 $ 0.74 $ 0.59 $ 0.82 $ 2.62
======= ======= ======= ======= ========
Weighted Average Shares Outstanding.......... 21,864 21,912 21,949 21,978 21,926
======= ======= ======= ======= ========
Diluted earnings per share of stock (Note 13):
Continuing operations........................ $ 0.11 $ 0.14 $ 0.19 $ 0.22 $ 0.66
Discontinued operations...................... 0.35 0.59 0.39 0.59 1.92
------- ------- ------- ------- --------
Earnings Per Share........................... $ 0.46 $ 0.73 $ 0.58 $ 0.81 $ 2.58
======= ======= ======= ======= ========
Weighted Average Shares Outstanding.......... 22,191 22,271 22,291 22,291 22,273
======= ======= ======= ======= ========
</TABLE>
F-27
<PAGE> 81
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In the fourth quarter of 1996, the Company determined that the carrying
value of one of its joint venture investments had been impaired. Accordingly,
the investment was reduced by a $2.7 million adjustment resulting in an
after-tax charge of $1.6 million.
Subsequent to the second quarter of 1996, the results of operations of
Scripps League, acquired on July 1, 1996, are included in the Company's
Statements of Consolidated Income (see Note 5).
In the fourth quarter of 1995, a state tax examination was settled
favorably, resulting in a reduction of income tax expense related to
discontinued operations of approximately $900,000.
Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.
* * * * * *
F-28
<PAGE> 82
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Pulitzer Publishing Company:
We have audited the consolidated financial statements of Pulitzer
Publishing Company and its subsidiaries as of December 31, 1997 and 1996, and
for each of the three years in the period ended December 31, 1997, and have
issued our report thereon dated February 6, 1998 (July 17, 1998 as to Notes 1, 4
and 14); such report is included elsewhere in this Current Report on Form 8-K.
Our audits also included the consolidated financial statement schedule II of
Pulitzer Publishing Company and its subsidiaries. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion based on our audits. In our opinion, such consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Saint Louis, Missouri
February 6, 1998
(July 17, 1998 as to
Notes 1, 4 and 14)
F-29
<PAGE> 83
SCHEDULE II
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
SCHEDULE II -- VALUATION & QUALIFYING ACCOUNTS & RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO CHARGES TO BALANCE
BEGINNING COSTS & OTHER AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
----------- ---------- ---------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1997
Valuation Accounts:
Allowance for Doubtful Accounts:
Continuing Operations............... $1,585 $1,151 $1,110(b) $1,626
Discontinued Operations............. 991 317 $178(a) 701(b) 785
Reserves:
Accrued Medical Plan -- Continuing
Operations.......................... 389 4,714 0 4,060(c) 1,043
Workers Compensation:
Continuing Operations............... 1,085 887 883 1,089
Discontinued Operations............. 1,041 312 485 868
YEAR ENDED DECEMBER 31, 1996
Valuation Accounts:
Allowance for Doubtful Accounts:
Continuing Operations............... $1,158 $1,691 $ 95(a) $1,359(b) $1,585
Discontinued Operations............. 851 440 226(a) 526(b) 991
Reserves:
Accrued Medical Plan -- Continuing
Operations.......................... 561 4,198 0 4,370(c) 389
Workers Compensation
Continuing Operations............... 1,055 1,049 1,019 1,085
Discontinued Operations............. 950 429 338 1,041
YEAR ENDED DECEMBER 31, 1995
Valuation Accounts:
Allowance for Doubtful Accounts:
Continuing Operations............... $1,325 $ 844 $1,011(b) $1,158
Discontinued Operations............. 810 694 $247(a) 900(b) 851
Reserves:
Accrued Medical Plan -- Continuing
Operations.......................... 789 4,907 0 5,135(c) 561
Workers Compensation
Continuing Operations............... 1,662 871 1,478 1,055
Discontinued Operations............. 665 321 36 950
</TABLE>
- -------------------------
(a) -- Accounts reinstated, cash recoveries, etc.
(b) -- Accounts written off
(c) -- Amount represents:
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Claims paid................................. $3,596 $3,830 $4,660
Service fees................................ 473 579 548
Cash refunds................................ (9) (39) (73)
------ ------ ------
$4,060 $4,370 $5,135
====== ====== ======
</TABLE>
* * * * * *
F-30
<PAGE> 84
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-------------------------
1998 1997
---- ----
(UNAUDITED)
(IN THOUSANDS, EXCEPT
EARNINGS PER SHARE DATA)
<S> <C> <C>
Operating revenues -- net:
Advertising............................................... $119,807 $112,373
Circulation............................................... 44,022 44,189
Other..................................................... 20,615 19,578
-------- --------
Total operating revenues............................... 184,444 176,140
-------- --------
Operating expenses:
Operations................................................ 74,526 70,044
Selling, general and administrative....................... 68,396 64,893
General corporate expense................................. 2,640 2,756
St. Louis Agency adjustment............................... 10,863 10,429
Depreciation and amortization............................. 6,823 6,736
-------- --------
Total operating expenses............................... 163,248 154,858
-------- --------
Operating income.......................................... 21,196 21,282
Interest income........................................... 2,156 2,501
Net other expense......................................... (1,176) (560)
-------- --------
Income from continuing operations before provision for
income taxes.............................................. 22,176 23,223
Provision for income taxes.................................. 9,497 9,894
-------- --------
Income from continuing operations........................... 12,679 13,329
Income from discontinued operations, net of tax (Note 3).... 23,987 18,847
-------- --------
Net income.................................................. $ 36,666 $ 32,176
======== ========
Basic earnings per share of stock:
Income from continuing operations......................... $ 0.57 $ 0.60
Income from discontinued operations....................... 1.08 0.86
-------- --------
Earnings per share........................................ $ 1.65 $ 1.46
======== ========
Weighted average number of shares outstanding............. 22,289 22,054
======== ========
Diluted earnings per share of stock:
Income from continuing operations......................... $ 0.56 $ 0.60
Income from discontinued operations....................... 1.06 0.84
-------- --------
Earnings per share........................................ $ 1.62 $ 1.44
======== ========
Weighted average number of shares outstanding............... 22,685 22,396
======== ========
</TABLE>
See notes to consolidated financial statements.
F-31
<PAGE> 85
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED FINANCIAL POSITION
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $101,408 $ 62,749
Trade accounts receivable (less allowance for doubtful
accounts of $1,708 and $1,626).......................... 35,950 35,002
Inventory................................................. 2,898 5,265
Prepaid expenses and other................................ 8,589 11,587
-------- --------
Total current assets.................................... 148,845 114,603
-------- --------
Properties:
Land...................................................... 5,625 5,991
Buildings................................................. 41,516 39,446
Machinery and equipment................................... 92,570 89,484
Construction in progress.................................. 7,739 4,042
-------- --------
Total................................................... 147,450 138,963
Less accumulated depreciation............................. 67,950 64,166
-------- --------
Properties -- net....................................... 79,500 74,797
-------- --------
Intangible and other assets:
Intangible assets -- net of amortization.................. 182,488 185,124
Receivable from The Herald Company........................ 38,136 39,733
Net assets of Broadcasting Business (Note 3).............. 30,538 36,069
Other..................................................... 20,170 13,985
-------- --------
Total intangible and other assets....................... 271,332 274,911
-------- --------
Total.............................................. $499,677 $464,311
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.................................... $ 11,047 $ 12,193
Salaries, wages and commissions........................... 8,598 10,523
Income taxes payable...................................... 6,214 3,070
Acquisition payable....................................... 9,804 9,804
Other..................................................... 6,840 3,183
-------- --------
Total current liabilities............................... 42,503 38,773
-------- --------
Pension obligations......................................... 21,970 21,165
-------- --------
Postretirement and postemployment benefit obligations....... 89,129 89,350
-------- --------
Other long-term liabilities................................. 4,204 4,246
-------- --------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 25,000,000 shares
authorized; issued and outstanding -- none
Common stock, $.01 par value; 100,000,000 shares
authorized; issued -- 7,026,173 in 1998 and 6,797,895 in
1997.................................................... 70 68
Class B common stock, convertible, $.01 par value;
50,000,000 shares authorized; issued -- 27,089,494 in
1998 and 27,125,247 in 1997............................. 271 271
Additional paid-in capital................................ 140,037 135,542
Retained earnings......................................... 389,466 362,828
-------- --------
Total................................................... 529,844 498,709
Treasury stock -- at cost; 25,519 and 24,660 shares of
common stock in 1998 and 1997, respectively, and
11,700,850 shares of Class B common stock in 1998 and
1997.................................................... (187,973) (187,932)
-------- --------
Total stockholders' equity.............................. 341,871 310,777
-------- --------
Total.............................................. $499,677 $464,311
======== ========
</TABLE>
See notes to consolidated financial statements.
F-32
<PAGE> 86
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1998 1997
---- ----
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Continuing operations
Cash flows from operating activities:
Income from continuing operations......................... $ 12,679 $ 13,329
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation........................................... 3,876 3,814
Amortization........................................... 2,947 2,922
Deferred income taxes.................................. 155 654
Changes in assets and liabilities (net of the effects
of the purchase and sale of properties) which provided
(used) cash:
Trade accounts receivable............................ (948) (286)
Inventory............................................ 2,367 (745)
Other assets......................................... 2,705 (4,330)
Trade accounts payable and other liabilities......... (2,229) 603
Income taxes payable................................. 3,144 (101)
-------- --------
Net cash provided by operating activities................... 24,696 15,860
-------- --------
Cash flows from investing activities:
Capital expenditures...................................... (9,312) (5,387)
Purchase of publishing properties......................... (1,998)
Investment in joint ventures and limited partnerships..... (4,620) (675)
Sale of publishing property............................... 2,590
Decrease in notes receivable.............................. 5 4,972
-------- --------
Net cash used in investing activities....................... (13,335) (1,090)
-------- --------
Cash flows from financing activities:
Dividends paid............................................ (6,676) (5,727)
Proceeds from exercise of stock options................... 3,841 2,033
Proceeds from employee stock purchase plan................ 656
Purchase of treasury stock................................ (41) (28)
-------- --------
Net cash used in financing activities....................... (2,220) (3,722)
-------- --------
Cash provided by continuing operations...................... 9,141 11,048
-------- --------
Discontinued operations (Note 3)
Operating activities...................................... 35,099 28,667
Investing activities...................................... (5,376) (8,889)
Financing activities...................................... (205) (26,705)
-------- --------
Cash provided by (used in) discontinued operations.......... 29,518 (6,927)
-------- --------
Net increase in cash and cash equivalents................... 38,659 4,121
Cash and cash equivalents at beginning of year.............. 62,749 73,052
-------- --------
Cash and cash equivalents at end of period.................. $101,408 $ 77,173
======== ========
</TABLE>
See notes to consolidated financial statements.
F-33
<PAGE> 87
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
On May 25, 1998, Pulitzer Publishing Company (the "Company"), Pulitzer
Inc., (a newly-organized wholly-owned subsidiary of the Company ("Newco")), and
Hearst-Argyle Television, Inc. ("Hearst-Argyle") entered into an Agreement and
Plan of Merger (the "Merger Agreement") pursuant to which Hearst-Argyle will
acquire the Company's Broadcasting Business (see Note 3) (the "Merger"). Prior
to the Spin-off (as defined below), the Company intends to borrow $700 million,
which may be secured by the assets of the Broadcasting Business. Out of the
proceeds of this new debt, the Company will pay the existing Company debt and
any costs arising as a result of the Merger and related transactions. Prior to
the Merger, the balance of the proceeds of this new debt, together with the
Company's publishing assets and liabilities, will be contributed by the Company
to Newco pursuant to a Contribution and Assumption Agreement (the
"Contribution"). Pursuant to the Merger Agreement, Hearst-Argyle will assume the
new debt following the consummation of the Spin-off and Merger.
Immediately following the Contribution, the Company will distribute to each
holder of Company Common Stock one fully-paid and nonassessable share of Newco
Common Stock for each share of Company Common Stock held and to each holder of
Company Class B Common Stock one fully-paid and nonassessable share of Newco
Class B Common Stock for each share of Company Class B Common Stock held (the
"Distribution"). The Contribution and Distribution collectively constitute the
"Spin-off."
The Company's obligation to consummate the Spin-off and the Merger is
subject to the fulfillment of various regulatory approvals and approval by the
stockholders of both the Company and Hearst-Argyle. The controlling stockholders
of both Hearst-Argyle and the Company have agreed to vote in favor of the Merger
and related transactions. The Spin-off and Merger are anticipated to be
completed by year-end 1998.
Following the consummation of the Spin-off and Merger, Newco will be
engaged primarily in the business of newspaper publishing. For financial
reporting purposes, Newco is the continuing stockholder interest and will retain
the Pulitzer name.
Results of the Company's newspaper publishing and related new media
businesses are reported as continuing operations in the statements of
consolidated income. The results of the Company's Broadcasting Business are
reported as "Discontinued Operations" (see Note 3).
2. ACCOUNTING POLICIES
Interim Adjustments -- In the opinion of management, the accompanying
unaudited consolidated financial statements contain all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly Pulitzer
Publishing Company's financial position as of June 30, 1998, results of
operations for the six-month periods ended June 30, 1998 and 1997 and cash flows
for the six-month periods ended June 30, 1998 and 1997. These financial
statements should be read in conjunction with the audited consolidated financial
statements and related notes thereto of the Company contained in this
Registration Statement on Form S-10. Results of operations for interim periods
are not necessarily indicative of the results to be expected for the full year.
Fiscal Year and Fiscal Quarters -- The Company's fiscal year and second
fiscal quarter end on the Sunday coincident with or prior to December 31 and
June 30, respectively. For ease of presentation, the Company has used December
31 as the year end and June 30 as the second quarter end.
Earnings Per Share of Stock -- Basic earnings per share of stock is
computed using the weighted average number of Common and Class B Common shares
outstanding during the applicable period. Diluted earnings per share of stock is
computed using the weighted average number of Common and Class B Common shares
outstanding and common stock equivalents (outstanding stock options). Weighted
average shares of Common
F-34
<PAGE> 88
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and Class B Common Stock and common stock equivalents used in the calculation of
basic and diluted earnings per share are summarized as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------
1998 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Weighted average shares outstanding (Basic EPS)............. 22,289 22,054
Stock option equivalents.................................... 396 342
------ ------
Weighted average shares outstanding and stock option
equivalents (Diluted EPS)................................. 22,685 22,396
====== ======
</TABLE>
Stock option equivalents included in the diluted earnings per share
calculation were determined using the treasury stock method. Under the treasury
stock method, outstanding stock options are dilutive when the average market
price of the Company's Common Stock exceeds the option price during a period. In
addition, proceeds from the assumed exercise of dilutive options along with the
related tax benefit are assumed to be used to repurchase common shares at the
average market price of such stock during the period.
Comprehensive Income -- In June 1997, the Financial Accounting Standards
Board issued statement of Financial Accounting Standards No. 130, Reporting
Comprehensive Income. This statement established standards for the reporting and
display of Comprehensive Income and its components. This statement is required
to be implemented in financial statements issued for periods ending after
December 15, 1997. For the six-month periods ended June 30, 1998 and 1997, the
Company did not incur items to be reported in "Comprehensive Income" that were
not already included in the reported "net income". As a result, comprehensive
income and net income were the same for these periods.
Reclassifications -- Certain reclassifications have been made to the 1997
consolidated financial statements to conform with the 1998 presentation.
3. DISCONTINUED OPERATIONS
Discontinued operations represent the Company's Broadcasting Business as
follows: Pulitzer Broadcasting Company, a wholly-owned subsidiary of the
Company, and its wholly-owned subsidiaries, WESH Television, Inc.; WDSU
Television, Inc.; and KCCI Television, Inc.; (collectively "Broadcasting" or
"Broadcasting Business"), own and operate nine network-affiliated television
stations and five radio stations. Broadcasting's television properties represent
market sizes from Omaha, Nebraska to Orlando, Florida and include operations in
the northeast, southeast, midwest and southwest. Three of Broadcasting's five
radio stations, representing the significant portion of its radio operations,
are located in Phoenix, Arizona.
F-35
<PAGE> 89
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The assets and liabilities of the Broadcasting Business are classified in
the statements of consolidated financial position as "Net Assets of Broadcasting
Business" and consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- ------------
(IN THOUSANDS)
<S> <C> <C>
Trade accounts receivable -- net........................ $ 50,863 $ 50,880
Program rights.......................................... 3,054 7,866
Other current assets.................................... 1,306 1,260
-------- --------
Total current assets............................... 55,223 60,006
Properties -- net....................................... 84,072 87,017
Intangible assets....................................... 98,670 102,493
Other assets............................................ 7,904 7,172
-------- --------
Total assets of Broadcasting Business.............. 245,869 256,688
-------- --------
Trade accounts payable and accrued expenses............. 10,335 10,226
Current portion of long-term debt....................... 12,705 12,705
Interest payable........................................ 5,640 5,677
Program contracts payable............................... 2,728 7,907
-------- --------
Total current liabilities.......................... 31,408 36,515
Long-term debt.......................................... 172,500 172,705
Long term employee benefit obligations.................. 8,901 8,100
Other long term liabilities............................. 2,522 3,299
-------- --------
Total liabilities of Broadcasting Business......... 215,331 220,619
-------- --------
Net assets of Broadcasting Business..................... $ 30,538 $ 36,069
======== ========
</TABLE>
The net income from operations of the Broadcasting Business, without
allocation of any general corporate expense, is reflected in the statements of
consolidated income as "Income from Discontinued Operations" and is summarized
as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1998 1997
---- ----
(IN THOUSANDS)
<S> <C> <C>
Operating revenues...................................... $119,773 $111,264
Operating income........................................ 46,290 39,637
Interest expense........................................ 6,925 8,699
Income before provision for income taxes................ 39,365 30,938
Provision for income taxes.............................. 15,378 12,091
Net income.............................................. 23,987 18,847
Depreciation and amortization........................... 11,051 11,684
</TABLE>
Pursuant to the Merger Agreement, the Company's existing long-term debt
will be repaid with new long-term borrowings prior to the Merger. In addition,
the new borrowings will be assumed by Hearst-Argyle at the time of the Merger.
Accordingly, all of the Company's long-term debt balances and related interest
expense are allocated to the Broadcasting Business and reported as discontinued
operations in the consolidated financial statements (see Note 1).
F-36
<PAGE> 90
PULITZER PUBLISHING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. DIVIDENDS
In the first quarter of 1998, two dividends of $0.15 per share were
declared, payable on February 2, 1998 and May 1, 1998. In the second quarter of
1998, a dividend of $0.15 per share was declared, payable on August 3, 1998.
In the first quarter of 1997, two dividends of $0.13 per share were
declared, payable on February 3, 1997 and May 1, 1997. In the second quarter of
1997, a dividend of $0.13 per share was declared, payable on August 1, 1997. In
the third quarter of 1997, a dividend of $0.13 per share was declared, payable
on November 1, 1997.
5. COMMITMENTS AND CONTINGENCIES
At June 30, 1998, the Company and its subsidiaries had construction and
equipment commitments of approximately $9,263,000 related to continuing
operations and $2,347,000 related to discontinued operations. The Company's
commitment for broadcasting program contracts payable and license fees at June
30, 1998 was approximately $29,672,000.
The Company is an investor in two limited partnerships requiring future
capital contributions. As of June 30, 1998, the Company's unfunded capital
contribution commitment related to these investments was approximately
$8,243,000.
The Company and its subsidiaries are defendants in a number of lawsuits,
some of which claim substantial amounts. While the results of litigation cannot
be predicted, management believes, after consultation with legal counsel, the
ultimate outcome of such litigation will not have a material adverse effect on
the consolidated financial statements of the Company and its subsidiaries.
* * * * * *
F-37
<PAGE> 1
EXHIBIT 3.1.1
CERTIFICATE OF INCORPORATION
OF
PULITZER INC.
--------------------------
Under Section 102 of the
General Corporation Law
--------------------------
The undersigned, for the purpose of forming a corporation
pursuant to the provisions of the General Corporation Law of the State of
Delaware, does hereby certify as follows:
FIRST: The name of the corporation is Pulitzer Inc.
(hereinafter referred to as the "Corporation").
SECOND: The address of the registered office of the
Corporation in the State of Delaware shall be at Corporation Trust
Center, 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware and the name of its registered agent at such address shall be
The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any
lawful act or activity for which a corporation may be organized under
the General Corporation Law of Delaware as set forth in Title 8 of the
Delaware Code 1953, as amended (the "GCL").
FOURTH: The total number of shares of stock which the
Corporation shall have the authority to issue is one thousand (1,000)
shares of common stock, with a par value of one hundred dollars
($100.00) per share.
FIFTH: The name and mailing address of the incorporator is
Richard A. Palmer, Esq., c/o Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, New York, New York 10103.
SIXTH: The Corporation shall indemnify and advance expenses to
the fullest extent permitted by Section 145 of the GCL, as amended from
time to time, each person who is or was a director or officer of the
Corporation and the heirs, executors and administrators of such person.
Any expenses (including attorneys' fees) incurred by each person who is
or was a director or officer of the Corporation, and the heirs,
executors and administrators of such person, in connection with
defending any such proceeding in advance of its final disposition shall
be paid by the Corporation; provided, however, that if the GCL
requires, an advancement of expenses incurred by an indemnitee in his
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only
upon delivery to the Corporation of
<PAGE> 2
an undertaking by or on behalf of such indemnitee to repay all amounts
so advanced, if it shall ultimately be determined that such indemnitee
is not entitled to be indemnified for such expenses under this Article
or otherwise.
SEVENTH: Whenever a compromise or arrangement is proposed
between the Corporation and its creditors or any class of them and/or
between the Corporation and its stockholders or any class of them, any
court of equitable jurisdiction within the State of Delaware may, on
the application in a summary way of the Corporation or of any creditor
or stockholder thereof or on the application of any receiver or
receivers appointed for the Corporation under the provisions of Section
291 of the GCL or on the application of trustees in dissolution or of
any receiver or receivers appointed for the Corporation under the
provisions of Section 279 of the GCL, order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of
stockholders of the Corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the
Corporation, as the case may be, agree to any compromise or arrangement
and to any reorganization of the Corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and the
said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all the creditors or class of
creditors, and/or on all the stockholders or class of stockholders, of
the Corporation, as the case may be, and also on the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by law, and
all rights and powers conferred on the stockholders, directors and
officers herein are granted subject to this reserved power.
NINTH: No director of the Corporation shall be personally
liable to the Corporation or its stockholders for monetary damages for
the breach of any fiduciary duty as a director, except (i) for any
breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the GCL, as the same exists or hereafter may be
amended, or (iv) for any transaction from which the director derived an
improper personal benefit. If the GCL is amended after the date of
incorporation of the Corporation to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the GCL, as so amended.
- 2 -
<PAGE> 3
Any repeal or modification of the foregoing paragraph by the
stockholders of the Corporation shall be prospective only, and shall
not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification.
I, THE UNDERSIGNED, being the sole incorporator as named above, for the
purpose of forming a corporation pursuant to the GCL, make this Certificate,
hereby declaring and certifying that this is my act and deed and the facts
herein stated are true, and accordingly have hereunto set my hand this 22nd day
of May, 1998.
/s/ Richard A. Palmer
---------------------------------
Richard A. Palmer
c/o Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
- 3 -
<PAGE> 1
EXHIBIT 3.2.1
PULITZER INC.
B Y - L A W S
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may, from
time to time, determine on the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. The annual meeting of the stockholders for the election of
directors shall be held in the City of St. Louis, State of Missouri, at the
office of the corporation. Meetings of stockholders other than the annual
meeting may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. The annual meeting of stockholders shall be held on the second
Monday of April in each year if not a legal holiday, and if a legal holiday,
then on the next secular day following, at 2:00 P.M., or at such other time as
shall be designated, from time to time, by the board
<PAGE> 2
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date
and hour of the meeting shall be given to each stockholder entitled to vote at
such meeting not less than ten nor more than fifty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The list shall also
be produced and kept open at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the board of directors, the Chairman of the
Board or the President.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is
called, shall be given not less than ten nor more than fifty days before the
date of the meeting to each stockholder of record entitled to vote at such
meeting.
-2-
<PAGE> 3
Section 7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the right successively to
adjourn the meeting without notice other than announcement of the time and
place thereof at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. If the adjournment is for more than thirty days, or if
after the adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which, by express provision of the statutes or
of the certificate of incorporation, a different vote is required in which case
such express provision shall govern and control the decision of such question.
Section 10. Except as provided above or in the certificate of
incorporation, each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy
-3-
<PAGE> 4
executed in writing by the stockholder or his duly authorized attorney-in-fact
for each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
so long as, it is coupled with an interest sufficient in law to support an
irrevocable power of attorney. The interest with which it is coupled need not
be an interest in the stock itself.
Section 11. Any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by all stockholders entitled
to vote with respect to the subject matter thereof. The Secretary shall file
such consents with the minutes of the meetings of the stockholders.
Section 12. At all meetings of stockholders, the chairman of the meeting
shall have absolute authority over matters of procedure, and there shall be no
appeal from the ruling of the chairman.
Section 13. If the object of a stockholders' meeting is to elect directors
or to take a vote of the stockholders on any proposition, then, the chairman of
the meeting shall appoint not less than two persons, who are not directors,
inspectors to receive and canvass the votes given at such meeting and certify
the result to him.
Section 14. Attendance of a stockholder, in person or by proxy, at any
meeting shall constitute a waiver of notice of such meeting, except where the
stockholder, in person or by
-4-
<PAGE> 5
proxy, attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE III
DIRECTORS
Section 1. The board of directors after adoption of this section shall
consist of three (3) directors, and thereafter the number of directors which
constitute the whole board may be increased or subsequently decreased by
resolution of the board of directors, but in no case shall be less than three
(3) directors. The directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article, and each
director elected shall hold office until the next succeeding annual meeting or
until his successor is elected and qualified or until his earlier resignation
or removal. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next annual election by the stockholders of the corporation or until their
successors are duly elected and shall qualify, or until their earlier
resignation or removal. If there are no directors in office, then an election
of directors may be held in the manner provided by statute.
Section 3. The property and business of the corporation shall be
controlled and managed by its board of directors which may exercise all such
powers of the corporation and do all
-5-
<PAGE> 6
such lawful acts and things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done
by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation, or any committees
thereof, may hold meetings, both regular and special, either within or without
the State of Delaware.
Section 5. The first meeting of each newly elected board of directors
shall be held at such time and place as the newly elected board of directors
shall determine, and no notice of such meeting to the newly elected directors
shall be necessary in order legally to constitute the meeting, provided a
quorum shall be present.
Section 6. Regular meetings of the board of directors shall be held
quarterly in the months of January, April, July and October upon such notice,
or without notice, and on such date and time and at such place as shall from
time to time be determined by the board of directors.
Section 7. The Chairman of the Board or the President of the corporation
and the Secretary may call a special meeting of the board of directors at any
time by giving notice, specifying the business to be transacted at and the
purpose or purposes of the meeting, to each member of the board at least ten
(10) days before the time appointed for the meeting.
Section 8. At all meetings of the board, a majority of the full board of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute, the certificate of incorporation or these
bylaws.
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<PAGE> 7
If a quorum shall not be present at any meeting of the board of directors, the
directors present thereat may adjourn the meeting, from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting if all members of the board or committee, as the case may be, consent
thereto in writing, setting forth the action so taken and the writing or
writings are filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these bylaws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting of
the board of directors, or any committee, by means of conference telephone or
similar communications equipment whereby all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board of directors, appoint one or more committees, each committee
to consist of three or more directors, which shall have such authority and
consist of such members as the board may from time to time determine by
resolution adopted by a majority of the whole board.
Section 12. Each committee of the board shall keep regular minutes of its
meetings.
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<PAGE> 8
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of
incorporation or these bylaws, the board of directors shall have the authority
to fix the compensation of directors who are not full-time employees of the
corporation. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors, and directors who are not full-time
employees of the corporation may be paid a fixed sum for attendance at each
meeting of the board of directors and/or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Any director or directors may be removed from office at any
time, at a meeting of stockholders called expressly for that purpose at the
office of the corporation in St. Louis, Missouri, without the necessity of
specifying any cause therefor and without any prior notice of such action to
the director or directors so removed by a vote of the holders of a majority of
the shares then entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall
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<PAGE> 9
be construed to mean written or printed notice given either personally or by
mail addressed to such director or stockholder, at his address as it appears on
the records of the corporation, with postage thereon prepaid, and such notice
shall be deemed to be delivered at the time when the same shall be deposited in
the United States mail. Notice to directors may also be given by wire.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
bylaws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be
deemed equivalent thereto.
Section 3. Attendance at a meeting shall constitute a waiver of notice
except where a person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
Section 4. Neither the business to be transacted at, nor the purpose of,
any regular meeting of the board of directors need be specified in the notice
or waiver of notice of such meeting.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors at its first meeting after each annual meeting of the stockholders
and shall be a Chairman of the Board, a President and Chief Executive Officer
and a Senior Vice President-Finance, all of whom shall be chosen from among
members of the board, and a Treasurer and a Secretary. The board of directors
may also choose one or more additional Vice Presidents and one or more
Assistant
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<PAGE> 10
Secretaries and Assistant Treasurers. Any number of offices may be held by the
same person, except the offices of president and secretary shall not be held by
the same person.
Section 2. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 3. The Chairman of the Board and President shall fix, after
consultation with outside sources when desirable, the compensation of all
officers of the corporation, including in the case of officers who are also
directors, compensation as directors, other than the Chairman of the Board;
provided that the President shall not participate in the fixing of his own
compensation. The President shall fix the compensation of all other employees
of the corporation (exclusive of the Chairman of the Board, President and
Senior Vice President-Finance).
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify or until their earlier resignation or
removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the whole board of
directors whenever in its judgment the best interests of the corporation will
be served thereby. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
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<PAGE> 11
CHAIRMAN OF THE BOARD
Section 5. The Chairman of the Board shall preside at all meetings of the
board of directors and the stockholders and shall have such other powers and
perform such other duties as may from time to time be assigned to him by the
board of directors.
THE PRESIDENT
Section 6. The President shall be the chief executive officer of the
corporation, shall be subject to the direction of the board, and shall have
general and active management of the business of the corporation and shall see
that all orders and resolutions of the board of directors are carried into
effect. In the absence of the Chairman of the Board or in the case he shall
resign, retire, become deceased or otherwise cease or be unable to act, the
President shall also perform the duties and exercise the powers of the Chairman
of the Board.
THE VICE PRESIDENTS
Section 7. In the absence of the President, or in the case where the
President shall resign, retire, become deceased or otherwise cease or be unable
to act, the Senior Vice President-Finance shall perform the duties and exercise
the powers of the President. In addition, the Senior Vice President-Finance
shall have such other powers and perform such other duties as may from time to
time be assigned to him by the board of directors. The other Vice Presidents
shall have such powers and perform such duties as may from time to time be
assigned to them by the board of directors or the President.
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<PAGE> 12
THE SECRETARY AND ASSISTANT SECRETARY
Section 8. The Secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees of the board when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the
board of directors or the chief executive officer, under whose supervision he
shall be. He shall have custody of the corporate seal of the corporation and
he, or an Assistant Secretary, shall have authority to affix the same to any
instrument requiring it and when so affixed, it may be attested by his
signature or by the signature of such Assistant Secretary. The board of
directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his signature.
Section 9. The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Secretary and shall have
such other powers and perform such other duties as may from time to time be
assigned to them by the board of directors.
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<PAGE> 13
THE TREASURER AND ASSISTANT TREASURERS
Section 10. The Treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
corporation in such depositories as may be designated by the board of
directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the chief executive officer and the board of
directors, at its regular meetings, or when the board of directors so requires,
an account of all his transactions as Treasurer and of the financial condition
of the corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
Section 13. The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the Treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the Treasurer and shall
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have such other powers and perform such other duties as may from time to time
be assigned to them by the board of directors.
ARTICLE VI
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
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Section 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation; except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the performance
of his duty to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability and in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Section 3. To the extent that a director, officer, employee or agent of
the corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Sections 1 or 2 of this Article
VI or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection with the action, suit or proceeding.
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<PAGE> 16
Section 4. Any indemnification under Sections 1 or 2 of this Article VI
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in Sections 1 or 2 of this Article
VI. Such determination shall be made (a) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
Section 5. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the corporation as authorized in this Article VI. Such expenses incurred by
other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
Section 6. The indemnification provided by this Article VI shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
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Section 7. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
Section 8. For the purpose of this Article VI, references to "the
corporation" shall include, in addition to the resulting corporation, all
constituent corporations (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article VI with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
Section 9. For purposes of this Article VI, the term "other enterprise"
shall include employee benefit plans; the term "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and the
term "serving at the request of the corporation" shall include any service as a
director, officer, employee or agent of the corporation which imposes
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duties on, or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or beneficiaries;
and a person who acted in good faith and in a manner he reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this Article VI.
ARTICLE VII
CERTIFICATES OF STOCK
Section 1. Every holder of shares of capital stock in the corporation
shall be entitled to have a certificate sealed with the seal of the corporation
and signed by, or in the name of the corporation by, the Chairman of the Board,
or the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the corporation,
certifying the number of shares owned by him in the corporation.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of capital stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for stock duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any
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dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the board of directors may fix,
in advance, a record date, which shall not be more than thirty nor less than
ten days before the date of such meeting, nor more than thirty days prior to
any other action. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the outstanding shares of the capital stock of
the corporation, subject to the provisions of the certificate of incorporation,
if any, may be declared by
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the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of any statute, the certificate of incorporation and
these bylaws.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money of the corporation shall be
signed by such officer or officers or such other person or persons as the board
of directors may from time to time designate.
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FISCAL YEAR
Section 5. The fiscal year of the corporation shall be a 52 to 53 week
period which ends on the Sunday nearest to the last day of December.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
CONTRACTS
Section 7. Except as otherwise provided in these bylaws:
(a) Contracts with labor unions shall be made or executed by the President
or Vice President/Administration.
(b) Contracts obligating the corporation for more than $25,000 shall be
approved by the board of directors, except that (i) contracts with labor unions
shall not require approval by the board of directors, and (ii) employment
contracts with any person other than an officer of the corporation shall not
require approval by the board of directors and may be made or executed by any
officer of the corporation with the prior approval of the President.
(c) Contracts obligating the corporation for more than $10,000 must be
made or executed by an officer of the corporation, with the prior approval of
the President.
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(d) Contracts in connection with the operation of their respective
departments, if obligating the corporation for less than $10,000, may be made
and executed by any officer of the corporation.
Section 8. An officer of the corporation may sign any note, bond, or
mortgage of the corporation in furtherance of the corporation's ordinary
business and in order to implement any action authorized by these bylaws.
TREASURY STOCK
Section 9. No stock of the corporation held in the corporation's treasury
shall be sold unless such sale is authorized and approved in advance by a
resolution adopted by a majority of the stockholders at a meeting duly called
for that purpose and is made in conformity with the terms and conditions set
forth in such resolution.
ARTICLE IX
AMENDMENTS
Section 1. The bylaws or any of them may be altered, amended or repealed
at any meeting of the board of directors by an affirmative vote of a majority
of the whole board, except that Section 9 of Article VIII of the bylaws shall
not be altered, amended or repealed except by a majority vote of the
stockholders at a meeting duly called and convened for that purpose.
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<PAGE> 1
EXHIBIT 4.1
<TABLE>
<S><C>
TEMPORARY CERTIFICATE-EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN READY FOR DELIVERY
COMMON STOCK
NUMBER SHARES
P
PULITZER INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 745769 10 9
THIS CERTIFIES THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01 EACH OF THE COMMON STOCK OF
========================================PULITZER INC.====================================
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly endorsed.
This certificate is not valid unless countersigned and registered by
the Transfer Agent and Registrar. WITNESS the facsimile seal of the Corporation
and the facsimile signatures of its duly authorized officers.
Dated:
James V. Maloney Michael E. Pulitzer
SECRETARY CHAIRMAN
[PULITZER SEAL] Countersigned and Registered:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
Transfer Agent
and Registrar
By
AUTHORIZED OFFICER
</TABLE>
<PAGE> 2
PULITZER INC.
The Corporation will furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-D.........................Custodian........................
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with the under Uniform Gifts to Minors
right of survivorship and Act........................
not as tenants in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, ________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
_______________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________________________________ shares
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint ___________________ Attorney to transfer the
said stock on the books of the within named Corporation with full power of
substitution in the premises.
Dated_____________________
______________________________________________________________
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
<PAGE> 1
EXHIBIT 10.1
THIS AGREEMENT made this 1st day of March, 1961, by and between THE
PULITZER PUBLISHING COMPANY, a Missouri corporation, Party of the First Part,
and the GLOBE DEMOCRAT PUBLISHING COMPANY, a Missouri corporation, Party of the
Second Part;
WITNESSETH:
WHEREAS, the parties hereto entered into an agreement bearing date of
February 27, 1959, under which The Pulitzer Publishing Company agreed to print
the newspaper published by the Globe Democrat Publishing Company at a fixed
price per standard size page, plus certain costs and increases therein, as more
fully set forth in said agreement; and
WHEREAS, the parties hereto have operated under the said agreement
subsequent to February 27, 1959; and
WHEREAS, The Pulitzer Publishing Company has found the said agreement of
February 27, 1959 extremely burdensome and has sustained losses on the printing
of the newspaper published by the Globe Democrat Publishing Company; and
WHEREAS, The Pulitzer Publishing Company has notified the Globe Democrat
Publishing Company that it would be willing to continue printing the newspaper
published by the Globe Democrat Publishing Company after the expiration of the
period provided in the said agreement of February 27, 1959 without an increase
in the charge for the printing of the said newspaper sufficient to compensate
it for the losses sustained during the period covered by the said agreement of
February 27, 1959; and
<PAGE> 2
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WHEREAS, the Globe Democrat Publishing Company has explored the
possibility of acquiring a new plant of its own for the printing of its
newspaper after the expiration of the said period, or of making other
arrangements for the printing of its newspaper, but has found it impossible to
acquire a new plant of its own without an excessive expenditure of funds far
beyond the point justified by its newspaper, and has concluded that it would be
unable to make other arrangements for the printing of its newspaper at a price
which would permit the continued publication of the said newspaper; and
WHEREAS, the costs of labor, newsprint and other materials used in the
printing of the newspapers have continued to increase; and
WHEREAS, the competition from television stations, radio stations, smaller
daily newspapers, weekly newspapers, community newspapers, religious and
philanthropic newspapers, foreign language newspapers and labor journals
published in the metropolitan area of St. Louis has continued to increase
thereby causing the newspapers published by the parties hereto to continue to
lose readers and advertisers who, except for the competition from the said
television stations, radio stations and other newspapers and journals, would be
regular readers of and advertisers in the newspapers published by the parties
hereto; and
WHEREAS, both parties are desirous of retaining their separate identities
and their separate advertising, circulation, news and editorial policies in
order that more than one coverage and opinion of public affairs may be
presented to the citizens of St. Louis by two independent daily newspapers of
substantial size; and
WHEREAS, the parties hereto are convinced that the only practicable way in
which they can continue to publish their respective newspapers
<PAGE> 3
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in competition with each other and with the other news and advertising media in
the metropolitan area of St. Louis is to continue to use a single printing
plant on a fair and equitable basis.
NOW, THEREFORE, the parties hereto in consideration of the premises and of
the mutual covenants herein set forth, agree with each other as follows:
1. Payment of Additional Compensation for Printing under Prior
Agreement. The Globe Democrat Publishing Company agrees to pay to The Pulitzer
Publishing Company, prior to midnight September 10, 1961 (the end of The
Pulitzer Publishing Company's ninth accounting period), the sum of Six Hundred
Thousand Dollars ($600,000) as additional compensation to The Pulitzer
Publishing Company for printing the newspaper published by the Globe
Democrat Publishing Company under the said agreement of February 27, 1959.
2. Cancellation of Printing Agreement. The said agreement bearing date
of February 27, 1959 between The Pulitzer Publishing Company, as Party of the
First Part, and the Globe Democrat Publishing Company, as Party of the Second
Part, is cancelled and abrogated in all respects as to both parties effective
at midnight December 31, 1960.
3. The Pulitzer Publishing Company to Complete Installation and to
Maintain Modern Printing Plant. The Pulitzer Publishing Company shall complete
the removal of its printing equipment from its old plant at 1111 Olive Street
to its new plant at 1133 Franklin Avenue, and shall complete the installation
in the latter plant of a modern and efficient newspaper printing plant capable
of printing the newspapers published by both parties hereto and shall at all
times maintain the said plant as a modern and efficient
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newspaper printing plant. However, The Pulitzer Publishing Company shall not
be obligated to install or maintain in the said plant any rotogravure printing
equipment.
4. The Pulitzer Publishing Company to Print the Globe Democrat Publishing
Company's Newspaper in Same Manner as under Old Agreement until Midnight
September 10, 1961. Subject to the adjustment provided in Paragraph 27 hereof,
The Pulitzer Publishing Company shall continue to print the newspaper published
by the Globe Democrat Publishing Company (which said newspaper is hereinafter
referred to as the "Globe-Democrat") and shall deliver the Globe-Democrat to
representatives of the Globe-Democrat Publishing Company at the truck side of
the loading dock, in the same manner as it has done heretofore under the
agreement of February 27, 1959, until midnight September 10, 1961. The Pulitzer
Publishing Company shall also continue to print and deliver its own newspaper,
The St. Louis Post-Dispatch (which said newspaper is hereinafter referred to as
the "Post-Dispatch"), in the same manner as it has done heretofore under the
agreement of February 27, 1959, until midnight September 10, 1961.
5. The Pulitzer Publishing Company to Produce Both Newspapers After
September 10, 1961 as Part of the "Agency Operation". Beginning at 12:01 a.m.
on September 11, 1961, The Pulitzer Publishing Company shall supervise, manage
and perform all operations involved in the production of the newspapers
published by both parties hereto, as part of the "Agency Operation" as defined
herein, and shall deliver each edition bundled, wrapped or otherwise prepared
for mailing or delivery, to the representatives of the respective parties at
the truck side of the loading dock. Each party hereto shall be responsible for
the mailing or delivery of its newspapers beyond the truck side of the loading
dock, but the cost of mailing or
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delivering each newspaper shall constitute a charge against the "Agency
Operation" as herein provided.
6. Definition of "Agency Operation". As used herein, the term "Agency
Operation" shall mean all activities involved in the production and mailing or
delivery of the newspapers published by both parties hereto from the point
where the news, editorial, advertising and other content of said newspapers is
delivered to The Pulitzer Publishing Company's printing plant for production
through to final mailing or delivery of the completed newspaper, and the
accounting therefor.
7. Definition of "Agency Income". As used herein, the term "Agency
Income" means the total circulation, advertising and other income from the
newspapers published by both parties hereto.
8. Definition of "Agency Operating Charges". As used herein, the term
"Agency Operating Charges" shall consist of the following expense items:
(a) All of the ordinary and necessary expenses incurred by The Pulitzer
Publishing Company in producing and in delivering both newspapers to
the truck side of the loading dock. Such ordinary and necessary
expenses shall include but shall not be limited to the costs of
labor, newsprint, ink, supplies and services required for the
production of both newspapers including weekly feature supplements;
the cost of keeping the books and records of the "Agency Operation";
the salaries of officers and other personnel of The Pulitzer
Publishing Company, other than the salary of its chief executive
officer, for services rendered directly to the "Agency Operation";
"Rental" for the space occupied by the "Agency Operation" computed in
the manner set forth in Paragraph 9 hereof; depreciation on printing
equipment, furniture and fixtures and other depreciable equipment
used in the "Agency Operation", said depreciation to be computed at
the rates and in the manner allowed by the United States Internal
Revenue Service for federal income tax purposes; other administrative
and indirect expenses of the "Agency Operation" as set forth in
Paragraph 17 hereof; and the fees and other charges of the
independent certified public accounting firm referred to in Paragraph
24 hereof; plus
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(b) The costs of mailing or delivering the newspapers published by both
parties, which costs shall be billed to and paid by the "Agency
Operation" as provided in Paragraph 16 hereof; plus
(c) The cost of defending, settling, paying or discharging any liability
or claim on account of anything published in either of the two
newspapers printed by the "Agency Operation" if such liability or
claim is the result of an error in the printing of the newspaper or
the result of the negligence of any person employed in the "Agency
Operation". No part of the cost of defending, settling, paying or
discharging any liability or claim on account of anything published
in either of the two said newspapers shall constitute part of the
"Agency Operating Charges" or be included in the computation of
"Excess of Income Over Expenses" or "Excess of Expenses Over Income",
as defined herein, where such liability or claim does not result from
an error in printing or result from the negligence of a person
employed in the "Agency Operation", it being the intention of the
parties hereto that each party shall defend and settle all
liabilities or claims arising out of or based on anything published
in its newspaper (other than liabilities or claims resulting from an
error in the printing of the newspaper or resulting from the
negligence of a person employed in the "Agency Operation") and that
no part of such cost shall be charged against the "Agency Operation"
or be included in the costs of operation of either party's own
separate advertising (including dispatch department), circulation,
news (including photographic department) and editorial departments
or, for the purpose of this agreement, in the costs of either party's
other activities relating to such party's own newspaper operation.
(d) Items which are partly chargeable to operations other than the
producing and mailing or delivering of the Post-Dispatch and the
Globe-Democrat and partly chargeable to the "Agency Operation" shall
be allocated on the basis of sound accounting principles subject to
approval at the end of the year by the independent certified public
accounting firm referred to in Paragraph 24 hereof.
(e) There shall not be included in the "Agency Operating Charges" the
salaries or other expenses of either party's own separate advertising
(including dispatch department), circulation, news (including
photographic department) and editorial departments or of either
party's other activities relating to such party's own newspaper
operation; nor any portion of the compensation of the chief executive
officer of either party; nor any expense of either party incurred in
carrying on its
<PAGE> 7
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general corporate and other non-newspaper operations, it being the
intention of the parties hereto that each party shall pay and have
exclusive control over the entire cost of gathering its own news,
preparing its own newspaper, handling its own circulation and
advertising, including all things necessary for the publication of its
own newspaper up to the point where such material for processing is
delivered to the printing plant for production, and that the "Agency
Operation" shall bear all expenses of producing and mailing or
delivering both newspapers, including accounting and administrative
and other direct and indirect expenses allocable thereto.
(f) The computation of "Agency Operating Charges" under this Paragraph 8
shall be made on the basis of sound accounting principles and shall be
subject to approval at the end of the year by the independent
certified public accounting firm referred to in Paragraph 24 hereof.
9. Definition of "Rental". As used herein, the term "Rental"
shall consist of an allocated portion of the total amount of the following
expense items:
(a) Depreciation on the building and building equipment owned by either
party in which said party operates its separate advertising (including
dispatch department), circulation, news (including photographic
department) and editorial departments and its other activities
relating to said party's own newspaper operation and, in the case of
The Pulitzer Publishing Company, the building (including building
equipment) in which it conducts the "Agency Operation" and in which
its printing plant is located, said depreciation to be computed at the
rates and in the manner allowed by the United States Internal Revenue
Service for federal income tax purposes.
(b) Rental paid by either party hereto on any building in which said party
operates its separate advertising (including dispatch department),
circulation, news (including photographic department) and editorial
departments and its other activities relating to said party's own
newspaper operation, and rental paid by either party for facilities
used in connection with the operation of its separate said four
departments and with its other activities relating to said party's
own newspaper operation; and, in the case of The Pulitzer Publishing
Company, rental paid on any building or for any facilities used in
connection with the "Agency Operation" including the printing plant.
<PAGE> 8
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(c) Amortization of leasehold improvements, if any, used by either
party in the operation of said party's separate advertising (including
dispatch department), circulation, news (including photographic
department) and editorial departments and its other activities
relating to said party's own newspaper operation and, in the case of
The Pulitzer Publishing Company, used in connection with the "Agency
Operation" including the printing plant, said amortization to be
computed at the rates and in the manner allowed by the United States
Internal Revenue Service for federal income tax purposes.
(d) The cost of operating and maintaining any buildings and building
equipment in which either party operates its separate advertising
(including dispatch department), circulation, news (including
photographic department) and editorial departments and its other
activities relating to said party's own newspaper operation and, in
the case of The Pulitzer Publishing Company, the building or
buildings (including building equipment) in which it conducts the
"Agency Operation" and the printing plant. Such operating and
maintenance costs shall include but shall not be limited to all real
estate and other taxes assessed against the buildings or equipment
therein, heat, light, water, fuel, power, air conditioning, repairs,
and wages of operating and maintenance employees.
In the case of The Pulitzer Publishing Company, the total amount
of the above mentioned expenses referred to in this Subparagraph 9(d)
shall be allocated to: (1) the space occupied by the "Agency
Operation" including the printing plant; (2) the space occupied by The
Pulitzer Publishing Company's separate advertising (including dispatch
department), circulation, news (including photographic department)
and editorial departments and by its other activities relating to its
own newspaper operation; and (3) the space occupied by The Pulitzer
Publishing Company for its general offices and its other non-newspaper
operations.
In the case of the Globe Democrat Publishing Company, the total
amount of the above mentioned expenses referred to in this
Subparagraph 9(d) shall be allocated to: (1) the space occupied by the
Globe Democrat Publishing Company's separate advertising (including
dispatch department), circulation, news (including photographic
department) and editorial departments and by its other activities
relating to its own newspaper operation; and (2) the space occupied by
the Globe Democrat Publishing Company for its general offices and its
other non-newspaper operations.
<PAGE> 9
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(e) The computation of "Rental" under this Paragraph 9 shall be made on
the basis of sound accounting principles and shall be subject to
approval at the end of the year by the independent certified public
accounting firm referred to in Paragraph 24 hereof.
(Each party hereto shall be reimbursed by the "Agency Operation"
as herein provided for that portion of the "Rental" computed in the
manner outlined herein allocable to the operation of said party's
separate advertising (including dispatch department), circulation,
news (including photographic department) and editorial departments
and its other activities relating to said party's own newspaper
operation. In addition, The Pulitzer Publishing Company shall be
reimbursed as herein provided for that portion of the "Rental"
computed in the manner outlined herein allocable to the "Agency
Operation" (including the printing plant) and such costs shall
constitute part of the "Agency Operating Charges" as provided in
Paragraph 8 hereof.)
10. Definition of "Excess of Agency Income Over Agency Operating Charges"
and "Excess of Agency Operating Charges Over Agency Income". As used herein,
the term "Excess of Agency Income Over Agency Operating Charges" shall mean the
excess of the total circulation, advertising and other income from both
newspapers over the "Agency Operating Charges", as defined herein. As used
herein, the term "Excess of Agency Operating Charges Over Agency Income" shall
mean the excess of the "Agency Operating Charges", as defined herein, over the
total circulation, advertising and other income from both newspapers.
11. Definition of "Excess of Income Over Expenses" and "Excess of Expenses
Over Income". As used herein, the term "Excess of Income Over Expenses" shall
mean the excess of the "Agency Income", as defined herein, over the total of the
following items for any particular period:
(1) The total "Agency Operating Charges" as defined herein;
plus
<PAGE> 10
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(2) The total cost of operating The Pulitzer Publishing
Company's separate advertising (including dispatch
department), circulation, news (including photographic
department) and editorial departments and of operating the
other activities relating to its own newspaper operation;
plus
(3) The total cost of operating the Globe Democrat Publishing
Company's separate advertising (including dispatch
department), circulation, news (including photographic
department) and editorial departments and of operating the
other activities relating to its own newspaper operation.
As used herein, the term "Excess of Expenses Over Income" shall mean
the excess of the total of the following items over the "Agency Income", as
defined herein, for any particular period:
(1) The total "Agency Operating Charges" as defined herein; plus
(2) The total cost of operating The Pulitzer Publishing
Company's separate advertising (including dispatch
department), circulation, news (including photographic
department) and editorial departments and of operating the
other activities relating to its own newspaper operation;
plus
(3) The total cost of operating the Globe Democrat Publishing
Company's separate advertising (including dispatch
department), circulation, news (including photographic
department) and editorial departments and of operating the
other activities relating to its own newspaper operation.
12. "Agency Bank Account". On or prior to September 11, 1961,
The Pulitzer Publishing Company shall open and thereafter maintain a special
bank account with one of the leading downtown banks in the City of St. Louis,
which account is hereinafter referred to as the "Agency Bank Account", and which
shall be used to finance the production and mailing or delivery of the
newspapers published by both parties hereto as hereinafter provided. At the time
that the said "Agency Bank Account" is opened, The Pulitzer Publishing Company
shall deposit therein as an advance the sum of
<PAGE> 11
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Four Hundred Twenty Thousand Dollars ($420,000) and the Globe Democrat
Publishing Company shall deposit therein as an advance the sum of One Hundred
Eighty Thousand Dollars ($180,000), it being understood that the initial
deposits are intended to cover the cost of producing and mailing or delivering
both newspapers until the "Agency Operation" shall have accumulated sufficient
funds from the advertising, circulation and other newspaper income to cover the
current cost of producing and mailing or delivering the said newspapers at which
time the advances shall be repaid to the respective depositors. The Pulitzer
Publishing Company shall have charge of the "Agency Bank Account" and shall pay
from the said "Agency Bank Account" all "Agency Operating Charges", as that term
is defined herein, keep complete and accurate records of the "Agency Operation",
as defined herein, and pay from the said "Agency Bank Account" to each of the
parties hereto the amounts, if any, payable therefrom to each said party as
provided herein.
13. Income from Both Newspapers to be Deposited in "Agency Bank
Account". Beginning on September 11, 1961, and continuing throughout the
remaining life of this agreement, the Globe Democrat Publishing Company shall
deposit each day in the "Agency Bank Account" the circulation, advertising and
other income from its newspaper and shall furnish The Pulitzer Publishing
Company each day a record of such deposits in sufficient detail to permit The
Pulitzer Publishing Company to record such deposits on the books and records of
the "Agency Operation". Beginning on the same day and continuing throughout the
remaining life of this agreement, The Pulitzer Publishing Company shall likewise
deposit each day in the "Agency Bank Account" the circulation, advertising and
other income from its newspaper
<PAGE> 12
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and shall account for the same in the records of the "Agency Operation" in the
same manner as it accounts for the revenues deposited by the Globe Democrat
Publishing Company.
14. The Pulitzer Publishing Company to Keep Separate Records of the
"Agency Operation". The Pulitzer Publishing Company shall maintain separate
and accurate books of account for the "Agency Operation", employing the accrual
method of accounting on the 13-period year basis. Such books shall show all
income of both newspapers from circulation, advertising and other sources and
shall show the "Agency Operating Charges", as that term is defined herein,
covering the production and mailing or delivery of both said newspapers. As
soon as practicable after the end of each 4-week period, The Pulitzer
Publishing Company shall submit to the Globe Democrat Publishing Company a
statement showing the "Agency Income", the "Agency Operating Charges",
and the "Excess of Agency Income Over Agency Operating Charges" or
the "Excess of Agency Operating Charges Over Agency Income", as each such
term is defined herein, for the period in question and cumulatively for all of
the elapsed 4-week periods of the current accounting year. On or before March
15th of each calendar year, The Pulitzer Publishing Company shall submit to the
Globe Democrat Publishing Company an annual statement showing the "Agency
Income", the "Agency Operating Charges", and the "Excess of Agency Income Over
Agency Operating Charges" or the "Excess of Agency Operating Charges Over
Agency Income", as each such term is defined herein, for the preceding 13-period
year ending on or about December 31st of the preceding year.
If any dispute should arise between the parties hereto with respect to
anything contained in or forming the basis for anything contained in a 4-week
periodic statement, including but not limited to the accounting for
<PAGE> 13
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or the allocation of cost items, such dispute shall be settled by agreement of
the treasurers of the parties hereto. If the said treasurers are unable to
agree, then such dispute shall be settled by the "Standing Committee", subject
to approval at the end of the year by the independent certified public
accounting firm and subject to the right to arbitration in the event of a
dispute as herein provided.
15. Globe Democrat Publishing Company to Have Right to Examine Books of
the "Agency Operation". The Globe Democrat Publishing Company shall have
access to and shall have the right to examine the accounting books and records
(including supporting data) maintained by The Pulitzer Publishing Company
recording the "Agency Operation", including the "Agency Bank Account", as each
such term is defined herein, but shall not have access to nor the right to
examine any of The Pulitzer Publishing Company's other books or records. The
Pulitzer Publishing Company shall have the right to examine any of the
accounting books and records (including supporting data) of the Globe Democrat
Publishing Company recording the financial activities included in the "Agency
Operation", but shall not have access to nor the right to examine any of the
Globe Democrat Publishing Company's other books or records.
16. Cost of Mailing or Delivering Both Newspapers to be Charged Against
the "Agency Operation". Each party hereto shall manage and direct the mailing
or delivery of its own newspaper in such manner as it deems best, but the cost
of mailing or delivering both newspapers shall be paid by the "Agency
Operation" and shall constitute part of the "Agency Operating Charges" as
defined herein. At the end of each week, or at the end of such other period
as may be agreed upon by the parties from time to time, each party hereto shall
submit to the "Agency Operation" a bill covering the cost
<PAGE> 14
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of mailing or delivering its newspaper for the period in question. The
Pulitzer Publishing Company shall thereupon pay to the Globe Democrat
Publishing Company out of the "Agency Bank Account" an amount equivalent to the
cost of mailing or delivering that company's newspaper for the period in
question, and shall likewise pay to itself out of the "Agency Bank Account" an
amount equivalent to the cost of mailing or delivering its own newspaper for
the said period.
17. General Administrative and Other Indirect Expenses to be Allocated.
Each party hereto shall keep separate and accurate records of its general
administrative expenses, including but not limited to the salaries of its
general officers (other than the salary of its chief executive officer), costs
of accounting, legal expenses, insurance expenses, charitable contributions,
travel expenses, parking lot, job printing, pensions and other expenses,
partly allocable to (1) the "Agency Operation"; party allocable to (2) the
operation of said party's separate advertising (including dispatch
department), circulation, news (including photographic department) and
editorial departments and to the other activities relating to said party's
own newspaper operation; and partly allocable to (3) said party's general
corporate and non-newspaper operations.
Such general administrative and other indirect expenses of each party
hereto shall be allocated on the basis of sound accounting principles, subject
to approval at the end of the 13-period year by the independent certified
public accounting firm referred to in Paragraph 24 hereof, to (1) the
"Agency Operation"; (2) the operation of said party's separate advertising
(including dispatch department), circulation, new (including photographic
department) and editorial departments and to the other activities relating to
said party's own newspaper operation; and (3) said party's general corporate
and non-newspaper operations.
<PAGE> 15
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The portion of such general administrative and other indirect expenses
allocable to the "Agency Operation" shall constitute part of the "Agency
Operating Charges" as provided in Paragraph 8 hereof. The portion of such
general administrative and other indirect expenses allocable to the operation
of each party's own separate advertising (including dispatch department),
circulation, news (including photographic department) and editorial departments
and to the other activities relating to said party's own newspaper operation
shall constitute part of the costs of said party's separate advertising
(including dispatch department), circulation, news (including photographic
department) and editorial departments and of the other activities relating to
said party's own newspaper operation for the purpose of computing the "Excess
of Income Over Expenses" or the "Excess of Expenses Over Income" as provided in
Paragraph 24 hereof. The portion of such general administrative and other
indirect expenses allocable to each party's general corporate and non-newspaper
operations shall be excluded from the computation of the "Agency Operating
Charges", and from the computation of the "Excess of Income Over Expenses" or
the "Excess of Expenses Over Income", as each such term is defined herein.
18. The Pulitzer Publishing Company's Rotogravure Operation Not to be
Included in the "Agency Operation". The parties hereto understand that The
Pulitzer Publishing Company operates a separate rotogravure printing plant now
located on Duncan Avenue in the City of St. Louis, in which it prints
rotogravure supplements for its own newspaper and also prints rotogravure
supplements on a contract basis for third parties. The parties agree that the
operations of the said rotogravure printing plant shall not constitute part of
the "Agency Operation". However, The Pulitzer Publishing Company may cause such
rotogravure printing plant to print one or
<PAGE> 16
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more rotogravure supplements for its own newspaper, the Post-Dispatch. If the
Globe Democrat Publishing Company should request The Pulitzer Publishing
Company to print any rotogravure supplements for use in its newspaper, the
Globe-Democrat, and if The Pulitzer Publishing Company should have sufficient
production capacity to handle such supplements, such rotogravure supplements
shall be printed for the Globe Democrat Publishing Company. The charges for the
printing of rotogravure supplements for either or both of the said newspapers
shall be at the same rates which The Pulitzer Publishing Company establishes
for the printing of supplements on a contract basis for other parties and such
rates shall be reasonably competitive. Such charges shall constitute part of
the "Agency Operating Charges" as defined herein. However, the profit or loss
of the rotogravure printing plant shall not constitute part of the "Agency
Operation" and The Pulitzer Publishing Company shall not be obligated to
account to the Globe Democrat Publishing Company for any part of the profit or
loss from the said rotogravure printing plant.
19. Globe Democrat Publishing Company to Operate Separate Advertising,
Circulation, News and Editorial Departments. The Globe Democrat Publishing
Company shall maintain in its own separate quarters, entirely apart from the
"Agency Operation", its own advertising (including dispatch department),
circulation, news (including photographic department) and editorial
departments, and shall continue to determine without regard to The Pulitzer
Publishing Company the advertising, circulation, news and editorial policies of
its newspaper, the Globe-Democrat.
20. The Pulitzer Publishing Company to Operate Separate Advertising,
Circulation, News and Editorial Departments. The Pulitzer Publishing Company
shall maintain in its own separate quarters, entirely apart
<PAGE> 17
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from the "Agency Operation", its own advertising (including dispatch
department), circulation, news (including photographic department) and
editorial departments, and shall continue to determine without regard to the
Globe Democrat Publishing Company the advertising, circulation, news and
editorial policies of its newspaper, the Post-Dispatch.
21. Each Party to Keep Records of Costs of its Own Separate Advertising,
Circulation, News and Editorial Departments and of its Other Activities Relating
to its Own Newspaper Operation. Each party shall keep separate and accurate
records of the costs of operating its own separate advertising (including
dispatch department), circulation, news (including photographic department) and
editorial departments and of the costs of the other activities relating to said
party's own newspaper operation, and shall make those records available to the
independent certified public accounting firm for use in determining the "Excess
of Income Over Expenses" or the "Excess of Expenses Over Income", as provided
in Paragraph 24 hereof.
Such costs of operation shall include all of the direct costs of operating
the said separate departments of each party and of operating the other
activities relating to said party's own newspaper operation. Such costs of
operation shall also include the correct portion of all costs which are partly
allocable to (1) the said separate departments of each party and the other
activities relating to said party's own newspaper operation; partly allocable
to (2) each party's general corporate and other non-newspaper operations; and
partly allocable to (3) the "Agency Operation", as defined herein. Such
allocable costs shall include but not be limited to those costs incorporated in
the term "Rental" as defined in Paragraph 9 hereof; depreciation on furniture,
fixtures and other equipment used by the said separate departments of each party
and by the other activities relating to said
<PAGE> 18
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party's own newspaper operation, said depreciation to be computed at the rates
and in the manner allowed by the United States Internal Revenue Service for
federal income tax purposes; and administrative and other indirect expenses
allocable to the said separate departments of each party and to the other
activities relating to said party's own newspaper operation, as provided in
Paragraph 17 hereof.
Such records shall be kept and the said allocations shall be made in
accordance with sound accounting principles and shall be subject to approval at
the end of the year by the independent certified public accounting firm and
subject to arbitration at the end of the year in the event of a dispute as
herein provided.
22. The Pulitzer Publishing Company to Submit Preliminary Report for Each
Accounting Period and Pay to Each Party a Portion of the "Excess of Agency
Income Over Agency Operating Charges", or Collect from Each Party a Portion of
the "Excess of Agency Operating Charges Over Agency Income". At the time that
The Pulitzer Publishing Company submits each of the 4-week periodic statements
during a particular year as provided in Paragraph 14 hereof, it shall: (1) pay
to the Globe Democrat Publishing Company out of the "Agency Bank Account" an
amount equivalent to twenty per cent (20%) of the "Excess of Agency Income Over
Agency Operating Charges", if any, for the period covered by the said statement,
plus an amount equivalent to (i) the portion of the "Rental" allocable to the
Globe Democrat Publishing Company's separate newspaper operation for the period
covered by the said statement as determined under Paragraph 9 hereof, and (ii)
the depreciation (other than the depreciation included in the determination of
"Rental" under Paragraph 9 hereof) applicable to the Globe Democrat Publishing
Company's separate newspaper operation for
<PAGE> 19
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the period covered by the said statement as determined under Paragraph 21
hereof; (2) pay to itself out of the "Agency Bank Account" sixty per cent
(60%) of the "Excess of Agency Income Over Agency Operating Charges", if any,
for the period covered by the said statement, plus an amount equivalent to (i)
the portion of the "Rental" allocable to The Pulitzer Publishing Company's
separate newspaper operation for the period covered by the said statement as
determined under Paragraph 9 hereof, and (ii) the depreciation (other than the
depreciation included in the determination of "Rental" under Paragraph 9
hereof) applicable to The Pulitzer Publishing Company's separate newspaper
operation for the period covered by the said statement as determined
under Paragraph 21 hereof, and (iii) the portion of the "Rental" applicable to
the "Agency Operation" and deducted in computing the "Agency Operating Charges"
for the period covered by the said statement as determined under Paragraphs 8
and 9 hereof, and (iv) the depreciation (other than the depreciation included
in the determination of "Rental" under Paragraph 9 hereof) applicable to the
printing equipment, furniture and fixtures and other depreciable equipment used
in the "Agency Operation" and deducted in computing the "Agency Operating
Charges" for the period covered by the said statement as determined under
Paragraph 8 hereof; and (3) retain in the "Agency Bank Account" the remaining
portion of the "Excess of Agency Income Over Agency Operating Charges" pending
disposition thereof under Paragraphs 23 and 24 hereof.
If the periodic statement should disclose an "Excess of Agency
Operating Charges Over Agency Income", as defined herein, for the period
covered by the said statement, then the Globe Democrat Publishing Company shall
within fifteen (15) days after receipt of the periodic statement pay into
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the "Agency Bank Account" thirty per cent (30%) of such "Excess of Agency
Operating Charges Over Agency Income", and The Pulitzer Publishing Company
shall within the same 15-day period transfer from its general funds to the
"Agency Bank Account" an amount equivalent to seventy per cent (70%) of the
"Excess of Agency Operating Charges Over Agency Income", less the amount of (i)
the portion of the "Rental" applicable to the "Agency Operation" and deducted
in computing the "Agency Operating Charges" for the period covered by the said
statement as determined under Paragraphs 8 and 9 hereof, and (ii) the
depreciation (other than the depreciation included in the determination of
"Rental" under Paragraph 9 hereof) applicable to the printing equipment,
furniture and fixtures and other depreciable equipment used in the "Agency
Operation" and deducted in computing the "Agency Operating Charges" for the
period covered by the said statement as determined under Paragraph 8 hereof.
In the event of a dispute between the parties hereto with respect to
the periodic statement, then the amounts due to the "Agency Operation" from the
parties hereto or any additional amounts due from the "Agency Operation" to the
parties hereto shall be paid within fifteen (15) days after settlement of the
said dispute by the treasurers of the parties hereto or by the "Standing
Committee", as provided in Paragraph 14 hereof.
The preliminary settlement percentages set forth in this Paragraph 22 may
be changed from time to time, either by agreement of the parties hereto or by
decision of the "Standing Committee" referred to in Paragraph 31 hereof, to
cover the needs of the parties for cash with which to operate their separate
advertising (including dispatch department), circulation, news (including
photographic department) and editorial departments.
<PAGE> 21
- 21 -
23. Preliminary Distribution of "Excess of Income Over Expenses".
At the close of any of the thirteen 4-week accounting periods during any
particular year, if the cumulative retained portion of the "Excess of Agency
Income Over Agency Operating Charges" as provided in Paragraph 22 hereof,
together with the anticipated "Agency Income" for the 13-period year, is
sufficient in the opinion of The Pulitzer Publishing Company to cover the
estimated "Agency Operating Charges" for the remainder of the year, then The
Pulitzer Publishing Company may pay to itself as a preliminary distribution of
the "Excess of Income Over Expenses", seventy percent (70%) of the retained
portion of the total "Excess of Agency Income Over Agency Operating Charges"
for the said period, which sum would otherwise be retained until after the end
of the year as provided in Paragraphs 22 and 24 hereof. The parties hereto
understand and agree that this permissive preliminary distribution of "Excess
of Income Over Expenses" is intended to permit The Pulitzer Publishing Company
to use a portion of its anticipated share of the "Excess of Income Over
Expenses" for the particular year for the replacement and maintenance of its
printing plant and equipment and, among other things, for the payment of
expenses arising out of the ownership and operation of the printing plant not
included in the "Agency Operating Charges" as defined herein. The amount of
such preliminary distribution paid by The Pulitzer Publishing Company to itself
out of the "Agency Bank Account" for any particular year shall be deducted from
its share of the total "Excess of Income Over Expenses" for the year, as
determined by the independent certified public accounting firm referred to in
Paragraph 24 hereof.
<PAGE> 22
- 22 -
24. Independent Certified Public Accounting Firm to Determine Final
Results for Year and Allocate Income or Loss Between the Parties. On or before
March 15th of each year, an independent certified public accounting firm, to be
selected by the parties hereto, shall ascertain from the books and records of
each party, and shall certify in writing to each party, a summary computation
(in a form to be agreed upon by the parties hereto) of the "Excess of Income
Over Expenses" or of the "Excess of Expenses Over Income" from the operation of
both newspapers for the preceding 13-period year ending on or about December
31st, taking into consideration (a) the "Excess of Agency Income Over Agency
Operating Charges" or the "Excess of Agency Operating Charges Over Agency
Income" as defined herein, and (b) the costs of operation of the separate
advertising (including dispatch department), circulation, news (including
photographic department) and editorial departments of each party and the costs
of each party's other activities relating to said party's own newspaper
operation as set forth in Paragraph 21 hereof.
If the said summary computation of the independent certified public
accounting firm shows that there was an "Excess of Income Over Expenses", as
defined herein, for the 13-period year in question, the "Excess of Income Over
Expenses" shall be allocated and apportioned as follows:
The Pulitzer Publishing Company shall receive all
the "Excess of Income Over Expenses", as defined herein, until it
receives an amount equivalent to Four Million Five Hundred Fifty
Thousand Dollars ($4,550,000). Thereafter, all "Excess of Income Over
Expenses", if any, shall be paid to the Globe Democrat Publishing
Company until the Globe Democrat Publishing Company shall have
received an amount equivalent to One Million Nine Hundred Fifty
Thousand Dollars ($1,950,000). If the "Excess of Income Over
Expenses", as defined herein, for any particular 13-period year should
not exceed the amount which The Pulitzer Publishing Company shall be
entitled to receive first, then the entire "Excess of Income Over
Expenses", as defined herein, for the said
<PAGE> 23
- 23 -
13-period year shall be received by The Pulitzer Publishing Company,
and the Globe Democrat Publishing Company shall not be entitled to any
of the "Excess of Income Over Expenses", as defined herein, for such
13-period year.
After The Pulitzer Publishing Company has received an amount of
the "Excess of Income Over Expenses", as defined herein, equivalent to
Four Million Five Hundred Fifty Thousand Dollars ($4,550,000), and
after the Globe Democrat Publishing Company has received an amount
equivalent to One Million Nine Hundred Fifty Thousand Dollars
($1,950,000), the balance, if any, of the "Excess of Income Over
Expenses", as defined herein, shall be divided seventy per cent (70%)
to The Pulitzer Publishing Company and thirty per cent (30%) to the
Globe Democrat Publishing Company.
If the said summary computation of the independent certified public
accounting firm shows that there was an "Excess of Expenses Over Income", as
defined herein, for the 13-period year in question, such "Excess of Expenses
Over Income" shall be borne seventy per cent (70%) by The Pulitzer Publishing
Company and thirty per cent (30%) by the Globe Democrat Publishing Company.
The said summary computation of the independent certified public
accounting firm shall contain a summary statement giving effect to the
foregoing provisions of this Paragraph 24 and to the preliminary distributions
previously made to the parties during the 13-period year in question under the
provisions of Paragraphs 22 and 23 hereof, and showing (1) the payments
required to be made by either party to the other; (2) the payments required to
be made by the "Agency Operation" to either or both parties; or (3) the
payments required to be made by either or both parties to the "Agency
Operation". Said payments shall be made as provided in Paragraph 25 hereof.
If any dispute should arise between the parties hereto with respect to
anything contained in or forming the basis for anything contained in the
aforesaid summary computation of the independent certified public accounting
firm, including but not limited to the accounting for or the allocation of
<PAGE> 24
- 24 -
cost items, such dispute shall be settled by agreement of the treasurers of the
parties hereto. If the said treasurers are unable to agree, then such dispute
shall be settled by arbitration as provided in Paragraph 32 hereof.
25. Balances Due to be Paid Within Twenty (20) Days After Final
Determination. Unless the summary computation referred to in Paragraph 24
hereof for any particular 13-period year, reflecting the accounting for the
said 13- period year as determined and approved by the independent certified
public accounting firm, is disputed by either party hereto and made the subject
of a demand for arbitration in the manner outlined in Paragraphs 24 and 32
hereof, the amounts due to or from the parties hereto as reflected by the said
summary computation of the independent certified public accounting firm shall
be paid within twenty (20) days after receipt of the said summary computation.
In the event of a demand for arbitration, payment shall be made within twenty
(20) days after the decision of the arbitrators or, in the event that the party
demanding arbitration fails to name an arbitrator within ten (10) days after
service of the demand for arbitration so that the right to arbitration lapses as
provided in Paragraph 32 hereof, within twenty (20) days after the lapse of such
right to arbitration.
26. The Accounting for Each Year to be Final. The accounting for each
13-period year as finally determined in accordance with the provisions of this
agreement, and the results thereof as set forth in the summary computation of
the independent certified public accounting firm referred to in Paragraph 24
hereof, shall be conclusive upon the parties hereto, subject to the right of
arbitration as provided in Paragraphs 24 and 32 hereof. Each such 13-period
year shall be separately accounted for without reference to any other 13-period
year.
<PAGE> 25
- 25 -
27. Newspaper Operations of Both Parties During First Nine (9) Accounting
Periods in 1961 to be Included in "Agency Operation". The parties hereto
intend that this agreement shall be retroactive to 12:01 a.m., January 1,
1961. Therefore, it is agreed that the newspaper operations of both parties
(but not any of the other operations of either party) for the period January 1,
1961 to and including September 10, 1961 (viz., the period including the first
nine (9) accounting periods of the year 1961) shall be consolidated and the
operating results for the first nine (9) periods shall be included in the total
results of the "Agency Operation" for the 13-period year ending on December 31,
1961. In order to facilitate this result, the treasurer of The Pulitzer
Publishing Company and the treasurer of the Globe Democrat Publishing Company
shall meet as soon after September 10, 1961 as possible and prepare and sign a
consolidated statement based upon the operations of both newspapers for the
period January 1, 1961 to September 10, 1961, inclusive. The consolidated
statement shall be similar in form and content to the periodic statements
described in Paragraph 22 hereof, and in determining therein the amounts due to
or from either or both parties the same factors shall be considered as are set
forth in Paragraph 22 hereof. If such statement shall indicate that either or
both parties owe any amount to the "Agency Operation", such amount shall be
paid into the "Agency Bank Account" by the party owing it within fifteen (15)
days following the date on which the treasurers of the two companies shall
prepare and sign the said statement. Conversely, if said statement indicates
that any amount is owing from the "Agency Operation" to either or both parties,
such amount shall be paid from the "Agency Bank Account" to the party entitled
to receive it within fifteen (15) days following the date of the said statement.
<PAGE> 26
- 26 -
28. The Pulitzer Publishing Company to Purchase the Globe Democrat
Publishing Company's Newsprint Requirement from Former Suppliers of That
Company. The Pulitzer Publishing Company shall continue purchasing all
newsprint, ink and other materials and supplies required for use in the
production of the two newspapers. However, The Pulitzer Publishing Company
shall continue to purchase from the suppliers who have previously furnished
newsprint to the Globe Democrat Publishing Company, the newsprint required for
the printing of the Globe Democrat Publishing Company's newspaper provided that
the cost of such newsprint shall not be greater than the cost at which The
Pulitzer Publishing Company is able to obtain newsprint from other sources and
provided that the quality of such newsprint is equal to that obtained from The
Pulitzer Publishing Company's other suppliers.
29. Reduction in Newsprint to be Borne Pro Rata. If the newsprint supply
should be limited or reduced by governmental order, by the newsprint
manufacturers or suppliers, by strikes, or by any other cause beyond the
control of The Pulitzer Publishing Company, such reduction shall be borne pro
rata based upon each newspaper's newsprint consumption during the previous
13-period year.
30. Uniform Rules to Govern Production and Delivery of Both Newspapers.
The Pulitzer Publishing Company shall continue to devise and to promulgate
rules concerning the place in its plant and time of delivery of material for
printing, the place in its plant and time of delivery of proofs, the number of
proofs to be furnished, the schedule for the printing of all editions of each
newspaper, together with any other matters required for the orderly and
economic production of the two newspapers, and such rules
<PAGE> 27
- 27 -
shall be binding upon both the Globe Democrat Publishing Company and The
Pulitzer Publishing Company, it being the intention of the parties that the
advertisers and customers of each newspaper shall be accorded fair and equal
treatment.
31. "Standing Committee". In order to facilitate the operations under this
agreement, The Pulitzer Publishing Company shall appoint three (3)
representatives and the Globe Democrat Publishing Company shall appoint two (2)
representatives who shall constitute a "Standing Committee".
The "Standing Committee" shall consult together from time to time to
consider and decide any questions or disputes concerning the functioning of the
"Agency Operation" and any accounting or cost allocation or other disputes
arising out of the 4-week periodic statements referred to in Paragraph 14
hereof, but the "Standing Committee" shall not consider or decide any disputes
arising out of the summary computations prepared by the independent certified
public accounting firm referred to in Paragraph 24 hereof, it being the
intention of the parties hereto that any dispute arising out of a summary
computation prepared by the aforesaid independent certified public accounting
firm, reflecting the accounting for a particular 13-period year as determined
and approved by the independent certified public accounting firm, shall be
subject to arbitration as provided in Paragraphs 24 and 32 hereof unless such
dispute can be settled by the treasurers of the parties hereto. The "Standing
Committee" shall also have the power to change the preliminary settlement
percentages referred to in Paragraph 22 hereof.
The "Standing Committee" shall not consider or decide any questions or
disputes concerning (1) any matter which is or may be the subject of
arbitration, it being the intention of the parties hereto that the jurisdiction
of the "Standing Committee" and of the arbitrators shall be mutually
<PAGE> 28
- 28 -
exclusive; or (2) any policy or operational matter concerning the separate
advertising, circulation, news or editorial departments of either party's
newspaper or concerning either party's other activities relating to said
party's own newspaper operation.
Any disputed matter arising out of a 4-week periodic statement referred to
in Paragraph 14 hereof which is settled by the "Standing Committee" may,
nevertheless, be subject to arbitration under Paragraphs 24 and 25 hereof if
the same matter becomes the subject of a dispute arising out of a summary
computation prepared by the independent certified public accounting firm
referred to in Paragraph 24 hereof.
The decision of the "Standing Committee" shall be made by a majority vote.
Each party hereto shall appoint successors to the members of the "Standing
Committee" whom it appointed in the first instance, it being the intention of
the parties hereto that The Pulitzer Publishing Company shall at all times be
represented by three (3) members on the "Standing Committee" and that the Globe
Democrat Publishing Company shall at all times be represented by two (2)
members on the "Standing Committee".
32. Provision for Arbitration. If the parties hereto should be unable to
settle any dispute arising out of this agreement (other than a dispute over
which the "Standing Committee" would have jurisdiction as provided in Paragraph
31 hereof), then the party believing itself aggrieved shall submit to the other
party a written statement specifically setting forth the matter or matters
complained of and setting forth the steps to be taken by the other party to
alleviate such complaint. If the party to whom such statement is submitted
fails to take the action necessary to satisfy the complaining party within
fifteen (15) days from the date on which the written statement is served, then
within five (5) days after the expiration of the said fifteen (15) day period
the complaining party may demand that the said dispute be submitted to
arbitration by serving written notice on the other party. Should
<PAGE> 29
- 32 -
shall not affect in any way the other operations or activities of either party
nor the operation of any newspaper now being published or which may be
published in the future by either party outside of the City and retail trading
zone of St. Louis as presently determined by the Audit Bureau of Circulation.
37. Rights Under This Agreement Follow Ownership of Newspaper Assets.
This agreement shall be construed under and in accordance with the laws of the
State of Missouri and shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. The purchaser of the
newspaper assets of either party (including an assignee, transferee, or
successor by merger, consolidation, operation of law or otherwise), and any
purchaser, assignee or transferee of the printing plant of The Pulitzer
Publishing Company, shall take the place of the seller, assignor or transferor
under this agreement as fully and completely as if such purchaser, assignee or
transferee had been a party hereto from the beginning. Each party hereto
specifically agrees that it will not sell, assign or transfer its newspaper
assets and, in the case of The Pulitzer Publishing Company the printing plant,
without requiring the purchaser, assignee or transferee to assume in writing
all of the rights, duties and obligations of the seller, assignor or transferor
under this agreement. Neither party hereto may sell, assign or transfer its
interests under this agreement to any party other than a purchaser, assignee or
transferee of its newspaper assets without the prior written consent of the
other party hereto.
38. Basis for Termination of This Agreement. Either party to this
agreement may terminate this agreement in the manner herein specified in the
event that the other party to this agreement shall make a voluntary
<PAGE> 30
- 33 -
assignment of its assets for the benefit of its creditors or shall file a
voluntary petition in bankruptcy or shall consent to the appointment of a
receiver of itself or of all or substantially all of its assets. Either party
to this agreement may also terminate this agreement in the manner herein
specified (a) if a court of competent jurisdiction shall enter an order,
judgment or decree, without consent, appointing a receiver of all, or
substantially all, of the property of such other party and such order, judgment
or decree shall not be vacated, set aside or stayed within sixty (60) days from
the date of such appointment, or (b) if a court of competent jurisdiction shall
enter an order, judgment or decree in involuntary bankruptcy proceedings
adjudicating such other party a bankrupt and such order, judgment or decree
shall not be vacated, set aside or stayed within sixty (60) days from the date
of such entry; provided, however, that if an appeal or appeals be taken from
such order, judgment or decree and if as a result of the final decision on
appeal the decree shall not be vacated or set aside, then either party may
terminate this agreement within sixty (60) days from the date of the final
determination of the last of such appeals. If the party entitled to terminate
this agreement under this Paragraph 38 shall elect to do so, it shall serve upon
the other party notice in writing of its election to terminate this agreement at
the end of sixty (60) days from the date of said notice, stating the condition
or matter upon which such notice of termination is based, and thereupon this
agreement and any and all rights thereunder on the part of the party to whom
such notice is addressed shall expire, terminate and come to an end at the end
of said sixty (60) day period unless the condition or matter referred to in said
notice is remedied within said sixty (60) day period, or is waived in writing;
and if said condition or
<PAGE> 31
- 34 -
matter is remedied, or in case of such written waiver, then the party receiving
such notice shall save the other party harmless from any loss or damage
resulting from the condition or matter which led to the notice.
39. Notice to be by Registered Mail. Any statement or notice required or
permitted to be given by this agreement shall be deemed to have been duly given
or served if and when the same is deposited in the United States Mail,
registered, postage prepaid and addressed to the party to be notified at such
party's address for the receipt of mail in the City of St. Louis, and any such
statement or notice shall be deemed to have been given or served at the time
that it is deposited in the United States Mail. Each party shall furnish the
other party with its address for the receipt of mail in the City of St. Louis
and shall keep the other party advised of any changes is such address.
40. Agreement Shall Not Prohibit Sale or Transfer of Stock of Either
Party. Nothing contained herein shall be deemed to prohibit or restrict the
sale or transfer of stock in The Pulitzer Publishing Company or stock in the
Globe Democrat Publishing Company by the stockholders of the said respective
corporations.
41. Upon Termination of This Agreement, the Parties to Share the Gain or
Loss upon Certain Depreciable Property in the Proportions of Seventy Per Cent
(70%) and Thirty Per Cent (30%), Respectively. Upon the termination of this
agreement, an independent appraiser or an independent firm of appraisers, to be
selected by the parties hereto, shall make a written itemized inventory and
appraisal of all the depreciable assets used by The Pulitzer Publishing Company
in the production (and in the mailing or delivery of the two newspapers of the
parties hereto if at the termination of
<PAGE> 32
- 35 -
this agreement The Pulitzer Publishing Company is then performing such services
for both parties hereto) of the two newspapers of the parties hereto (which
assets then collectively constitute the printing plant of The Pulitzer
Publishing Company), including the building or buildings occupied by the
printing plant, the building equipment and fixtures contained therein, the
printing machinery and equipment, and the furniture and other tangible
depreciable property contained in the said printing plant, but not including the
rotogravure printing plant owned by The Pulitzer Publishing Company and referred
to in Paragraph 18 hereof or any depreciable properties contained therein. All
of the said depreciable property shall be appraised at its fair market value as
of the termination date of this agreement. After the said itemized inventory and
appraisal has been completed, the fair market value appraisal figure for each
item of depreciable property listed on the said itemized inventory and
appraisal shall then be added together in order to arrive at a total dollar
figure, hereinafter referred to as the "total fair market valuation figure".
Thereupon, the said itemized inventory and appraisal shall be turned over
to the independent certified public accounting firm referred to in
Paragraph 24 hereof.
Upon receipt of the said itemized inventory and appraisal, the independent
certified public accounting firm shall determine from the books of The Pulitzer
Publishing Company the depreciated cost basis of each item of tangible property
listed in the said inventory and appraisal, the said depreciated cost basis to
be determined as of the termination date of this agreement. As used herein,
the term "depreciated cost basis" shall mean the cost (or other basis for
depreciation recognized by the United States Internal Revenue Service for the
computation of depreciation for federal
<PAGE> 33
- 36 -
income tax purposes) to The Pulitzer Publishing Company of each such item of
property less the depreciation thereon previously included in the "Agency
Operating Charges" as defined herein. The depreciated cost basis figure for
each item of depreciable property listed on the said itemized inventory and
appraisal shall then be added together in order to arrive at a total dollar
figure, hereinafter referred to as the "total depreciated cost basis figure".
The independent certified public accounting firm shall then submit to each
of the parties hereto a summary statement showing (1) the "total fair market
valuation figure"; (2) the "total depreciated cost basis figure"; and (3) the
difference in dollars between the two said figures.
If the "total fair market valuation figure" exceeds the "total depreciated
costs basis figure", thirty per cent (30%) of such excess shall be paid to the
Globe Democrat Publishing Company by The Pulitzer Publishing Company and the
remaining seventy per cent (70%) of such excess shall be retained by The
Pulitzer Publishing Company.
If the "total depreciated costs basis figure" exceeds the "total fair
market valuation figure", thirty per cent (30%) of such excess shall be paid to
The Pulitzer Publishing Company by the Globe Democrat Publishing Company and
the remaining seventy per cent (70%) of such excess shall be absorbed by The
Pulitzer Publishing Company.
Unless the appraisal and computation referred to in this Paragraph 41 is
disputed by either party hereto and made the subject of a demand for
arbitration in the manner outlined in Paragraph 32 hereof, the amount due from
one party to the other as reflected in the said summary statement of the
independent certified public accounting firm shall be paid within twenty
<PAGE> 34
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(20) days after receipt of the said summary statement. In the event of a demand
for arbitration, payment shall be made within twenty (20) days after the
decision of the arbitrators or, in the event that the party demanding
arbitration fails to name an arbitrator within ten (10) days after service of
the demand for arbitration on the other party so that the complaining party's
right to arbitration lapses as provided in Paragraph 32 hereof, within twenty
(20) days after the lapse of such right to arbitration.
No part of the expenses and compensation of the independent appraiser or
independent firm of appraisers, nor any part of the expenses and compensation
of the independent certified public accounting firm incurred in connection with
services performed under this Paragraph 41, shall be included in the "Agency
Operating Charges" as defined herein, nor be taken into consideration in the
determination of the "Excess of Income Over Expenses" or the "Excess of
Expenses Over Income" as those terms are defined herein. Such expenses and
compensation shall be borne seventy per cent (70%) by The Pulitzer Publishing
Company and thirty per cent (30%) by the Globe Democrat Publishing Company and,
for the purpose of this agreement, shall be considered as costs allocable to
the general corporate and non-newspaper operations of each of the parties
hereto.
42. Period of This Agreement. The period of this agreement shall begin at
12:01 a.m. on the first day of January, 1961 and shall continue until midnight
on the last day of the accounting period ending nearest to December 31, 1985,
unless terminated earlier in the manner provided herein.
<PAGE> 35
- 38 -
43. Parties Not to be Construed as Partners. Nothing contained herein
shall constitute the parties hereto partners, joint venturers, an unincorporated
association, or as having any other relationship except as specifically provided
by this agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals this 1st day of March 1961.
THE PULITZER PUBLISHING COMPANY
By /s/ Charles J. Hentschell
--------------------------
Vice President
(Seal)
ATTEST:
/s/ Dell B. Stafford
- ---------------------
Secretary
Party of the First Part
GLOBE DEMOCRAT PUBLISHING COMPANY
By /s/ S.I. Newhouse
--------------------
President
(Seal)
ATTEST:
[SIG]
- ----------------
Secretary
Party of the Second Part.
<PAGE> 36
EXTENSION AND AMENDMENT AGREEMENT
THIS EXTENSION AND AMENDMENT AGREEMENT dated September 4,
1975, by and between THE PULITZER PUBLISHING COMPANY, a Missouri corporation,
Party of the First Part, and THE HERALD COMPANY (successor to the Globe Democrat
Publishing Company), a New York corporation, Party of the Second Part, to the
Agreement between The Pulitzer Publishing Company and the Globe Democrat
Publishing Company (predecessor of The Herald Company) dated March 1, 1961,
effective January 1, 1961, as amended (collectively the "Agency Agreement".)
W I T N E S S E T H:
WHEREAS, the parties desire to extend and amend the Agency
Agreement; and
WHEREAS, the parties desire to insure that increases in costs
of their separate newspaper departments and activities includible as expenses
for the purpose of calculating income or losses to be divided under the Agency
Agreement relate solely to those reasonably incurred by prudent businessmen in
order to insure the survival of their respective newspapers, but that this shall
not in any manner inhibit either party from incurring for its own
<PAGE> 37
account additional costs in its separate newspaper departments and activities,
such as costs of increasing circulation or making changes in its news or
editorial departments which shall not be so includible.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties agree as follows:
Section 1. Term. Paragraph 42 of the Agency Agreement is
hereby amended by deleting the date "December 31, 1985" in line 4 thereof and by
substituting therefor the date "December 31, 1999" so that Paragraph 42 of the
Agency Agreement as so amended shall read as follows:
"42. Period of this Agreement. The period of
this agreement shall begin at 12:01 a.m. on the
first day of January, 1961 and shall continue
until midnight on the last day of the accounting
period ending nearest to December 31, 1999,
unless terminated earlier in the manner provided
herein."
Section 2. Computation of Profits. The indented portion of the
second paragraph of Paragraph 24 of the Agency Agreement shall be amended in its
entirety to read as follows:
"The Pulitzer Publishing Company and The Herald Company, as
successor to the Globe Democrat Publishing Company, shall each
receive fifty percent (50%) of the first $4,000,000 of the
"Excess of Income Over Expenses", as defined herein. The
Pulitzer Publishing Company shall then receive one hundred
percent (100%) of the "Excess
-2-
<PAGE> 38
of Income Over Expenses", if any, in excess of $4,000,000 but
not in excess of $7,000,000. Thereafter, the balance, if any,
of the "Excess of Income Over Expenses" above $7,000,000 shall
be divided seventy percent (70%) to The Pulitzer Publishing
Company and thirty percent (30%) to The Herald Company,
successor to the Globe Democrat Publishing Company."
Section 3. Charitable Contributions. Paragraph 17 of the
Agency Agreement is hereby amended by deleting the phrase "charitable
contributions" in lines 5 and 6 of the first paragraph thereof.
Section 4. Definition of "Excess of Income Over Expenses" and
"Excess of Expenses Over Income." Subparagraphs (2) and (3) of the first
paragraph of Paragraph 11 defining "Excess of Income Over Expenses" and
subparagraphs (2) and (3) of the second paragraph of Paragraph 11 defining
"Excess of Expenses Over Income" shall in each case be amended in their entirety
to read as follows:
"(2) The total cost of operating The Pulitzer
Publishing Company's separate advertising
(including dispatch department), circulation
news (including photographic department) and editorial
departments and of operating the other activities relating to
its own newspaper operation, except (a) costs not to be
included pursuant to Paragraph 8(c) above, (b) charitable
contributions, and (c) increases in costs of its separate
newspaper departments and activities for any 13-period year
above the costs therefor for the 13-period year ending
December 30, 1974, except to the extent that the increases are
reasonably necessary
-3-
<PAGE> 39
in the light of prudent business practices,
any dispute with respect thereto to be
subject to arbitration as elsewhere provided
herein; plus
"(3) The total cost of operating The Herald Company's
separate advertising (including dispatch department),
circulation, news (including photographic
department) and editorial departments and of
operating the other activities relating to its
own newspaper operation, except (a) costs not
to be included pursuant to Paragraph 8(c) above,
(b) charitable contributions, and (c) increases
in costs of its separate newspaper departments
and activities for any 13-period year above
the costs therefor for the 13-period year ending
December 30, 1974, except to the extent that
the increases are reasonably necessary in the
light of prudent business practices, any dispute
with respect thereto to be subject to arbitration
as elsewhere provided herein."
Section 5. Arbitration. Paragraph 32 of the Agency Agreement
shall be amended in its entirety to read as follows:
"32. Provision for Arbitration.
(A) If the parties hereto should be unable to settle any
dispute arising out of this Agreement [other than (i) a dispute over which the
"Standing Committee" would have jurisdiction as provided in Paragraph 31 hereof
or (ii) a dispute as to whether any increase in costs in the separate newspaper
departments and activities of either party is reasonably necessary in the light
of prudent business practices as to which subparagraph (B) below shall apply],
then the party believing itself aggrieved shall submit to the other party a
written statement specifically setting forth the matter or matters complained of
and setting forth the
-4-
<PAGE> 40
steps to be taken by the other party to alleviate such complaint. If the party
to whom such statement is submitted fails to take the action necessary to
satisfy the complaining party within fifteen (15) days from the date on which
the written statement is served, then within five (5) days after the expiration
of the said fifteen (15) day period the complaining party may demand that the
said dispute be submitted to arbitration by serving written notice on the other
party. Should the complaining party fail to serve such written notice upon the
other party within the said five (5) day period, the complaining party's right
to arbitration of the specific matter or matters complained of shall lapse.
"(B) Any dispute as to whether any increase in costs in the
separate advertising (including dispatch department), circulation, news
(including photographic department) and editorial departments and the other
activities relating to the newspaper operation of either party (sometimes
referred to in this Paragraph 32 as the "separate newspaper departments and
activities") is reasonably necessary in the light of prudent business practices
shall be considered first by the Treasurers (or any other persons respectively
designated in their place by either or both of The Pulitzer Publishing Company
and The Herald Company) of the respective parties. If the Treasurers (or their
respectively designated replacement or replacements)
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<PAGE> 41
do not agree that an increase in costs in the separate newspaper departments and
activities of either party is reasonably necessary in the light of prudent
business practices, then either party may serve on the other a written statement
of the dispute; and if the Treasurers (or their respectively designated
replacement or replacements) shall not resolve the dispute within fifteen (15)
days from the date on which the written statement is served, then within five
(5) days after the expiration of the fifteen (15) day period the complaining
party may demand that the dispute be submitted to arbitration by serving written
notice on the other party. Should the complaining party fail to serve such
written notice upon the other party within said five (5) day period, the
complaining party's right to arbitration of the specific dispute or disputes
complained of shall lapse. The determination of the arbitrator or the
arbitrators, as the case may be, as to whether any increase in costs in the
separate newspaper departments and activities of either party is reasonably
necessary in the light of prudent business practices shall be consistent with
the following guidelines:
1. It would not be reasonably necessary in the light
of prudent business practices if the expenses incurred by The
Herald Company for circulation promotion of the Globe-Democrat
for any 13-period year exceed the total amount expended by The
Pulitzer Publishing Company for circulation promotion of the
Post-Dispatch for the same period.
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<PAGE> 42
2. Subject to the provisions of subparagraph 4 below,
it would not be reasonably necessary in the light of prudent
business practices for The Herald Company to incur increased
costs for wages and other terms and conditions of employment
during any 13-period year which exceed on a per employee basis
the increase, determined by the greater of a percentage or
dollar increase as applied to the minimum wage basis on
similar job descriptions or classifications, incurred by The
Pulitzer Publishing Company for the same period.
3. Increases in costs of the separate newspaper
departments and activities of either party attributable to
non-discretionary items such as, but not limited to, rents,
service charges and taxes, to the extent such increases are
not due to a change in organization, number, function and
compensation of personnel or manner and scope of operation of
the separate newspaper departments and activities of either
party, shall be deemed to be reasonably necessary in the light
of prudent business practices.
4. The pension costs, including unfunded past service
liabilities, of each party which are attributable respectively
to the former, present and future Post-Dispatch employees who
participate in The Joseph Pulitzer Pension Plan and the
former, present and future Globe-Democrat employees who
participate in the [Globe-Democrat Pension Plan] shall be
included as expenses in the 'Excess of Income Over Expenses'
and 'Excess of Expenses Over Income', as defined in Paragraph
11 hereof. Increases in costs (including variations in
contributions attributable to differences in investment
results and the like) of either party's pension plan to
maintain benefits at present levels shall be deemed to be
reasonably necessary in the light of prudent business
practices. Each party shall use the same actuary, valuation
method (except for the interpretation applied to the
calculation of future service benefits which varies slightly
between the two plans), actuarial assumptions and funding
methods (for both past and current costs) for its above
described pension plan. Increases in costs of either party's
pension plan attributable to any amendment, modification or
change thereof required by law shall be deemed to be
reasonably necessary in the light of prudent
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<PAGE> 43
business practices. Increases in costs of either party's
pension plan due to increases in or extensions of benefits
thereunder as a result of an amendment, modification or change
not required by law shall be considered reasonably necessary
in the light of prudent business practices only to the extent
that the increases or extensions are also made by the other
party on a commensurate basis.
5. Except as provided in the foregoing subparagraphs 1,
2, 3 and 4 with respect to the subject matters respectively
covered thereby, it would not be reasonably necessary in the
light of prudent business practices for either party to
increase the operating costs of its separate newspaper
departments and activities for any 13-period year to a point
where the percentage of increase over the immediately prior
13-period year substantially exceeds the percentage of
increase of such costs of the other party for the same period.
"The guidelines are intended solely to provide standards for the arbitrator or
the arbitrators in order to define the extent to which increases in costs of the
separate newspaper departments and other activities of either party are
includible in costs for purposes of the calculations in Paragraph 11 hereof and
shall not affect in any way the rights of either party to determine without
regard to the other party the advertising, circulation, news and editorial
policies of its own newspaper, or restrict in any manner whatsoever the amounts
which either party may expend for its own advertising (including dispatch
department), circulation, news (including photographic department) and
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<PAGE> 44
editorial departments and other activities relating to its own newspaper
operation.
"(C) In the event of a demand for arbitration under
subparagraphs (A) or (B) above, the parties hereto shall select as arbitrator a
member of the Board of Directors of the American Newspaper Publishers
Association who shall have no employment, professional or financial interest in
either party or in any person, firm, corporation or other entity directly or
indirectly controlling, controlled by, or under common control with, either
party ("Disinterested Director"). If the parties cannot agree on the arbitrator
within ten (10) days after service of a written demand for arbitration, the
parties hereto or either of them may apply to the Chief Judge of the United
States District Court for the Eastern District of Missouri to designate and
appoint a qualified arbitrator. The parties agree that a qualified arbitrator
shall be a Disinterested Director of the American Newspaper Publishers
Association.
"In the event no Disinterested Director of the American
Newspaper Publishers Association is available or willing to serve as the
arbitrator, each party hereto shall name an arbitrator and the two arbitrators,
in turn, shall name a third arbitrator. Should the party demanding arbitration
fail to name an arbitrator within ten (10) days after service of a written
demand upon the other party, the complaining party's right to arbitration of the
specific
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<PAGE> 45
matter or matters complained of or in dispute shall lapse. Should the other
party fail to name an arbitrator within the same ten (10) day period, then the
party demanding arbitration may apply to any judge of the United States District
Court for the Eastern District of Missouri to designate and appoint such
arbitrator. Should the two arbitrators named by or for the parties hereto fail
to name a third arbitrator within ten (10) days after having been named as
arbitrators by or for the parties hereto, then the parties hereto or either of
them may apply to any judge of the United States District Court for the Eastern
District of Missouri to designate and appoint a third arbitrator. The three
arbitrators shall decide the disputed matter or matters by majority vote.
"The decision of the arbitrator or arbitrators, as the case may
be, shall be conclusive upon both parties hereto and shall not be subject to
litigation.
"The expenses and compensation of the arbitrator or the
arbitrators, as the case may be, in connection with any specific dispute shall
be borne by the parties hereto in such manner as shall be determined by the
arbitrator or the arbitrators. In the absence of any such determination by the
arbitrator or the arbitrators, the expenses and compensation in connection with
any specific dispute shall be borne equally by the parties hereto. No part of
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<PAGE> 46
the expenses and compensation of the arbitrator or the arbitrators shall be
included in the 'Agency Operating Charges', as defined herein, nor be taken into
consideration in the determination of the 'Excess of Income Over Expenses' or
the 'Excess of Expenses Over Income', as each such term is defined herein;
rather, for the purpose of this Agreement, such expenses and compensation shall
be considered as costs allocable to the general corporate and non-newspaper
operations of the parties hereto.
"The arbitrator or the arbitrators, as the case may be, shall
not have the power to add to, subtract from, or modify the terms of this
Agreement or any amendment, extension or supplement thereto."
Section 6. Effectiveness. This Extension and Amendment
Agreement shall be effective from and after December 29, 1975 and shall
continue to be and remain in effect during the remainder of the term set forth
in the Agency Agreement as amended hereby.
Section 7. Continued Effectiveness of Agency Agreement. Except
as set forth herein, the Agency Agreement shall continue
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<PAGE> 47
to remain and be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals on the day and year first above mentioned.
THE PULITZER PUBLISHING COMPANY
(Seal) By: /s/ Joseph Pulitzer, Jr.
------------------------
Joseph Pulitzer, Jr.
President
ATTEST:
/s/ Glenn A. Christopher
- -----------------------------
Party of the First Part.
THE HERALD COMPANY
(successor to the Globe Democrat
(Seal) Publishing Company)
ATTEST:
By: /s/ Donald E. Newhouse
-----------------------------
/s/ Charles Sabin Party of the Second Part.
- -----------------------------
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<PAGE> 48
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT dated April 12, 1979, by and between
THE PULITZER PUBLISHING COMPANY, a Missouri corporation, Party of the First
Part, and THE HERALD COMPANY (successor to the Globe Democrat Publishing
Company), a New York corporation, Party of the Second Part, to the Agreement
between The Pulitzer Publishing Company and the Globe Democrat Publishing
Company (predecessor of The Herald Company) dated March 1, 1961, effective
January 1, 1961, as amended (collectively the "Agency Agreement").
W I T N E S S E T H :
WHEREAS, the parties desire to amend the Agency Agreement;
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties agree as follows:
I. Paragraph 5 of the Agency Agreement is amended to read
as follows:
5. The Pulitzer Publishing Company to Produce
Both Newspapers as Part of the "Agency Operation". The
Pulitzer Publishing Company shall supervise, manage and
<PAGE> 49
perform all operations involved in printing and producing, promoting, soliciting
and selling advertising, establishing advertising and circulation rates (subject
to the provisions of Paragraph 34 hereof), and selling and distributing the
Globe-Democrat and the Post-Dispatch (hereinafter sometimes collectively
referred to as the "Newspapers"); shall make all determinations (subject to the
provisions of Paragraph 45 hereof) as to acquisition or construction of
buildings, equipment and other properties (including land) which it deems
necessary or desirable in connection with the Agency Operation, hereinafter
referred to as "New Property"; shall make all determinations as to leasing of
buildings, equipment and other properties (including land) which it deems
necessary or desirable in connection with the Agency Operation; shall purchase
newsprint (in conformance with the provisions of Paragraph 28 hereof), materials
and supplies as required; shall collect the Newspapers' circulation and
advertising accounts receivable; and shall make all determinations and decisions
and do any and all acts and things which The Pulitzer Publishing Company deems
necessary or desirable in connection with the foregoing activities. All of the
foregoing operations shall be carried on and performed by The Pulitzer
Publishing Company in a plant or plants
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<PAGE> 50
located at such place or places as The Pulitzer Publishing Company may
determine, or by independent contractors selected by The Pulitzer
Publishing Company.
II. Paragraph 6 of the Agency Agreement is amended to read as
follows:
6. Definition of "Agency Operation". As used herein, the
term "Agency Operation" shall mean all activities comprised in
Paragraphs 5 and 14 of this Agreement.
III. Paragraph 8 of the Agency Agreement is amended to read as
follows:
8. Definition of "Agency Operating Charges". As used
herein, the term "Agency Operating Charges" shall consist of the
following expense items:
(a) All of the ordinary and necessary expenses
incurred by The Pulitzer Publishing Company
in carrying out its obligations under this
agreement with respect to the Agency Operation.
Such ordinary and necessary expenses shall
include but shall not be limited to the costs of
labor, newsprint, ink, supplies and services
required for the production of both newspapers
including weekly feature supplements; the costs
of mailing or delivering both newspapers; the
costs of soliciting and selling advertising space
in both newspapers; the costs of promotion and
circulation; the costs of collecting Agency In-
come; the costs of keeping the books and records
of the "Agency Operation"; the salaries of
officers and other personnel of The Pulitzer
Publishing Company, other than the salary of its chief
executive officer and publisher, for services
rendered directly to the "Agency Operation";
"Rental" for the space occupied by the "Agency
Operation" computed in the manner set forth in
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<PAGE> 51
Paragraph 9 hereof; depreciation on printing equipment, furniture and
fixtures and other depreciable equipment (subject to the provisions of
Paragraph 45 hereof) used in the "Agency Operation", said depreciation
to be computed at the rates and in the manner allowed by the United
States Internal Revenue Service for federal income tax purposes; other
administrative and indirect expenses of the "Agency Operation" as set
forth in Paragraph 17 hereof; and the fees and other charges of the
independent certified public accounting firm referred to in Paragraph
24 hereof; plus
(b) All of the expenses ordinarily and necessarily incurred by The Herald
Company in implementing the changes contemplated in Paragraph 5 of this
agreement, such as lease termination, pension and severance payments,
and such future expenses of The Herald Company as relate to the Agency
Operation; plus
(c) The cost of defending, settling, paying or discharging any liability
or claim on account of anything published in either of the two
newspapers printed by the "Agency Operation" if such liability or claim
arises out of or in connection with the advertising content of either
of the two newspapers or is the result of an error in the printing of
the newspaper or the result of the negligence of any person employed in
the "Agency Operation". No part of the cost of defending, settling,
paying or discharging any liability or claim on account of anything
published in the news and editorial columns of either of the two said
newspapers shall constitute part of the "Agency Operating Charges" or
be included in the computation of "Excess of Income Over Expenses" or
"Excess of Expenses Over Income", as defined herein, where such
liability or claim does not result from an error in printing or result
from the negligence of a person employed in the "Agency Operation", it
being the intention of the parties hereto that each party shall defend
and settle all liabilities or claims arising out of or based on
anything published in the news or editorial columns of its
newspaper (other than liabilities or claims resulting from an error in
the printing of the newspaper or resulting from the negligence of a
person employed in the "Agency Operation") and
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<PAGE> 52
that no part of such cost shall be charged against the "Agency
Operation" or be included in the costs of operation of either party's
own separate news (including photographic department) and editorial
departments or, for the purpose of this agreement, in the costs of
either party's other activities relating to such party's own newspaper
operation.
(d) Items which are partly chargeable to the "Agency Operation"
shall be allocated on the basis of sound accounting principles subject
to approval at the end of the year by the independent certified public
accounting firm referred to in Paragraph 24 hereof.
(e) There shall not be included in the "Agency Operating Charges" the
salaries or other expenses of either party's own separate news
(including photographic department) and editorial departments or of
either party's other activities relating to such party's own newspaper
operation; nor any portion of the compensation of the chief executive
officer and publisher of either party; nor any expense of either party
incurred in carrying on its general corporate and other non-newspaper
operations, it being the intention of the parties hereto that each
party shall pay and have exclusive control over the entire cost of
conducting its separate news (including photographic department) and
editorial departments and its other activities relating to its own
newspaper operation and its general corporate and other non-newspaper
operations.
(f) The computation of "Agency Operating Charges" under this Paragraph
8 shall be made on the basis of sound accounting principles and shall
be subject to approval at the end of the year by the independent
certified public accounting firm referred to in Paragraph 24 hereof.
IV. Paragraph 10 of the Agency Agreement is
amended to read as follows:
10. Definition of "Excess of Agency Income
Over Agency Operating Charges" and "Excess of Agency
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<PAGE> 53
Operating Charges Over Agency Income". As used herein, the term "Excess
of Agency Income Over Agency Operating Charges" shall mean the excess
of Agency Income over the "Agency Operating Charges", as defined
herein. As used herein, the term "Excess of Agency Operating Charges
Over Agency Income" shall mean the excess of the "Agency Operating
Charges", as defined herein, over Agency Income.
V. The second and third paragraphs of Paragraph 24 of the
Agency Agreement are amended to read as follows:
If the said summary computation of the independent
certified public accounting firm shows that there was an "Excess of
Income Over Expenses", as defined herein, for the 13-period year in
question, the "Excess of Income Over Expenses" shall be allocated and
apportioned as follows:
The Pulitzer Publishing Company and The Herald Company
shall each receive fifty percent (50%) of the "Excess of
Income Over Expenses", as defined herein.
If the said summary computation of the independent
certified public accounting firm shows that there was an "Excess of
Expenses Over Income", as defined herein, for the 13-period year in
question, such "Excess of
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<PAGE> 54
Expenses Over Income" shall be borne fifty per cent (50%) by The
Pulitzer Publishing Company and fifty per cent (50%) by The Herald
Company.
VI. Paragraph 33 of the Agency Agreement is amended to read
as follows:
33. Each Party to Determine its Own Newspaper Content.
Each party shall continue to determine independently in its sole discretion the
amount and substance of the reading content and the editorial policies of its
own newspaper, without any restriction or control by the other party.
VII. Paragraph 34 of the Agency Agreement is amended to read
as follows:
34. Combination Advertising and Circulation Rates. The
parties hereto shall operate and publish their respective newspapers in
accordance with high standards of business ethics and of journalistic
integrity. If any combination advertising or circulation rates are established,
there shall not be any practice or policy whereby an advertiser, subscriber, or
member of the general public is required to deal with both newspapers or with
any radio or television station which either party may own or control as a
condition to dealing with either or both of the Newspapers. Neither party hereto
shall in its newspaper or otherwise represent to the public that it or its
newspaper
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<PAGE> 55
is associated in any way (other than as provided for herein) with the other
party or the newspaper published by the other party, it being the intention of
the parties hereto that the news and editorial departments of each newspaper
shall continue to be, as to its advertisers, subscribers and the general public,
completely separate and independent.
VIII. Paragraph 41 of the Agency Agreement is redesignated as
Paragraph 41(A), and the reference to Paragraph 41 in each of the last two
paragraphs of redesignated Paragraph 41(A) is amended to read "Paragraph 41(A)".
The percentage figures contained in redesignated Paragraph 41(A) (other than the
last sentence thereof) of the Agency Agreement shall be adjusted to reflect the
allocation of the "Excess of Income Over Expenses" or the "Excess of Expenses
Over Income" between the parties during each year in which each particular item
covered by Paragraph 41(A) was used in the "Agency Operation". The last sentence
of Paragraph 41(A) of the Agency Agreement is amended to read as follows: "Such
expenses and compensation shall be borne fifty percent (50%) by The Pulitzer
Publishing Company and fifty percent (50%) by The Herald Company and, for the
purpose of this agreement, shall be considered as costs allocable to the
general corporate and non-newspaper operations of each of the parties hereto."
Paragraph 41(A) shall not apply to New Property.
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<PAGE> 56
All gains or losses from the sale of land used in the
operations of the newspapers published by The Herald Company and The Pulitzer
Publishing Company shall be for the account of the party which owns the land.
All gains or losses from the sale of buildings, machinery, equipment and other
depreciable property, except New Property, used in the operations of the
newspapers published by The Herald Company and The Pulitzer Publishing Company
shall be allocated between the parties on the same basis as the "Excess of
Income Over Expenses" or the "Excess of Expenses Over Income" was allocated
between the parties during each year in which the particular building or item of
machinery, equipment or other depreciable property was used in the operations of
the newspapers published by The Herald Company and The Pulitzer Publishing
Company.
IX. The Agency Agreement is amended to add new Paragraphs
41(B), 41(C), 44, 45, 46 and 47 which shall read as follows:
41(B). Treatment of New Property Upon Termination of this
Agreement. At least three years prior to the termination of this agreement by
expiration of its term and any renewals thereof (including the five year
extension period) or as soon as possible after knowledge of prospective
termination by operation of Paragraph 38 or for other extraordinary reason, an
independent appraiser or an independent firm of
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<PAGE> 57
appraisers, selected by the parties hereto (the "independent appraiser"), shall
make a written itemized inventory and appraisal of all items of New Property
(the "appraisal"). All items of New Property shall be appraised at their fair
market value as of the termination date (including the five year extension
period, if applicable). After the appraisal has been completed, the fair market
value figure for each item of New Property listed on the appraisal shall then be
totalled (the "aggregate appraised value"). The independent appraiser shall
deliver to each of the parties hereto a statement of the appraisal, including
the aggregate appraised value. If the appraisal is disputed by either party
hereto, it may be made the subject of a demand for arbitration in the manner
outlined in Paragraphs 32(A) and (C) hereof.
The Pulitzer Publishing Company shall have the first right to
purchase the interest of The Herald Company in all items of New Property. In the
event The Pulitzer Publishing Company shall not exercise its first right to
purchase, then The Herald Company shall have the right to purchase the interest
of The Pulitzer Publishing Company in all items of New Property. The exercise
price shall be the amount derived from multiplying the aggregate appraised value
(adjusted to reflect the determination of the arbitrator or arbitrators, as the
case may be) by the percentage of interest of the other party in all items of
New Property.
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<PAGE> 58
The person or persons designated by the chief executive
officer of The Pulitzer Publishing Company and the person or persons designated
by the chief executive officer of The Herald Company (collectively the
"Designated Persons") shall consider and determine (i) the time and terms of
exercise, purchase and payment, it being the intention of the parties hereto
that the time and terms of exercise, purchase and payment shall be such as to
permit each party to make any reasonably necessary and appropriate financial
arrangements, and (ii) in the event neither party exercises its right to
purchase, the method and terms for disposition of New Property upon termination
of this agreement. In making their determinations hereunder, the Designated
Persons shall give primary consideration to maintaining the separate identity of
each of the Newspapers, preserving the separate news (including photographic
department) and editorial departments of each of the Newspapers and continuing
the independent determination by each party of the editorial policies of its
newspapers. If the Designated Persons are unable to reach agreement on any
matter hereunder, the matter shall be treated as a dispute arising out of this
agreement and shall be determined in accordance with the provisions of
Paragraphs 32(A) and (C) of this agreement.
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<PAGE> 59
41(C). Treatment of Occasional Dispositions, Sales and
Trade-Ins of New Property. The Treasurers or designated persons of each of the
parties shall consider any questions concerning occasional sales, dispositions
or trade-ins of items of New Property other than in connection with the
termination of this agreement. If the Treasurers or designated persons of each
of the parties are unable to reach agreement, the matter shall be treated as a
dispute arising out of this agreement and shall be determined in accordance with
the provisions of Paragraphs 32(A) and (C) of this agreement.
44. Effectuation of Agreement, etc. The Pulitzer Publishing
Company agrees to maintain the separate identity of the Post-Dispatch as a six
day a week (Monday through Saturday) afternoon newspaper with a Sunday morning
edition and The Herald Company agrees to maintain the separate identity of the
Globe-Democrat as a five day a week (Monday through Friday) morning newspaper
with a Saturday morning weekend edition. The exercise by The Pulitzer Publishing
Company of its powers under Paragraph 5 hereof as to printing and production of
the Newspapers, including determinations as to press times, page sizes and cut
offs, shall be consistent with the foregoing. Each of the parties further
agrees, subject to the foregoing, to take all proper action necessary to carry
out and effectuate the intent, purposes and provisions of this agreement as
amended and to cooperate with the other in every proper way to promote the
success of the Agency Operation.
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<PAGE> 60
45. New Property
(A) The costs of acquisition and construction of New Property
shall be borne equally by The Herald Company and The Pulitzer Publishing Company
and title to New Property shall be held jointly by The Herald Company and The
Pulitzer Publishing Company. Notwithstanding any other provision of this
agreement, all credits, depreciation, gains and losses in connection with the
acquisition, construction, ownership and disposition of New Property shall be
for the individual account of each party. "New Property" shall not include,
however, (i) building equipment and fixtures for the plants owned by The
Pulitzer Publishing Company, (ii) alterations and repairs to the plants
(including building equipment and fixtures) and major items of equipment owned
by The Pulitzer Publishing Company, and (iii) any building, item of equipment or
other property (including land) the full cost of which The Pulitzer Publishing
Company elects to pay pursuant to subparagraph (B) below. The costs of
acquisition and construction of any new building, item of equipment or other
property (including land) which does not constitute New Property shall be
treated in the same manner as any present building, item of equipment or other
property (including land) which The Pulitzer Publishing Company acquired for use
in connection with the printing and production of the Newspapers.
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<PAGE> 61
(B) In the event the projected cost of acquiring or
constructing any building, item of equipment or other property (including land)
which The Pulitzer Publishing Company deems necessary or desirable in connection
with the Agency Operation exceeds $500,000, The Pulitzer Publishing Company
shall provide The Herald Company with the details of and the reasons for such
acquisition or construction. If the Treasurers (or any other persons
respectively designated in their place by either or both of The Pulitzer
Publishing Company and The Herald Company) of the respective parties do not
agree that the proposed acquisition or construction is necessary or desirable in
connection with the Agency Operation, then The Pulitzer Publishing Company may
serve on The Herald Company a written statement of the dispute and the following
procedures shall apply, notwithstanding the provisions of Paragraph 32(A)
hereof: if the Treasurers (or their respectively designated replacement or
replacements) shall not resolve the dispute within fifteen (15) days from the
date on which the written statement is served, then within five (5) days after
the expiration of the fifteen (15) day period, The Pulitzer Publishing Company
may either demand that the dispute be submitted to arbitration in accordance
with Paragraph 32(C) of this agreement or elect (either before or after the
determination of the arbitrator or the arbitrators, as the case may be) to pay
the full cost of such acquisition or
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<PAGE> 62
construction by serving written notice of its demand or election on The Herald
Company.
46. Cost of Production, Mailing and Delivery of Supplemental
Color Content and Supplemental Reading Content. Within 10 days after the end of
each of the thirteen 4-week accounting periods, each party shall contribute to
the Agency Operation the cost of production, mailing and delivery of
supplemental color content and of supplemental reading content of its newspaper,
which payment shall be deemed to be Agency Income and no part of which shall be
included in the costs of operation of either party's own separate departments or
otherwise charged against the "Agency Operation." Each party shall be deemed to
have incurred supplemental color content cost with respect to any edition of its
newspaper for which there is used more than one full color printing unit without
full color advertising to support such usage. Each party shall be deemed to have
incurred supplemental reading content cost when the average amount of reading
content of its newspaper for any 4-week accounting period exceeds the schedules
from time to time accepted by the parties.
47. Roto Magazine, news Services, Metro-Suburbia. The
Pulitzer Publishing Company recognizes that the Globe-Democrat may continue to
have Art Gravure Corporation of Ohio ("Art Gravure") print the Roto Magazine
included in
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the Weekend edition of the Globe-Democrat and does not object thereto provided
that the cost of such printing shall not be greater than the cost at which The
Pulitzer Publishing Company could have the Roto Magazine printed by another
rotogravure printer and that Art Gravure is otherwise reasonably competitive
with other rotogravure printers. The Pulitzer Publishing Company also recognizes
that the Globe-Democrat may continue to subscribe to existing news services,
provided that the rates charged to the Globe-Democrat for those services shall
be no greater than the rates charged to other users of similar services. The
Pulitzer Publishing Company also recognizes the use of Metro-Suburbia as the
national sales representative for advertising solicitation for the Newspapers,
subject to the existing commitments of each of the Newspapers, on such terms and
conditions as The Herald Company and The Pulitzer Publishing Company may agree.
X. Paragraphs 13, 16, and 18 of the Agency Agreement are
deleted.
XI. The Agency Agreement is extended for a period of thirty
five (35) years and shall thereafter be renewed and extended for three
successive periods of thirty (30) years each upon written notice given by either
The Herald Company or The Pulitzer Publishing Company to the other, unless
terminated earlier in the manner provided therein. In the event
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neither party elects to renew and extend the Agency Agreement, as amended, at
any of the times above provided for, the Agency Agreement, as amended, shall
continue in full force and effect (unless terminated earlier in the manner
provided therein) for an additional period of five (5) years after the date on
which it would otherwise expire.
XII. The phrase "in the case of The Pulitzer Publishing Company,"
where it appears in subdivisions (a) and (c) of Paragraph 9 of the Agency
Agreement is amended in each of such subdivisions to read "in the case of The
Pulitzer Publishing Company (subject to the provisions of Paragraph 45(A)
hereof),": the phrase "of its separate said four departments" in subdivision
(b) of Paragraph 9 of the Agency Agreement is amended to read "of its separate
said departments"; and the second sentence of Paragraph 14 of the Agency
Agreement is amended to read: "Such books shall show all 'Agency Income' and
shall show all 'Agency Operating Charges', as those terms are defined herein".
Except as otherwise provided in this Amendment Agreement, whenever the phrase
"the Globe Democrat Publishing Company" is used in the Agency Agreement, it is
amended to read "The Herald Company"; whenever the phrase "other than the salary
of its chief executive officer" is used in the Agency Agreement, it is amended
to read "other than the salary of its chief executive officer and publisher";
whenever the phrase
-17-
<PAGE> 65
"printing plant" is used in the Agency Agreement, it is amended to read
"printing plants"; and whenever the phrases "separate advertising (including
dispatch department), circulation, news (including photographic department) and
editorial departments" "separate advertising, circulation, news and [or]
editorial departments" and "advertising, circulation, news and editorial
policies" are used in the Agency Agreement, they are amended to read "separate
news (including photographic department) and editorial departments", "separate
news and [or] editorial departments" and "news and editorial policies",
respectively. Any textual reference in the Agency Agreement to Paragraph 32
thereof is amended to refer to Paragraphs 32(A) and (C) thereof.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals on the day and year first above mentioned.
THE PULITZER PUBLISHING COMPANY
(Seal) By: /s/ Joseph Pulitzer, Jr.
--------------------------
Joseph Pulitzer, Jr.
Chairman of the Board
By: /s/ Alex T. Primm
---------------------------
Alex T. Primm
Senior Vice President
ATTEST:
/s/ Ronald H. Ridgway Party of the First Part.
- -----------------------
-18-
<PAGE> 66
THE HERALD COMPANY
(successor to the Globe Democrat
Publishing Company)
(Seal) By /s/ S.I. Newhouse, III
--------------------------
S. I. Newhouse, III
Vice President
ATTEST:
/s/ Charles Sabin Party of the Second Part.
- -----------------
<PAGE> 67
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT dated December 22, 1983, by and
between THE PULITZER PUBLISHING COMPANY, a Missouri corporation, Party of the
First Part, and THE HERALD COMPANY (successor to the Globe-Democrat Publishing
Company), a New York corporation, Party of the Second Part, to the Agreement
between The Pulitzer Publishing Company and the Globe-Democrat Publishing
Company (predecessor of The Herald Company) dated March 1, 1961, as amended
(collectively the "Agency Agreement").
W I T N E S S E T H:
WHEREAS, the parties desire to amend the Agency Agreement;
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties agree as follows:
I. In the event of, and effective with, discontinuance by The Herald
Company of publication of the Globe-Democrat or any change in the
days, areas or time identification of the Globe-Democrat as published
at the present time (i.e., as a five-day week, Monday through Friday,
morning newspaper with a Saturday morning weekend edition) or the
closing of the sale of the name and good will of the Globe-Democrat by
The Herald Company referred to in Section II below:
A. Paragraph 8(c) of the Agency Agreement shall be
amended to read as follows:
<PAGE> 68
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"(c) The cost of defending, settling, paying and
discharging, and insuring against, any liability or claim on
account of anything hereafter printed, distributed, published
or disseminated by the Agency Operation or any employee or
agent of either party whose compensation is subtracted from
Agency Income in the calculation of Excess of Income Over
Expenses or Excess of Expenses Over Income.
B. Paragraph 11 of the Agency Agreement shall be amended to delete the phrase
",except (a) costs not to be included pursuant to Paragraph 8(c) above, (b)
charitable contributions, and (c) increases in costs of its separate
newspaper departments and activities for any 13-period year above the costs
therefor for the 13-period year ending December 30, 1974, except to the
extent that the increases are reasonably necessary in the light of prudent
business practices, any dispute with respect thereto to be subject to
arbitration as elsewhere provided herein", whenever it is used therein.
C. The first sentence of Paragraph 32(A) shall be amended to read as follows:
"(A) If the parties hereto should be unable to
settle any dispute arising out of this agreement (other than
a dispute over which the "Standing Committee" would have
jurisdiction as provided in Paragraph 31 hereof), then the
party believing itself aggrieved shall submit to the other
party a written statement specifically setting forth the
matter or matters complained of and setting forth the steps
to be taken by the other party to alleviate such complaint."
<PAGE> 69
- 3 -
D. Paragraph 32(B) of the Agency Agreement, as well as the reference thereto in
Paragraph 32(C) of the Agency Agreement, shall be deleted.
E. Paragraph 44 of the Agency Agreement shall be amended to read as follows:
"44. Effectuation of Agreement, etc. The Pulitzer
Publishing Company may publish and distribute the
Post-Dispatch as a morning, afternoon or all day newspaper
during any day or days of the week. The authority of The
Pulitzer Publishing Company under Paragraphs 5 and 30 hereof
as to printing and production of the Newspapers shall include
the power to determine the press times, page sizes, cut offs,
days, area and time identification of publication of the
Globe-Democrat if and to the extent it continues publication.
Each of the parties further agrees to take all proper action
necessary to carry out and effectuate the intent, purposes
and provisions of this agreement as amended and to cooperate
with the other in every proper way to promote the success of
the Agency Operation.
F. Any equipment and property thereafter acquired or constructed for use in
connection with the news (including photographic department) and editorial
departments of the Post-Dispatch shall be treated as New Property.
G. Paragraph 46 of the Agency Agreement shall be deleted and the existing
schedules accepted by the parties pursuant thereto shall be of no further
force and effect.
<PAGE> 70
-4-
H. All of the expenses ordinarily and necessarily incurred by The Pulitzer
Publishing Company and The Herald Company as a result of any actions
taken in connection with this Amendment Agreement, such as lease
termination, pension and severance payments arising out of the
discontinuation, reduction of operations or sale of the Globe-Democrat,
shall be included in Agency Operating Charges. All revenues received
from any sale of the assets of the Globe-Democrat referred to in
Section II below shall be applied first to the expenses referred to
above if incurred as a result of such sale.
I. There shall be included in Agency Operating Charges an annual
administrative fee, payable to The Pulitzer Publishing Company, of
$200,000.00, adjusted each year by the percentage increase or decrease
for the month of December in the Consumer Price Index for Urban Wage
Earners and Clerical Workers (All Items), U.S. City Average (1967 =
100), published by the United States Department of Labor, Bureau of
Labor Statistics ("CPI") or in the successor comparable index published
by the United States Government if the CPI shall no longer be
published, over the month of December for the immediately preceding
year.
<PAGE> 71
-5-
II. Sale of certain assets to Gluck Media, Inc. as proposed in a draft
dated December 22, 1983 shall not convey any interest in the Agency
Agreement or any right thereto and Globe-Democrat shall not be required
to cause Gluck Media, Inc. to assume the rights, duties and obligations
of The Herald Company under the Agency Agreement.
III. Notwithstanding any other provision of the Agency Agreement,
discontinuance by The Herald Company of publication of the
Globe-Democrat or any change in the days, areas or time identification
of the Globe-Democrat as published at the present time (i.e., as a
five-day a week, Monday through Friday, morning newspaper with a
Saturday morning weekend edition) shall not violate the Agency
Agreement or, except as contemplated by this Amendment Agreement,
derogate in any respect from the power and authority of The Pulitzer
Publishing Company under the Agency Agreement as hereby amended.
IV. Except as inconsistent herewith or as amended hereby, the provisions of
the Agency Agreement shall continue to remain in full force and effect.
In the event of the closing of the sale of assets of the Globe-Democrat
referred to in Section II above, all references to the "Globe-Democrat"
in the Agency Agreement shall be deemed to mean the Globe-Democrat as
published by The Herald Company or its predecessor, the Globe-Democrat
Publishing Company.
<PAGE> 72
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IN WITNESS WHEREOF, the parties hereto have hereunto set their
hands and seals on the day and year first above mentioned.
ATTEST: THE PULITZER PUBLISHING COMPANY
/s/ Ronald H. Ridgway By: /s/ Glenn A. Christopher
- ---------------------------- ---------------------------
Ronald H. Ridgway,
Secretary Party of the First Part.
ATTEST: THE HERALD COMPANY
(Successor to the Globe-
Democrat Publishing Company)
/s/ Arthur J. Steinhauer BY: /s/Charles Sabin
- ---------------------------- --------------------------
Arthur J. Steinhauer, Charles Sabin,
Assistant Secretary Vice President
Party of the Second Part.
<PAGE> 1
EXHIBIT 10.2.1
AMENDED AND RESTATED
JOINT OPERATING AGREEMENT
BETWEEN
STAR PUBLISHING COMPANY
AND
CITIZEN PUBLISHING COMPANY
December 22, 1988
<PAGE> 2
AMENDED AND RESTATED
JOINT OPERATING AGREEMENT
BETWEEN
STAR PUBLISHING COMPANY
AND
CITIZEN PUBLISHING COMPANY
December 22, 1988
TABLE OF CONTENTS
Page
ARTICLE 1: THE AGENCY
1.1 Formation. . . . . . . . . . . . . . . . . . . . . . . 3
1.2 Initial Capital Contribution of Star . . . . . . . . . 4
1.3 Initial Capital Contribution of Citizen. . . . . . . . 7
1.4 Valuation of Initial Capital Contributions . . . . . . 10
1.5 Other Capital Contributions. . . . . . . . . . . . . . 11
1.6 Failure to Make Payments . . . . . . . . . . . . . . . 11
1.7 Dissolution of TNI . . . . . . . . . . . . . . . . . . 12
1.8 Assumption of Liabilities. . . . . . . . . . . . . . . 13
1.9 Employees. . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 2: ACTIVITIES OF THE AGENCY
2.1 Publication and Operations . . . . . . . . . . . . . . 14
2.2 Capital Assets . . . . . . . . . . . . . . . . . . . . 16
2.3 Editorial Independence . . . . . . . . . . . . . . . . 17
2.4 News and Editorial Services and Expenses . . . . . . . 18
2.5 Budgets and Allocations of News Space. . . . . . . . . 21
ARTICLE 3: ALLOCATIONS AND OTHER FINANCIAL MATTERS
3.1 Distributions. . . . . . . . . . . . . . . . . . . . . 23
3.2 Allocations. . . . . . . . . . . . . . . . . . . . . . 23
3.3 Books and Records. . . . . . . . . . . . . . . . . . . 23
3.4 Financial Statements . . . . . . . . . . . . . . . . . 24
3.5 Auditors and Fiscal Year . . . . . . . . . . . . . . . 25
3.6 Bank Accounts. . . . . . . . . . . . . . . . . . . . . 25
3.7 TAX Returns. . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 4: GOVERNANCE OF THE AGENCY
4.1 Board of Directors . . . . . . . . . . . . . . . . . . 26
4.2 Officers of the Agency . . . . . . . . . . . . . . . . 29
4.3 Deadlocks. . . . . . . . . . . . . . . . . . . . . . . 30
<PAGE> 3
- 2 -
ARTICLE 5: DURATION; TERMINATION
Page
5.1 Term; Renewals . . . . . . . . . . . . . . . . . . . . . . 35
5.2 Termination; Dissolution of the Agency . . . . . . . . . . 35
5.3 Dissolution Prior to Expiration of Term. . . . . . . . . . 38
5.4 Termination at End of Term . . . . . . . . . . . . . . . . 44
5.5 Change of Control. . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 6: MISCELLANEOUS
6.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 48
6.3 Entire Understanding . . . . . . . . . . . . . . . . . . . 48
6.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.5 Governing Law; Modification . . . . . . . . . . . . . . . 49
6.6 Severability . . . . . . . . . . . . . . . . . . . . . . . 49
6.7 Further Assurances . . . . . . . . . . . . . . . . . . . . 50
6.8 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . 50
6.9 Specific Performance . . . . . . . . . . . . . . . . . . . 51
6.10 No Third Party Beneficiaries . . . . . . . . . . . . . . . 51
6.11 Nature of Relationship . . . . . . . . . . . . . . . . . . 51
6.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 51
Exhibit A: Partnership Agreement
Exhibit B: License Agreement (Star)
Exhibit C: License Agreement (Citizen)
<PAGE> 4
AMENDED AND RESTATED
JOINT OPERATING AGREEMENT
THIS AMENDED AND RESTATED JOINT OPERATING AGREEMENT dated as of
December 22, 1988 between STAR PUBLISHING COMPANY, an Arizona corporation
("Star"), and CITIZEN PUBLISHING COMPANY, an Arizona corporation ("Citizen").
WHEREAS, Star publishes The Arizona Daily Star, a seven day per
week morning newspaper, including Sunday, and Citizen publishes the Tucson
Citizen, a weekday afternoon and Saturday newspaper, both in Tucson, Arizona;
WHEREAS, Star and Citizen, or their respective predecessors,
have entered into and are operating pursuant to that certain Operating Agreement
dated March 28, 1940, as amended by agreements dated June 15, 1953 and October
14, 1970 (collectively, the "Operating Agreement"), whereby Tucson Newspapers,
Inc., an Arizona corporation ("TNI"), was organized by Star and Citizen to
handle, manage and operate The Arizona Daily Star and Tucson Citizen, save and
except for the news and editorial departments of each of the newspapers, which
news and editorial departments have remained separate and independent;
WHEREAS, the current term of the Operating Agreement runs until
June 1, 1990 and, pursuant to the terms thereof, has been renewed and extended
for an additional twenty-five year period from such date;
<PAGE> 5
- 2 -
WHEREAS, Star and Citizen desire to reformulate their
arrangement to provide that the functions currently performed by TNI, a
corporation 50% of whose capital stock is owned by each of Star and Citizen,
will be performed by a general partnership that is 50% owned by each of Star and
Citizen, and to provide for the organization, operation and governance of such
partnership;
WHEREAS, the purpose and intent of this Agreement is to provide
a plan of common operation of the newspapers published by Star and Citizen, so
as to afford economy in money and effort, produce better newspapers for their
readers, improve acceptance for their advertisers, subserve public interests by
maintaining the separate identities, individuality and editorial and news
freedom and integrity of each of said newspapers, and ensure the ability of each
newspaper to maintain its journalistic characteristics and to meet the
highest standards of editorial quality and journalistic excellence; and
Whereas, this agreement continues to maintain as separate and
independent the respective news, editorial and reportorial operations,
departments and staffs (the "news operations" or "news departments") of Star and
Citizen, consistent with the requirements of the Newspaper Preservation Act, 15
U.S.C. Section 1801 et seq.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties hereby agree that the
<PAGE> 6
- 3 -
Operating Agreement shall be amended and restated in its entirety as follows:
ARTICLE 1
THE AGENCY
1.1 Formation.
(a) Star and Citizen will on the date hereof cause to be formed
under the laws of the State of Arizona a general partnership named "TNI
Partners" (such new partnership is referred to herein as the "Agency"), by
executing and delivering to each other the Partnership Agreement (the
"Partnership Agreement") in the form set forth as Exhibit A hereto, and by
making such filings and taking such other actions as are appropriate under
applicable Arizona law.
(b) Each of Star and Citizen shall have a 50% partnership
interest in the Agency and shall, as of the Effective Date, make the respective
initial capital contributions described in Sections 1.2 and 1.3 hereof.
(c) As used in this Agreement, the "Effective Date" shall be
12:01 A.M., Tucson, Arizona time, on December 26, 1988.
(d) Star and Citizen will cause the Agency, on the date hereof,
to become a party to this Agreement and to agree to perform all of the
obligations herein to be performed by it by signing this Agreement and
delivering executed copies hereof to Star and Citizen.
<PAGE> 7
- 4 -
1.2 Initial Capital Contribution of Star.
(a) Effective as of the Effective Date, Star hereby
contributes, assigns, transfers and conveys to the Agency all of its right,
title and interest (which Star represents and warrants to Citizen are free and
clear of any and all pledges, mortgages, security interests, liens or other
encumbrances except for those that do not materially affect use, value or
marketability), in and to the following property and assets (collectively, the
"Star Contributed Assets"):
(1) Star's interest in all trade accounts receivable and
contracts in existence on the Effective Date that arise from or in
connection with any activity or operation that has been carried on by TNI
as agent for Star and Citizen, including without limitation trade
accounts receivable and contracts arising out of or relating to the sale
or distribution of The Arizona Daily Star or the Tucson Citizen, the sale
of advertising in either such newspaper, or the printing or distribution
of any other material;
(2) Star's interest in any and all non-capital assets in
existence on the Effective Date that are jointly owned by Star and
Citizen and that are used or held for use in connection with, or that
arise from, any activity or operation that has been carried on by TNI as
agent for Star and Citizen; and
<PAGE> 8
- 5 -
(3) All shares of common stock of TNI owned by Star, which Star
represents and warrants to Citizen constitute 50% of TNI's outstanding
capital stock.
(b) The following assets shall not constitute any part of the Star
Contributed Assets but shall remain the separate property of Star:
(1) (i) The whole or any part of the name, title, and masthead
of The Arizona Daily Star, together with all names, titles and slogans
used exclusively in connection with The Arizona Daily Star and all
intangible rights and privileges of whatever kind belonging to or
incidental thereto, including any and all copyrights and trademarks
relating thereto, and any and all copyrights, and the right to renew the
same, on issues of The Arizona Daily Star published before, on or after
the Effective Date, and the right to reprint all or any part thereof
(collectively the "Star Names"), (ii) all lists relating to
subscriptions, bulk sales, circulation, dealers and sub-dealers of The
Arizona Daily Star, together with all records and other lists relating to
or concerning the following: routes, daily draws by editions,
distribution, delivery, sales, subscriptions and returns of The Arizona
Daily Star in any territory, all lists of dealers and agencies served by
all distribution methods in the city of Tucson, its
<PAGE> 9
- 6 -
metropolitan areas and in all cities and towns served by The Arizona Daily Star,
including a list of dealer and agency deposits, if any, and (iii) lists of all
advertisers and advertising contracts relating to The Arizona Daily Star and
related advertiser information, including dates of contracts, names and
addresses of advertisers, space contracted for, frequency of insertions, rates
per line, expiration dates and any special conditions, records requirements or
publication orders with advertisers with the dates thereof, as well as lists of
any special agreements or commitments with advertisers and all insertion orders
(the assets described in clauses (ii) and (iii) of this subsection being
referred to collectively as the "Star Intangibles"); provided however, that Star
shall grant to the Agency a royalty-free license covering the Star Names and the
Star Intangibles, in the form attached hereto as Exhibit B, which shall be
executed by Star and delivered to the Agency on the Effective Date;
(2) The library or "morgue" of The Arizona Daily Star, including all
files of clippings, photographs (negatives and positives) and related
publication material, together with all bound files and file copies of The
Arizona Daily Star and microfilms thereof;
(3) Any properties, assets and contract and other rights of Star used
or held for use solely in connection
<PAGE> 10
- 7 -
with the operation of the news department of The Arizona Daily Star;
(4) Star's interest in all capital assets in existence on the
Effective Date that are jointly owned by Star and Citizen and that are
used or held for use in connection with any activity or operation that
has been carried on by TNI as agent for Star and Citizen; and
(5) Any asset or property right of any kind or description
that is not specifically listed in section 1.2(a) hereof.
1.3 Initial Capital Contribution of Citizen.
(a) Effective as of the Effective Date, Citizen hereby
contributes, assigns, transfers and conveys to the Agency all of its right,
title and interest (which Citizen represents and warrants to Star are free and
clear of any and all pledges, mortgages, security interests, liens or other
encumbrances except for those that do not materially affect use, value or
marketability), in and to the following property and assets (collectively, the
"Citizen Contributed Assets"):
(1) Citizen's interest in all trade accounts receivable and
contracts in existence on the Effective Date that arise from or in
connection with any activity or operation that has been carried on by
TNI as agent for Star and Citizen, including without limitation trade
accounts
<PAGE> 11
- 8 -
receivable and contracts arising out of or relating to the sale or
distribution of The Arizona Daily Stag or the Tucson Citizen, the sale
of advertising in either such newspaper, or the printing or distribution
of any other material.
(2) Citizen's interest in any and all non-capital assets in
existence on the Effective Date that are jointly owned by Star and
Citizen and that are used or held for use in connection with, or that
arise from, any activity or operation that has been carried on by TNI as
agent for Star and Citizen.
(3) All shares of common stock of TNI owned by Citizen, which
Citizen represents and warrants to Star constitute 50% of TNI's
outstanding capital stock.
(b) The following assets shall not constitute any part of the
Citizen Contributed Assets but shall remain the separate property of Citizen:
(1) (i) The whole or any part of the name, title, and masthead
of Tucson Citizen, together with all names, titles and slogans used
exclusively in connection with Tucson Citizen and all intangible rights
and privileges of whatever kind belonging to or incidental thereto,
including any and all copyrights and trademarks relating thereto, and
any and all copyrights, and the right to renew the same, on
<PAGE> 12
- 9 -
issues of Tucson Citizen published before, on or after the Effective Date, and
the right to reprint all or any part thereof (collectively the "Citizen Names"),
(ii) all lists relating to subscriptions, bulk sales, circulation, dealers and
sub-dealers of Tucson Citizen, together with all records and other lists
relating to or concerning the following: routes, daily draws by editions,
distribution, delivery, sales, subscriptions and returns of Tucson Citizen in
any territory, all lists of dealers and agencies served by all distribution
methods in the City of Tucson, its metropolitan area and in all cities and towns
served by Tucson Citizen, including a list of dealer and agency deposits, if
any, and (iii) lists of all advertisers and advertising contracts relating to
Tucson Citizen and related advertiser information, including dates of contracts,
names and addresses of advertisers, space contracted for, frequency of
insertions, rates per line, expiration dates and any special conditions, records
requirements or publication orders with advertisers with the dates thereof, as
well as lists of any special agreements or commitments with advertisers and all
insertion orders (the assets described in clauses (ii) and (iii) of this
subsection being referred to collectively as the "Citizen Intangibles");
provided, however, that Citizen shall grant to the Agency a royalty-free license
covering
<PAGE> 13
- 10 -
the Citizen Names and Citizen Intangibles, in the form attached hereto
as Exhibit C, which shall be executed by Citizen and delivered to the
Agency on the Effective Date;
(2) The library or "morgue" of Tucson Citizen, including all
files of clippings, photographs (negatives and positives) and related
publication material, together with all bound files and file copies of
Tucson Citizen and microfilms thereof;
(3) Any properties, assets and contract and other rights of
Citizen used or held for use solely in connection with the operation of
the news department of Tucson Citizen;
(4) Citizen's interest in all capital assets in existence on
the Effective Date that are jointly owned by Star and Citizen and that
are used or held for use in connection with any activity or operation
that has been carried on by TNI as Agent for Star and Citizen; and
(5) Any asset or property right of any kind or description
that is not specifically listed in Section 1.3(a) hereof.
1.4 Valuation of Initial Capital Contributions. For all
purposes of this Agreement and the Partnership Agreement, the value of the
respective initial capital contributions of Star and Citizen shall be equal in
amount and shall each be equal to the sum of (i) 50% of the book value of the
aggregate
<PAGE> 14
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trade accounts receivable referred to in Sections 1.2(a)(1) and 1.3(a)(1)
hereof, (ii) 50% of the book value of the aggregate non-capital assets referred
to in Sections 1.2(a)(2) and 1.3(a)(2) hereof, and (iii) 50% of the total
stockholders' equity of TNI as of the close of business on December 25, 1988.
1.5 Other Capital Contributions. In the event that the
Agency shall require funds or other capital contributions for any authorized
business purpose, such funds or contributions, unless obtained from outside
sources, shall be contributed by Star and Citizen on identical terms and in
equal amounts when and as authorized and directed by the Agency's Board of
Directors.
1.6 Failure to Make Payments. If either partner (a
"Defaulting Party") (i) fails to make any payment to the Agency including, but
not limited to, any properly authorized capital contribution, whether arising
under the terms of this Agreement or the Partnership Agreement, or (ii) fails
to pay its portion of any properly authorized capital expenditure, then the
other partner may lend the amount thereof to the Agency or make such payment on
behalf of the Defaulting Party, as the case may be, including any amounts or
payments necessary to cure the consequences of the failure by the Defaulting
Party to have made such payment. In either such event, no distributions
<PAGE> 15
- 12 -
shall thereafter be made by the Agency pursuant to Section 3.1 hereof or
otherwise until the full amount of such loan and/or such payment and/or the cost
of such cure 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 lesser of (i) 150% of the rate announced from time to
time by Morgan Guaranty Trust Company of New York as its prime or reference rate
or (ii) the maximum rate permitted by applicable law as in effect from time to
time) has been paid in full to the non-Defaulting Party by the Agency. If at any
time both partners are entitled to the priority payments set out herein, then
priority payments shall be made in the same ratio as the respective payments due
to each of them bear to one another.
1.7 Dissolution of TNI. Effective on the Effective Date:
(i) the status of TNI as agent of Star and Citizen under the Operating Agreement
shall terminate, except for the discharge of any liabilities of TNI not assumed
by the Agency and any other winding up of TNI's affairs; and (ii) the Agency
will cause TNI to distribute to the Agency all or substantially all of TNI's
assets and property rights of every kind and description. As soon as practicable
after the Effective Date, the Agency will cause TNI to be dissolved under the
applicable provisions of Arizona law.
<PAGE> 16
- 13 -
1.8 Assumption of Liabilities. Effective as of the
Effective Date, the Agency will assume and agree to pay, perform and discharge
(i) any and all obligations and liabilities arising under the contracts assigned
to it pursuant to Section 1.2(a)(1) or Section 1.3(a)(1) hereof, and (ii) all
or substantially all of the contracts, obligations and liabilities of TNI,
contingent or otherwise, that are in existence as of the Effective Date.
1.9 Employees. It is the intention of the parties that:
(i) on the Effective Date, the Agency will employ, or offer to employ, all those
who were employees of TNI immediately before the Effective Date; (ii) the terms
and conditions of such employment by the Agency shall be the same or
substantially the same as those in effect with TNI immediately before the
Effective Date; and (iii) the Agency shall take such actions as are appropriate
with respect to any pension or employee benefit plans applicable to such
employees in order to ensure that such plans (or their substantial equivalent),
including credit for years of service, will be applicable to such employees in
their capacity as employees of the Agency.
Nothing herein, however, is intended to confer on any employee
of TNI or the Agency any legal or contractual right (as a third party
beneficiary or otherwise) to be or remain
<PAGE> 17
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employed by the Agency, to be or remain employed by the Agency on any particular
terms and conditions of employment, or to be entitled to the continuation of, or
to participate in, any pension or employee benefit plan.
ARTICLE 2
ACTIVITIES OF THE AGENCY
The parties agree that from and after the Effective Date:
2.1 Publication and Operations.
(a) Subject to the provisions of Section 2.3 hereof, the Agency
shall print, produce, distribute, sell and market (both circulation and
advertising) The Arizona Daily Star seven mornings per week, including Sunday,
and Tucson Citizen weekday afternoons and Saturday. The Agency shall control,
supervise, manage and perform all operations (other than news/editorial
operations) involved in printing, producing, distributing, selling and marketing
the newspapers; shall determine the edition times of the newspapers; shall
purchase newsprint, materials and supplies as appropriate; shall solicit and
sell advertising space in such newspapers; shall collect for its own account all
accounts receivable, whether such accounts receivable come into existence prior
to, on or after the Effective Date; shall establish circulation and advertising
rates for such newspapers; and shall make all determinations
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and decisions and do any and all acts and things necessarily connected with the
foregoing activities;
(b) The Agency shall promote and market each newspaper in a
manner designed to enhance or improve the advertising in and circulation of each
newspaper and allow each newspaper to achieve its full market potential;
(c) The Agency shall provide all accounting and controlling
services necessary in connection with the business and affairs of the Agency and
the newspapers;
(d) The Agency shall receive and collect all of the receipts
and income relating to The Arizona Daily Star and the Tucson Citizen, and from
such income pay all operating expenses incident to the Agency's operations and
the publication of the newspapers in the manner and to the extent provided in
this Agreement; and
(e) Subject to Section 2.3 hereof, the Agency may engage in
other activities that would be appropriate for an entity that owns one or more
newspapers, including distributing or making available all or a portion of the
information or advertising in the newspapers by printed or other various means
of distribution; commercial printing, including commercial printing of other
publications; and any other activities necessary for or compatible with its
principal business. Star and Citizen shall retain exclusive rights to all news
and information content (including photographs) generated for
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publication in their respective newspapers, but any sale or licensing thereof
to wire services or otherwise shall be for the account of the Agency.
2.2 Capital Assets.
(a) The parties presently intend that the Agency will own no
capital assets, and that in producing, and carrying on the business functions
of, the newspapers under this Agreement, the Agency shall utilize plant,
property and equipment owned or leased jointly by Star and Citizen.
(b) Each of Star and Citizen agree that they shall make
available to the Agency such plant, property and equipment as is appropriate for
the Agency's operations, including all capital assets that are currently used or
held for use by TNI, Star or Citizen (whether or not jointly owned by Star and
Citizen) and including such capital assets as the Agency's Board of Directors
may in the future determine (pursuant to the budgeting process described in
Section 2.5(a) hereof) are necessary or appropriate for the Agency's operations
or for the news and editorial departments of Star and Citizen. In the case of
such future capital assets, Star and Citizen will jointly (on an equal basis)
acquire and fund the acquisition of such assets, and make the same available to
the Agency, Star or Citizen, as the case may be.
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(c) All operating costs, including costs of repair,
maintenance, light, heat, air conditioning, janitorial services and the like,
associated with all capital assets referred to in this Section 2.2 shall be an
operating expense of the Agency or, if paid by Star and/or Citizen in the first
instance, will be reimbursed by the Agency.
2.3 Editorial Independence. Preservation of the editorial
independence of each newspaper is of the essence of this Agreement. The
editorial and reportorial staffs of the respective newspapers shall be
independent and shall not be merged, combined or amalgamated, and their
editorial policies shall be independently determined. Star and Citizen shall
retain complete and exclusive control of the news operations, contracts, conduct
and contents, and the selection of the editors and news department employees,
for their respective newspapers. Neither Star, Citizen nor the Agency shall seek
to influence or to impair the independent news, editorial and reportorial voice
and content of any other party's newspaper. Each of Star and Citizen shall
independently develop standards for determining the acceptability of
advertising copy for publication in its newspaper, and the Agency shall apply
these standards in determining the acceptability of advertising copy for
publication in such newspaper. The news department of The Arizona Daily Star and
all employees engaged in said department
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shall be employed by and under the exclusive direction and control of Star. The
news department of Tucson Citizen and all employees engaged in said department
shall be employed by and under the exclusive direction and control of Citizen.
2.4 News and Editorial Services and Expenses.
(a) Each newspaper shall maintain a staff of news and
editorial employees appropriate to furnish, and shall furnish to the Agency,
complete news and editorial services necessary and appropriate for the
publication of such newspaper as provided in this Agreement. Each newspaper, in
furnishing news and editorial copy and like materials to the Agency for
publication, shall conform to the mechanical standards and limitations which
prevail in the Agency's plant or plants from time to time, including edition
times established by the Agency.
(b) Subject to the reimbursement provisions of Section 2.4(d)
hereof, all Editorial Expense (as defined in Section 2.4(c) hereof) of the news
department of The Arizona Daily Star shall be borne by Star and all Editorial
Expense of the news department of the Tucson Citizen shall be borne by Citizen.
(c) The term "Editorial Expense" as used in this Agreement
shall mean all costs and expenses associated with the news department of The
Arizona Daily Star or of the Tucson Citizen. Notwithstanding the foregoing,
Editorial Expense
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shall not include, and the reimbursement provisions of Section 2.4(d) hereof
shall not be applicable to, the following:
(1) the capital cost of office space, equipment, and
other capital assets that are owned by Star and/or Citizen or that are jointly
leased by Star and Citizen, and that in either case are related to the news
departments of The Arizona Daily Star or the Tucson Citizen, such assets to be
provided by, and the cost of which shall be borne equally by, Star and Citizen,
it being the intention of the parties that (i) the cost of such capital assets
that have been acquired before the Effective Date shall be borne by Star or
Citizen, as the case may be, as the separate owner thereof, (ii) the ownership
and cost of such capital assets that are jointly acquired on or after the
Effective Date shall be shared equally by Star and Citizen, and (iii) the rental
cost of any capital assets that either Star or Citizen may elect separately to
lease for its news department (and any operating costs associated therewith)
shall, subject to Section 4.1(a)(x) hereof, be deemed an Editorial Expense and
shall be subject to the reimbursement provisions of Section 2.4(d) hereof;
(2) any salary, benefits, memberships, travel or other
costs associated with the publisher (or equivalent local senior executive) of
either newspaper, or any executive or parent-level persons who are not full-time
employees of either newspaper, or any financial, accounting or controlling
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employees of either newspaper, all such costs to be borne separately by Star or
Citizen, as the case may be;
(3) the cost of defending, settling, paying or
discharging any liability or claim on account of anything published in the news
or editorial columns of either of the newspapers, or an account of the
advertising acceptability standards of either of the newspapers, where such
liability or claim does not result from an error in printing or the negligence
of an employee of the Agency, it being the intention of the parties that (i)
Star or Citizen, as the case may be, shall bear the full cost of such
liabilities or claims, (ii) the Agency shall bear, as an operating expense, the
full cost of liabilities or claims resulting from an error in printing or the
negligence of an employee of the Agency, and (iii) notwithstanding the
foregoing, costs incurred by Star or Citizen for insurance policies insuring
against such liabilities, as well as costs incurred for any pre-publication
review of material prepared for publication in the news or editorial columns of
either of the newspapers, shall in each case be deemed an Editorial Expense and
shall be subject to the reimbursement provisions of Section 2.4(d) hereof;
(4) any depreciation on any capital assets owned by
Star and/or Citizen;
(5) any charitable contributions made by Star or
Citizen, unless such contributions are specifically authorized
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by the Agency's Board of Directors as being in the Agency's best interest;
(6) any costs or fees incurred for any audit or review
of the separate financial statements of Star or Citizen; or
(7) any costs or expenses incurred for any special
cultural or promotional events that are not produced or sponsored by the Agency.
(d) On a monthly basis during each fiscal year, the Agency
shall, as part of its operating expenses, reimburse Star and Citizen for their
respective actual Editorial Expense, as documented by each newspaper. In the
event that the actual total Editorial Expense of either Star or Citizen for a
full fiscal year shall exceed the aggregate reimbursable Editorial Expense
budget for such newspaper applicable to such year, then the amount of such
excess shall be billed by the Agency to, and promptly paid by, Star or Citizen,
as the case may be. Nothing in this Agreement, however, shall in any way
whatsoever limit the amount of Editorial Expense that either Star or Citizen
may, in its sole discretion, elect from time to time to expend.
2.5 Budgets and Allocations of News Space.
(a) On an annual basis, the Agency's Board of Directors
will consider and approve, for the Agency's next fiscal year, capital and
operating budgets, including an
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aggregate reimbursable Editorial Expense budget for each of Star and Citizen,
all in a manner and amounts consistent with the purposes and intent of this
Agreement. The determination by the Board of the capital and operating budgets,
including an aggregate reimbursable Editorial Expense budget for each of Star
and Citizen, shall take into account, among other things, the editorial and news
expenses incident to the nature, frequency of publication and edition times of
the newspapers as contemplated by this Agreement. The Board may in its
discretion review and revise any of such budgets from time to time.
(b) As part of the budgeting process, the Agency's Board of
Directors will establish allocations of news space for The Arizona Daily Star
and the Tucson Citizen, which shall include "newshole banks" of space beyond the
normal allocations to be used for coverage of special stories or projects as
separately determined by Star or Citizen. Star or Citizen may exceed its
respective allocations of news space (including such "newshole bank") upon
reasonable notice to the Agency; provided, however, that (i) such excess must be
compatible with the Agency's production capability and scheduling, and (ii) the
newsprint and production costs associated with such excess shall be billed by
the Agency to, and promptly paid by, Star or Citizen, as the case may be, at the
end of the applicable fiscal year.
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ARTICLE 3
ALLOCATIONS AND OTHER FINANCIAL MATTERS
The parties agree that from and after the Effective Date:
3.1 Distributions. The Agency shall, after payment of its
operating expenses, distribute equally to Star and citizen all funds in excess
of funds reasonably needed by the Agency for the conduct of its business. Such
distributions shall be made at least monthly, or at more frequent intervals as
may be authorized by the Agency's Board of Directors.
3.2 Allocations. Net income or net loss of the Agency, as
determined in accordance with generally accepted accounting principles
consistently applied (except as otherwise agreed by the Agency's Board of
Directors), shall be allocated equally to Star and Citizen. Taxable income or
taxable loss of the Agency shall be allocated equally to Star and Citizen.
3.3 Books and Records. The Agency shall keep, at its
principal office, accurate, full and complete books of accounts and records,
wherein all transactions of the Agency, and of Star and Citizen (insofar as such
transactions of Star or Citizen relate to activities contemplated by this
Agreement), shall be entered in accordance with generally accepted
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accounting principles consistently applied (except as otherwise agreed by the
Agency's Board of Directors). Star, Citizen and their respective representatives
shall have the right to inspect, copy or reproduce, each at its own expense, the
books and records of the Agency.
3.4 Financial Statements. The Agency shall account monthly
to Star and Citizen for all revenues and expenditures of the Agency and keep
Star and Citizen regularly informed of its affairs and business. In addition,
the Agency shall cause to be delivered to Star and to Citizen the following
financial statements and reports of the Agency (and of each of Star and Citizen,
insofar as such statements of Star or Citizen relate to activities contemplated
by this Agreement) prepared, in each case, in accordance with generally accepted
accounting principles consistently applied (except as may otherwise be agreed by
the Agency's Board of Directors):
(a) promptly upon availability and in any event within
eight business days after the end of each fiscal month, (i) an
unaudited balance sheet as of the end of such month and a
comparison of such balance sheet with the balance sheet for the
same month of the fiscal year immediately preceding, and (ii)
an unaudited statement of income or loss for the interim period
through such month and the monthly period then
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ended, in reasonable detail, and a comparison of such statements
with statements for the same periods of the fiscal year
immediately preceding; and
(b) such other analytical reports relating to
activities contemplated by this Agreement as either Star or
Citizen (or their respective parent corporations) may from time
to time request.
3.5 Auditors and Fiscal Year. The independent auditors of
the Agency shall be selected by the Agency's Board of Directors. The Agency
shall keep its books and records on the basis of a 52/53 week fiscal year ending
on the last Sunday of each calendar year and on the basis of four fiscal
quarters, each composed of months of five, four and four weeks.
3.6 Bank Accounts. The Agency shall maintain bank accounts
in such banks or institutions as its Board of Directors from time to time shall
select, and such accounts shall be drawn upon by check signed by any person, and
in such manner, as may be designated by the Board of Directors. All moneys of
the Agency shall be deposited in the bank accounts of the Agency and all debts
and obligations of the Agency (except petty expense items) shall be paid by
check or other prudent and customary method, including electronic transfer of
funds.
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3.7 Tax Returns. The Agency shall cause income and other
required tax returns for the Agency to be prepared and timely filed with the
appropriate authorities, making such elections as the Board of Directors shall
deem to be in the best interests of the Agency, Star and Citizen. The Agency
shall submit any such income tax filing to Star and Citizen for review at least
30 days prior to its filing date unless otherwise agreed to by Star and Citizen.
ARTICLE 4
GOVERNANCE OF THE AGENCY
4.1 Board of Directors.
(a) The business and affairs of the Agency shall be
managed by or under the direction of a Board of Directors in a manner consistent
with the purposes and intent of this Agreement. The Board of Directors shall
have and exercise final authority with respect to such business and affairs
except as otherwise provided in this Agreement or the Partnership Agreement.
Without limiting the generality of the foregoing, the Board of Directors shall
have the sole power and authority to take or authorize the Agency to take the
following actions:
(i) Elect and remove the President and other
officers of the Agency;
(ii) Approve and revise budgets as provided in
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Section 2.5 hereof;
(iii) Make any capital call to Star and Citizen
as provided in Section 1.5 (a) hereof;
(iv) Determine the timing of editions and the
production format of the two newspapers, and
determine whether the number of editions and/or
sections of either newspaper shall be changed;
(v) Determine circulation and advertising rates
for the two newspapers;
(vi) Determine the benefits and policies
applicable to employees of the Agency;
(vii) Approve any material contracts that the Agency
may enter into, including without limitation any
employment contract, any contract with any labor
union, any contract with a duration of more than one
year, any contract in any fiscal year involving a
value in excess of such amount as shall be determined
from time to time by the Board of Directors, and any
contract out of the ordinary course of business;
(viii) Determine whether and on what terms the Agency
shall incur indebtedness for borrowed money;
(ix) Select the Agency's outside auditors;
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(x) Determine whether and on what basis the Agency
shall acquire or lease any capital assets, and
determine whether and on what basis to reimburse Star
or Citizen for the cost of any capital assets that may
be acquired or leased separately by either of them;
(xi) Make any significant tax or accounting election
for the Agency;
(xii) Waive any right of the Agency to
receive any payment due to it from either Star or
Citizen; and
(xiii) Allocate appropriate office space and other
capital assets for the news departments and
executive officers of Star and Citizen.
(b) Unless otherwise agreed in writing by both Star and
Citizen, there shall be six members of the Agency's Board of Directors, three of
whom shall be appointed by Star, and three of whom shall be appointed by
Citizen. There shall in no event be an uneven number of directors, and each of
Star and Citizen shall at all times have the right to appoint an equal number of
directors. Each director shall hold office until he shall die, resign or be
removed (with or without cause, with or without notice) by the party by whom he
or she was appointed, whereupon such party shall appoint a successor.
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(c) As provided in the Partnership Agreement, if proper notice
(as set forth therein) of a meeting is given to all directors or waived, the
presence at any meeting of the Board of Directors (in person or represented by
proxy) of both (i) a majority of the total authorized number of directors, and
(ii) a majority of directors who were appointed by Star and a majority of
directors who were appointed by Citizen, shall constitute a quorum for the
taking of action. Subject to the written consent procedure described in Section
3.2(c) of the Partnership Agreement, the Board of Directors shall act on all
matters by an affirmative vote of both (i) a majority of directors present at
any meeting in person or by proxy, and (ii) a majority of those directors who
were appointed by Star and a majority of those directors who were appointed by
Citizen.
4.2 Officers of the Agency.
(a) The Agency shall have a President and such other officers
as the Board of Directors may from time to time determine. Officers shall serve
for a one-year term unless they earlier die, resign or are removed. Any officer
may be removed by the Board of Directors with or without cause or notice.
(b) Subject to this Agreement, the Partnership Agreement and
the determinations of the Board of Directors, the President shall have full
day-to-day operating authority,
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control and management of the business and affairs of the Agency.
(c) Subject to this Agreement and the Partnership Agreement,
any other officers of the Agency shall have such authority as is from time to
time determined by the Board of Directors.
4.3 Deadlocks. In the event of a controversy arising pertaining
to the affairs of the Agency wherein the members of the Board of Directors
representing Star and the members of the Board of Directors representing Citizen
are evenly divided, then:
(a) At the written call of Star or Citizen, which call shall
include a written statement specifically setting forth the matter or matters in
controversy and the proposed resolution or resolutions of the Board of Directors
on which the Board is deadlocked, the parties shall meet within fifteen (15)
days from the date on which the written call is served for the purpose of
resolving such controversy. If the parties shall also be evenly divided on the
matter or matters so specified for more than fifteen (15) days following the
date of such meeting, then either Star or Citizen (the "demanding party") may
thereafter demand that the matter or matters in controversy be submitted to
arbitration by serving a written demand on the other party.
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(b) In the event of a demand for arbitration, the parties
shall seek to mutually appoint a Disinterested Person (as hereafter defined) to
resolve the matter or matters in controversy. As used in this Section 4.3,
"Disinterested Person" means a person who (i) has no employment, professional or
financial interest in either party or in any person, firm, corporation or other
entity directly or indirectly controlling, controlled by, or under common
control with, either party and (ii) has significant experience in the newspaper
publishing industry (who shall include for purposes of this clause (ii) any
director of the American Newspaper Publishers Association).
(c) If, within thirty (30) days after service of the
demand for arbitration, the parties are unable to agree upon and mutually
appoint a single arbitrator who is a Disinterested Director and is willing to
serve, then the parties shall provide for the appointment of a panel of three
Disinterested Persons to resolve the matter or matters in controversy, as
follows:
(i) Each of Star and Citizen shall name an
arbitrator who is a Disinterested Person. Should the demanding party fail to
name an arbitrator who is a Disinterested Person within fifteen (15) days of
the lapse of the aforesaid thirty
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(30) day period, the demanding party's right to arbitration of the specific
matter or matters in controversy shall lapse. Should the other party fail to
name an arbitrator who is a Disinterested Person within the same fifteen (15)
day period, then the matter or matters in controversy shall be determined by
the Disinterested Person appointed by the demanding party, acting as a single
arbitrator.
(ii) In turn, the two arbitrators so named shall name
a third arbitrator who is a Disinterested Person. Should the two arbitrators,
within thirty (30) days after having been named as arbitrators as provided
herein, fail to name a third arbitrator who is a Disinterested Person and is
willing to serve, then the demanding party, within thirty (30) days of the
lapse of the aforesaid thirty (30) days, either alone or together with the other
party, may apply to the presiding judge for the United States District Court for
the District of Arizona, sitting in Tucson, or if he refuses, within fifteen
(15) days of such refusal, to the Senior Judge of the Pima County Superior
Court, Tucson, Arizona, to designate and appoint a third arbitrator, from a list
of six names submitted with the application to the court. The list shall contain
the names of three Disinterested Persons specified by each of the two
arbitrators. The three arbitrators shall decide the matter or matters in
controversy by majority vote. If the demanding
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party fails to make application to the court for designation and appointment of
a third arbitrator within the specified time period (which shall include the
names of three Disinterested Person designated by the arbitrator named by it),
the demanding party's right to arbitration of the specific matter or matters in
controversy shall lapse. If the other party fails to join in the application to
the court or to furnish the names of three Disinterested Persons designated by
the arbitrator named by it, then the matter or matters in controversy shall be
determined by the Disinterested Person initially appointed by the demanding
party, acting as a single arbitrator.
(d) The decision of a single arbitrator shall be rendered in
writing within thirty (30) days after his appointment, and where three
arbitrators are acting said decision shall be rendered in writing within thirty
(30) days after appointment of the third arbitrator; provided, however,
additional time to render a decision may be taken by the arbitrator or
arbitrators as he, she or they may deem reasonably necessary under the
circumstances. The written decision of the arbitrator or arbitrators, as the
case may be, shall be final and shall be binding upon the parties and the
Agency. All expenses and compensation of the arbitrator or the arbitrators, as
the case may be, in connection with any matter or matters in controversy shall
be paid by the Agency. No arbitrator(s) shall determine or have the power to
determine
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whether any party is in breach of any obligation under this Agreement or any
other agreement, it being the intention of the parties that the sole function of
the arbitration process described in this Section 4.3 is to provide a mechanism
to break a deadlock at the Board of Directors of the Agency on matters that are
appropriately before the Board and that are within the power and authority of
the Board of Directors pursuant to this Agreement.
(e) Notwithstanding the foregoing, the parties agree that if
the Board of Directors is evenly divided and therefore unable to approve, for
any fiscal year, the reimbursable Editorial Expense budget for either Star or
Citizen, as contemplated by Section 2.5(a) hereof, then the Board of Directors
shall nonetheless be deemed to have approved for such fiscal year an aggregate
reimbursable Editorial Expense budget that is identical to the budget (as the
same may have been revised by the Board of Directors from time to time) that was
actually approved by the Board of Directors for the next preceding year. If the
Board of Directors is evenly divided and unable to approve an aggregate
reimbursable Editorial Expense budget for two or more consecutive years, then
the controversy shall be resolved and a budget for the year in dispute shall be
set
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by way of the procedures described in Section 4.3(a)-(d) hereof. Pending such
resolution, the parties shall proceed as if such budget were identical to the
budget that was in effect for the next preceding year, but upon such resolution
such budget shall be effective retroactively to the beginning of the year for
which the Board of Directors shall not have approved, or shall not be deemed to
have approved, a budget.
ARTICLE 5
DURATION; TERMINATION
5.1 Term; Renewals. This Agreement shall run for a period
ending at the close of business on June 1, 2015, and may be renewed and extended
for subsequent periods of twenty-five (25) years each at the option of either
Star or Citizen. Unless two years' written notice is given by both Star and
Citizen that they desire to end this Agreement or any renewal hereof, this
Agreement shall continue in force for subsequent periods of twenty-five (25)
years each. Only by mutual written consent can this Agreement or any renewal
hereof be terminated.
5.2 Termination; Dissolution of the Agency.
(a) This Agreement shall terminate only upon expiration of its
term, including any renewals thereof, as provided in and subject to Section 5.1
hereof.
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(b) No partner shall cause the Agency to be dissolved except as
provided in this Section 5.2(b), and the Agency shall continue until so
dissolved. The Agency shall be dissolved upon the occurrence of any of the
following:
(i) expiration of the term of this Agreement, including
any renewals thereof, as set forth in Section 5.1 hereof; or
(ii) upon the bankruptcy of a partner. For purposes hereof,
"bankruptcy" means with respect to any partner, (A) the making
by such partner of an assignment for the benefit of creditors
or admitting in writing its inability to pay its debts when
due; or (B) the commencement by such partner with respect to
itself or its assets of any liquidation, dissolution,
bankruptcy, reorganization, insolvency or other proceeding for
the relief of financially distressed debtors; or (C) the
appointment for such partner, or a substantial part of such
partner's assets, of a receiver, liquidator, custodian or
trustee, and, if any of the events referred to in this clause
(C) occur involuntarily, the failure of the same to be
dismissed, stayed or discharged within 90 days; or (D) the
entry of an order for relief against such partner under Title
11 of the United States Code, or any other similar law enacted
by the United States
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Congress to regulate bankruptcies; or (E) the commencement against such partner
of any liquidation, dissolution, bankruptcy, reorganization, insolvency or other
proceeding for the relief of financially distressed debtors if such proceeding
remains undismissed for a period of 90 days; or
(iii) at the written election of a partner if a court of competent
jurisdiction, in a judgment no longer subject to appeal or judicial review, has
found that (1) the other partner (and only the other partner) has willfully or
persistently committed one or more material breaches of this Agreement or the
Partnership Agreement, and (2) such breaches materially and adversely frustrate
the essential purposes and intent of the parties as expressed in this Agreement,
and (3) the electing partner gave written notice to the other partner of such
breaches and such breaches were not substantially cured within 90 days after
such notice was given; it being the intention of the parties that either
partner may seek such a judgment in a court of competent jurisdiction without
being barred from doing so by reason of the provisions of Section 4.3 hereof,
which provisions are intended as a mechanism to break a deadlock at the Board of
Directors of the Agency as provided in
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Section 4.3(d) hereof, rather than as a mechanism to determine
whether any breaches of this Agreement or the Partnership
Agreement of the nature described in this Section 5.2(b)(iii)
have occurred; or
(iv) in the manner and subject to the requirements
provided in Sections 4.2 and 4.3 of the Partnership
Agreement.
No termination of this Agreement or dissolution of the
Agency shall be construed to release any partner from liability at law or in
equity to the other partner or the Agency arising out of any breach of the terms
of this Agreement or the Partnership Agreement.
5.3 Dissolution Prior to Expiration of Term.
As contemplated by Sections 5.1 and 5.2(a), it is the
intention of Star and Citizen that both this Agreement and the Partnership
Agreement shall continue in full force and effect until June 1, 2015 and
thereafter for successive 25 year periods so long as either Star or Citizen
wishes such renewals to occur. Star and Citizen recognize, however, that the
partnership between them may be dissolved upon bankruptcy of a partner (as
provided in Section 5.2(b)(ii) hereof) or pursuant to the provisions of Section
5.2(b)(iii) hereof or pursuant to the provisions of the applicable partnership
law of the State
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of Arizona. In order to take account of the possibility of such a dissolution,
the parties therefore wish to provide in this Section 5.3 for the orderly
continuation of this Agreement for its term and any renewals thereof in the
unlikely and unanticipated event of, and notwithstanding, any such dissolution
of the partnership between them that may occur.
For purposes of this Section 5.3 "Defaulting Partner" shall
mean (i) a partner who becomes bankrupt within the meaning of Section 5.2(b)(ii)
hereof, (ii) a partner whose breaches led to dissolution of the Agency in
accordance with Section 5.2(b)(iii) hereof, or (iii) a partner who causes a
dissolution of the Agency under applicable law but in contravention of this
Agreement or the Partnership Agreement (whether by such partner's express will
or otherwise); "Non-defaulting Partner" shall mean the partner other than the
Defaulting Partner; "Buying Party" shall mean the party who purchases the other
party's property rights (as described in Arizona Revised Statutes Sections
29-201 et seq. or other applicable law) in the Agency and other assets pursuant
to this Section 5.3; and "Selling Party" shall mean the party who sells its
property rights in the Agency and other assets pursuant to this Section 5.3.
If the Agency dissolves after the Effective Date and prior to
the expiration of the then current term of this Agreement (other than in the
manner and in accordance with the
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requirements provided in Sections 4.2 and 4.3 of the Partnership Agreement),
then:
(a) This Agreement and the joint operating arrangement
contemplated hereby (as modified, however, pursuant to this Section 5.3) shall
not terminate but shall continue for the remaining term of years (and any
renewals) hereof.
(b) The Non-defaulting Partner (and not the Agency or the
Board of Directors) shall, notwithstanding any provision of this Agreement or
the Partnership Agreement, have and exercise final authority with respect to
all the affairs of the Agency between the date of dissolution of the Agency
(the "Dissolution Date") and the Closing Date (as defined below), and the
Non-defaulting Partner may exercise any and all authority conferred in this
Agreement or the Partnership Agreement on the Board of Directors (whether by
majority vote, unanimous vote, or otherwise) or on the Agency.
(c) Within 90 days after the Dissolution Date, the Defaulting
Partner shall give written notice to the Non-defaulting Partner of a specific
dollar amount (the "Specified Amount"), which shall be a single number and not a
formula of any kind. If the Defaulting Partner fails to do so, the
Non-defaulting Partner shall give written notice to the Defaulting Partner of a
Specified Amount, and that shall be the Specified Amount for purposes of this
Section unless the Defaulting Partner within 10 days thereafter gives the
<PAGE> 44
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Non-defaulting Partner written notice of a different Specified Amount, in which
event such different Specified Amount shall be the Specified Amount for purposes
of this Section. Within 180 days after the Dissolution Date, the Non-defaulting
Partner may give written notice to the Defaulting Partner of the Non-defaulting
Partner's election either (1) to sell all its property rights as a partner in
the Agency and all its property rights in capital assets used or held for use by
the Agency to the Defaulting Partner for the Specified Amount (in which event
the Non-defaulting Partner shall be the Selling Party and the Defaulting Partner
shall be the Buying Party), or (2) to purchase all the Defaulting Partner's
property rights as a partner in the Agency and all its property rights in
capital assets used or held for use by the Agency for the Specified Amount (in
which event the Non-defaulting Partner shall be the Buying Party and the
Defaulting Partner shall be the Selling Party). If the Non-defaulting Partner
fails to make a timely election, the Defaulting Partner shall within 210 days
after the Dissolution Date make such election on behalf of the Non-defaulting
Partner, and the Non-defaulting Partner shall be bound thereby. The date on
which such election is made is referred to herein as the "Election Date".
(d) The closing of the purchase and sale contemplated by
Section 5.3(c) hereof (the "Closing") shall occur at the principal offices of
the Agency on a date (the "Closing Date")
<PAGE> 45
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selected by the Buying Party and as to which it has given at least 15 days'
prior written notice to the Selling Party. The Closing Date shall be not less
than 45 days nor more than 90 days after the Election Date.
(e) At the Closing, the Buying Party shall deliver to the
Selling Party the full amount of the Specified Amount in immediately available
funds. At the Closing, the Selling Party shall execute and deliver to the Buying
Party such assignments of interest, deeds, bills of sale, instruments of
conveyance, and other instruments as the Buying Party may reasonably require, to
give good and clear record and marketable title to all the Selling Party's
property rights as a partner in the Agency and all the Selling Party's property
rights in capital assets used or held for use by the Agency.
(f) Following the Closing and for the remaining term of this
Agreement (and any renewals thereof), the Buying Party shall print, produce,
distribute and market (both circulation and advertising) the newspapers in the
same manner that this Agreement contemplates shall be done by the Agency,
subject in all cases to the editorial independence of the newspapers as
contemplated herein. Each of Star and Citizen shall continue to be obligated to
provide news and editorial product as provided in Section 2.4(a) hereof. All
revenues, costs, expenses and distributions of money with respect to such
newspapers shall be treated by the Buying Party in the same
<PAGE> 46
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manner that this Agreement contemplates shall be done by the Agency except that,
for all periods of time subsequent to the Closing Date, distributions of all
funds in excess of the funds reasonably needed by the Buying Party for the
conduct of the joint operating arrangement contemplated hereby shall be made 75%
to the Non-defaulting Partner and 25% to the Defaulting Partner. Notwithstanding
anything in this Agreement, however, the Buying Party shall have sole and
exclusive control, power and authority over all matters (excluding editorial
matters of the Selling Party) related to the implementation of the joint
operating arrangement contemplated by this Agreement, including without
limitation, all right, power and authority that this Agreement contemplates
shall be exercised by the Board of Directors (whether by majority vote,
unanimous vote, or otherwise) or by the Agency.
(g) Upon dissolution of the Agency and occurrence of the events
contemplated in this Section 5.3, nothing in this Agreement or the arrangements
of the parties shall constitute the parties hereto partners, joint venturers,
successors, alter egos, joint employers or an unincorporated association, or as
having any relationship other than as specifically provided by this Agreement
(as this Agreement is modified however, pursuant to this Section 5.3).
<PAGE> 47
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5.4 Termination at End of Term. If both this Agreement and the
Partnership Agreement terminate upon expiration of their term, including any
renewals thereof, and the purchase and sale contemplated by Section 5.3 shall
not have occurred:
(a) Star and Citizen will meet with each other and use their
best efforts to develop a just and equitable plan for discontinuing and
dissolving the Agency, distributing its assets in kind between Star and Citizen
(after payment of all indebtedness and liabilities of the Agency and all costs
of dissolution and liquidation) equally to Star and Citizen, and partitioning on
an equal basis all capital assets used or held for use by the Agency, so as to
enable Star and Citizen to resume separate publication of The Arizona Daily Star
and Tucson Citizen, respectively, as independent businesses (a "Distribution
Plan"). If Star and Citizen agree on a Distribution Plan, the assets of the
Agency shall be distributed, and said capital assets shall be partitioned, in
accordance with the Distribution Plan, the Licenses granted pursuant to Sections
1.2(b)(i) and 1.3(b)(i) hereof shall automatically expire and terminate, and the
Agency shall thereupon be dissolved. Except as provided in the Distribution
Plan and upon the effective distribution of assets by the Agency pursuant
thereto, neither Star nor Citizen shall have any separate right, title or
interest in or to any asset of the Agency.
<PAGE> 48
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(b) If Star and Citizen are unable to agree upon a Distribution
Plan, or if the Agency's assets are not sufficient to pay all of its
indebtedness and liabilities and all costs of dissolution and liquidation, the
business affairs and assets of the Agency shall be liquidated as promptly as
possible and receivables collected, all in an orderly and businesslike manner so
as not to involve undue sacrifice, and the assets of the Agency and the capital
assets used or held for use by the Agency shall be converted into cash and all
of its indebtedness and liabilities paid. In the event there is a cash surplus
available for distribution, the surplus will be distributed equally to Star and
Citizen, and in the event there is a deficiency, the same will be made up by
Star and Citizen in accordance with Section 1.5 hereof, and the Agency shall
thereupon be dissolved.
5.5 Change of Control.
(a) Neither control of Star or Citizen nor the assets or
business of The Arizona Daily Star or Tucson Citizen shall be transferred to any
other person, corporation, partnership, trust or other entity unless the
transferee assumes all obligations of Star or Citizen, as the case may be, under
this Agreement, the Partnership Agreement and the applicable License Agreement.
Any purported transfer in violation of this Section 5.5(a) shall be null, void
and of no effect. Neither
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Star nor Citizen shall transfer any of its right, title and interest in this
Agreement or in its partnership interest in the Agency except as part of a
transaction permitted by this Section 5.5(a) in which control of Star or
Citizen, or all or substantially all of the assets and business of The Arizona
Daily Star or Tucson Citizen, are being transferred. For purposes of this
Section 5.5(a), no transfer or change of control shall be deemed to have
occurred as a result of a transfer to an Affiliate as permitted by Section 4.2
of the Partnership Agreement or a change of control, directly or indirectly, of
the ultimate parent of Star or Citizen, as the case may be.
(b) If from time to time either Star or Citizen (the
"transferring party") intends to effect a transfer other than one referred to in
the last sentence of Section 5.5(a), notice of such intent shall first be given
to the other party (the "non-transferring party") at least 30 days before the
transferring party enters into any definitive agreement, agreement in principle,
letter of intent or similar understanding with a transferee regarding the
material terms of such a transfer. If requested by the transferring party, the
non-transferring party will maintain the confidentiality of such notice. If,
after giving such notice to the nontransferring party and within 150 days
thereafter, the transferring party has not consummated with a third party a
transaction of the type contemplated by this Section 5.5, then this Section
5.5(b) shall again become applicable except to the
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consummation of a transaction with a third party that is contemplated pursuant
to a definitive agreement (as it may be amended) that was entered into with such
third party during such 150 day period.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. Each notice or other communication given pursuant
to this Agreement or the Partnership Agreement shall be in writing and shall be
deemed to have been duly given when hand delivered or five 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:
Star: Star Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726-6887
Attention: Vice President
and Business Manager
with a copy to:
Pulitzer Publishing Company
900 North Tucker Blvd.
St. Louis, Missouri 63101
Attention: Senior Vice President-
Newspaper Operations
Citizen: Citizen Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726-6887
Attention: Publisher
with a copy to:
<PAGE> 51
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Gannett Co., Inc.
1100 Wilson Blvd.
Arlington, Virginia 22209
Attention: Chief Financial Officer
Agency: TNI Partners
4850 South Park Avenue
P.O. Box 26887
Tucson, Arizona 85726-6887
Attention: President
All such notices to the Agency shall be to the attention of the President, with
copies to Star and Citizen at the addresses then designated by them for the
receipt of such notices pursuant to this Section 6.1. 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 6.1.
6.2 Assignment. Subject to Section 5.5 hereof, this Agreement
shall be binding upon and shall inure to the benefit of each of the parties
hereto and their permitted successors and assigns.
6.3 Entire Understanding. This Agreement (including
the Exhibits hereto) and the Partnership Agreement constitute the entire
understanding and agreement of the parties hereto on the subject matter herein
contained and any and all other representations or agreements heretofore made on
such subject
<PAGE> 52
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matter, whether oral or in writing, of any party or its agents shall be null,
void and of no effect whatsoever.
6.4 Headings. Headings have been inserted in this Agreement for
the purpose of convenience only. They will not be used to interpret or construe
the meaning of the Articles or Sections hereof, nor will they have the effect of
limiting or enlarging the meaning thereof.
6.5 Governing Law; Modification. This Agreement shall be
governed by, construed and enforced in accordance with the internal laws of the
State of Arizona, without giving effect to conflict of laws principles. This
Agreement may not be changed orally, but only by an agreement in writing and
signed by the party against whom enforcement of any waiver, modification or
discharge is sought.
6.6 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be held in
any proceeding to be invalid or unenforceable, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it was held to be invalid or unenforceable, shall not be affected
thereby, and shall be valid and be enforceable to the fullest extent
<PAGE> 53
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permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential purposes and intent as
expressed herein.
6.7 Further Assurances. Each party agrees to take all action
necessary to carry out and effectuate the intent, purposes and provisions of
this Agreement and the Partnership Agreement, and to cooperate with the others
in every reasonable and proper way that will promote the successful operation of
the arrangements contemplated by this Agreement and the Partnership Agreement.
6.8 Force Majeure. No party shall be liable to the others for
any failure or delay in performance under this Agreement or the Partnership
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 6.8 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
Partnership Agreement.
<PAGE> 54
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6.9 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.
6.10 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.
6.11 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 Partnership Agreement.
6.12 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement, and any party hereto may execute
this Agreement by signing one or more counterparts hereof. This Agreement shall
become effective when counterparts hereof have been duly executed and delivered
by each party.
<PAGE> 55
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IN WITNESS WHEREOF, the parties have executed this Agreement by
their respective duly authorized officers as of the day and year first above
written.
STAR PUBLISHING COMPANY
By: Nicholas G. Penniman IV
-------------------------------
Title: Senior vice President
CITIZEN PUBLISHING COMPANY
By: Gary L. Watson
-------------------------------
Title: Vice President
TNI PARTNERS, being the Agency referred to in the foregoing
Agreement, hereby becomes a party thereto and agrees to perform all of the
obligations therein to be performed by it and to be bound by all of the terms
and provisions thereof.
TNI PARTNERS
By: Star Publishing Company
General Partner
By: Nicholas G. Penniman IV
-------------------------------
Title: Senior Vice President
By: Citizen Publishing Company
General Partner
BY: Gary L. Watson
-------------------------------
Title: Vice President
<PAGE> 56
EXHIBIT A
---------
PARTNERSHIP AGREEMENT
PARTNERSHIP AGREEMENT, dated as of December 22, 1988, between
STAR PUBLISHING COMPANY ("STAR"), an Arizona corporation, and CITIZEN PUBLISHING
COMPANY ("CITIZEN"), an Arizona corporation.
1. FORMATION OF PARTNERSHIP.
1.1 Partners. STAR and CITIZEN (individually, a "Partner"
and collectively, the "Partners") hereby form a general partnership under the
laws of the State of Arizona (the "Partnership") for the purposes and on the
terms set forth herein.
1.2 Name and Principal Office. The name of the Partnership
shall be "TNI PARTNERS", or such other name as shall be mutually agreeable to
the Partners. The Partnership shall do business under the name "TNI PARTNERS"
and its principal office shall be located at 4850 South Park Avenue, Tucson,
Arizona 85726, or such other place as the Partners shall designate from time to
time.
1.3 Purpose of Partnership. The purpose of the Partnership
shall be (i) to be the Agency (as that term is defined in that certain Amended
and Restated Joint Operating Agreement, dated the date hereof, between STAR and
CITIZEN (the "Agency Agreement")) and to conduct all the activities, have all of
the rights and powers, and perform all of the duties and obligations, of the
Agency set forth in the Agency Agreement, and (ii) to do any act and thing and
to enter into any contract incidental to, or necessary, proper or advisable for,
the accomplishment of such purposes, to the extent permitted by law.
1.4 Commencement; Term. The Partnership shall commence
on the date hereof and continue for a term ending at the close of business on
June 1, 2015, and may be renewed and extended for subsequent periods of twenty-
five (25) years each at the option of either STAR or CITIZEN. Unless two years'
written notice is given by both STAR and CITIZEN that they desire to end this
Partnership or any renewal hereof, this Partnership shall continue in force for
subsequent periods of twenty-five (25) years each. Only by mutual written
consent shall this Partnership Agreement or any renewal hereof be terminated.
2. PARTNERSHIP INTERESTS, CONTRIBUTIONS AND DISTRIBUTIONS.
2.1 Partnership Interests. Except as otherwise expressly
provided herein or in the Agency Agreement, the
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respective interests of the Partners in the assets, liabilities, profits and
losses of the Partnership ("Partnership Interest") shall be as follows:
STAR: 50%
CITIZEN: 50%
Each Partner shall have at all times an interest as a tenant in partnership in
the assets and properties of the Partnership equal to its Partnership Interest
and neither Partner shall have any separate right, title or interest in or to
any asset or property of the Partnership.
2.2 Capital Accounts and Contributions.
(a) The initial capital account of each Partner shall
be the amount determined in accordance with Section 1.4 of the
Agency Agreement. Subsequently, each Partner's capital account
shall be (i) increased by (x) the amount of any net income of
the Partnership allocable to such Partner pursuant to Section
3.2 of the Agency Agreement and (y) the amount of any cash plus
the fair market value of any non-cash assets subsequently
contributed by such Partner to the Partnership, and (ii)
decreased by (a) the amount of any net loss of the Partnership
allocable to such Partner pursuant to Section 3.2 of the Agency
Agreement and (b) the amount of any cash and the fair market
value of any non-cash assets distributed by the Partnership to
such Partner.
(b) Each Partner shall make one or more capital
contributions to the Partnership in such amounts, and upon such
terms and conditions, as are provided in the Agency Agreement.
No interest shall be paid by the Partnership on any capital
contributed to the Partnership unless the Partners otherwise
agree.
2.3 Distributions of Cash and Allocations of Taxable
Income or Loss.
(a) Cash shall be distributed to each Partner at such
times and in such amounts as is provided in Section 3.1 of the
Agency Agreement.
(b) Net income and net loss shall be allocated to the
Partners in the amounts specified in Section 3.2 of the Agency
Agreement.
<PAGE> 58
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(c) For income tax purposes, taxable income and loss
and allocations thereof to each Partner will be determined in
accordance with Section 3.2 of the Agency Agreement.
2.4 Expenses Incurred Prior to the Formation of the
Partnership. No expense or obligation incurred for services performed or
products supplied by either Partner prior to the formation of the Partnership
shall be considered to be a contribution or loan to, or made on behalf of, the
Partnership, unless otherwise provided in the Agency Agreement or by agreement
of the Partners.
2.5 Distribution to Partners; Funding of Losses. Cash and
other property shall be distributed by or withdrawn from the Partnership, and
losses of the Partnership shall be funded, on the terms and conditions (and
pursuant to the procedures) set forth in the Agency Agreement.
3. MANAGEMENT OF THE PARTNERSHIP.
3.1 Board of Directors. There is hereby established a
Board of Directors of the Partnership consisting of six members, or such even
number of Directors as the Partners may from time to time agree upon, to have
and exercise final authority, except as otherwise provided herein or in the
Agency Agreement, with respect to the affairs of the Partnership specified in
this Agreement. The initial members of the Board of Directors shall be appointed
by the Partners on or prior to December 26, 1988, and shall consist of three
members appointed by STAR and three members appointed by CITIZEN. Each member
shall hold office until he shall die, resign or be removed (with or without
cause or notice) by the Partner that he represents, whereupon such Partner shall
appoint such member's successor to the Board of Directors. Each member shall
have one vote.
3.2 Meetings and Action of the Board of Directors.
(a) The initial meeting of the Board of Directors shall take place at
such time and place as the Partners shall agree. The Board of Directors may
establish meeting dates and requisite notice requirements, adopt rules of
procedure it deems consistent herewith, and may meet by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time.
<PAGE> 59
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(b) Any member of the Board of Directors may call a meeting. Unless
waived, at least five business days' notice of a meeting is required. Notice to
a director shall be given to the Partner whom the director represents, and shall
be given in the manner described in Section 6.1 of the Agency Agreement. If
proper notice of a meeting is given to all directors or waived, the presence at
any meeting, in person or by proxy, of both (i) a majority of the total
authorized number of directors and (ii) a majority of directors who were
appointed by STAR and a majority of directors who were appointed by CITIZEN,
shall constitute a quorum for the taking of any action, subject to Section 3.3
hereof. Any member may, in writing, appoint a proxy to act on his behalf and
vote in his stead at any meeting. Subject to Section 3.2(c) below, the Board of
Directors shall act on all matters by an affirmative vote of both (i) a majority
of directors present at any meeting in person or by proxy, and (ii) a majority
of directors who were appointed by STAR and a majority of directors who were
appointed by CITIZEN.
(c) Any action required or permitted to be taken by the Board
of Directors may be taken without notice and without a meeting if a majority of
the total authorized number of directors, including at least a majority of
directors who were appointed by CITIZEN and at least a majority of directors who
were appointed by STAR, consent in writing to the adoption of a resolution
authorizing the action.
3.3 Actions by Partners.
(a) The Board of Directors shall have no power, without action
by the Partners themselves, (i) to amend this Agreement; (ii) to act other than
in accordance with the purposes of the Partnership as set forth in Section 1.3
hereof; (iii) to admit a new partner; (iv) to merge or consolidate the
Partnership with any other entity; or (v) to dissolve the Partnership.
(b) No partner shall, except as authorized by the provisions
hereof, take any action or assume any obligations or liabilities on behalf of
the Partnership.
(c) Nothing in this Agreement or the Agency Agreement shall in
any way restrict, prohibit or impair the right of each Partner to sell or
otherwise license its own news, editorial and feature content to wire services
or otherwise (for the account of the Partnership) as it deems in its best
interest.
<PAGE> 60
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(d) Any fiduciary or other duty that either Partner (or any
Affiliate thereof) may owe to the other with respect to any of its businesses or
operations that are allegedly in competition with those of the Agency shall be
determined as if the legal relationship between the Partners were that which
existed under the Previous operating Agreement, and without regard to any
subsequent agreement between the parties other than the express contractual
provisions under this Agreement or the Agency Agreement. For purposes of this
Section 3.3(d), "Previous Operating Agreement" means that certain Operating
Agreement dated March 28, 1940, as amended by agreements dated June 15, 1953 and
October 14, 1970.
3.4 President and Other Officers. The Agency shall have a
President and such other officers as the Board of Directors may from time to
time determine. Officers shall serve for a one-year term unless they earlier
die, resign or are removed. Any officer may be removed by the Board of Directors
with or without cause or notice. Subject to the Agency Agreement, this Agreement
and the determinations of the Board of Directors, the President shall have full
day-to-day operating authority, control and management of the business and
affairs of the Agency, and any other officers of the Agency shall have such
authority as is from time to time determined by the Board of Directors.
The President and such other officers shall act in accordance with the
decisions of the Board of Directors and shall have no authority to take any
action requiring prior Board of Directors approval without first obtaining the
approval of the Board of Directors.
3.5 Indemnification.
(a) The Partnership shall indemnify any person made, or threatened to be
made, a party to an action or proceeding, whether brought by a Partner or
Affiliate of a Partner or any other person, whether civil or criminal, including
an action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any member of the Board of Directors or officer
of the Partnership served in any capacity at the request of the Partnership, by
reason of the fact that he, his testator or intestate, is or was a member of the
Board of Directors or an officer of the Partnership, or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees actually and
<PAGE> 61
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necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such member of the Board of Directors or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the Partnership and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such member of the
Board of Directors or officer did not act, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interest of the Partnership or that
he had reasonable cause to believe that his conduct was unlawful.
(c) For the purpose of this Section 3.5, the Partnership shall be deemed
to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Partnership also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to applicable law shall be considered fines;
and action taken or omitted by a person with respect to an employee benefit plan
in the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be a purpose which is not opposed to the best interests
of the Partnership.
(d) Indemnification under this Section 3.5 shall be made by the
Partnership in any specific case only:
(i) if the beneficiary thereof shall have prevailed in an
action or proceeding brought against him or shall have
been found to have acted in compliance with the
applicable standard of conduct set forth in this
Section 3.5; or,
(ii) by the Board of Directors upon the opinion in writing
of independent legal counsel that indemnification is
proper in the circumstances because the applicable
standard of conduct set
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forth in this Section 3.5 has been met by such member
or officer.
(e) The Partnership shall have the power, but shall not be obligated, to
purchase and maintain insurance:
(i) to indemnify the Partnership for any obligation which
it incurs as a result of the indemnification of the
Board of Directors and officers under the provisions
of this Section 3.5;
(ii) to indemnify such members and officers in instances
in which they may be indemnified by the Partnership
under the provisions of this Section 3.5; and
(iii) to indemnify such members and officers in instances in
which they may not otherwise be indemnified by the
Partnership under the provision of this Section 3.5.
4. TRANSFER OF PARTNERSHIP INTERESTS.
4.1 Prohibited Transfers. Except as expressly permitted by
Section 4.2 hereof, neither Partner may transfer any of its right, title or
interest in or to its Partnership Interest, in whole or in part. No attempted
transfer of any Partnership Interest in violation of any provision of this
Agreement or of the Agency Agreement shall be effective to pass any right, title
or interest therein, but shall instead be null, void and of no effect.
4.2 Transfer to Affiliate. Subject to Section 4.3 hereof,
a Partner (the "Transferor Partner") may transfer its entire Partnership
Interest to any Affiliate of the Transferor Partner or to another transferee in
accordance with the express provisions of Section 5.5 of the Agency Agreement.
As used in this Agreement, an "Affiliate" of a party is any corporation or
entity that directly or indirectly wholly owns such party, is directly or
indirectly wholly-owned by such party, or is directly or indirectly wholly-owned
by any other Affiliate of such party.
4.3 Conditions to Transfer. Any transfer made under
Section 4.2 hereof is subject to satisfaction of the following conditions:
(a) the transferee shall be admitted as a Partner
of the Partnership and the Partners shall cause this Agreement
to be amended accordingly;
<PAGE> 63
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(b) the transferee shall in writing assume and agree
to perform all of its duties and obligations as a Partner under
this Agreement and under the Agency Agreement; and
(c) the Transferor Partner (and any Affiliate that
directly or indirectly wholly owns the Transferor Partner)
shall agree fully to indemnify on an after tax basis the other
Partner against any adverse tax consequences to the other
Partner that may result from any termination of the Partnership
for tax purposes on account of such transfer.
5. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP.
5.1 Dissolution of the Partnership. The Partnership shall
continue until dissolved as herein provided. Except as provided in Section 4.2
hereof or in Section 5.2 of the Agency Agreement, no Partner shall cause the
Partnership to be dissolved without the prior written consent of the other
Partner. Upon dissolution of the Partnership, the provisions of Section 5.2, 5.3
and 5.4 of the Agency Agreement shall apply, as the case may be.
6. MISCELLANEOUS.
6.1 Amendments and Waivers. This Agreement may not be
amended, modified, terminated, rescinded, or cancelled, except by a writing
signed by both of the Partners. The observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) by a writing signed by the Partner against which such waiver
is to be asserted.
6.2 Specific Performance. In addition to any other
remedies the Partners may have, each Partner shall have the right to enforce the
provisions of this Agreement through injunctive relief or by a decree or decrees
of specific performance.
6.3 Severability. If any provision of this Agreement or
the application thereof to any person or circumstance shall to any extent be
held in any proceeding to be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it was held to be invalid or unenforceable, shall not
be affected thereby, and shall be valid and be enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and
<PAGE> 64
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adversely frustrate the Partners' essential purposes and intent as expressed
herein and in the Agency Agreement.
6.4 No Waiver. No delay on the part of any Partner in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any Partner of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
6.5 Headings. The section headings herein are intended
only for convenience and do no constitute a part of this Agreement and shall not
be considered in the interpretation of this Agreement or any of its provisions.
6.6 Variation of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity or identities of the antecedent person or persons may
require.
6.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement, and any party hereto may execute
this Agreement by signing one or more counterparts hereof. This Agreement shall
become effective when counterparts hereof duly executed by each Partner have
been delivered to each Partner.
6.8 Binding Effect; No Third-Party Beneficiaries. This
Agreement shall be binding upon and shall inure to the benefit of the Partners
and their respective permitted successors and assigns. Nothing in the Agreement,
expressed or implied, shall give to anyone other than the Partners and their
respective permitted successors and assigns and the Partnership any benefit, or
any legal or equitable right, remedy or claim, under or in respect of this
Agreement.
6.9 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State of
Arizona, without giving effect to conflict of laws principles.
6.10 Priority of Interpretation. If any provision of this
Agreement conflicts with any provision in the Agency Agreement, the provision in
the Agency Agreement shall control.
6.11 Notices. Each notice or other communication given
pursuant to this Agreement shall be given as provided in Section 6.1 of the
Agency Agreement.
<PAGE> 65
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.
STAR PUBLISHING COMPANY
By:
----------------------------------
Name:
Title:
CITIZEN PUBLISHING COMPANY
By:
----------------------------------
Name:
Title:
<PAGE> 66
EXHIBIT B
---------
LICENSE AGREEMENT (Star)
THIS LICENSE AGREEMENT (the "License Agreement") is made as of
the 26th day of December, 1988, by and between STAR PUBLISHING COMPANY, an
Arizona corporation ("Licensor") and TNI PARTNERS, an Arizona partnership
("Licensee").
WHEREAS, Licensor and CITIZEN PUBLISHING COMPANY, an Arizona
corporation, have entered into an Amended and Restated Joint Operating Agreement
dated as of December 22, 1988 (the "Contract"), and have formed the Licensee
under a Partnership Agreement (the "Partnership Agreement"), for the purpose of
establishing a joint operating arrangement to publish The Arizona Daily Star,
owned by Licensor, and the Tucson Citizen owned by Citizen Publishing Company,
all on the terms set forth in the Contract; and
WHEREAS, the Contract provides that Licensor shall grant to
Licensee a license as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee a
royalty-free license and right (which license and right shall be exclusive
against all persons and entities, except for Licensor and its Affiliates, as
that term is defined in the Partnership Agreement, subject to the provisions of
Section 3 herein) to use (i) the whole or any part of the name, title, and
masthead of The Arizona Daily Star and all intangible rights and privileges of
whatever kind belonging to or incidental thereto, including any and all
copyrights and trademarks relating thereto and any and all copyrights, and the
right to renew the same, on issues of The Arizona Daily Star published before,
on or after the date hereof, and the right to reprint all or any part thereof
(collectively the "Names"); (ii) all lists relating to subscriptions, bulk
sales, circulation, dealers and sub-dealers of The Arizona Daily Star, together
with all records and other lists relating to or concerning the following:
routes, daily draws by editions, distribution, delivery, sales, subscriptions
and returns of The Arizona Daily Star in any territory, all lists of dealers and
agencies served by all distribution methods in the City of Tucson, its
metropolitan areas and in all cities and towns served by The Arizona Daily Star,
including a list of dealer and agency deposits, if any; and (iii) lists of all
advertisers and advertising contracts relating to The Arizona Daily Star and
related advertiser information, including dates of contracts, names and
addresses of advertisers, space contracted
<PAGE> 67
-2-
for, frequency of insertions, rates per line, expiration dates and any special
conditions, records requirements or publication orders with advertisers with the
dates thereof, and any special agreements or commitments with advertisers, as
well as lists of all insertion orders (the items in clauses (ii) and (iii) are
collectively referred to as the "Intangibles").
2. Term. The term of this License shall remain in effect
for so long as and only for so long as the Contract remains in effect.
3. Use by Licensor. Licensor shall maintain quality
control of the manner in which the Names are used by Licensee, all as provided
in the Contract. Neither Licensor, Pulitzer Publishing Company nor any of their
respective Affiliates shall use any of the Names or the Intangibles in
connection with the printing or distribution of a daily newspaper, the
dissemination of news or editorial information, or the sale or dissemination of
advertising, in each case in the Tucson, Arizona metropolitan area, or otherwise
in competition with the activities of the Licensee contemplated or permitted by
the Contract. Notwithstanding the foregoing, Licensor, Pulitzer Publishing
Company, and their respective Affiliates may engage in those activities
described in the last sentence of Section 3.3(c) of the Partnership Agreement.
4. Default. If, for a period of six consecutive months,
Licensee uses neither the Names nor the Intangibles, or if Licensee becomes
insolvent, or if Licensee initiates proceedings in any court under any
bankruptcy, reorganization or similar law or for the appointment of a trustee or
receiver of Licensee's property, or if Licensee is adjudicated a bankrupt or
debtor under any bankruptcy, reorganization or similar law, or if there shall be
a default in the performance of any agreement herein contained on the part of
Licensee and such default remains uncured for more than 180 days after written
notice of such default is given by Licensor, this License Agreement (if Licensor
so elects by written notice to Licensee) shall thereupon become null and void,
and Licensee shall have no further right to use of the Names or the Intangibles.
5. Assignment. Licensee shall not, without Licensor's
prior written consent, which consent shall not be unreasonably withheld, assign,
directly or indirectly, its rights hereunder, except that no such consent shall
be required if such assignment is made pursuant to Section 5.3 of the Contract.
<PAGE> 68
-3-
6. Indemnification. Licensor agrees to indemnify and hold
Licensee and its officers, agents and employees harmless from and against any
and all claims, actions, liabilities, losses, damages, costs and expenses
including reasonable attorneys' fees, arising out of any claim that Licensor did
not have the right and power to enter into and perform this License Agreement
and to license the Names and the Intangibles to Licensee as provided in this
License Agreement without infringing the rights of any third party. Licensor
shall have the right to defend any such claim or action at Licensor's own
expense with counsel of its selection, in which event Licensee shall have the
right at its expense to participate in such defense with counsel of its own
selection. Licensee shall notify Licensor promptly of any adverse use or
infringement of the use of the Names by any third parties and assist Licensor in
all reasonable ways in the protection thereof. Subject to the first sentence of
this Section 6, Licensor shall not be liable to Licensee for any loss or
liability suffered by Licensee by reason of Licensee's use of the Names or the
Intangibles or by reason of any infringement thereof by any third parties unless
caused by Licensor.
7. Waivers. No assent, express or implied, by either
party hereto, to any breach of any of the other party's covenants or agreements
shall be deemed or taken to be a waiver of any succeeding breach of the same
covenant or agreement.
8. Notices. Each notice or other communication given
hereunder shall be deemed to have been duly given when hand delivered or five
days after being deposited in the U.S. mail, certified, postage prepaid, return
receipt requested, addressed as follows (or to such other address as may be
given by either party hereto to the other party:
Licensor:
Star Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President
and Business Manager
With a copy to:
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63102
Attention: Senior Vice President - Newspaper
Operations
<PAGE> 69
-4-
Licensee:
TNI Partners
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President
and Business Manager
With copies to:
Citizen Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Publisher
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Senior Vice President-Newspaper
Operations
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
9. Law Governing. This License Agreement shall be
governed by, construed, and enforced in accordance with the internal laws of the
State of Arizona, without giving effect to conflicts of laws principles.
10. Counterparts. This License Agreement may be executed
in counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement, and any party hereto may
execute this License Agreement by signing one or more counterparts hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement as of the day and year first above written.
STAR PUBLISHING COMPANY
By:
----------------------------
Title:
-------------------------
<PAGE> 70
-5-
TNI PARTNERS
By: Citizen Publishing Company,
General Partner
By:
----------------------------
Title:
-------------------------
By: Star Publishing Company,
General Partner
By:
----------------------------
Title:
-------------------------
<PAGE> 71
EXHIBIT C
---------
LICENSE AGREEMENT (Citizen)
THIS LICENSE AGREEMENT (the "License Agreement") is made as of
the 26th day of December, 1988, by and between CITIZEN PUBLISHING COMPANY, an
Arizona corporation ("Licensor") and TNI PARTNERS, an Arizona partnership
("Licensee").
WHEREAS, Licensor and STAR PUBLISHING COMPANY, an Arizona
corporation ("STAR"), have entered into an Amended and Restated Joint Operating
Agreement dated as of December 22, 1988 (the "Contract"), and have formed the
Licensee under a Partnership Agreement (the "Partnership Agreement"), for the
purpose of establishing a joint operating arrangement to publish The Arizona
Daily Star, owned by Star Publishing Company and the Tucson Citizen owned by
Licensor, all on the terms set forth in the Contract; and
WHEREAS, the Contract provides that Licensor shall grant to
Licensee a license as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee a
royalty-free license and right (which license and right shall be exclusive
against all persons and entities, except for Licensor and its Affiliates, as
that term is defined in the Partnership Agreement, subject to the provisions of
Section 3 herein) to use (i) the whole or any part of the name, title, and
masthead of the Tucson Citizen and all intangible rights and privileges of
whatever kind belonging to or incidental thereto, including any and all
copyrights and trademarks relating thereto and any and all copyrights, and the
right to renew the same, on issues of the Tucson Citizen published before, on or
after the date hereof, and the right to reprint all or any part thereof
(collectively the "Names"); (ii) all lists relating to subscriptions, bulk
sales, circulation, dealers and sub-dealers of the Tucson Citizen, together with
all records and other lists relating to or concerning the following: routes,
daily draws by editions, distribution, delivery, sales, subscriptions and
returns of the Tucson Citizen in any territory, all lists of dealers and
agencies served by all distribution methods in the City of Tucson, its
metropolitan areas and in all cities and towns served by the Tucson Citizen,
including a list of dealer and agency deposits, if any; and (iii) lists of all
advertisers and advertising contracts relating to the Tucson Citizen and related
advertiser information, including dates of contracts, names and addresses of
advertisers, space contracted for,
<PAGE> 72
-2-
frequency of insertions, rates per line, expiration dates and any special
conditions, records requirements or publication orders with advertisers with the
dates thereof, and any special agreements or commitments with advertisers, as
well as lists of all insertion orders (the items in clauses (ii) and (iii) are
collectively referred to as the "Intangibles").
2. Term. The term of this License shall remain in effect
for so long as and only for so long as the Contract remains in effect.
3. Use by Licensor. Licensor shall maintain quality
control of the manner in which the Names are used by Licensee, all as provided
in the Contract. Neither Licensor, Gannett Co., Inc. nor any of their respective
Affiliates shall use any of the Names or the Intangibles in connection with the
printing or distribution of a daily newspaper, the dissemination of news or
editorial information, or the sale or dissemination of advertising, in each case
in the Tucson, Arizona metropolitan area, or otherwise in competition with the
activities of the Licensee contemplated or permitted by the Contract.
Notwithstanding the foregoing, Licensor, Gannett Co. Inc., and their respective
Affiliates may engage in those activities described in the last sentence of
Section 3.3(c) of the Partnership Agreement.
4. Default. If, for a period of six consecutive months,
Licensee uses neither the Names nor the Intangibles, or if Licensee becomes
insolvent, or if Licensee initiates proceedings in any court under any
bankruptcy, reorganization or similar law or for the appointment of a trustee or
receiver of Licensee's property, or if Licensee is adjudicated a bankrupt or
debtor under any bankruptcy, reorganization or similar law, or if there shall be
a default in the performance of any agreement herein contained on the part of
Licensee and such default remains uncured for more than 180 days after written
notice of such default is given by Licensor, this License Agreement (if Licensor
so elects by written notice to Licensee) shall thereupon become null and void,
and Licensee shall have no further right to use of the Names or the Intangibles.
5. Assignment. Licensee shall not, without Licensor's
prior written consent, which consent shall not be unreasonably withheld, assign,
directly or indirectly, its rights hereunder, except that no such consent shall
be required if such assignment is made pursuant to Section 5.3 of the Contract.
<PAGE> 73
-3-
6. Indemnification. Licensor agrees to indemnify and hold
Licensee and its officers, agents and employees harmless from and against any
and all claims, actions, liabilities, losses, damages, costs and expenses
including reasonable attorneys' fees, arising out of any claim that Licensor did
not have the right and power to enter into and perform this License Agreement
and to license the Names and the Intangibles to Licensee as provided in this
License Agreement without infringing the rights of any third party. Licensor
shall have the right to defend any such claim or action at Licensor's own
expense with counsel of its selection, in which event Licensee shall have the
right at its expense to participate in such defense with counsel of its own
selection. Licensee shall notify Licensor promptly of any adverse use or
infringement of the use of the Names by any third parties and assist Licensor in
all reasonable ways in the protection thereof. Subject to the first sentence of
this Section 6, Licensor shall not be liable to Licensee for any loss or
liability suffered by Licensee by reason of Licensee's use of the Names or the
Intangibles or by reason of any infringement thereof by any third parties unless
caused by Licensor.
7. Waivers. No assent, express or implied, by either
party hereto, to any breach of any of the other party's covenants or agreements
shall be deemed or taken to be a waiver of any succeeding breach of the same
covenant or agreement.
8. Notices. Each notice or other communication given
hereunder shall be deemed to have been duly given when hand delivered or five
days after being deposited in the U.S. mail, certified, postage prepaid, return
receipt requested, addressed as follows (or to such other address as may be
given by either party hereto to the other party:
Licensor:
Citizen Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Publisher
With a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
<PAGE> 74
-4-
Licensee:
TNI Partners
4850 South Park Avenue
Tucson, Arizona 85726
Attention: President
With copies to:
Star Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President and
Business Manager
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Senior Vice President-Newspaper
Operations
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
9. Law Governing. This License Agreement shall be
governed by, construed, and enforced in accordance with the internal laws of the
State of Arizona, without giving effect to conflict of laws principles.
10. Counterparts. This License Agreement may be executed
in counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement, and any party hereto may
execute this License Agreement by signing one or more counterparts hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement as of the day and year first above written.
CITIZEN PUBLISHING COMPANY
By:
---------------------------
Title:
------------------------
<PAGE> 75
-5-
TNI PARTNERS
By: Citizen Publishing Company,
General Partner
By:
----------------------------
Title:
-------------------------
By: Star Publishing Company,
General Partner
By:
----------------------------
Title:
-------------------------
<PAGE> 1
EXHIBIT 10.2.2
PARTNERSHIP AGREEMENT
PARTNERSHIP AGREEMENT, dated as of December 22, 1988, between
STAR PUBLISHING COMPANY ("STAR"), an Arizona corporation, and CITIZEN PUBLISHING
COMPANY ("CITIZEN"), an Arizona corporation.
1. FORMATION OF PARTNERSHIP.
1. 1 Partners. STAR and CITIZEN (individually, a "Partner" and
collectively, the "Partners") hereby form a general partnership under the laws
of the State of Arizona (the "Partnership") for the purposes and on the terms
set forth herein.
1.2 Name and Principal Office. The name of the Partnership
shall be "TNI PARTNERS", or such other name as shall be mutually agreeable to
the Partners. The Partnership shall do business under the name "TNI PARTNERS"
and its principal office shall be located at 4850 South Park Avenue, Tucson,
Arizona 85726, or such other place as the Partners shall designate from time to
time.
1.3 Purpose of Partnership. The purpose of the Partnership shall
be (i) to be the Agency (as that term is defined in that certain Amended and
Restated Joint Operating Agreement, dated the date hereof, between STAR and
CITIZEN (the "Agency Agreement")) and to conduct all the activities, have all of
the rights and powers, and perform all of the duties and obligations, of the
Agency set forth in the Agency Agreement, and (ii) to do any act and thing and
to enter into any contract incidental to, or necessary, proper or advisable for,
the accomplishment of such purposes, to the extent permitted by law.
1.4 Commencement; Term. The Partnership shall commence on the
date hereof and continue for a term ending at the close of business on June 1,
2015, and may be renewed and extended for subsequent periods of twenty-five (25)
years each at the option of either STAR or CITIZEN. Unless two years' written
notice is given by both STAR and CITIZEN that they desire to end this
Partnership or any renewal hereof, this Partnership shall continue in force for
subsequent periods of twenty-five (25) years each. Only by mutual written
consent shall this Partnership Agreement or any renewal hereof be terminated.
2. PARTNERSHIP INTERESTS, CONTRIBUTIONS AND DISTRIBUTIONS.
2.1 Partnership Interests. Except as otherwise expressly
provided herein or in the Agency Agreement, the
<PAGE> 2
- 2 -
respective interests of the Partners in the assets, liabilities, profits and
losses of the Partnership ("Partnership Interest") shall be as follows:
STAR: 50%
CITIZEN: 50%
Each Partner shall have at all times an interest as a tenant in partnership in
the assets and properties of the Partnership equal to its Partnership Interest
and neither Partner shall have any separate right, title or interest in or to
any asset or property of the Partnership.
2.2 Capital Accounts and Contributions.
(a) The initial capital account of each Partner shall
be the amount determined in accordance with Section 1.4 of the
Agency Agreement. Subsequently, each Partner's capital account
shall be (i) increased by (x) the amount of any net income of
the Partnership allocable to such Partner pursuant to Section
3.2 of the Agency Agreement and (y) the amount of any cash plus
the fair market value of any non-cash assets subsequently
contributed by such Partner to the Partnership, and (ii)
decreased by (a) the amount of any net loss of the Partnership
allocable to such Partner pursuant to Section 3.2 of the Agency
Agreement and (b) the amount of any cash and the fair market
value of any non-cash assets distributed by the Partnership to
such Partner.
(b) Each Partner shall make one or more capital
contributions to the Partnership in such amounts, and upon such
terms and conditions, as are provided in the Agency Agreement.
No interest shall be paid by the Partnership on any capital
contributed to the Partnership unless the Partners otherwise
agree.
2.3 Distributions of Cash and Allocations of Taxable
Income or Loss.
(a) Cash shall be distributed to each Partner at such
times and in such amounts as is provided in Section 3.1 of the
Agency Agreement.
(b) Net income and net loss shall be allocated to the
Partners in the amounts specified in Section 3.2 of the Agency
Agreement.
<PAGE> 3
- 3 -
(c) For income tax purposes, taxable income and loss
and allocations thereof to each Partner will be determined in
accordance with Section 3.2 of the Agency Agreement.
2.4 Expenses Incurred Prior to the Formation of the
Partnership. No expense or obligation incurred for services performed or
products supplied by either Partner prior to the formation of the Partnership
shall be considered to be a contribution or loan to, or made on behalf of, the
Partnership, unless otherwise provided in the Agency Agreement or by agreement
of the Partners.
2.5 Distribution to Partners; Funding of Losses. Cash and
other property shall be distributed by or withdrawn from the Partnership, and
losses of the Partnership shall be funded, on the terms and conditions (and
pursuant to the procedures) set forth in the Agency Agreement.
3. MANAGEMENT OF THE PARTNERSHIP.
3.1 Board of Directors. There is hereby established a Board of
Directors of the Partnership consisting of six members, or such even number of
Directors as the Partners may from time to time agree upon, to have and exercise
final authority, except as otherwise provided herein or in the Agency Agreement,
with respect to the affairs of the Partnership specified in this Agreement. The
initial members of the Board of Directors shall be appointed by the Partners on
or prior to December 26, 1988, and shall consist of three members appointed by
STAR and three members appointed by CITIZEN. Each member shall hold office until
he shall die, resign or be removed (with or without cause or notice) by the
Partner that he represents, whereupon such Partner shall appoint such member's
successor to the Board of Directors. Each member shall have one vote.
3.2 Meetings and Action of the Board of Directors.
(a) The initial meeting of the Board of Directors shall take place at
such time and place as the Partners shall agree. The Board of Directors may
establish meeting dates and requisite notice requirements, adopt rules of
procedure it deems consistent herewith, and may meet by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time.
<PAGE> 4
- 4 -
(b) Any member of the Board of Directors may call a meeting. Unless
waived, at least five business days' notice of a meeting is required. Notice to
a director shall be given to the Partner whom the director represents, and shall
be given in the manner described in Section 6.1 of the Agency Agreement. If
proper notice of a meeting is given to all directors or waived, the presence at
any meeting, in person or by proxy, of both (i) a majority of the total
authorized number of directors and (ii) a majority of directors who were
appointed by STAR and a majority of directors who were appointed by CITIZEN,
shall constitute a quorum for the taking of any action, subject to Section 3.3
hereof. Any member may, in writing, appoint a proxy to act on his behalf and
vote in his stead at any meeting. Subject to Section 3.2(c) below, the Board of
Directors shall act on all matters by an affirmative vote of both (i) a majority
of directors present at any meeting in person or by proxy, and (ii) a majority
of directors who were appointed by STAR and a majority of directors who were
appointed by CITIZEN.
(c) Any action required or permitted to be taken by the Board
of Directors may be taken without notice and without a meeting if a majority of
the total authorized number of directors, including at least a majority of
directors who were appointed by CITIZEN and at least a majority of directors who
were appointed by STAR, consent in writing to the adoption of a resolution
authorizing the action.
3.3 Actions By Partners.
(a) The Board of Directors shall have no power, without action
by the Partners themselves, (i) to amend this Agreement; (ii) to act other than
in accordance with the purposes of the Partnership as. set forth in Section 1.3
hereof; to admit a new partner; (iv) to merge or consolidate the Partnership
with any other entity; or (v) to dissolve the Partnership.
(b) No partner shall, except as authorized by the provisions
hereof, take any action or assume any obligations or liabilities on behalf of
the Partnership.
(c) Nothing in this Agreement or the Agency Agreement shall in
any way restrict, prohibit or impair the right of each Partner to sell or
otherwise license its own news, editorial and feature content to wire services
or otherwise (for the account of the Partnership) as it deems in its best
interest.
<PAGE> 5
- 5 -
(d) Any fiduciary or other duty that either Partner (or any
Affiliate thereof) may owe to the other with respect to any of its businesses or
operations that are allegedly in competition with those of the Agency shall be
determined as if the legal relationship between the Partners were that which
existed under the Previous Operating Agreement, and without regard to any
subsequent agreement between the parties other than the express contractual
provisions under this Agreement or the Agency Agreement. For purposes of this
Section 3.3(d), "Previous Operating Agreement" means that certain Operating
Agreement dated March 28, 1940, as amended by agreements dated June 15, 1953 and
October 14, 1970.
3 .4 President and Other Officers. The Agency shall have a
President and such other officers as the Board of Directors may from time to
time determine. Officers shall serve for a one-year term unless they earlier
die, resign or are removed. Any officer may be removed by the Board of Directors
with or without cause or notice. Subject to the Agency Agreement, this Agreement
and the determinations of the Board of Directors, the President shall have full
day-to-day operating authority, control and management of, the business and
affairs of the Agency, and any other officers of the Agency shall have such
authority as is from time to time determined by the Board of Directors.
The President and such other officers shall act in accordance with the
decisions of the Board of Directors and shall have no authority to take any
action requiring prior Board of Directors approval without first obtaining the
approval of the Board of Directors.
3.5 Indemnification.
(a) The Partnership shall indemnify any person made, or threatened to
be made, a party to an action or proceeding, whether brought by a Partner or
Affiliate of a Partner or any other person, whether civil or criminal, including
an action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any member of the Board of Directors or officer
of the Partnership served in any capacity at the request of the Partnership, by
reason of the fact that he, his testator or intestate, is or was a member of the
Board of Directors or an officer of the Partnership, or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, against judgments, fines, amounts paid in settlement
and reasonable expenses, including attorneys' fees actually and
<PAGE> 6
- 6 -
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such member of the Board of Directors or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests
of the Partnership and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such member of the
Board of Directors or officer did not act, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interest of the Partnership or that
he had reasonable cause to believe that his conduct was unlawful.
(c) For the purpose of this Section 3.5, the Partnership shall be
deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Partnership also imposes duties
on, or otherwise involves services by, such person to the plan or participants
or beneficiaries of the plan; excise taxes assessed on a person with respect to
an employee benefit plan pursuant to applicable law shall be considered fines;
and action taken or omitted by a person with respect to an employee benefit plan
in the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be a purpose which is not opposed to the best interests
of the Partnership.
(d) Indemnification under this Section 3.5 shall be made by the
Partnership in any specific case only:
(i) if the beneficiary thereof shall have prevailed in an
action or proceeding brought against him or shall have
been found to have acted in compliance with the
applicable standard of conduct set forth in this
Section 3.5; or
(ii) by the Board of Directors upon the opinion in
writing of independent legal counsel that
indemnification is proper in the circumstances because
the applicable standard of conduct set
<PAGE> 7
- 7 -
forth in this Section 3.5 has been met by such member
or officer.
(e) The Partnership shall have the power, but shall not be obligated,
to purchase and maintain insurance:
(i) to indemnify the Partnership for any obligation
which it incurs as a result of the indemnification of
the Board of Directors and officers under the
provisions of this Section 3.5;
(ii) to indemnify such members and officers in instances
in which they may be indemnified by the Partnership
under the provisions of this Section 3.5; and
(iii) to indemnify such members and officers in instances
in which they may not otherwise be indemnified by the
Partnership under the provision of this Section 3.5.
4. TRANSFER OF PARTNERSHIP INTERESTS.
4.1 Prohibited Transfers. Except as expressly permitted by
Section 4.2 hereof, neither Partner may transfer any of its right, title or
interest in or to its Partnership Interest, in whole or in part. No attempted
transfer of any Partnership Interest in violation of any provision of this
Agreement or of the Agency Agreement shall be effective to pass any right,
title or interest therein, but shall instead be null, void and of no effect.
4.2 Transfer to Affiliate. Subject to Section 4.3 hereof,
a Partner (the "Transferor Partner") may transfer its entire Partnership
Interest to any Affiliate of the Transferor Partner or to another transferee in
accordance with the express provisions of Section 5.5 of the Agency Agreement.
As used in this Agreement, an "Affiliate" of a party is any corporation or
entity that directly or indirectly wholly owns such party, is directly or
indirectly wholly-owned by such party, or is directly or indirectly wholly-owned
by any other Affiliate of such party.
4.3 Conditions to Transfer. Any transfer made under
Section 4.2 hereof is subject to satisfaction of the following conditions:
(a) the transferee shall be admitted as a Partner of
the Partnership and the Partners shall cause this Agreement to
be amended accordingly;
<PAGE> 8
- 8 -
(b) the transferee shall in writing assume and agree
to perform all of its duties and obligations as a Partner under
this Agreement and under the Agency Agreement; and
(c) the Transferor Partner (and any Affiliate that
directly or indirectly wholly owns the Transferor Partner)
shall agree fully to indemnify on an after tax basis the other
Partner against any adverse tax consequences to the other
Partner that may result from any termination of the Partnership
for tax purposes on account of such transfer.
5. DISS0LUTION AND TERMINATION OF THE PARTNERSHIP.
5.1 Dissolution of Partnership. The Partnership shall continue
until dissolved as herein provided. Except as provided in Section 4.2 hereof or
in Section 5.2 of the Agency Agreement, no Partner shall cause the Partnership
to be dissolved without the prior written consent of the other Partner. Upon
dissolution of the Partnership, the provisions of Section 5.2, 5.3 and 5.4 of
the Agency Agreement shall apply, as the case may be.
6. MISCELLANEOUS.
6.1 Amendments and Waivers. This Agreement may not be amended,
modified, terminated, rescinded, or cancelled, except by a writing signed by
both of the Partners. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by a writing signed by the Partner against which such waiver is
to be asserted.
6.2 Specific Performance. In addition to any other remedies the
Partners may have, each Partner shall have the right to enforce the provisions
of this Agreement through injunctive relief or by a decree or decrees of
specific performance.
6.3 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be held in
any proceeding to be invalid or unenforceable, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it was held to be invalid or unenforceable, shall not be affected
thereby, and shall be valid and be enforceable to the fullest extent permitted
by law, but only if and to the extent such enforcement would not materially and
<PAGE> 9
- 9 -
adversely frustrate the Partners' essential purposes and intent as expressed
herein and in the Agency Agreement.
6.4 No Waiver. No delay on the part of any Partner in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver on the part of any Partner of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
6.5 Headings. The section headings herein are intended only
for convenience and do no constitute a part of this Agreement and shall not be
considered in the interpretation of this Agreement or any of its provisions.
6.6 Variation of Pronouns. All pronouns and all variations
thereof shall be deemed to refer to the masculine, feminine or neuter, singular
or plural, as the identity or identities of the antecedent person or persons may
require.
6.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement, and any party hereto may execute
this Agreement by signing one or more counterparts hereof. This Agreement shall
become effective when counterparts hereof duly executed by each Partner have
been delivered to each Partner.
6.8 Binding Effect; No Third-Party Beneficiaries. This
Agreement shall be binding upon and shall inure to the benefit of the Partners
and their respective permitted successors and assigns. Nothing in the Agreement,
expressed or implied, shall give to anyone other than the Partners and their
respective permitted successors and assigns and the Partnership any benefit, or
any legal or equitable right, remedy or claim, under or in respect of this
Agreement.
6.9 Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with the internal laws of the State of
Arizona, without giving effect to conflict of laws principles.
6.10 Priority of Interpretation. If any provision of this
Agreement conflicts with any provision in the Agency Agreement, the provision in
the Agency Agreement shall control.
6.11 Notices. Each notice or other communication given pursuant
to this Agreement shall be given as provided in Section 6.1 of the Agency
Agreement.
<PAGE> 10
- 10 -
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed as of the date first above written.
STAR PUBLISHING COMPANY
By: Nicholas G. Penniman IV
---------------------------------------------
Name: Nicholas G. Penniman IV
Title: Senior Vice President
CITIZEN PUBLISHING COMPANY
By: Gary L. Watson
---------------------------------------------
Name: Gary L. Watson
Title: Vice President
<PAGE> 11
EXHIBIT B
LICENSE AGREEMENT (Star)
THIS LICENSE AGREEMENT (the "License Agreement") is made as of
the 26th day of December, 1988, by and between STAR PUBLISHING COMPANY, an
Arizona corporation ("Licensor") and TNI PARTNERS, an Arizona partnership
("Licensee").
WHEREAS, Licensor and CITIZEN PUBLISHING COMPANY, an Arizona
corporation, have entered into an Amended and Restated Joint Operating Agreement
dated as of December 22, 1988 (the "Contract"), and have formed the Licensee
under a Partnership Agreement (the "Partnership Agreement"), for the purpose of
establishing a joint operating arrangement to publish The Arizona Daily Star,
owned by Licensor, and the Tucson Citizen owned by Citizen Publishing Company,
all on the terms set forth in the Contract; and
WHEREAS, the Contract provides that Licensor shall grant to
Licensee a license as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee a
royalty-free license and right (which license and right shall be exclusive
against all persons and entities, except for Licensor and its Affiliates, as
that term is defined in the Partnership Agreement, subject to the provisions of
Section 3 herein) to use (i) the whole or any part of the name, title, and
masthead of The Arizona Daily Star and all intangible rights and privileges of
whatever kind belonging to or incidental thereto, including any and all
copyrights and trademarks relating thereto and any and all copyrights, and the
right to renew the same, on issues of The Arizona Daily Star published before,
on or after the date hereof, and the right to reprint all or any part thereof
(collectively the "Names"); (ii) all lists relating to subscriptions, bulk
sales, circulation, dealers and sub-dealers of The Arizona Daily Star, together
with all records and other lists relating to or concerning the following:
routes, daily draws by editions, distribution, delivery, sales, subscriptions
and returns of The Arizona Daily Star in any territory, all lists of dealers
and agencies served by all distribution methods in the City of Tucson, its
metropolitan areas and in all cities and towns served by The Arizona Daily Star,
including a list of dealer and agency deposits, if any; and (iii) lists of all
advertisers and advertising contracts relating to The Arizona Daily Star and
related advertiser information, including dates of contracts, names and
addresses of advertisers, space contracted
<PAGE> 12
- 2 -
for, frequency of insertions, rates per line, expiration dates and any special
conditions, records requirements or publication orders with advertisers with the
dates thereof, and any special agreements or commitments with advertisers, as
well as lists of all insertion orders (the items in clauses (ii) and (iii) are
collectively referred to as the "Intangibles")
2. Term. The term of this License shall remain in effect for
so long as and only for so long as the Contract remains in effect.
3. Use by Licensor. Licensor shall maintain quality control
of the manner in which the Names are used by Licensee, all as provided in the
Contract. Neither Licensor, Pulitzer Publishing Company nor any of their
respective Affiliates shall use any of the Names or the Intangibles in
connection with the printing or distribution of a daily newspaper, the
dissemination of news or editorial information, or the sale or dissemination of
advertising, in each case in the Tucson, Arizona metropolitan area, or otherwise
in competition with the activities of the Licensee contemplated or permitted by
the Contract. Notwithstanding the foregoing, Licensor, Pulitzer Publishing
Company, and their respective Affiliates may engage in those activities
described in the last sentence of Section 3.3(c) of the Partnership Agreement.
4. Default. If, for a period of six consecutive months,
Licensee uses neither the Names nor the Intangibles, or if Licensee becomes
insolvent, or if Licensee initiates proceedings in any court under any
bankruptcy, reorganization or similar law or for the appointment of a trustee or
receiver of Licensee's property, or if Licensee is adjudicated a bankrupt or
debtor under any bankruptcy, reorganization or similar law, or if there shall be
a default in the performance of any agreement herein contained on the part of
Licensee and such default remains uncured for more than 180 days after written
notice of such default is given by Licensor, this License Agreement (if Licensor
so elects by written notice to Licensee) shall thereupon become null and void,
and Licensee shall have no further right to use of the Names or the Intangibles.
5. Assignment. Licensee shall not, without Licensor's prior
written consent, which consent shall not be unreasonably withheld, assign,
directly or indirectly, its rights hereunder, except that no such consent shall
be required if such assignment is made pursuant to Section 5.3 of the Contract.
<PAGE> 13
- 3 -
6. Indemnification. Licensor agrees to indemnify and hold
Licensee and its officers, agents and employees harmless from and against any
and all claims, actions, liabilities, losses, damages, costs and expenses
including reasonable attorneys' fees, arising out of any claim that Licensor did
not have the right and power to enter into and perform this License Agreement
and to license the Names and the Intangibles to Licensee as provided in this
License Agreement without infringing the rights of any third party. Licensor
shall have the right to defend any such claim or action at Licensor's own
expense with counsel of its selection, in which event Licensee shall have the
right at its expense to participate in such defense with counsel of its own
selection. Licensee shall notify Licensor promptly of any adverse use or
infringement of the use of the Names by any third parties and assist Licensor in
all reasonable ways in the protection thereof. Subject to the first sentence of
this Section 6, Licensor shall not be liable to Licensee for any loss or
liability suffered by Licensee by reason of Licensee's use of the Names or the
Intangibles or by reason of any infringement thereof by any third parties
unless caused by Licensor.
7. Waivers. No assent, express or implied, by either party
hereto, to any breach of any of the other party's covenants or agreements shall
be deemed or taken to be a waiver of any succeeding breach of the same covenant
or agreement.
8. Notices. Each notice or other communication given
hereunder shall be deemed to have been duly given when hand delivered or five
days after being deposited in the U.S. mail, certified, postage prepaid, return
receipt requested, addressed as follows (or to such other address as may be
given by either party hereto to the other party:
Licensor:
Star Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President
and Business Manager
With a copy to:
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63102
Attention: Senior Vice President - Newspaper
Operations
<PAGE> 14
- 4 -
Licensee:
TNI Partners
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President
and Business Manager
With copies to:
Citizen Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Publisher
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Senior Vice President - Newspaper
Operations
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
9. Law Governing. This License Agreement shall be governed
by, construed, and enforced in accordance with the internal laws of the State of
Arizona, without giving effect to conflicts of laws principles.
10. Counterparts. This License Agreement may be executed in
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement, and any party hereto may execute
this License Agreement by signing one or more counterparts hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement as of the day and year first above written.
STAR PUBLISHING COMPANY
By:
------------------------------------
Title:
---------------------------------
<PAGE> 15
- 5 -
TNI PARTNERS
By: Citizen Publishing Company,
General Partner
By:
--------------------------------------------
Title:
-----------------------------------------
By: Star Publishing Company,
General Partner
By:
--------------------------------------------
Title:
-----------------------------------------
<PAGE> 16
EXHIBIT C
LICENSE AGREEMENT (Citizen)
THIS LICENSE AGREEMENT (the "License Agreement") is made as of
the 26th day of December, 1988, by and between CITIZEN PUBLISHING COMPANY, an
Arizona corporation ("Licensor") and TNI PARTNERS, an Arizona partnership
("Licensee").
WHEREAS, Licensor and STAR PUBLISHING COMPANY, an Arizona
corporation ("STAR"), have entered into an Amended and Restated Joint Operating
Agreement dated as of December 22, 1988 (the "Contract"), and have formed the
Licensee under a Partnership Agreement (the "Partnership Agreement"), for the
purpose of establishing a joint operating arrangement to publish The Arizona
Daily Star, owned by Star Publishing Company and the Tucson Citizen owned by
Licensor, all on the terms set forth in the Contract; and
WHEREAS, the Contract provides that Licensor shall grant to
Licensee a license as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and the
covenants and agreements herein contained, the parties agree as follows:
1. Grant of License. Licensor hereby grants Licensee a
royalty-free license and right (which license A right shall be exclusive against
all persons and entities, except for Licensor and its Affiliates, as that term
is defined in the Partnership Agreement, subject to the provisions of Section 3
herein) to use (i) the whole or any part of the name, title, and masthead of the
Tucson Citizen and all intangible rights and privileges of whatever kind
belonging to or incidental thereto, including any and all copyrights and
trademarks relating thereto and any and all copyrights, and the right to renew
the same, on issues of the Tucson Citizen published before, on or after the date
hereof, and the right to reprint all or any part thereof (collectively the
"Names"); (ii) all lists relating to subscriptions, bulk sales, circulation,
dealers and sub-dealers of the Tucson Citizen, together with all records and
other lists relating to or concerning the following: routes, daily draws by
editions, distribution, delivery, sales, subscriptions and returns of the Tucson
Citizen in any territory, all lists of dealers and agencies served by all
distribution methods in the City of Tucson, its metropolitan areas and in all
cities and towns served by the Tucson Citizen, including a list of dealer and
agency deposits, if any; and (iii) lists of all advertisers and advertising
contracts relating to the Tucson Citizen and related advertiser information,
including dates of contracts, names and addresses of advertisers, space
contracted for,
<PAGE> 17
- 2 -
frequency of insertions, rates per line expiration dates and any special
conditions, records requirements or publication orders with advertisers with the
dates thereof, and any special agreements or commitments with advertisers, as
well as lists of all insertion orders (the items in clauses (ii) and (iii) are
collectively referred to as the "Intangibles").
2. Term. The term of this License shall remain in effect
for so long as and only for so long as the Contract remains in effect.
3. Use by Licensor Licensor shall maintain quality control
of the manner in which the Names are used by Licensee. all as provided in the
Contract. Neither Licensor, Gannett Co., Inc. nor any of their respective
Affiliates shall use any of the Names or the Intangibles in connection with the
printing or distribution of a daily newspaper, the dissemination of news or
editorial information, or the sale or dissemination of advertising, in each case
in the Tucson, Arizona metropolitan area, or otherwise in competition with the
activities of the Licensee see contemplated or permitted by the Contract.
Notwithstanding the foregoing, Licensor, Gannett Co. Inc., and their respective
Affiliates may engage in those activities described in the last sentence of
Section 3.3(c) of the Partnership Agreement.
4. Default. If, for a period of six consecutive months,
Licensee uses neither the Names nor the Intangibles, or if Licensee
becomes insolvent, or if Licensee see initiates proceedings in any court under
any bankruptcy, reorganization or similar law or for the appointment of a
trustee or receiver of Licensee's property, or if Licensee is adjudicated a
bankrupt or debtor under any bankruptcy, reorganization or similar law, or if
there shall be a default in the performance of any agreement herein contained on
the part of Licensee and such default remains uncured for more than 180 days
after written notice of such default is given by Licensor, this License
Agreement (if Licensor so elects by written notice to Licensee) shall thereupon
become null and void and Licensee shall have no further right to use of the
Names or the Intangibles.
5. Assignment Licensee shall not, without Licensor's prior
written consent, which consent shall not be unreasonably withhold, assign,
directly or indirectly, its rights hereunder, except that no such consent shall
be required if such assignment is made pursuant to Section 5.3 of the Contract.
<PAGE> 18
- 3 -
6. Indemnification. Licensor agrees to indemnify and hold
Licensee and its officers, agents and employees harmless from and against any
and all claims, actions, liabilities, losses, damages, costs and expenses
including reasonable attorneys' fees, arising out of any claim that Licensor did
not have the right and power to enter into and perform this License Agreement
and to license the Names and the Intangibles to Licensee as provided in this
License Agreement without infringing the rights of any third party. Licensor
shall have the right to defend any such claim or action at Licensor's own
expense with counsel of its selection, in which event Licensee shall have. the
right at its expense to participate in such defense with counsel of its own
selection. Licensee shall notify Licensor promptly of any adverse use or
infringement of the use of the Names by any third parties and assist Licensor in
all reasonable ways in the protection thereof. Subject to the first sentence of
this Section 6, Licensor shall not be liable to Licensee for any loss or
liability suffered by Licensee by reason of Licensee's use of the Names or the
Intangibles or by reason of any infringement thereof by any third parties unless
caused by Licensor.
7. Waivers. No assent, express or implied, by either party
hereto, to any breach of any of the other party's covenants or agreements shall
be deemed or taken to be a waiver of any succeeding breach of the same covenant
or agreement.
8. Notices. Each notice or other communication given hereunder
shall be deemed to have been duly given when hand delivered or five days after
being deposited in the U.S. mail, certified, postage prepaid, return receipt
requested, addressed as follows (or to such other address as may be given by
either party hereto to the other party:
Licensor:
Citizen Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Publisher
With a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
<PAGE> 19
- 4 -
Licensee:
TNI Partners
4850 South Park Avenue
Tucson, Arizona 85726
Attention: President
With copies to:
Star Publishing Company
4850 South Park Avenue
Tucson, Arizona 85726
Attention: Vice President
and Business Manager
Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Senior Vice President-Newspaper
Operations
Gannett Co., Inc
1100 Wilson Boulevard
Arlington, Virginia 22206
Attention: Chief Financial Officer
9. Law Governing. This License Agreement shall be governed by,
construed, and enforced in accordance with the internal laws of the State of
Arizona, without giving effect to conflict of laws principles.
10. Counterparts. This License Agreement may be executed in
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement, and any party hereto may execute
this License Agreement by signing one or more counterparts hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
License Agreement as of the day and year first above written.
CITIZEN PUBLISHING COMPANY
By:
-----------------------------
Title:
--------------------------
<PAGE> 20
- 5 -
TNI PARTNERS
By: Citizen Publishing Company,
General Partner
By:
-----------------------------
Title:
--------------------------
By: Star Publishing Company,
General Partner
By:
-----------------------------
Title:
--------------------------
<PAGE> 1
EXHIBIT 10.3
AGREEMENT
AGREEMENT dated as of May 12, 1986 (the "Agreement") among The
Pulitzer Publishing Company, a Missouri corporation ("PPC"), and each of the
beneficial owners of shares of Class B Common Stock, $.01 par value ("Class B
Stock"), of PPC who is a signatory of this Agreement (the "Shareholders").
W I T N E S S E T H:
WHEREAS, each of the Shareholders is the beneficial owner of the
number of shares of Class B Stock set forth on Schedule I hereto (such shares of
Class B Stock being, collectively, the "Shares");
WHEREAS, the Shares owned beneficially by the Shareholders are
held of record by the trustees under a Voting Trust Agreement dated as of June
1, 1980, as amended (the "Voting Trust Agreement"), and the Shareholders'
beneficial interest in the Shares is represented by certificates (the "Voting
Trust Certificates") issued pursuant to the Voting Trust Agreement;
WHEREAS, the transfer of Voting Trust Certificates is subject to
the terms of an Option Agreement dated as of June 2, 1980, as amended (the
"Option Agreement");
<PAGE> 2
2
WHEREAS, certain of the Shareholders and PPC are parties to an
action pending in the United States District Court, Eastern District of
Missouri, Eastern Division (the "Litigation"), which action is entitled Clement
C. Moore II, Gordon C. Weir, William E. Weir, James R. Weir, Kate Davis Pulitzer
Quesada, T. Ricardo Quesada and Peter W. Quesada, Plaintiffs (the "Plaintiffs"),
v. Joseph Pulitzer, Jr., David E. Moore, Michael E. Pulitzer, Glenn A.
Christopher, Ronald H. Ridgway, Ken J. Elkins, Nicholas G. Penniman, Marvin
Kanne, Roger Ruwe, James Cherry, Harold Grams, Peter Repetti, David Lipman and
The Pulitzer Publishing Company, Defendants (the "Defendants"); and
WHEREAS, the parties desire to settle the Litigation;
NOW, THEREFORE, in consideration of the premises and the mutual
and dependent promises and agreements hereinafter set forth, the parties hereto
agree as follows:
SECTION 1. Settlement of Litigation. PPC and each of the
Shareholders who is a Plaintiff agree that on the Closing Date (as herein
defined) each will take appropriate action to dismiss, with prejudice and
without cost, all claims in the Litigation by PPC or the Plaintiffs, as the case
may be, and to execute releases substantially in the form of Exhibits A and B
hereto, respectively. PPC and each of the Shareholders who is not a Plaintiff
agrees that on the Closing Date each will execute releases substantially in the
form of Exhibits C and D, respectively.
<PAGE> 3
3
SECTION 2. Transfer of Interest in Voting Trust Shares.
(a) In the event that on the Closing Date either the Shares or
the Voting Trust Certificates may be transferred to PPC without giving
rise to the rights to purchase the Voting Trust Certificates set forth
in Section 1 of the Option Agreement (the "First Refusal Rights"), PPC
agrees to purchase from each Shareholder, and each Shareholder agrees
to sell to PPC, either the Shares beneficially owned by such
Shareholder or the Voting Trust Certificates representing such Shares
(as specified in a written notice delivered to the Shareholders not
less than 24 hours prior to the Closing (as hereinafter defined)). As
consideration for such purchases, PPC agrees to pay to each Shareholder
on the Closing Date a purchase price of $2.882 per Share (the "Share
Purchase Price").
(b) In the event that on the Closing Date neither the Shares nor
the Voting Trust Certificates can be transferred to PPC without giving
rise to the First Refusal Rights, (i) PPC agrees that on the Closing
Date it will exercise its First Refusal Rights and purchase the Voting
Trust Certificates at a price per Share determined in accordance with
the Option Agreement (the "Option Agreement Price") and that it will
make an
<PAGE> 4
4
additional payment to each Shareholder equal to the number of Shares
beneficially owned by such Shareholder multiplied by an amount equal to
the Share Purchase Price less the Option Agreement Price; and (ii) each
Shareholder agrees that on the Closing Date it will sell its Voting
Trust Certificates to PPC as provided above.
(c) Each of the Shareholders hereby waives his First Refusal
Rights, if any, which he may otherwise have under the Option Agreement.
(d) All payments pursuant to this Section 2 shall be made on the
Closing Date by PPC in immediately available United States funds in New
York City.
SECTION 3. The Closing. The closing of this Agreement (the
"Closing") shall take place at the offices of Shearman & Sterling, 53 Wall
Street, New York, New York, on June 17, 1986 at 10:00 A.M. (Eastern Daylight
Time) or at the option of PPC, at such later date, not more than 30 days
thereafter, as shall be specified by PPC in a written notice delivered to the
Shareholders not less than 48 hours prior thereto. Each of the parties shall use
its best efforts to cause the Closing to occur at the earliest practicable date.
The date upon which the Closing occurs is herein referred to as the Closing
Date.
<PAGE> 5
5
SECTION 4. Representations and Warranties of the Shareholders.
Each of the Shareholders represents and warrants to PPC that:
(a) This Agreement has been duly executed on behalf of such
Shareholder and is the legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with
its terms, subject to applicable bankruptcy, reorganization, insolvency
and other similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law). Such execution and delivery do not, and such performance
will not, (i) conflict with, violate or breach any order, judgment,
injunction or decree of any court, arbitrator, government or
governmental agency or instrumentality against or binding on such
Shareholder or by which any of his assets or properties are bound, (ii)
constitute a violation by such Shareholder of any law, ordinance, rule
or regulation, as such law, ordinance, rule or regulation relates to
the consummation by such Shareholder of the transactions contemplated
hereby or (iii) conflict with, violate, breach or cause a default under
any agreement or instrument to which such Shareholder is a party or by
which his assets or properties are bound.
<PAGE> 6
6
(b) Each Shareholder has valid title to all of his Shares, free
and clear of any liens, charges or encumbrances, and such Shares are
not subject to any claims, whether by virtue of rights, options,
contracts, calls, agreements or otherwise, other than the terms of the
Voting Trust Agreement and the Option Agreement. No Shareholder has any
agreement, arrangement or understanding with A. Alfred Taubman or any
of his affiliates with regard to his Shares or any rights with respect
thereto.
SECTION 5. Representations and Warranties of PPC.
PPC represents and warrants to each Shareholder that the
execution and delivery of this Agreement by PPC and the performance by PPC of
its obligations hereunder are within the corporate power of, and have been duly
and validly authorized by, all necessary corporate action on the part of PPC for
the valid authorization of such acts. This Agreement has been duly and validly
executed by PPC and is the legal, valid and binding obligation of PPC,
enforceable against PPC in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency and other similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). Such execution and delivery do not, and such
<PAGE> 7
7
performance will not, (a) conflict with, violate, breach or cause a default
under the Amended and Restated Articles of Incorporation or Bylaws of PPC or any
order, judgment, injunction or decree of any court, arbitrator, government or
governmental agency or instrumentality against or binding on PPC or by which any
of its assets or properties are bound, (b) constitute a violation by PPC of any
law, ordinance, rule or regulation, as such law, ordinance, rule or regulation
relates to the consummation by PPC of the transactions contemplated hereby or
(c) conflict with, violate, breach or cause a default under any agreement or
instrument to which PPC is a party or by which its assets or properties are
bound, except as set forth on Schedule II hereto.
SECTION 6. Conditions Precedent to PPC's Obligations. The
obligations of PPC to purchase Shares pursuant to this Agreement are subject to
the fulfillment, prior to or on the Closing Date, of the following conditions:
(a) The representations and warranties of each of the
Shareholders contained in this Agreement shall then be true in all
material respects and shall not contain any material errors and
misstatements, and each Shareholder shall have performed and complied
in all material respects with all agreements and conditions required by
this Agreement to be performed or complied with prior to the Closing;
and
<PAGE> 8
8
(b) Each Shareholder who is a Plaintiff shall have executed and
delivered to PPC (i) such documents evidencing the dismissal of his
claims under the Litigation as PPC and its counsel shall reasonably
request and (ii) a release substantially in the form of Exhibit B
hereto, and each Shareholder who is not a Plaintiff shall have executed
and delivered to PPC a release substantially in the form of Exhibit D
hereto; and
(c) Between the date hereof and the Closing Date, there shall
not have occurred either (i) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities or (ii) the engagement by the United States in hostilities
which have resulted in the declaration, on or after the date of this
Agreement, of a national emergency or war, if the effect of any such
event specified in clause (ii) in PPC's reasonable judgment precludes
PPC from obtaining the financing required for the purchase of the
Shares contemplated hereby.
SECTION 7. Conditions Precedent to the Shareholders'
Obligations. The obligations of the Shareholders to sell Shares pursuant to this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:
<PAGE> 9
9
(a) The representations and warranties of PPC contained in this
Agreement shall then be true in all material respects (without reference
to the exception set forth in Section 5(c)) and shall not contain any
material errors and misstatements, and PPC shall have performed and
complied in all material respects with all agreements and conditions
required by this Agreement to be performed or complied with prior to the
Closing; and
(b) The Defendants shall have executed and delivered to the
Shareholders (i) such documents evidencing the dismissal of their claims
under the Litigation as the Shareholders and their counsel shall
reasonably request and (ii) releases substantially in the form of
Exhibits A and C hereto.
SECTION 8. Additional Payments.
(a) Certain Definitions. For purposes of this Section 8, the
following terms shall have the meanings set forth below:
"Applicable Percentage" shall mean, with respect to any Gross-Up
Transaction, the percentage set forth below opposite the period during which
either the Gross-Up Transaction is consummated or an agreement is reached
concerning all the material terms of the Gross-Up Transaction, whichever first
occurs;
<PAGE> 10
10
TIME PERIOD APPLICABLE PERCENTAGE
----------- ---------------------
Prior to May 12, 1991 100%
May 13, 1991 through
May 12, 1996 66 2/3%
May 13, 1996 through
May 12, 2001 50%
"Common Stock" shall mean the Common Stock, par value $.10 per
share, of PPC and any shares of capital stock of PPC subsequently issued in
respect thereof.
"Fair Market Value" of any consideration shall mean, in the case
of cash, the amount thereof, and, in the case of any other consideration, the
fair market value thereof as agreed to by a Valuation Firm selected by PPC and a
Valuation Firm selected by the Shareholders, or, if such Valuation Firms are
unable to reach an agreement with respect to such fair market value, the fair
market value of such consideration as determined by a third Valuation Firm (the
"Third Valuation Firm") selected by such previously selected Valuation Firms.
Any such agreement or determination shall be final and binding on the parties,
and the fees and expenses of the Third Valuation Firm, if any, shall be shared
<PAGE> 11
11
equally by PPC on the one hand and the Shareholders on the other. PPC shall
provide to each such Valuation Firm access to such information as may be
necessary for the determination of the Fair Market Value of any consideration.
"Gross-Up Transaction" shall mean any merger, consolidation,
liquidation or sale, in any transaction or series of related transactions, of
more than 85% of the voting securities or equity of, or all or substantially all
the assets of, or any other business combination (other than a change of PPC's
state of incorporation) involving, PPC pursuant to which holders of the Common
Stock receive cash, securities (other than Common Stock) or other property, and
(any recapitalization, dividend or distribution, or series of related
recapitalizations, dividends, or distributions, in which holders of the Common
Stock receive cash, securities (other than Common Stock) or other property
having a Fair Market Value of not less than 33 1/3% of the Fair Market Value of
the shares of Common Stock outstanding immediately prior to such transaction.)
"Imputed Value" for one share of Common Stock on a given date
shall be an amount equal to $28.82 compounded annually from the date hereof to
such given date at the rate of 15% per annum.
"Issuable Common Shares" shall mean shares of Common Stock
issuable upon conversion of shares of Class B Stock.
<PAGE> 12
12
"Transaction Proceeds" shall mean, in the case of a merger,
consolidation, liquidation or sale of at least 85% of the voting securities or
equity or substantially all the assets of or any other business combination
involving PPC, the aggregate Fair Market Value of the consideration received
pursuant thereto by the holder of one share of Common Stock, and in the case of
a recapitalization, dividend or distribution, the aggregate Fair Market Value of
the amounts paid or distributed in respect of one share of Common Stock plus the
aggregate Fair Market Value of one share of the Common Stock following such
transaction.
"Valuation Firm" shall mean a nationally recognized investment
banking firm or other institution experienced in the valuation of securities,
businesses and assets.
(b) Additional Payments. In the event that a Gross-Up Transaction shall
occur at any time during the period from the date hereof through May 12, 2001,
PPC shall pay to each Shareholder an amount equal to (X) the product of (i) the
amount by which the Transaction Proceeds exceeds the Imputed Value (the
"Excess") multiplied by (ii) the Applicable Percentage multiplied by (iii) the
number of Issuable Common Shares set forth opposite the name of such Shareholder
on Schedule I, adjusted in accordance with Section 8(c) hereof; less (Y) the sum
of any amounts previously received by such Shareholder pursuant to this Section
8; provided, however,
<PAGE> 13
13
that in the event of a recapitalization, dividend or distribution, the Excess
shall in no event exceed the amount paid or distributed pursuant to such
recapitalization, dividend or distribution in respect of one share of Common
Stock.
(c) The number of Issuable Common Shares set forth opposite the name of
each Shareholder on Schedule I shall be adjusted as follows:
(i) In case PPC shall pay a dividend or other
distribution on the Common Stock in shares of Common Stock, the
number of Issuable Common Shares set forth opposite the name of
each Shareholder on Schedule I shall be adjusted by adding to
such number the number of shares of Common Stock that would have
been distributed in respect of such Issuable Common Shares had
such Issuable Common Shares been outstanding on the record date
for such dividend or distribution. In the event that PPC shall
subdivide the shares of Common Stock into a larger number of
shares or combine the shares of Common Stock into a smaller
number of shares, the number of Issuable Common Shares set forth
opposite the name of
<PAGE> 14
14
each Shareholder on Schedule I shall be appropriately adjusted
to take into account such subdivision or combination.
(ii) In the event PPC shall issue rights or warrants
to all holders of the Common Stock or Class B Stock entitling
them to subscribe for or purchase shares of Common Stock or
Class B Stock at a price per share less than the then current
Fair Market Value thereof, the number of Issuable Common Shares
set forth opposite the name of each Shareholder on Schedule I
shall be multiplied by a fraction of which the numerator shall
be the sum of (A) the number of shares of Common Stock
outstanding immediately prior to such issuance plus (B) the
number of shares of Common Stock issuable upon the conversion of
all shares of Class B Stock outstanding immediately prior to
such issuance plus (C) the number of additional shares of Common
Stock offered for subscription or purchase plus (D) the number
of shares of Common Stock issuable upon conversion of the shares
of Class B Common Stock offered for subscription or
<PAGE> 15
15
purchase, and the denominator of which shall be the sum of (W)
the number of shares of Common Stock outstanding immediately
prior to such issuance plus (X) the number of shares of Common
Stock issuable upon conversion of all shares of Class B Stock
outstanding immediately prior to such issuance plus (Y) the
number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock issuable
pursuant to such warrants or rights to purchase Common Stock
would purchase at the then current Fair Market Value of the
Common Stock plus (Z) the number of shares of Common Stock
issuable upon conversion of the shares of Class B Stock which
the aggregate offering price of the total number of shares of
Class B Stock issuable pursuant to such warrants or rights to
purchase Class B Stock would purchase at the then current Fair
Market Value of the Class B Common Stock.
(iii) In case PPC shall distribute to all holders of
its Common Stock evidences of indebtedness, securities (other
than
<PAGE> 16
16
securities described in subsections (i) or (ii) above) or other
assets (other than cash) other than pursuant to a Gross-Up
Transaction, the number of Issuable Common Shares set forth
opposite the name of each Shareholder on Schedule I shall be
multiplied by a fraction, of which the numerator shall be the
then current Fair Market Value of one share of Common Stock, and
of which the denominator shall be the amount by which such
current Fair Market Value exceeds the then current Fair Market
Value of the evidences of indebtedness, securities or assets so
distributed with respect to one share of Common Stock.
(iv) In addition to the other adjustments provided
herein, in the event that the Common Stock is adjusted in a
manner not contemplated herein, the number of Issuable Common
Shares set forth opposite the name of such Shareholder on
Schedule I shall be appropriately adjusted to reflect such
adjustment in the Common Stock.
<PAGE> 17
17
SECTION 9. Agreements of the Shareholders Prior to the Closing
Date. Each Shareholder agrees that during the period from the date hereof
through the Closing Date he will not grant options or rights to any other
person, firm, corporation or entity ("person") to acquire his Shares or any
rights with respect thereto (except, however, the existing right to acquire his
Shares under this Agreement), and he will not grant to any person the right or
proxy to vote his Shares at any meeting or meetings of the shareholders of PPC
(whether regular or special); provided, however, that a Shareholder, if he so
desires, may give a proxy to vote his Shares in favor of the recommendations of
the management of PPC at any such meeting or meetings.
SECTION 10. Indemnification,
(a) The Shareholders shall, severally, indemnify and hold
harmless PPC from and against any and all losses, costs, expenses,
liabilities, judgments, assessments and penalties, and reasonable
attorneys' fees and disbursements relating thereto (collectively,
"Damages") resulting from or arising out of the inaccuracy of any
representation or the breach of any warranty or nonfulfillment of any
covenant or agreement on the part of such Shareholder under this
Agreement, or resulting from any misrepresentation in, or occasioned by,
any certificate or other instrument furnished by such Shareholder under
this Agreement.
<PAGE> 18
18
(b) PPC agrees to indemnify and hold harmless the Shareholders
from and against any and all Damages resulting from or arising out of
the inaccuracy of any representation or breach of any warranty or the
nonfulfillment of any covenant or agreement on the part of PPC under
this Agreement, or resulting from any misrepresentation in, or
occasioned by, any certificate or other instrument furnished by PPC
under this Agreement.
SECTION 11. Miscellaneous.
(a) Effectiveness. This Agreement shall become effective upon
the execution hereof by PPC and each of the Shareholders.
(b) Amendments; Waivers. This Agreement may be amended only be
an agreement in writing signed by PPC and by Shareholders holding not
less than a majority of the Shares (the "Required Holders"). Any
conditions to the obligations of PPC hereunder may be waived by a
written instrument executed by PPC, and any conditions to the
obligations of the Shareholders hereunder may be waived by a written
instrument executed by the Required Holders.
(c) Rights of the Parties to Abandon this Transaction. This
Agreement and the transactions contemplated herein may be terminated:
(i) at any time, by a written agreement executed by PPC and
each of the Shareholders; and
<PAGE> 19
19
(ii) if the Closing has not occurred on or before December
31, 1986, by PPC by written notice delivered to each
Shareholder, and by the Shareholders by written notice signed by
the Required Holders and delivered to PPC and each of the other
Shareholders; provided, however, this right of termination shall
not be available to the party having breached this Agreement if
such breach shall have resulted in non-occurrence of the
Closing.
(d) Descriptive Headings. Descriptive headings herein are for
convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
(e) Counterparts. This Agreement may be executed in any number
of counterparts, and each such executed counterpart shall be and shall
be deemed to be an original instrument, but all of such counterparts
shall be one and the same agreement.
(f) Successors. No Shareholder shall assign any of his rights or
delegate any of his duties hereunder. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors
and assigns of each of the parties hereto. Nothing in this Agreement is
intended to confer upon any other person any other right or remedy under
or by reason of this Agreement.
<PAGE> 20
20
(g) Specific Performance and Injunctive Relief. PPC and each
Shareholder acknowledge and agree that the Shareholders or PPC would be
irreparably damaged in the event any of the provisions of this Agreement
were not performed by PPC or the Shareholders, as the case may be, in
accordance with their specific terms or otherwise breached. PPC and the
Shareholders shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, in addition to any
other remedy to which such party may be entitled at law or in equity.
(h) Notices. All notices and other communications provided for
or permitted hereunder shall be in writing (including telex and telecopy
communication) and shall be sent by mail, telex, telecopier or hand
delivery: (i) if to PPC at its address at: 900 North Tucker Boulevard,
St. Louis, Missouri 63101, Attention: Ronald H. Ridgway or at such other
address as shall be designated by it in a written notice to the
Shareholders, (ii) if to any Shareholder at his address set forth on
Schedule I hereto or at such other address as shall have been designated
by it in a written notice to PPC and the other Shareholders.
<PAGE> 21
21
All notices and communications shall be deemed to have been duly given
or made, when delivered by hand or five business days after being deposited in
the mail, postage prepaid, when telexed, answer-back received and when
telecopied, receipt acknowledged.
(i) Non-Disclosure. During the period from the date hereof
through May 13, 1987, neither PPC nor any Shareholder (nor their
respective employees, agents or advisors) shall make any disclosure of
the terms hereof or the negotiations with respect hereto (other than to
the parties hereto and their representatives and advisors and A. Alfred
Taubman and his representatives and advisors) except pursuant to a press
release which shall be approved by the parties hereto prior to the
release thereof, and except pursuant to such press release, neither the
Shareholders nor PPC (nor any of their respective employees, agents or
advisors) shall make any public statement concerning the Litigation or
the merits thereof or the positions taken by the parties in connection
therewith, except in the case of PPC, insofar as it relates to
Litigation with persons who are not parties hereto. During such time
period the Shareholders (and their agents and advisors) shall make no
disparaging public statement with respect to PPC, any of its employees
or any of the Shareholders, and PPC (and its
<PAGE> 22
22
employees, agents and advisors) shall make no disparaging comments
concerning any of the Shareholders. The provisions of this subsection
shall not apply to agents or advisors of persons who are not bound
hereby after the termination of the letter agreement of even date
herewith among PPC and certain other shareholders of PPC.
(j) Best Efforts. Each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all action and to do, or cause to
be done, all things necessary, proper or advisable to consummate and to
make effective the transactions contemplated by this Agreement.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
THE PULITZER PUBLISHING
COMPANY
By /s/ Peter J. Repetti
-----------------------------
Peter J. Repetti
Director
<PAGE> 23
THE SHAREHOLDERS
----------------
*
---------------------------
Clement C. Moore II
*
---------------------------
Gordon C. Weir
*
---------------------------
William E. Weir
*
---------------------------
James R. Weir
*
---------------------------
Kenward G. Elmslie
Stephen E. Nash and
Manufacturers Hanover Trust
Company, Trustees under
Indenture of Hope Ware
Putnam
*
---------------------------
Stephen E. Nash, Trustee
---------------------------
Manufacturers Hanover Trust
Company, Trustee
Manufacturers Hanover Trust
Company, Trustee under Trust
for the benefit of Clement
C. Moore, II
By *
-------------------------
* /s/ Christopher Mayer
---------------------------
Christopher Mayer
Attorney-in-Fact
<PAGE> 24
SCHEDULE I
----------
<TABLE>
<CAPTION>
Number of Shares Issuable
Shareholder's Name of Class B Stock Common Shares
- ------------------ ---------------- -------------
<S> <C> <C>
Kenward G. Elmslie 18,604,600 1,860,460
140 Greenwich Ave
New York, N.Y. 10006
Clement C. Moore, 11 8,576,200 857,620
182 Farmholme Rd.
Stonington, CT 06378
William E. Weir 1,717,980 171,798
230333 Bristol Court
Birmingham, MI 48010
Gordon C. Weir 1,717,980 171,798
2 Larchwood Drive
Cambridge, MA 02138
James R. Weir 1,827,580 182,758
6 Berkley Place
Cambridge, MA 02138
Stephen E. Nash & 27,400 2,740
Manufacturers Hanover
Trust Company,
Trustees under
Indenture of
Hope W. Putnam
Manufacturers Hanover 438,400 43,840
Trust Company, Trustee
under Trust for benefit
of Clement C. Moore, II
</TABLE>
<PAGE> 25
SCHEDULE II
1. Note Agreement between PPC and The Prudential Insurance Company of America
dated October 16, 1978, as amended.
2. Revolving Credit Agreement between PPC and Mercantile Bank, National
Association, dated April 28, 1986. ($25,000,000).
3. Revolving Credit Agreement between PPC and Mercantile Bank, National
Association, date April 28, 1986. ($15,000,000).
<PAGE> 26
EXHIBIT A
RELEASE
1. This Release is being delivered pursuant to and in
satisfaction of Section 1 of, and is annexed as Exhibit A to, the settlement
agreement (the "Agreement") dated as of May 12, 1986 among The Pulitzer
Publishing Company ("PPC"), a Missouri corporation, and each of the beneficial
owners of shares of Class B Common Stock of PPC who is a signatory of the
Agreement.
2. In this Release:
(a) Plaintiffs include Clement C. Moore II, Gordon C. Weir,
William E. Weir and James R. Weir, and their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and
assignors, and any or all of them;
(b) The Pulitzer Publishing Company ("PPC") includes, and this
Release is given on behalf of that corporation, and its successors,
predecessors, assigns, directors, officers, former directors, former officers,
receivers, trustees, parents, subsidiaries, and affiliates, and any or all of
them, and, in the case of individuals, their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
<PAGE> 27
2
(c) Defendants include Joseph Pulitzer, Jr., David E. Moore,
Michael E. Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins,
Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold Grams,
Peter Repetti, and David Lipman, and their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
(d) the "Pulitzer Action" refers to the action entitled
Clement C. Moore II, Gordon C. Weir, William E. Weir, James R. Weir, Kate Davis
Pulitzer Quesada, T. Ricardo Quesada and Peter W. Quesada v. Joseph Pulitzer,
Jr., David E. Moore, Michael E. Pulitzer, Glenn A. Christopher, Ronald H.
Ridgway, Ken J. Elkins, Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James
Cherry, Harold Grams, Peter Repetti, David Lipman and The Pulitzer Publishing
Company, Civil Action No. 86-0658-C-3, filed March 31, 1986 and currently
pending in the United States District Court for the Eastern District of
Missouri, Eastern Division.
3) PPC and Defendants hereby release and discharge Plaintiffs
from any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialities, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, and demands whatsoever, in law, equity or otherwise,
including without limitation, all
<PAGE> 28
3
claims which PPC and Defendants ever had, now have or hereafter can, shall or
may, have for, upon or by reason of or arising from the Pulitzer Action.
IN WITNESS WHEREOF, PPC has caused this Release to be executed
by a duly authorized officer or representative on the dates hereafter set forth.
ATTEST: Date of THE PULITZER PUBLISHING COMPANY
Execution
---------
By:
- --------------------- --------- -------------------------------
Its
Before me, a Notary Public in and for said State and County,
on this day personally appeared the above-named __________________________ of
the Pulitzer Publishing Company, and acknowledged the foregoing Release to be
the free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, the Defendants have hereunto set their
hand and seal on the dates hereafter set forth.
Date of
Execution
---------
- --------------------- --------- ---------------------------------
JOSEPH PULITZER, JR.
--------- ---------------------------------
DAVID E. MOORE
--------- ---------------------------------
MICHAEL E. PULITZER
<PAGE> 29
4
--------- ---------------------------------
GLEN A. CHRISTOPHER
--------- ---------------------------------
RONALD H. RIDGWAY
--------- ---------------------------------
KEN J. ELKINS
--------- ---------------------------------
NICHOLAS G. PENNIMAN
--------- ---------------------------------
MARVIN KANNE
--------- ---------------------------------
ROGER RUWE
--------- ---------------------------------
JAMES CHERRY
--------- ---------------------------------
HAROLD GRAMS
--------- ---------------------------------
PETER REPETTI
--------- ---------------------------------
DAVID LIPMAN
On May _, 1986, came Joseph Pulitzer, Jr. to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
---------------------------------
On May _, 1986, came David E. Moore to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly, acknowledged to me that he executed the same.
---------------------------------
<PAGE> 30
5
On May _, 1986, came Michael E. Pulitzer, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Glen A. Christopher to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Ronald H. Ridgway to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Ken J. Elkins to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Nicholas G. Penniman, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 31
6
On May _, 1986, came Marvin Kanne to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Roger Ruwe to me known and known to me to
be the individual described in, and who executed the foregoing Release and duly
acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came James Cherry to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Harold Grams, to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Peter Repetti to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 32
7
On May _, 1986, came David Lipman to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 33
EXHIBIT B
RELEASE
1. This Release is being delivered pursuant to and in
satisfaction of Section 1 of, and is annexed as Exhibit B to, the settlement
agreement (the "Agreement") dated as of May 12, 1986 among The Pulitzer
Publishing Company ("PPC"), a Missouri corporation, and each of the beneficial
owners of shares of Class B Common Stock of PPC who is a signatory of the
Agreement.
2. In this Release:
(a) Plaintiffs include Clement C. Moore II, Gordon C. Weir,
William E. Weir, James R. Weir, Kate Davis Pulitzer Quesada, T. Ricardo Quesada
and Peter W. Quesada, and their respective heirs, receivers, conservators,
beneficiaries, executors, administrators, successors, and assignors, and any or
all of them;
(b) The Pulitzer Publishing Company ("PPC") includes, and this
Release is given on behalf of that corporation, and its successors,
predecessors, assigns, directors, officers, former directors, former officers,
receivers, trustees, parents, subsidiaries, and affiliates, and any or all of
them, and, in the case of individuals, their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
<PAGE> 34
2
(c) Defendants include Joseph Pulitzer, Jr., David E. Moore,
Michael E. Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins,
Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold Grams,
Peter Repetti, and David Lipman, and their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
(d) the "Pulitzer Action" refers to the action entitled
Clement C. Moore II, Gordon C. Weir, William E. Weir, James R. Weir, Kate Davis
Pulitzer Quesada, T. Ricardo Quesada and Peter W. Quesada v. Joseph Pulitzer
Jr., David E. Moore, Michael E. Pulitzer, Glenn A. Christopher, Ronald H.
Ridgway, Ken J. Elkins, Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James
Cherry, Harold Grams, Peter Repetti, David Lipman and The Pulitzer Publishing
Company, Civil Action No. 86-0658-C-3, filed March 31, 1986 and currently
pending in the United States District Court for the Eastern District of
Missouri, Eastern Division.
3) Plaintiffs hereby release and discharge PPC and Defendants
from any and all actions, causes of action, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
executions, claims, and demands whatsoever, in law, equity or otherwise,
including without limitation, all
<PAGE> 35
3
claims which Plaintiffs ever had, now have or hereafter can, shall or may, have
for, upon or by reason of or arising from the Pulitzer Action.
IN WITNESS WHEREOF, Plaintiffs have hereunto set their hand
and seal on the dates hereafter set forth.
Date of
Execution
---------
ATTEST:
- ------------------------- --------- ------------------------------
CLEMENT C. MOORE, II
--------- ------------------------------
GORDON C. WEIR
--------- ------------------------------
WILLIAM E. WEIR
--------- ------------------------------
JAMES R. WEIR
--------- ------------------------------
KATE DAVIS PULITZER QUESADA
--------- ------------------------------
T. RICARDO QUESADA
--------- ------------------------------
PETER W. QUESADA
On May 1986, came Clement C. Moore, II, to me known and known
to me to be the individual described in, and who executed the foregoing Release.
and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 36
4
On May _, 1986, came Gordon C. Weir, to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came William E. Weir, to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came James R. Weir, to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Kate Davis Pulitzer Quesada, to me known
and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that she executed the same.
------------------------------
On May _, 1986, came T. Ricardo Quesada, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 37
5
On May _, 1986, came Peter W. Quesada, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 38
EXHIBIT C
RELEASE
1. This Release is being delivered pursuant to and in
satisfaction of Section 1 of, and is annexed as Exhibit C to, the settlement
agreement (the "Agreement") dated as of May 12, 1986 among The Pulitzer
Publishing Company ("PPC"), a Missouri corporation, and each of the beneficial
owners of shares of Class B Common Stock of PPC who is a signatory of the
Agreement.
2. In this Release:
(a) The Shareholders include A. Rick D'Arcangelo, as Trustee,
Kenward G. Elmslie, Sigler & Co., as nominee for Clement C. Moore II, Frederick
D. Pulitzer, Michael E. Pulitzer, Jr., Robert S. Pulitzer, Joseph Pulitzer IV,
Stephen E. Nash and Manufacturers Hanover Trust Company, as Trustees, and Elinor
P. Hempelmann, and their respective heirs, receivers, conservators,
beneficiaries, executors, administrators, successors, and assignors, and any or
all of them;
(b) The Pulitzer Publishing Company ("PPC") includes, and this
Release is given on behalf of that corporation, and its successors,
predecessors, assigns, directors, officers, former directors, former officers,
receivers, trustees, parents, subsidiaries, and affiliates,
<PAGE> 39
2
and any or all of them, and, in the case of individuals, their respective heirs,
receivers, conservators, beneficiaries, executors, administrators, successors,
and assigns, and any or all of them;
(c) Defendants include Joseph Pulitzer, Jr., David E. Moore,
Michael E. Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins,
Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold Grams,
Peter Repetti, and David Lipman, and their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
(d) the "Pulitzer Action" refers to the action entitled
Clement C. Moore II, Gordon C. Weir, William E. Weir, James R. Weir, Kate Davis
Pulitzer Quesada, T. Ricardo Quesada and Peter W. Quesada v. Joseph Pulitzer,
Jr., David E. Moore, Michael E. Pulitzer, Glenn A. Christopher, Ronald H.
Ridgway, Ken J. Elkins, Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James
Cherry, Harold Grams, Peter Repetti, David Lipman and The Pulitzer Publishing
Company, Civil Action No. 86-0658-C-3, filed March 31, 1986 and currently
pending in the United States District Court for the Eastern District of
Missouri, Eastern Division.
3) PPC and Defendants hereby release and discharge the
Shareholders from any and all actions, causes of action, suits, debts, dues,
sums of money, accounts, reckonings,
<PAGE> 40
3
bonds, bills, specialities, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims, and
demands whatsoever, in law, equity or otherwise, including without limitation,
all claims that PPC and Defendants now have or could have asserted against the
Shareholders had the Shareholders been plaintiffs in the Pulitzer Action.
IN WITNESS WHEREOF, PPC has caused this Release to be executed
by a duly authorized officer or representative on the dates hereafter set forth.
ATTEST: Date of THE PULITZER PUBLISHING COMPANY
Execution
_______________________ _________ By:____________________________
Its
Before me, a Notary Public in and for said State and County,
on this day personally appeared the above-named _______________________ of the
Pulitzer Publishing Company, and acknowledged the foregoing Release to be the
free and voluntary act and deed of said corporation.
IN WITNESS WHEREOF, the Defendants have hereunto set their
hand and seal on the DATES HEREAFTER SET FORTH.
<PAGE> 41
4
Date of
Execution
---------
- ----------------------- --------- ------------------------------
JOSEPH PULITZER, JR.
--------- ------------------------------
DAVID E. MOORE
--------- ------------------------------
MICHAEL E. PULITZER
--------- ------------------------------
GLEN A. CHRISTOPHER
--------- ------------------------------
RONALD H. RIDGWAY
--------- ------------------------------
KEN J. ELKINS
--------- ------------------------------
NICHOLAS G. PENNIMAN
--------- ------------------------------
MARVIN KANNE
--------- ------------------------------
ROGER RUWE
--------- ------------------------------
JAMES CHERRY
--------- ------------------------------
HAROLD GRAMS
--------- ------------------------------
PETER REPETTI
--------- ------------------------------
DAVID LIPMAN
On May __, 1986, came Joseph Pulitzer, Jr. to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 42
5
On May _, 1986, came David E. Moore to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Michael E. Pulitzer, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Glen A. Christopher to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Ronald H. Ridgway to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Ken J. Elkins to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 43
6
On May _, 1986, came Nicholas G. Penniman, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Marvin Kanne to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Roger Ruwe to me known and known to me to
be the individual described in, and who executed the foregoing Release and duly
acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came James Cherry to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Harold Grams, to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 44
-7-
On May _, 1986, came Peter Repetti to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came David Lipman to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 45
EXHIBIT D
RELEASE
1. This Release is being delivered pursuant to and in
satisfaction of Section 1 of, and is annexed as Exhibit D to, the settlement
agreement (the "Agreement") dated as of May 12, 1986 among The Pulitzer
Publishing Company ("PPC"), a Missouri corporation, and each of the beneficial
owners of shares of Class B Common Stock of PPC who is a signatory of the
Agreement.
2. In this Release:
(a) The Shareholders include A. Rick D'Arcangelo, as Trustee,
Kenward G. Elmslie, Sigler & Co., as nominee for Clement C. Moore II, Frederick
D. Pulitzer, Michael E. Pulitzer, Jr., Robert S. Pulitzer, Joseph Pulitzer IV,
Stephen E. Nash and Manufacturers Hanover Trust Company, as Trustees, and Elinor
P. Hempelmann, and their respective heirs, receivers, conservators,
beneficiaries, executors, administrators, successors, and assignors, and any or
all of them;
(b) The Pulitzer Publishing Company ("PPC") includes, and this
Release is given on behalf of that corporation, and its successors,
predecessors, assigns, directors, officers, former directors, former officers,
receivers, trustees, parents, subsidiaries, and affiliates,
<PAGE> 46
2
and any or all of them, and, in the case of individuals, their respective heirs,
receivers, conservators, beneficiaries, executors, administrators, successors,
and assigns, and any or all of them;
(c) Defendants include Joseph Pulitzer, Jr., David E. Moore,
Michael E. Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins,
Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold Grams,
Peter Repetti, and David Lipman, and their respective heirs, receivers,
conservators, beneficiaries, executors, administrators, successors, and assigns,
and any or all of them;
(d) the "Pulitzer Action" refers to the action entitled
Clement C. Moore II, Gordon C. Weir, William E. Weir, James R. Weir, Kate Davis
Pulitzer Quesada, T. Ricardo Quesada and Peter W. Quesada v. Joseph Pulitzer,
Jr., David E. Moore, Michael E. Pulitzer, Glenn A. Christopher, Ronald H.
Ridgway, Ken J. Elkins, Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James
Cherry, Harold Grams, Peter Repetti, David Lipman and The Pulitzer Publishing
Company, Civil Action No. 86-0658-C-3, filed March 31, 1986 and currently
pending in the United States District Court for the Eastern District of
Missouri, Eastern Division.
3) The Shareholders hereby release and discharge PPC and
Defendants from any and all actions, causes of action, suits, debts, dues, sums
of money, accounts,
<PAGE> 47
3
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, executions,
claims, and demands whatsoever, in law, equity or otherwise, including without
limitation, all claims that the Shareholders now have or that they could have
asserted had they been plaintiffs in the Pulitzer Action.
IN WITNESS WHEREOF, Sigler & Co. has caused this Release to be
executed by a duly authorized representative on the date hereafter set forth.
Date of
Execution
---------
ATTEST: SIGLER & CO.
By:
- ----------------------- --------- --------------------------
Before me, a Notary Public in and for said State and County,
on this day personally appeared _________________________ of Sigler & Co. and
acknowledged the foregoing Release to be the free and voluntary act and deed of
said corporation.
<PAGE> 48
4
IN WITNESS WHEREOF, Manufacturers Hanover Trust Company has
caused this Release to be executed by a duly authorized representative on the
date hereafter set forth.
Date of
Execution
ATTEST: MANUFACTURERS HANOVER TRUST
COMPANY, TRUSTEE
- ------------------- --------- By:
--------------------------------
Before me, a Notary Public in and for said State an County, on
this day personally appeared _________________________ of Manufacturers Hanover
Trust Company, Trustee, and acknowledged the foregoing Release to be the free
and voluntary act and deed of said corporation, acting as Trustee.
IN WITNESS WHEREOF, the Shareholders have hereunto set their
hand and seal on the dates hereafter set forth.
Date of
Execution
---------
ATTEST:
- ------------------- --------- ------------------------------
A. RICK D'ARCANGELO,
TRUSTEE
--------- ------------------------------
KENWARD G. ELMSLIE
--------- ------------------------------
FREDERICK D. PULITZER
<PAGE> 49
5
--------- ------------------------------
MICHAEL E. PULITZER, JR.
--------- ------------------------------
ROBERT S. PULITZER
--------- ------------------------------
JOSEPH PULITZER, IV
--------- ------------------------------
STEPHEN E. NASH, TRUSTEE
--------- ------------------------------
ELINOR P. HEMPELMANN
On May _, 1986, came A. Rick D'Arcangelo, Trustee, to me known
and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Kenward G. Elmslie, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Frederick D. Pulitzer, Jr., to me known
and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 50
6
On May _, 1986, came Michael E. Pulitzer, Jr., to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Robert S. Pulitzer, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that she executed the same.
------------------------------
On May _, 1986, came Joseph Pulitzer, IV, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Stephen E. Nash, Trustee, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
On May _, 1986, came Elinor P. Hempelmann, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
------------------------------
<PAGE> 1
EXHIBIT 10.4
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
September 29, 1986
To the persons identified
on Schedules I and II
attached hereto.
Dear Sirs:
With reference to an agreement (the "Agreement") dated as of May
12, 1986 among The Pulitzer Publishing Company (the "Company") and Clement C.
Moore, II, Gordon C. Weir, William E. Weir, James R. Weir, Kenward G. Elmslie,
Manufacturers Hanover Trust Company, Trustee under Trust for the benefit of
Clement C. Moore, II, and Stephen E. Nash and Manufacturers Hanover Trust
Company, Trustees under the Indenture of Hope W. Putnam, holders of Voting Trust
Certificates (the "Certificates") representing shares of Class B Common Stock,
par value $.01 (the "Shares"), of the Company, the Company and all holders of
shares of the Company's Common Stock and Certificates hereby acknowledge and
consent to (i) transfer by each of the persons (the "Sellers") set forth on
Schedule I of Certificates representing the number of Shares set forth opposite
the name of such Seller on Schedule I (and the Shares underlying such
Certificates) to the persons (the "Purchasers") set forth on Schedule II on a
pro rata basis (based on the ratio of the number of Shares set forth opposite
the name of each such Purchaser on Schedule II to the aggregate number of Shares
set forth opposite the names of all Purchasers on Schedule II) subject to the
assumption by such Purchasers of the Seller's obligations under Sections 2(a),
(b), and (d) and 9 of the Agreement with respect to the Certificates to be
purchased by such Purchasers (and the Company shall deliver to the depository
under the Voting Trust Agreement the Certificates, together with instruments of
transfer delivered to the Company by the Sellers, and shall direct the
depository to reflect in the records of the depository the transfers reflected
in such documents), (ii) transfer by Clement C. Moore, II of Certificates
representing 456,750 Shares and 292,350 Shares to The Moore Foundation, Inc. and
Mariemont Corporation, respectively, subject to the assumption by The Moore
Foundation, Inc. and the Mariemont Corporation, respectively, of Clement C.
Moore, II'S obligations under Sections 2(a), (b), and (d) and 9 of the Agreement
with respect to the Certificates to be transferred to The Moore Foundation, Inc.
and Mariemont Corporation, respectively, (iii) the transfer by
<PAGE> 2
Kenward G. Elmslie of Certificates representing 1,260,400 Shares to Z Press,
Inc., subject to the assumption by Z Press, Inc. of Kenward G. Elmslie's
obligations under Sections 2(a), (b) and (d) and 9 of the Agreement with respect
to the Certificates to be transferred to Z Press, Inc., (iv) the grant to the
Purchasers of an irrevocable proxy to vote the Certificates (and the Shares
underlying such Certificates) to be purchased in such manner as they may deem
appropriate, to the extent permitted by the Voting Trust Agreement and subject
to Section 9 of the Agreement, (v) the assignment of the rights of Sellers to
the Purchasers, and assumption of the obligations of the Sellers by the
Purchasers, under Sections 2(a), (b) and (d) and 9 of the Agreement with respect
to the Certificates to be purchased by such Purchasers, (vi) the assignment of
the rights of Clement C. Moore, II to The Moore Foundation, Inc. and Mariemont
Corporation, and assumption of the obligations of Clement C. Moore, II by The
Moore Foundation Inc. and Mariemont Corporation, under Sections 2(a), (b), and
(d) and 9 of the Agreement with respect to the Certificates to be transferred to
The Moore Foundation, Inc. and Mariemont Corporation, respectively, and (vii)
the assignment of the rights of Kenward G. Elmslie to Z Press, Inc., and
assumption of the obligations of Kenward G. Elmslie by Z Press, Inc., under
Sections 2(a), (b), and (d) and 9 of the Agreement with respect to the
Certificates to be transferred to Z Press, Inc.
The Company hereby further agrees to release (x) the Sellers from
liability with respect to their obligations under Sections 2(a), (b) and (d) and
9 of the Agreement with respect to the Certificates to be purchased by such
Purchasers, subject to the consummation of the Closing, as defined in the
Agreement, (y) Clement C. Moore, II from liability with respect to. his
obligations under Sections 2(a), (b) and (d) and 9 of the Agreement with respect
to the Certificates to be transferred to The Moore Foundation, Inc. and
Mariemont Corporation, subject to the consummation of the Closing, as defined in
the Agreement, and (z) Kenward G. Elmslie from liability with respect to his
obligations under Sections 2(a), (b) and (d) and 9 of the Agreement with respect
to the Certificates to be transferred to Z Press, Inc., subject to the
consummation of the Closing, as defined in the Agreement. The Company and the
Sellers further affirm that in all other respects the Agreement continues to be
a valid and binding obligation between the Sellers and the Company, including,
without limitation, the rights of the Sellers under Section 8 of the Agreement,
as if the Certificates to be sold to the Purchasers had not been so sold and as
if the Certificates to be transferred by Clement C. Moore, II to The Moore
Foundation, Inc. and Mariemont Corporation and by Kenward G. Elmslie to Z Press,
Inc. had not been so transferred.
<PAGE> 3
The Purchasers hereby agree with the Sellers and confirm to the
Company that the Purchasers do not succeed to the rights of the Sellers under
Section 8 of the Agreement upon the sale of the Certificates to be sold by the
Sellers to the Purchasers. The Moore Foundation, Inc. and Mariemont Corporation
hereby agree with Clement C. Moore, II and confirm to the Company that The Moore
Foundation, Inc. and Mariemont Corporation do not succeed to the rights of
Clement C. Moore, II under Section 8 of the Agreement upon the transfer of the
Certificates to be transferred by Clement C. Moore, II to The Moore Foundation,
Inc. and Mariemont Corporation. Z Press, Inc. hereby agrees with Kenward G.
Elmslie and confirms to the Company that Z Press, Inc. does not succeed to the
rights of Kenward G. Elmslie under Section 8 of the Agreement upon the transfer
of the Certificates to be transferred by Kenward G. Elmslie to Z Press, Inc.
Very truly yours,
The Pulitzer Publishing Company
By /s/ Michael E. Pulitzer
----------------------------------
Title: President
Trust Under Agreement
Made by David Moore
By /s/ A. Rick D'arcangelo, Trustee
----------------------------------
A. Rick D'Arcangelo, trustee
By /s/ David Moore
----------------------------------
David E. Moore
/s/ Michael E. Pulitzer
----------------------------------
Frederick Dempwolf Pulitzer
/s/ Michael E. Pulitzer
----------------------------------
Michael E. Pulitzer, Jr.
/s/ Michael E. Pulitzer
----------------------------------
Robert Stair Pulitzer
/s/ Richard A. Palmer
----------------------------------
Joseph Pulitzer, IV
<PAGE> 4
/s/ Michael E. Pulitzer
----------------------------------
Joseph Pulitzer, Jr.
/s/ Michael E. Pulitzer
----------------------------------
Michael E. Pulitzer
Stephen E. Nash, trustee
Manufacturers Hanover Trust
Company, Trustees under
Indenture of Hope Ware Putnam
/s/ Peter W. Quesada
----------------------------------
Stephen E. Nash, Trustee
[SIG]
----------------------------------
Manufacturers Hanover
Trust Company, Trustee
Manufacturers Hanover Trust
Company, Trustees under
Trust for the benefit of
Clement C. Moore, II
By [SIG]
--------------------------------
Title:
/s/ Kenward G. Elmslie
----------------------------------
Kenward G. Elmslie
/s/ William E. Weir
----------------------------------
Gordon C. Weir
/s/ William E. Weir
----------------------------------
William E. Weir
<PAGE> 5
/s/ William E. Weir
----------------------------------
James R. Weir
/s/ Peter W. Quesada
----------------------------------
Peter W. Quesada
/s/ Peter W. Quesada
----------------------------------
T. Ricardo Quesada
/s/ Peter W. Quesada
----------------------------------
Kate Davis P. Quesada
/s/ Elinor P. Hempelmann
----------------------------------
Elinor P. Hempelmann
The Moore Foundation, Inc.
By /s/ CC Moore II
--------------------------------
Clement C. Moore, II
President
Mariemont Corporation
By /s/ CC Moore II
--------------------------------
Clement C. Moore, II
President
Z Press, Inc.
By /s/ Kenward G. Elmslie
--------------------------------
Kenward G. Elmslie
President
<PAGE> 6
/s/ C.C. Moore, II
----------------------------------
Clement C. Moore, II
<PAGE> 7
SCHEDULE I
----------
Name Number of Shares
- ---- ----------------
Kenward G. Elmslie 17,344,200
Clement C. Moore, II 7,827,100
James R. Weir 1,827,580
Gordon C. Weir 1,717,980
William E. Weir 1,717,980
Manufacturers Hanover 438,400
Trust Company, Trustee
under Trust for benefit
of Clement C. Moore, II
<PAGE> 8
SCHEDULE II
-----------
Name Number of Shares
- ---- ----------------
Peter W. Quesada 11,003,840
T. Ricardo Quesada 11,003,840
Kate Davis P. Quesada 4,411 400
Elinor P. Hempelmann 4,466,200
------------
30,885,280
<PAGE> 1
EXHIBIT 10.5
May 12, 1986
Peter W. Quesada
T. Ricardo Quesada
Kate Davis P. Quesada
Elinor P. Hempelmann
c/o Peter W., Quesada
Fore River Company
5 Milk Street
P.O. Box 7523
Portland, Maine 04172
Dear Sirs and Mesdames:
This letter will confirm our agreement as follows:
1. You (the "Shareholders") shall seek an adjournment of the civil
action entitled Moore v. Pulitzer, Civil No. 86-06380-C-3 (the
"Litigation") until May 20, 1986, which The Pulitzer Publishing Company
(the "Company") shall support.
2. If the Shareholders are released from the Option and Voting
Agreement dated as of January 21, 1986, an amended, with Taubman Media,
Inc. and A. Alfred Taubman prior to September 30, 1986 and are free to
deliver to the Company valid title to the shares of common stock of the
Company that are subject to such Agreement, free and clear of any liens,
charges and encumbrances, you and the Company agree to enter into an
agreement to purchase such shares substantially on the terms set forth in
the attached agreement.
3. If prior to May 20, 1986 the Shareholders ask the Company to
join the Shareholders in seeking dismissal of all claims in the Litigation
with prejudice, the Company agrees to do so. If on or after May 20, 1986,
the Shareholders proceed with a trial in connection with the Litigation or
fail to withdraw their opposition to the Company's pending motion for
summary judgment with regard to certain claims by the Shareholders in the
Litigation, the Company shall no longer be obligated to enter into an
agreement to purchase the Shareholders' shares as provided in paragraph 2
above.
<PAGE> 2
Peter W. Quesada
T. Ricardo Quesada
Kate Davis P. Quesada
Elinor P. Hempelmann 2 May 12, 1986
4. During the period from the date hereof through May 13, 1987,
each of the parties hereto agrees not to make any disclosure of the terms
hereof or the negotiations with respect hereto (other than to the parties
hereto and their representatives and advisors and A. Alfred Taubman and
his representatives and advisors) except as required by law and except
pursuant to a press release which shall be approved by the parties hereto
prior to the release thereof and except pursuant to such press release,
each of the parties hereto agrees not to make any public statement
concerning the Litigation or the merits thereof or the positions taken by
the parties in connection therewith. During such time period, the
Shareholders (and their agents and advisors) shall make no disparaging
public statement with respect to the Company, any of its employees or any
of the defendants to the Litigation and the Company (and its employees,
agents and advisors) shall make no disparaging comments concerning any of
the Shareholders.
The terms of this letter agreement shall terminate upon such time
as the Company is no longer obligated to enter into an agreement to purchase the
Shareholders' shares as provided in paragraph 2 above.
It the foregoing correctly sets forth our agreement, please so
indicate by signing below.
Very truly yours,
THE PULITZER PUBLISHING COMPANY
BY /s/ Peter J. Repetti
-----------------------------
Peter J. Repetti
Director
Accepted and Agreed:
Peter W. Quesada
T. Ricardo Quesada
Kate Davis P. Quesada
Elinor P. Hempelmann
Christopher Mayer
- ---------------------------------------
Christopher Mayer
Attorney-in-fact
<PAGE> 1
EXHIBIT 10.6
AGREEMENT
AGREEMENT dated as of September 29, 1986 (the "Agreement") among
The Pulitzer Publishing Company, a Missouri corporation ("PPC"), and each of the
beneficial owners of shares of Class B Common Stock, $.01 par value ("Class B
Stock"), of PPC who is a signatory of this Agreement (the "Shareholders").
W I T N E S S E T H:
WHEREAS, each of the Shareholders is the beneficial owner of the
number of shares of Class B Stock set forth on Schedule I hereto (such shares of
Class B Stock being, collectively, the "Shares");
WHEREAS, the Shareholders propose to enter into a series of
transactions (the "Option Termination") pursuant to which they will be released
from the Option and Voting Agreement (the "Option Agreement") dated as of
January 21, 1986, as amended, among the Shareholders, Taubman Media, Inc.
("TMI") and A. Alfred Taubman ("Taubman") and will be free to deliver to PPC
valid title to the shares of Class B Stock that are subject to the Option
Agreement, free and clear of any liens, charges and encumbrances;
WHEREAS, certain of the Shareholders and PPC and its directors,
certain of its officers and David Lipman (collectively, the "Defendants") are
parties to an action pending in the United States District Court, Eastern
District of Missouri, Eastern Division (the "Federal Litigation"), which action
is entitled Clement C. Moore, II, et al., v. Joseph Pulitzer, Jr., et al., No.
86-0658C(3);
WHEREAS, the Defendants also are parties to an action pending in
the Circuit Court of the City of St. Louis, State of Missouri, Division 3, which
action is entitled Taubman Media, Inc. et al. v. The Pulitzer Publishing Co., et
al., No. 864-263 (the "State Litigation" and together with the Federal
Litigation, the "Litigation"); and
WHEREAS, the parties desire to settle the Litigation;
NOW, THEREFORE, in consideration of the premises and the mutual
and dependent promises and agreements hereinafter set forth, the parties hereto
agree as follows:
<PAGE> 2
SECTION 1. Settlement of Litigation. PPC and each of the
Shareholders who is a plaintiff in the Litigation agree that on and after the
Closing Date (as herein defined) each will take whatever additional action is
necessary to dismiss, with prejudice and without cost, all claims in the
Litigation by PPC or on behalf of PPC and by each such Shareholder, as the case
may be, and to execute releases substantially in the form of Exhibit I hereto.
PPC and each of the Shareholders who is not a plaintiff in the Litigation agree
that on and after the Closing Date each will execute releases substantially in
the form of Exhibit I.
SECTION 2. Transfer of Interest in Shares of Class B Stock.
(a) PPC agrees to purchase from each Shareholder, and each
Shareholder agrees to sell to PPC, the Shares owned by such Shareholder.
As consideration for such purchases, PPC agrees to pay to each
Shareholder on the Closing Date a purchase price equal to the amount set
forth next to the name of such Shareholder on Schedule III hereto. (the
"Share Purchase Price").
(b) PPC agrees to purchase from Peter W. Quesada on the Closing
Date, and Peter W. Quesada agrees to sell to PPC, the 27,400 shares of
Class B Stock (the "Additional Shares") to be purchased by Peter W.
Quesada from TMI for an aggregate consideration of $91,400.
(c) All payments pursuant to this Section 2 shall be made on the
Closing Date by PPC in immediately available United States funds in New
York City.
SECTION 3. The Closing. The closing of this Agreement (the
"Closing") shall take place at the offices of Davis Polk & Wardwell, 1 Chase
Manhattan Plaza, New York, New York, as soon as possible after the date hereof
but in no event later than September 30, 1986. Each of the parties shall use its
best efforts to cause the Closing to occur at the earliest, practicable
date. The date upon which the Closing occurs is herein referred to as the
Closing Date.
SECTION 4. Representations and Warranties of the Shareholders.
Each of the Shareholders represents and warrants to PPC that:
-2-
<PAGE> 3
(a) This Agreement has been duly executed on behalf of such
Shareholder and is the legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency and other similar laws
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). Such execution and delivery do not, and such
performance will not, (i) conflict with, violate or breach any order, judgment,
injunction or decree of any court, arbitrator, government or governmental agency
or instrumentality against or binding on such Shareholder or by which any of his
assets or properties are bound, (ii) constitute a violation by such Shareholder
of any law, ordinance, rule or regulation, as such law, ordinance, rule or
regulation relates to the consummation by such Shareholder of the transactions
contemplated hereby or (iii) conflict with, violate, breach or cause a default
under any agreement or instrument to which such Shareholder is a party or by
which his assets or properties are bound except for the Option Agreement and
Escrow Agreement (as defined in the Option Agreement), which are subject to
termination pursuant to the Option Termination.
(b) Each Shareholder has valid title to the Shares owned by such
Shareholder, free and clear of any liens, charges or encumbrances, and such
Shares are not subject to any claims, whether by virtue of rights, options,
contracts, calls, agreements or otherwise except for the Option Agreement and
Escrow Agreement, which are subject to termination pursuant to the Option
Termination.
(c) As of the Closing, (i) the performance of this Agreement will
not conflict with, breach or cause a default under the Option Agreement or
Escrow Agreement and (ii) each Shareholder shall deliver to the Company valid
title to the Shares owned by such Shareholder, not subject to any claims whether
by virtue of rights, options, contracts, calls, agreements or otherwise.
-3-
<PAGE> 4
SECTION 5. Representations and Warranties of PPC.
PPC represents and warrants to each Shareholder that the
execution and delivery of this Agreement by PPC and the performance by PPC of
its obligations hereunder are within the corporate power of, and have been duly
and validly authorized by, all necessary corporate action on the part of PPC for
the valid authorization of such acts. This Agreement has been duly and validly
executed by PPC and is the legal, valid and binding obligation of PPC,
enforceable against PPC in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency and other similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). Such execution and delivery do not, and such
performance will not, (a) conflict with, violate, breach or cause a default
under the Amended and Restated Articles of Incorporation or Bylaws of PPC or any
order, judgment, injunction or decree of any court, arbitrator, government or
governmental agency or instrumentality against or binding on PPC or by which any
of its assets or properties are bound, (b) constitute a violation by PPC of any
law, ordinance, rule or regulation, as such law, ordinance, rule or regulation
relates to the consummation by PPC of the transactions contemplated hereby or
(c) conflict with, violate, breach or cause a default under any agreement or
instrument to which PPC is a party or by which its assets or properties are
bound, except as set forth on Schedule II.
SECTION 6. Conditions Precedent to PPC's Obligations. The
obligations of PPC to purchase Shares and the Additional Shares pursuant to this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
the following conditions:
(a) The representations and warranties of each of the
Shareholders contained in this Agreement shall then be true in all
material respects and shall not contain any material errors or
misstatements, and each Shareholder shall have performed and complied in
all material respects with all agreements and conditions required by this
Agreement to be performed or complied with prior to the Closing; and
(b) Each Shareholder who is a plaintiff in the Litigation shall
have executed and delivered to PPC (i) such documents to procure
dismissal of his
-4-
<PAGE> 5
claims under the Litigation, including without limitation Stipulations of
Dismissal substantially in the form attached as Exhibits III and IV
hereto, as PPC and its counsel shall reasonably request, (ii) a release
substantially in the form of Exhibit I hereto and (iii) a consent and
waiver substantially in the form of Exhibit II hereto, and each
Shareholder who is not a plaintiff in the Litigation shall have executed
and delivered to PPC (x) a release substantially in the form of Exhibit I
hereto and (y) a consent and waiver substantially in the form of Exhibit
II hereto;
(c) Between the date hereof and the Closing Date, there shall not
have occurred either (i) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities or (ii) the engagement by the United States in hostilities
which have resulted in the declaration, on or after the date of this
Agreement, of a national emergency or war, if the effect of any such
event specified in clause (ii) in PPC's reasonable judgment precludes PPC
from obtaining the financing required for the purchase of the Shares
contemplated hereby; and
(d) The Option Agreement shall have terminated and the Shares
released to the Shareholders by the Escrow Agent (as defined in the
Option Agreement).
(e) A. Alfred Taubman and Taubman Media, Inc. shall have executed
and delivered to PPC (i) releases substantially in the forms of Annex I
to the Letter Agreement dated as of September 29, 1986 among Acquisition
G.P., Taubman and TMI, (ii) consents and waivers substantially in the
forms of Annexes III and IV, respectively, to the Option Termination
Agreement and (iii) Stipulations of Dismissal substantially in the form
of Exhibits III and IV hereto.
SECTION 7. Conditions Precedent to the Shareholders' Obligations.
The obligations of the Shareholders to sell Shares pursuant to this Agreement
are subject to the fulfillment, prior to or on the Closing Date, of the
following conditions:
(a) The representations and warranties of PPC contained in this
Agreement shall then be true in
-5-
<PAGE> 6
all material respects (without reference to the exception set forth in
Section 5(c) hereof) and shall not contain any material errors and
misstatements, and PPC shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with prior to the Closing;
(b) The Defendants shall have executed and delivered to the
Shareholders (i) such documents to procure dismissal of their claims
under the Litigation as the Shareholders and their counsel shall
reasonably request and (ii) releases substantially in the form of Exhibit
I hereto; and
(c) Option Agreement shall have terminated and the Shares
released to the Shareholders by the Escrow Agent (as defined in the
Option Agreement).
SECTION 8. Additional Payments.
(a) Certain Definitions. For purposes of this Section 8, the
following terms shall have the meanings set forth below:
"Applicable Percentage" shall mean, with respect to any Gross-Up
Transaction, the percentage set forth below opposite the period during which
either the Gross-Up Transaction is consummated or an agreement is reached
concerning all the material terms of the Gross-Up Transaction, whichever first
occurs;
<TABLE>
<CAPTION>
TIME PERIOD APPLICABLE PERCENTAGE
----------- ---------------------
<S> <C>
Prior to May 12, 1991 100%
May 13, 1991 through
May 12, 1996 66 2/3%
May 13, 1996 through
May 12, 2001 50%
</TABLE>
"Common Stock" shall mean the Common Stock, par value $.10 per
share, of PPC and any shares of capital stock of PPC subsequently issued in
respect thereof.
"Fair Market Value" of any consideration shall mean, in the case
of cash, the amount thereof, and, in the case of any other consideration, the
fair market value thereof as
-6-
<PAGE> 7
agreed to by a Valuation Firm selected by PPC and a Valuation Firm selected by
the Shareholders, or, if such Valuation Firms are unable to reach an agreement
with respect to such fair market value, the fair market value of such
consideration as determined by a third Valuation Firm (the "Third Valuation
Firm") selected by such previously selected Valuation Firms. Any such agreement
or determination shall be final and binding on the parties, and the fees and
expenses of the Third Valuation Firm, if any, shall be shared equally by PPC on
the one hand and the Shareholders (including the shareholders who entered into
an agreement substantially similar to this agreement on May 12, 1986) on the
other. PPC shall provide to each such Valuation Firm access to such information
as may be necessary for the determination of the Fair Market Value of any
consideration.
"Gross-Up Transaction" shall mean any merger, consolidation,
liquidation or sale, in any transaction or series of related transactions, of
more than 85% of the voting securities or equity of, or all or substantially all
the assets of, or any other business combination (other than a change of PPC's
state of incorporation) involving, PPC pursuant to which holders of the Common
Stock receive cash, securities (other than Common Stock) or other property, and
any recapitalization, dividend or distribution, or series of related
recapitalizations, dividends, or distributions, in which holders of the Common
Stock receive cash, securities (other than Common Stock) or other property
having a Fair Market Value of not less than 33 1/3% of the Fair Market Value of
the shares of Common Stock outstanding immediately prior to such transaction.
"Imputed Value" for one share of Common Stock on a given date
shall be an amount equal to $28.82 compounded annually from May 12, 1986 to such
given date at the rate of 15% per annum.
"Issuable Common Shares" shall mean shares of Common Stock
issuable upon conversion of shares of Class B Stock.
"Transaction Proceeds" shall mean, in the case of a merger,
consolidation, liquidation or sale of at least 85% of the voting securities or
equity or substantially all the assets of or any other business combination
involving PPC, the aggregate Fair Market Value of the consideration received
pursuant thereto by the holder of one share of Common Stock, and in the case of
a recapitalization, dividend or distribution, the aggregate Fair Market Value of
the amounts paid or distributed in respect of one share of Common Stock
-7-
<PAGE> 8
plus the aggregate Fair Market Value of one share of the Common Stock following
such transaction.
"Valuation Firm" shall mean a nationally recognized investment
banking firm or other institution experienced in the valuation of securities,
businesses and assets.
(b) Additional Payments. In the event that a Gross-Up Transaction
shall occur at any time during the period from the date hereof through May 12,
2001, PPC shall pay to each Shareholder an amount equal to (X) the product of
(i) the amount by which the Transaction Proceeds exceeds the Imputed Value (the
"Excess") multiplied by (ii) the Applicable Percentage multiplied by (iii) the
number of Issuable Common Shares set forth opposite the name of such Shareholder
on Schedule I, adjusted in accordance with Section 8(c) hereof; less (Y) the sum
of any amounts previously received by such Shareholder pursuant to this Section
8; provided, however, that in the event of a recapitalization, dividend or
distribution, the Excess shall in no event exceed the amount paid or distributed
pursuant to such recapitalization, dividend or distribution in respect of one
share of Common Stock.
(c) The number of Issuable Common Shares set forth opposite the
name of each Shareholder on Schedule I shall be adjusted as follows:
(i) In case PPC shall pay a dividend or other distribution on
the Common Stock in shares of Common Stock, the number of Issuable
Common Shares set forth opposite the name of each Shareholder on
Schedule I shall be adjusted by adding to such number the number of
shares of Common Stock that would have been distributed in respect of
such Issuable Common Shares had such Issuable Common Shares been
outstanding on the record date for such dividend or distribution. In the
event that PPC shall subdivide the shares of Common Stock into a larger
number of shares or combine the shares of Common Stock into a smaller
number of shares, the number of Issuable Common Shares set forth
opposite the name of each Shareholder on Schedule I shall be
appropriately adjusted to take into account such subdivision or
combination.
(ii) In the event PPC shall issue rights or warrants to all
holders of the Common Stock or Class B Stock entitling them to subscribe
for or
-8-
<PAGE> 9
purchase shares of Common Stock or Class B Stock at a price per share
less than the then current Fair Market Value thereof, the number of
Issuable Common Shares set forth opposite the name of each Shareholder
on Schedule I shall be multiplied by a fraction of which the numerator
shall be the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the number of shares of
Common Stock issuable upon the conversion of all shares of Class B Stock
outstanding immediately prior to such issuance plus (C) the number of
additional shares of Common Stock offered for subscription or purchase
plus (D) the number of shares of Common Stock issuable upon conversion
of the shares of Class B Common Stock offered for subscription or
purchase, and the denominator of which shall be the sum of (W) the
number of shares of Common Stock outstanding immediately prior to such
issuance plus (X) the number of shares of Common Stock issuable upon
conversion of all shares of Class B Stock outstanding immediately prior
to such issuance plus (Y) the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock
issuable pursuant to such warrants or rights to purchase Common Stock
would purchase at the then current Fair Market Value of the Common Stock
plus (Z) the number of shares of Common Stock issuable upon conversion
of the shares of Class B Stock which the aggregate offering price of the
total number of shares of Class B Stock issuable pursuant to such
warrants or rights to purchase Class B Stock would purchase at the then
current Fair Market Value of the Class B Stock.
(iii) In case PPC shall distribute to all holders of its Common
Stock evidences of indebtedness, securities (other than securities
described in subsections (i) or (ii) above) or other assets (other than
cash) other than pursuant to a Gross-Up Transaction, the number of
Issuable Common Shares set forth opposite the name of each Shareholder
on Schedule I shall be multiplied by a fraction, of which the numerator
shall be the then current Fair Market Value of one share of Common
Stock, and of which the denominator shall be the amount by which such
current Fair Market Value exceeds the then current Fair Market Value of
the evidences of
-9-
<PAGE> 10
indebtedness, securities or assets so distributed with respect to one
share of Common Stock.
(iv) In addition to the other adjustments provided herein, in
the event that the Common Stock is adjusted in a manner not contemplated
herein, the number of Issuable Common Shares set forth opposite the name
of such Shareholder on Schedule I shall be appropriately adjusted to
reflect such adjustment in the Common Stock.
SECTION 9. Agreements of the Shareholders Prior to the Closing
Date. Each Shareholder agrees that during the period from the date hereof
through the Closing Date he will not grant options or rights to any other
person, firm, corporation or entity ("person") to acquire his Shares or any
rights with respect thereto (except, however, the existing right to acquire his
Shares under this Agreement), and he will not grant to any person the right or
proxy to vote his Shares at any meeting or meetings of the shareholders of PPC
(whether regular or special); provided, however, that a Shareholder, if he so
desires, may give a proxy to vote his Shares in favor of the recommendations of
the management of PPC at any such meeting or meetings.
SECTION 10. Indemnification.
(a) The Shareholders shall, severally, indemnify and hold
harmless PPC from and against any and all losses, costs, expenses,
liabilities, judgments, assessments and penalties, and reasonable
attorneys' fees and disbursements relating thereto (collectively,
"Damages") resulting from or arising out of the inaccuracy of any
representation or the breach of any warranty or nonfulfillment of any
covenant or agreement on the part of such Shareholder under this
Agreement, or resulting from any misrepresentation in, or occasioned by,
any certificate or other instrument furnished by such Shareholder under
this Agreement.
(b) PPC agrees to indemnify and hold harmless the Shareholders
from and against any and all Damages resulting from or arising out of the
inaccuracy of any representation or breach of any warranty or the
nonfulfillment of any covenant or agreement on the part of PPC under this
Agreement, or resulting from any misrepresentation in, or
-10-
<PAGE> 11
occasioned by, any certificate or other instrument furnished by PPC under this
Agreement.
SECTION 11. Miscellaneous.
(a) Effectiveness. This Agreement shall become effective upon the
execution hereof by PPC and each of the Shareholders and the letter agreement
dated May 12, 1986 among the Company and the Shareholders shall thereupon be
terminated and superseded.
(b) Amendments; Waivers. This Agreement may be amended only by an
agreement in writing signed by PPC and by Shareholders holding not less than a
majority of the Shares (the "Required Holders"). Any conditions to the
obligations of PPC hereunder may be waived by a written instrument executed by
PPC, and any conditions to the obligations of the Shareholders hereunder may be
waived by a written instrument executed by the Required Holders.
(c) Rights of the Parties to Abandon this Transaction. This
Agreement and the transactions contemplated herein may be terminated:
(i) at any time, by a written agreement executed by PPC and
each of the Shareholders; and
(ii) if the Closing has not occurred on or before December 31,
1986, by PPC by written notice delivered to each Shareholder, and by the
Shareholders by written notice signed by the Required Holders and
delivered to PPC and each of the other Shareholders; provided, however,
this right of termination shall not be available to the party having
breached this Agreement if such breach shall have resulted in
non-occurrence of the Closing.
(d) Descriptive Headings. Descriptive headings herein are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, and each such executed counterpart shall be and shall be
-11-
<PAGE> 12
deemed to be an original instrument, but all of such counterparts shall be one
and the same agreement.
(f) Successors. No Shareholder shall assign any of his rights or
delegate any of his duties hereunder. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and assigns of each
of the parties hereto. Nothing in this Agreement is intended to confer upon any
other person any other right or remedy under or by reason of this Agreement.
(g) Specific Performance and Injunctive Relief. PPC and each
Shareholder acknowledge and agree that the Shareholders or PPC would be
irreparably damaged in the event any of the provisions of this Agreement were
not performed by PPC or the Shareholders, as the case may be, in accordance with
their specific terms or otherwise breached. PPC and the Shareholders shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state thereof having jurisdiction, in
addition to any other remedy to which such party may be entitled at law or in
equity.
(h) Notices. All notices and other communications provided for or
permitted hereunder shall be in writing (including telex and telecopy
communication) and shall be sent by mail, telex, telecopier or hand delivery:
(i) if to PPC at its address at: 900 North Tucker Boulevard, St. Louis, Missouri
63101, Attention: Ronald H. Ridgway or at such other address as shall be
designated by it in a written notice to the Shareholders, (ii) if to any
Shareholder at his address set forth on Schedule I hereto or at such other
address as shall have been designated by it in a written notice to PPC and the
other Shareholders.
All notices and communications shall be deemed to have been duly given
or made, when delivered by hand or five business days after being deposited in
the mail, postage prepaid, when relaxed, answerback received and when
telecopied, receipt acknowledged.
-12-
<PAGE> 13
(i) Non-Disclosure. Except as otherwise required by law, during
the period from the date hereof through May 13, 1987, neither PPC nor any
Shareholder (nor their respective employees, agents or advisors) shall make any
disclosure of the terms hereof or the negotiations with respect hereto (other
than to the parties hereto and their representatives and advisors and A. Alfred
Taubman and his representatives and advisors) except pursuant to a press release
which shall be approved by the parties hereto prior to the release thereof, and
except pursuant to such press release, neither the Shareholders nor PPC (nor any
of their respective employees, agents or advisors) shall make any public
statement concerning the Litigation or the merits thereof or the positions taken
by the parties in connection therewith. During such time period the
Shareholders (and their agents and advisors) shall make no disparaging public
statement with respect to PPC, any of its directors, officers, employees or any
of the Shareholders, and PPC (and its employees, agents and advisors) shall make
no disparaging comments concerning any of the Shareholders.
(j) Best Efforts. Each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and to make
effective the transactions contemplated by this Agreement.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
-13-
<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
THE PULITZER PUBLISHING
COMPANY
By /S/ Michael E. Pulitzer
------------------------
Title: President
THE SHAREHOLDERS
----------------
/s/ Peter W. Quesada
--------------------------
Peter W. Quesada
*T. Ricardo Quesada
*Kate Davis P. Quesada
*By /s/ Peter W. Quesada
------------------------
Peter W. Quesada,
Attorney-in-fact
/s/ Elinor P. Hempelmann
------------------------
Elinor P. Hempelmann
-14-
<PAGE> 15
EXHIBIT I
TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW
THAT The Pulitzer Publishing Company, Joseph Pulitzer, Jr., David E. Moore,
Michael E. Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins,
Nicholas G. Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold O. Grams,
Peter J. Repetti, David Lipman, Joseph Pulitzer, IV, Frederick Pulitzer, Michael
E. Pulitzer, Jr., Robert S. Pulitzer, A. Rick D'Arcangelo, as Trustee under
agreement made by David E. Moore, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada, Elinor P. Hempelmann, John Swett, Kenward G. Elmslie,
Clement C. Moore, II, William E. Weir, Gordon C. Weir, James R. Weir, Stephen E.
Nash and Manufacturers Hanover Trust Company, Trustees under Indenture of Hope
W. Putnam, Manufacturers Hanover Trust Company, Trustee under Trust for benefit
of Clement C. Moore, II, Kate Reid, A. Alfred Taubman, The Moore Foundation,
Inc., Mariemont Corporation, Z Press, Inc. and Taubman Media, Inc., as
RELEASORS, in consideration of the sum of one dollar and other good and valuable
consideration, receipt whereof is hereby acknowledged, release and discharge The
Pulitzer Publishing Company, Joseph Pulitzer, Jr., David E. Moore, Michael E.
Pulitzer, Glenn A. Christopher, Ronald H. Ridgway, Ken J. Elkins, Nicholas G.
Penniman, Marvin Kanne, Roger Ruwe, James Cherry, Harold O. Grams, Peter J.
Repetti, David Lipman, Joseph Pulitzer, IV, Frederick Pulitzer, Michael E.
Pulitzer, Jr., Robert S. Pulitzer, A. Rick D'Arcangelo, as Trustee under
agreement made by David E. Moore, Peter W. Quesada, T. Ricardo Quesada, Kate
Davis Pulitzer Quesada, Elinor P. Hempelmann, John Swett, Kenward G. Elmslie,
Clement C. Moore, II, William E. Weir, Gordon C. Weir, James R. Weir, Stephen E.
Nash and Manufacturers Hanover Trust Company, Trustees under Indenture of Hope
W. Putnam, Manufacturers Hanover Trust Company, Trustee under Trust for benefit
of Clement C. Moore, II, Kate Reid, A. Alfred Taubman, The Moore Foundation,
Inc., Mariemont Corporation, Z Press, Inc. and Taubman Media, Inc., the
RELEASEES, RELEASEES' heirs, executors, administrators, shareholders, directors,
officers, successors and assigns from all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims, and demands
whatsoever, in law, admiralty or equity, against the RELEASEES, which the
RELEASORS, RELEASORS' heirs, executors, administrators, successors and assigns
ever had, now have or
<PAGE> 16
hereafter can, shall or may, have for, upon, or by reason of any matter, cause
or thing whatsoever from the beginning of the world to the day of the date of
this RELEASE including, without limitation, all claims which RELEASORS ever had,
now have or hereafter can, shall or may, have for, upon or by reason of or
arising from or relating to any of the facts, counts, claims and causes of
action alleged or otherwise asserted in the actions entitled Clement C. Moore,
II et al. v. Joseph Pulitzer, Jr. et al., Civil Action No. 86-0658C(3) filed
March 31, 1986 and currently pending in the United States District Court for the
Eastern District of Missouri, Eastern Division and Taubman Media, Inc. et al. v.
The Pulitzer Publishing Co. et al., Civil Action No. 864-263, filed May 15,
1986 and currently pending in the Circuit Court of the City of St. Louis, State
of Missouri, Division 3.
Whenever the text hereof requires, the use of singular number
shall include the appropriate plural number as the text of the within instrument
may require.
This RELEASE may not be changed orally.
Date of
Execution
-------------
THE PULITZER PUBLISHING COMPANY
By
- ----------------------- ------------- --------------------------------------
- ----------------------- ------------- --------------------------------------
JOSEPH PULITZER, JR.
- ----------------------- ------------- --------------------------------------
DAVID E. MOORE
- ----------------------- ------------- --------------------------------------
MICHAEL E. PULITZER
- ----------------------- ------------- --------------------------------------
GLENN A. CHRISTOPHER
- ----------------------- ------------- --------------------------------------
RONALD H. RIDGWAY
- ----------------------- ------------- --------------------------------------
KEN J. ELKINS
-2-
<PAGE> 17
- ----------------------- ------------- --------------------------------------
NICHOLAS G. PENNIMAN
- ----------------------- ------------- --------------------------------------
MARVIN KANNE
- ----------------------- ------------- --------------------------------------
ROGER RUWE
- ----------------------- ------------- --------------------------------------
JAMES CHERRY
- ----------------------- ------------- --------------------------------------
HAROLD O. GRAMS
- ----------------------- ------------- --------------------------------------
PETER J. REPETTI
- ----------------------- ------------- --------------------------------------
DAVID LIPMAN
- ----------------------- ------------- --------------------------------------
JOSEPH PULITZER, IV
- ----------------------- ------------- --------------------------------------
FREDERICK PULITZER
- ----------------------- ------------- --------------------------------------
MICHAEL E. PULITZER, JR.
- ----------------------- ------------- --------------------------------------
ROBERT S. PULITZER
- ----------------------- ------------- --------------------------------------
A. RICK D'ARCANGELO,
as Trustee under agreement
made by David E. Moore
- ----------------------- ------------- --------------------------------------
PETER W. QUESADA
- ----------------------- ------------- --------------------------------------
T. RICARDO QUESADA
- ----------------------- ------------- --------------------------------------
KATE DAVIS PULITZER QUESADA
-3-
<PAGE> 18
- ----------------------- ------------- --------------------------------------
ELINOR P. HEMPELMANN
- ----------------------- ------------- --------------------------------------
JOHN SWETT
- ----------------------- ------------- --------------------------------------
KENWARD G. ELMSLIE
- ----------------------- ------------- --------------------------------------
CLEMENT C. MOORE, II
- ----------------------- ------------- --------------------------------------
WILLIAM E. WEIR
- ----------------------- ------------- --------------------------------------
GORDON C. WEIR
- ----------------------- ------------- --------------------------------------
JAMES R. WEIR
- ----------------------- ------------- --------------------------------------
STEPHEN E. NASH, as
Trustee under Indenture
of Hope W. Putnam
- ----------------------- ------------- MANUFACTURERS HANOVER TRUST
COMPANY, as Trustee under
Indenture of Hope W. Putnam
By
-----------------------------------
- ----------------------- ------------- MANUFACTURERS HANOVER TRUST
COMPANY, as Trustee under
Trust for benefit of Clement
C. Moore, II
By
-----------------------------------
- ----------------------- ------------- --------------------------------------
KATE REID
- ----------------------- ------------- --------------------------------------
A. ALFRED TAUBMAN
-4-
<PAGE> 19
- ----------------------- ------------- THE MOORE FOUNDATION, INC.
By
------------------------------------
- ----------------------- ------------- MARIEMONT CORPORATION
By
------------------------------------
- ----------------------- ------------- Z PRESS, INC.
By
------------------------------------
TAUBMAN MEDIA, INC.
By
------------------------------------
-5-
<PAGE> 20
On September _, 1986, appeared before me the above
named_________________________ of The Pulitzer Publishing Company and
acknowledged the foregoing Release to be the free and voluntary act and deed of
said corporation.
_____________________________
On September _, 1986, came Joseph Pulitzer, Jr. to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came David E. Moore to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Michael E. Pulitzer, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Glenn A. Christopher to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September __, 1986, came Ronald H. Ridgway to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
-6-
<PAGE> 21
On September _, 1986, came Ken J. Elkins to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Nicholas G. Penniman, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Marvin Kanne to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Roger Ruwe to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came James Cherry to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Harold 0. Grams, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
-7-
<PAGE> 22
On September _, 1986, came Peter J. Repetti to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came David Lipman to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Joseph Pulitzer, IV, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Frederick Pulitzer, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Michael E. Pulitzer, Jr., to me known
and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that. he executed the same.
_____________________________
On September _, 1986, came Robert S. Pulitzer, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
-8-
<PAGE> 23
On September _, 1986, came A. Rick D'Arcangelo Trustee, to me
known and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Peter W. Quesada, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came T. Ricardo Quesada, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Kate Davis Pulitzer Quesada, to me
known and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Elinor P. Hempelmann, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came John Swett, to me known and known to
me to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
-9-
<PAGE> 24
On September _, 1986, came Kenward G. Elmslie, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged edged to me that he executed the same.
_____________________________
On September _, 1986, came Clement C. Moore, II, to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _ 1986, came William E. Weir, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Gordon C. Weir, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came James R. Weir, to me known and known
to me to be the individual described in, and who executed the foregoing Release
and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came Stephen E. Nash, Trustee, to me known
and known to me to be the individual described in, and who executed the
foregoing Release and duly acknowledged to me that he executed the same.
_____________________________
-10-
<PAGE> 25
On September _, 1986, appeared before me the above named
___________________ of Manufacturers Hanover Trust Company and acknowledged the
foregoing release to be the free and voluntary act and deed of said corporation,
acting as Trustee.
_____________________________
On September _,1986, came Kate Reid to me known and known to me
to be the individual described in, and who executed the foregoing Release and
duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, came A. Alfred Taubman to me known and
known to me to be the individual described in, and who executed the foregoing
Release and duly acknowledged to me that he executed the same.
_____________________________
On September _, 1986, appeared before me the above named
_______________________of The Moore Foundation, Inc. and acknowledged the
foregoing release to be the free and voluntary act and deed of said corporation.
_____________________________
On September _, 1986, appeared before me the above named of
_______________________ Mariemont Corporation and acknowledged the foregoing
release to be the free and voluntary act and deed of said corporation.
_____________________________
-11-
<PAGE> 26
On September _, 1986, appeared before me the above
named_________________________ of Z Press, Inc. and acknowledged the foregoing
release to be the free and voluntary act and deed of said corporation.
_____________________________
On September _, 1986, appeared before me the above named
__________________________ of Taubman Media, Inc. and acknowledged the
foregoing release to be the free and voluntary act and deed of said corporation.
_____________________________
-12-
<PAGE> 27
EXHIBIT II
----------
CONSENT AND WAIVER
OF SHAREHOLDER OF THE PULITZER PUBLISHING COMPANY
-------------------------------------------------
I, , as a stockholder of The Pulitzer
Publishing Company, a Missouri corporation (the "Company"), having received (1)
Notice of Proposed Settlement, Settlement Hearing and Right to Appear in the
action entitled Moore et al. v. Pulitzer et al., pending in the United States
District Court, Eastern District of Missouri, Eastern Division, Civil Action No.
86.0658-C-3, and (2) notice of the settlement and proposed dismissal of the
action entitled Taubman Media, Inc. et al. v. The Pulitzer Publishing Company et
al., pending in the Missouri Circuit Court, Twenty-Second Judicial Circuit (St.
Louis City), Cause No. 864-00263, Division No. 3, hereby consent to the
dismissal with prejudice of these two actions, including all derivative claims
asserted in these actions on behalf of the Company and its shareholders, and I
hereby waive any and all rights to further notice of such dismissals to object
to or appeal such dismissals and to have any hearing on such dismissals.
Dated: September , 1986 _____________________________
<PAGE> 28
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day of September, 1986 before me personally
came , to me known, and known to me to be the individual
described in, and who executed the foregoing instrument, and he acknowledged to
me that he executed the same.
_____________________________
Notary Public
[Seal]
-2-
<PAGE> 29
EXHIBIT III
IN THE CIRCUIT COURT OF THE CITY OF ST. LOUIS
STATE OF MISSOURI
TAUBMAN MEDIA, INC., et al., )
)
Plaintiffs, )
)
) Cause No. 864-00263
)
V. )
)
) Division No. 3
THE PULITZER PUBLISHING )
COMPANY, et al., )
)
Defendants. )
STIPULATION OF DISMISSAL
------------------------
Come now all plaintiffs and all defendants, acting by and through
their respective counsel, and pursuant to Rule 67.01 and other applicable
Missouri Rules of Civil Procedure, hereby stipulate to the dismissal with
prejudice of all claims contained in the Petition for Declaratory Judgment,
Injunction and Damages, as amended, and all claims contained in plaintiffs'
Amended Verified Petition for Declaratory Judgment, Injunctive Relief and
Damages, and all other claims filed or which could have been filed herein.
Attached hereto and incorporated by reference are consents to the
dismissal of this action executed by all shareholders of The Pulitzer Publishing
Company and all parties hereto verifying that all shareholders of the Company
consent to the dismissal with prejudice of this action, including all derivative
claims asserted in this action on behalf of The
<PAGE> 30
2
Pulitzer Publishing Company and its shareholders, and agree to waive any and all
rights to further notice of such dismissal, to object to or appeal such
dismissal and to have any hearing on such dismissal.
ARMSTRONG, TEASDALE, KRAMER MIRO MIRO & WEINER
& VAUGHAN
By:_________________________ By:___________________________
John J. Cole Joseph Aviv
611 Olive Street Suite 200
St. Louis, Missouri 63101 500 North Woodward Ave.
(314) 621-5070 Bloomfield Hills, MI
(313) 646-2400
Attorneys for Plaintiffs
BRYAN, CAVE, McPHEETERS & SHEARMAN & STERLING
McROBERTS
By:_________________________ By:___________________________
Thomas C. Walsh Jeremy G. Epstein
J. Thomas Archer Charles M. Lizza
500 North Broadway 53 Wall Street
St. Louis, Missouri 63102 New York, New York 10005
(314) 231-8600 (212) 837-6000
KOHN, SHANDS, ELBERT DAVIS POLK & WARDWELL
GIANOULAKIS & GILJUM
By:__________________________ By:___________________________
Alan C. Kohn Steven F. Goldstone
411 North Seventh Street Dennis E. Glazer
St. Louis, Missouri 63103 One Chase Manhattan Plaza
(314) 241-3963 NEW YORK, NEW York 10005
(212) 530-4000
Attorneys for Defendants
<PAGE> 31
IN THE CIRCUIT COURT OF THE CITY OF ST. LOUIS
STATE OF MISSOURI
TAUBMAN MEDIA, INC., et al., )
)
Plaintiffs, )
) Cause No. 864-00263
v. )
THE PULITZER PUBLISHING ) Division No. 3
COMPANY, et al., )
)
Defendants. )
ORDER
-----
Pursuant to the attached Stipulation Of Dismissal and the
consents of all the shareholders of The Pulitzer Publishing Company attached
thereto, thereby satisfying all provisions and requirements of Rule 52.09 of
the Missouri Rules of Civil Procedure, it is hereby ordered:
1. That this action and all claims contained in the Petition for
Declaratory Judgment, Injunctive Relief and Damages, as amended, and all claims
contained in plaintiffs' Amended Verified Petition for Declaratory Judgment,
Injunctive Relief and Damages, and all other claims filed herein are dismissed
with prejudice.
2. Each party shall bear its own costs.
SO ORDERED:
DATE:
______________________________________
Honorable Jean C. Hamilton
Circuit Judge
<PAGE> 32
EXHIBIT IV
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CLEMENT C. MOORE, II, GORDON C. )
WEIR, WILLIAM E. WEIR, JAMES R. )
WEIR, KATE DAVIS PULITZER QUESADA, )
T. RICARDO QUESADA and PETER W. )
QUESADA, )
)
Plaintiffs, )
)
v. )
JOSEPH PULITZER, JR., DAVID E. ) Cause No. 86-0658-C(3)
MOORE, MICHAEL E. PULITZER, )
GLENN A. CHRISTOPHER, RONALD H. )
RIDGWAY, KEN J. ELKINS, )
NICHOLAS G. PENNIMAN, MARVIN )
KANNE, ROGER RUWE, JAMES CHERRY, )
HAROLD GRAMS, PETER REPETTI, )
DAVID LIPMAN and THE PULITZER )
PUBLISHING COMPANY, )
)
Defendants. )
STIPULATION OF DISMISSAL
------------------------
Come now all plaintiffs, all defendants, and Taubman Media, Inc.,
having appeared in this action as a shareholder of The Pulitzer Publishing
Company to object to the proposed settlement of the captioned action, acting by
and through their respective counsel, and pursuant to Rule 41 and other
applicable Federal Rules of Civil Procedure, hereby stipulate to the withdrawal
of all requests for additional discovery and of all objections to the settlement
of this action, and further stipulate to the dismissal with prejudice of all
claims and counterclaims filed or which could have been filed herein.
Attached hereto and incorporated by reference are consents to the
dismissal executed by all shareholders of The Pulitzer Publishing Company,
including all parties hereto,
<PAGE> 33
2
verifying that all shareholders of the Company consent to the dismissal with
prejudice of this action, including all derivative claims asserted in this
action on behalf of The Pulitzer Publishing Company and its shareholders, and
agree to waive any and all rights to further notice of such dismissal, to object
to or appeal such dismissal and to have an hearing on such dismissal.
KOHN, SHANDS, ELBERT DAVIS POLK & WARDWELL
GIANOULAKIS & GILJUM
By:___________________________ By:_________________________
Alan C. Kohn Steven F. Goldstone
411 North Seventh Street Dennis E. Glazer
St. Louis, Missouri 63103 One Chase Manhattan Plaza
(314) 241-3963 New York, New York 10005
(212) 530-4000
Attorneys for Plaintiffs
BRYAN, CAVE, McPHEETERS & SHEARMAN & STERLING
McROBERTS
By:___________________________ By:_________________________
Thomas C. Walsh Jeremy G. Epstein
J. Thomas Archer Charles M. Lizza
500 North Broadway 53 Wall Street
St. Louis, Missouri 63102 New York, New York 10005
(314) 231-8600 (212) 837-6000
Attorneys for Defendants-Counterclaimants
ARMSTRONG, TEASDALE, KRAMER MIRO MIRO & WEINER
& VAUGHAN
By:___________________________ By:_________________________
John J. Cole Joseph Aviv
611 Olive Street Suite 200
St. Louis, Missouri 63101 500 North Woodward Ave.
(314) 621-5070 Bloomfield Hills, MI
(313) 646-2400
Attorneys for Objecting
Shareholder, Taubman Media, Inc.
<PAGE> 34
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CLEMENT C. MOORE, II, GORDON C. )
WEIR, WILLIAM E. WEIR, JAME R. )
WEIR, KATE DAVIS PULITZER QUESADA, )
T. RICARDO QUESADA and PETER W. )
QUESADA, )
)
Plaintiffs, )
)
v. )
)
JOSEPH PULITZER, JR., DAVID E. ) Cause No. 86-0658-C(3)
MOORE, MICHAEL E. PULITZER, )
GLENN A. CHRISTOPHER, RONALD H. )
RIDGWAY, KEN J. ELKINS, )
NICHOLAS G. PENNIMAN, MARVIN )
KANNE, ROGER RUWE, JAMES CHERRY, )
HAROLD GRAMS, PETER REPETTI, )
DAVID LIPMAN and THE PULITZER )
PUBLISHING COMPANY )
)
Defendants. )
ORDER.
------
Pursuant to the attached Stipulation Of Dismissal and the
consents of all the shareholders of The Pulitzer Publishing Company attached
thereto, thereby satisfying all provisions and requirements of Rule 23.1 of the
Federal Rules of Civil Procedure, it is hereby ordered:
1. That this action and all claims and counterclaims filed herein
are dismissed with prejudice.
2. Each party shall bear its own costs.
SO ORDERED:
DATE: ______________________________
William L. Hungate
District Judge
<PAGE> 35
SCHEDULE I
----------
<TABLE>
<CAPTION>
Issuable
Name Number of Shares Common Shares
- ---- ---------------- -------------
<S> <C> <C>
Peter W. Quesada 11,003,840 1,100,384
Five Milk Street
P.O. Box 7525
Portland, ME 04112
T. Ricardo Quesada 11,003,840 1,100,384
Five Milk Street
P.O. Box 7525
Portland, ME 04112
Kate Davis P. Quesada 4,411,400 441,140
228 South Beach Road
Hobe Sound, FL 33455
Elinor P. Hempelmann 4,466,200 446,620
c/o John E. Swett
700 Midtown Tower
Rochester, NY 14604
</TABLE>
<PAGE> 36
SCHEDULE II
1. Note Agreement between PPC and The Prudential Insurance Company of America
dated October 16, 1978, as amended.
2. Revolving Credit Agreement between PPC and Mercantile Bank, National
Association, dated April 28, 1986. ($25,000,000).
3. Line of Credit Agreement between PPC and Mercantile Bank, National
Association, date April 28, 1986. ($15,000,000).
<PAGE> 37
SCHEDULE III
Shareholder Purchase Price
----------- -------- -----
Peter W. Quesada $32,425,628.98
T. Ricardo Quesada $32,425,628.98
Kate Davis P. Quesada $12,999,318.39
Elinor P. Hempelmann $13,160,800.61
-2-
<PAGE> 1
EXHIBIT 10.7.1
FURTHER RESOLVED, that Section 3.2 of The Pulitzer Publishing
Company Annual Incentive Compensation Plan be, and it hereby is, amended to
delete the fourth sentence thereof so that as so amended Section 3.2 shall read
as follows:
"3.2 The Committee shall consist of at least three members,
each of whom shall be appointed by, shall remain in office
at the will of, and may be removed, with or without cause,
by, the Board. Any member of the Committee may resign at
any time. No member of the Committee shall be entitled to
act on or decide any matter relating solely to himself or
any of his rights or benefits under the Plan. No bond or
other security need be required of the Committee or any
member thereof in any jurisdiction."
DATED: MARCH 9, 1992
<PAGE> 1
EXHIBIT 10.7.2
THE PULITZER PUBLISHING COMPANY
-------------------------------
ANNUAL INCENTIVE COMPENSATION PLAN
----------------------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<C> <C> <C>
1 Purpose of the Plan 3
2 Definitions 4
3 Administration 7
4 Determination and Allocation of the Fund 9
5 Payment of Awards 10
6 Designation of Beneficiaries 12
7 Amendment or Termination of the Plan 14
8 Miscellaneous Provisions 15
</TABLE>
- 2 -
<PAGE> 3
SECTION 1
PURPOSE OF THE PLAN
The purpose of the Plan is to aid in obtaining and retaining qualified and
competent executive and senior management personnel and to encourage significant
contributions to the success of The Pulitzer Publishing Company and its
subsidiaries by providing additional compensation to those individuals who
contribute to the successful and profitable operation of The Pulitzer
Publishing Company and its subsidiaries.
- 3 -
<PAGE> 4
SECTION 2
DEFINITIONS
Unless the context clearly requires otherwise, the following terms shall have
the following meanings:
1.1 "Award" means an award of incentive compensation pursuant to
Section 4.1 hereof.
1.2 "Beneficiary" means the beneficiary or beneficiaries designated
in accordance with Section 6 hereof to receive the amount, if
any, payable under the Plan upon the death of a Participant.
1.3 "Board" means the Board of Directors of The Pulitzer Publishing
Company.
1.4 "Committee" means the committee selected by the Board to
administer the Plan in accordance with Section 3 hereof.
1.5 "Company" means The Pulitzer Publishing Company, its successors
and assigns, and each of its subsidiaries.
1.6 "Effective Date" means January 1, 1986.
- 4 -
<PAGE> 5
1.7 "Employee" means any officer or other key employee of the
Company who is in service with the Company at the end of the
Plan Year and who has been designated by the Committee as
eligible to receive Awards hereunder; provided, however, that
if in the judgement of the Committee, an Employee who is not in
service with the Company at the end of any Plan Year as a
result of his death or Total Disability has made an outstanding
contribution to the successful operation of the Company during
the portion of the Plan Year in which he performed services for
the Company, he or his Beneficiary may receive a pro rata Award
based on his service during the portion of such Plan Year in
which he performed services for the Company notwithstanding
the fact that his service terminated before the end of such
Plan Year.
1.8 "Participant" means any Employee to whom an Award has been made
hereunder.
1.9 "Plan" means The Pulitzer Publishing Company Annual Incentive
Compensation Plan, as herein set forth and as hereafter amended
from time to time.
1.10 "Plan Year" means any fiscal year of the Company commencing on
or after the Effective Date.
- 5 -
<PAGE> 6
1.11 "Total Disability" means any Employee's complete and permanent
inability by reason of illness or accident to perform the
duties of the occupation at which he was employed by the
Company when such disability commenced, all as determined by
the Committee. All determinations as to the date and extent of
an Employee's disability shall be made by the Committee upon
the basis of such evidence, including independent medical
reports and data, as the Committee deems necessary and
desirable, and all such determinations of the Committee shall
be final and conclusive.
- 6 -
<PAGE> 7
SECTION 3
ADMINISTRATION
3.1 The Committee shall have full power and authority to construe,
interpret and administer the Plan. All decisions, actions or
interpretations of the Committee shall be final, conclusive and
binding upon all parties.
3.2 The Committee shall consist of at least three members, each of
whom shall be appointed by, shall remain in office at the will
of, and may be removed, with or without cause, by the Board.
Any member of the Committee may resign at any time. No member
of the Committee shall be entitled to act on or decide any
matter relating solely to himself or any of his rights or
benefits under the Plan. No bond or other security need be
required of the Committee or any member thereof in any
jurisdiction.
3.3 The Committee shall elect or designate its own chairman,
establish its own procedures and the time and place for its
meetings and provide for the keeping of minutes of all
meetings.
- 7 -
<PAGE> 8
A majority of the members of the Committee shall constitute a
quorum for the transaction of business at a meeting of the
Committee. Any action of the Committee may be taken upon the
affirmative vote of a majority of the members of the Committee
at a meeting or, at the direction of its chairman, without a
meeting by mail, telegraph or telephone, provided that all
members of the Committee are informed of their right to vote on
the proposal and of the outcome of the vote thereon.
3.4 No member of the Committee shall be personally liable by reason
of any contract or other instrument executed by him or on his
behalf in his capacity as a member of the Committee nor for any
mistake of judgement made in good faith, and the Company shall
indemnify and hold harmless each member of the Committee and
each other officer, employee or director of the Company to whom
any duty or power relating to the administration or
interpretation of the Plan has been delegated, against any cost
or expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the
Committee) arising out of any act or omission to act in
connection with the Plan, unless arising out of such person's
own fraud or bad faith.
- 8 -
<PAGE> 9
SECTION 4
DETERMINATION AND ALLOCATION OF THE FUND
4.1 Awards for each Plan Year shall be allocated among the
Employees on the basis of their contributions to the successful
management of the Company and in accordance with such other
criteria as the Committee shall deem relevant, including,
without limitation, preestablished performance objectives, base
salary midpoints for the positions of the respective Employees
and corporate and group financial goals. Award levels during
any Plan Year shall not exceed seventy-five (75%) of such
Employee's base salary. In the case of Employees who receive
Awards under this Plan and who have, prior to the Effective
Date, been awarded an Incentive Bonus Certificate under The
Pulitzer Publishing Company Incentive Bonus Plan, effective
July 1, 1977, as amended (the "1977 Bonus Plan"), the amount of
any Award hereunder shall be appropriately adjusted to reflect
the amount of any bonus payable under the 1977 Bonus Plan. The
Committee shall report to the Board, as promptly as is
reasonably practicable, the amount of Awards which have been
allocated, paid or deferred.
- 9 -
<PAGE> 10
SECTION 5
PAYMENT OF AWARDS
5.1 Payment of Awards shall be made entirely in lump-sum cash
distributions as soon as practicable after allocation or, at
the sole discretion of the Committee, may be deferred for such
periods as the Committee, in its sole discretion, shall
determine; provided, however, that the payment of Awards may
not be deferred beyond the date which is sixty (60) days after
a Participant's termination of employment with the Company for
any reason whatsoever. The Committee's determination with
respect to the payment or deferral of Awards may be made on an
individual basis or on the basis of classifications of age,
salary or other criteria. For this purpose, the Committee may
take into consideration any preference a Participant may have
expressed in writing not less than thirty (30) days prior to
the end of the Plan Year for which the Award is made.
5.2 The portion of any Participant's Award which is not paid
currently shall be credited to an account on the Company's
books which shall be established in the name of such
Participant, and such account shall be annually adjusted on the
basis of either
- 10 -
<PAGE> 11
(i) the percentage increase in the Consumer Price Index-U.S.
City Average (or, if publication of that Index is terminated,
any substantially equivalent successor thereto), as published
by the Bureau of Labor Statistics of the United States
Department of Labor, or (ii) interest at a rate to be
determined annually by the Committee, for each subsequent Plan
Year that payment of such Award is deferred. The Committee
shall, upon the request of a Participant, provide the
Participant with a statement of his deferred Award account
within sixty (60) days after the end of each Plan Year. The
establishment and maintenance of a deferred Award account under
this Section 5.2 shall not vest in any Participant or
Beneficiary any right, title or interest in and to any specific
assets of the Company.
- 11 -
<PAGE> 12
SECTION 6
DESIGNATION OF BENEFICIARIES
6.1 Each Participant shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall
be entitled to receive the amount, if any, payable under the
Plan upon his death. A Participant may, from time to time,
revoke or change his Beneficiary designation without the
consent of any prior Beneficiary by filing a new designation
with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as
of a date prior to such receipt.
6.2 If no Beneficiary designation is in effect at the time of a
Participant's death, or if no designated Beneficiary survives
the Participant, or if such designation conflicts with law, the
Participant's estate shall be deemed to have been designated
his Beneficiary and shall receive the payment of the amount, if
any, payable under the Plan upon his death. If the Committee is
in doubt as to the right of any person to receive such amount,
the
- 12 -
<PAGE> 13
Committee may retain such amount, without liability for any
interest thereon, until the rights thereto are determined, or
the Committee may pay such amount into any court of appropriate
jurisdiction and such payment shall be a complete discharge of
the liability of the Plan and the Company therefor.
- 13 -
<PAGE> 14
SECTION 7
AMENDMENT OR TERMINATION OF THE PLAN
The Board reserves the right at any time to amend, suspend or terminate the Plan
in whole or in part and for any reason and without the consent of any
Participant or Beneficiary; provided, however, that no such amendment shall
adversely affect rights to receive any amount to which Participants or
Beneficiaries have become entitled prior to such amendment.
- 14 -
<PAGE> 15
SECTION 8
MISCELLANEOUS PROVISIONS
8.1 The 1977 Bonus Plan shall continue after the Effective Date;
provided, however, that (i) Employees may not participate in
both the Plan and the 1977 Bonus Plan with respect to fiscal
years 1987 and thereafter, and (ii) any Employee who has
received an Incentive Bonus Certificate under the 1977 Bonus
Plan prior to the Effective Date shall be entitled to receive
the bonus payable to him in accordance with the terms of the
1977 Bonus Plan notwithstanding any other provision of this
Plan.
8.2 Nothing contained in the Plan shall give any Employee the right
to be retained in the employment of the Company or affect the
right of the Company to dismiss any Employee. The adoption of
the Plan shall not constitute a contract between the Company
and any Employee. No Employee shall receive any right to be
granted an Award hereunder nor shall any such Award be
considered as compensation under any employee benefit plan of
the Company, except as otherwise determined by the Board.
8.3 If the Committee shall find that any person to whom any amount
is payable under the Plan is unable to care for his affairs
because of illness or accident, is a minor or has died, then
any payment
- 15 -
<PAGE> 16
due him or his Beneficiary (unless a prior claim therefor has
been made by a duly appointed legal representative), may, if
the Committee so directs, be paid to his spouse, a child, a
relative, an institution maintaining or having custody of such
person or any other person deemed by the Committee to be a
proper recipient on behalf of such person otherwise entitled to
payment. Any such payment shall be a complete discharge of the
liability of the Committee and the Company therefor.
8.4 Except insofar as may otherwise be required by law, no amount
payable at any time under the Plan shall be subject in any
manner to alienation by anticipation, sale, transfer,
assignment, bankruptcy, pledge, attachment, charge or
encumbrance of any kind nor in any manner be subject to the
debts or liabilities of any person, and any attempt to so
alienate or subject any such amount, whether presently or
thereafter payable, shall be void. If any person shall attempt
to, or shall, alienate, sell, transfer, assign, pledge, attach,
charge or otherwise encumber any amount payable under the Plan,
or any part thereof, or if by reason of his bankruptcy or other
event happening at any such time, such amount would be made
subject to his debts or liabilities or would otherwise not be
enjoyed by him, then the Committee, if it so elects, may direct
that such amount be
- 16 -
<PAGE> 17
withheld and that the same or any part thereof be paid or
applied to or for the benefit of such person, his spouse,
children or other dependents, or any of them, in such manner
and proportion as the Committee may deem proper.
8.5 The Participant shall have no right, title or interest
whatsoever in or to any investments which the Company may make
to aid it in meeting its obligations under the Plan. Nothing
contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of
any kind or a fiduciary relationship between the Company and
any Employee or any other person. To the extent that any person
acquires a right to receive payments from the Company under the
Plan, such right shall be no greater than the right of an
unsecured general creditor of the Company. All payments to be
made hereunder shall be paid from the general funds of the
Company, and no special or separate fund shall be established
and no segregation of assets shall be made to assure payment of
such amounts except as expressly set forth in the Plan.
- 17 -
<PAGE> 18
8.6 The Plan is intended to constitute an unfunded deferred
compensation arrangement for a select group of management or
highly compensated personnel and all rights thereunder shall be
governed by and construed in accordance with the laws of the
State of Missouri.
- 18 -
<PAGE> 1
EXHIBIT 10.7.3
PULITZER PUBLISHING COMPANY
NEWSPAPER OPERATIONS
ANNUAL INCENTIVE PLAN
---------------------
<PAGE> 2
TABLE OF CONTENTS
-----------------
1. Plan Objective 1
2. Definitions 1
3. Plan Administration 2
4. Participants 2
5. Award Levels 3
6. Performance Components 4
7. Communication of the Plan 5
8. Payment of Awards 5
9. Miscellaneous Provisions 8
10. Effective Date 8
<PAGE> 3
Pulitzer Publishing Company
Newspaper Operations
Annual Incentive Plan
1. Plan Objective
The objective of the Plan is to advance the interests of Pulitzer Publishing
Company and certain subsidiaries by providing financial incentives in order
to attract, retain and motivate key employees.
2. Definitions
For purposes of the Plan, the following definitions shall control:
a. "Committee means the Compensation Committee of the Board of Directors of
the Company.
b. "Company" means Pulitzer Publishing Company.
c. "Department" means a designated Department in one of the corporations that
is part of Newspaper Operations or the St. Louis Post-Dispatch.
d. "Incentive Award" means an award made under this Plan.
e. "Newspaper Operations" means the St. Louis Post-Dispatch, Star Publishing
Company, Lerner Newspapers, Inc. and any other division or subsidiary of
the Company which the Committee designates as part of Newspaper Operations
for purposes of the Plan.
f. "Operating Income" means, as to any fiscal year and as to the St. Louis
Post-Dispatch or any other
- 1 -
<PAGE> 4
division or subsidiary of the Company included within Newspaper
Operations, the operating income thereof as reported in the consolidating
assembly for the Statement of Consolidated Income included in the annual
audit report rendered by the Company's auditors, subject to any
adjustments approved by the Committee pursuant to Paragraph 5 below;
provided, however, that Operation Income for the St. Louis Post-Dispatch
means the operating income thereof before rather than after Agency
adjustment.
g. "Plan" means Pulitzer Publishing Company Newspaper Operations 1988
Incentive Plan.
h. "Plan Year" means the Company's fiscal year.
i. "President" means the President of the Company.
j. "Senior Vice President-Newspaper Operations" means executive who occupies
such position with the Company.
3. Plan Administration
The Plan will be administered by the Committee which is authorized to
interpret the Plan and to establish rules and regulations necessary for
Plan administration. The decisions of the Committee shall be final and
binding on all persons claiming any benefits under the Plan.
4. Participants
Participants will be selected by the Committee from among
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<PAGE> 5
key employees working at Newspaper Operations who are in a position to make
significant contributions to the success of the Company and its
subsidiaries. The Senior Vice President-Newspaper Operations shall recommend
to the Committee, in writing, the employees who are to be participants under
the Plan for each Plan Year. At the President's discretion, participants may
be added to the Plan during the first six months of the Plan Year or removed
from the Plan for any reason whatsoever at any time during the Plan Year.
5. Award Levels
When employees are selected to participant in the Plan, the Senior Vice
President-Newspaper Operations shall recommend to the President the annual
Incentive Award for each participant which shall be earned if the
predetermined performance components are met. An Incentive Award shall be
described in terms of a percentage of a participant's base salary for the
Plan Year (adjusted as necessary if the participant commences participation
during a Plan Year) and shall be designated as a minimum, a target and a
maximum amount. The amount of the Incentive Awards shall become effective
when they are approved by the Committee. At the end of each Plan Year, the
Senior Vice President-Newspaper Operations will review the financial results
of each division or subsidiary of the Company included in Newspaper
- 3 -
<PAGE> 6
Operations in order to determine whether circumstances have occurred which
warrant an adjustment which would increase or decrease any Incentive Award
amount in order to maintain the equity, fairness and objective of the
Plan. Any adjustment will be reviewed by the President and become
effective upon the approval of the Committee.
6. Performance Components
For each Plan Year the Senior Vice President-Newspaper Operations shall
recommend to the President a minimum, a target, and a maximum level for
each performance component described below. Based on such recommendations,
the President shall determine the allocation of each participant's
Incentive Award among the performance components.
a. Newspaper Operation Component: This performance objective shall consist of
one or more quantitative measures of the financial performance during a
Plan Year of the applicable division or subsidiary that is part of
Newspaper Operations.
b. Department Component: This performance objective shall consist of one or
more quantitative measures of a Department's financial performance during
a Plan Year.
c. Individual Component: Performance objectives will be established for each
participant. These objectives shall relate to the strategic objectives
and/or
- 4 -
<PAGE> 7
special projects of the participant's employer or Department. Individual
objectives shall be weighted according to their importance to the
participant's employer or Department and the impact of a participant on
their achievement.
7. Communication of the Plan
After Incentive Award levels and performance components are established as
described above, the Senior Vice President-Newspaper Operations, or his
designee, shall advise each participant of the performance objectives to
be met, the minimum, target, and maximum Incentive Award levels, and the
manner in which Incentive Award will be determined and paid.
8. Payment of Awards
a. For each Plan Year, Operating Income goals will be established for each
division or subsidiary that is part of Newspaper Operations and will
constitute the performance objective by which the newspaper operation
performance component is measured. Such goals will consist of a minimum
level, a target level and a maximum level.
b. Incentive Awards shall be payable in cash as soon as practicable after
the close of the Plan Year.
c. In the event of a participant's death while working for a division or
subsidiary that is part of Newspaper Operations, the participant shall
earn a
- 5 -
<PAGE> 8
pro rata portion of his Incentive Award based on the time employed
during the Plan Year prior to death. Any amounts to which such
participant is entitled shall be paid as soon as practicable after the
close of the Plan Year to the participant's designated beneficiary or,
in the absence of such designation, to his estate.
d. The following provisions shall apply to the payment of Incentive Awards
in the event of a participant's termination of employment with the
Company or a division or subsidiary of the Company that is part of
Newspaper Operations:
(1) If termination is by reason of disability, retirement or transfer
to a division or subsidiary of the Company that is not part of
Newspaper Operations, the participant, subject to the President's
approval, shall earn a pro rata portion of his Incentive Award
based on the time employed during the Plan Year prior to
termination of employment. Payment of the participant's Incentive
Award shall be made as soon as practicable after the close of the
Plan year.
(2) If termination of employment is for any other reason, participation
in the Plan shall cease and no Incentive Award will be payable.
- 6 -
<PAGE> 9
e. In the event a participant is removed from the Plan pursuant to
Paragraph 4, the participant shall earn a pro rata portion of his
Incentive Award based on the time employed during the Plan Year prior
to removal, except if the participant is removed for any act which in
the Committee's opinion constitutes fraud, embezzlement, disclosure of
confidential information or dishonesty. Payment of the Participant's
Incentive Award shall be made as soon as practicable after the close of
the Plan Year.
9. Miscellaneous Provisions
No provision of the Plan or any document describing the Plan or
establishing rules or regulations regarding the Plan's administration
shall be deemed to confer on any participant or employee the right to
continue in the Company's or any subsidiary's employ or to affect the
right of the Company or a subsidiary to terminate any person's employment.
The Plan shall not be treated as an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of 1974.
Neither the Company nor any subsidiary shall establish any fund to pay
Incentive Awards, and no participant or any other person shall have any
right to any specific assets or funds of the Company or a subsidiary to
satisfy the payment of an Incentive Award.
10. Effective Date
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<PAGE> 10
The Plan will be effective for the Plan Year commencing December 28, 1987
and shall continue in effect until terminated by the Board of Directors of
the Company. Subject to the approval of the Board of Directors of the
Company, the Plan may be amended at any time by the Committee.
- 8 -
<PAGE> 1
EXHIBIT 10.10.1
AMENDMENT OF THE
PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED OCTOBER 29, 1997
Paragraph E of Article 1 of the Pulitzer Publishing Company Supplemental
Executive Benefit Pension Plan is amended in its entirety to read as follows:
"Compensation" means, with respect to any calendar year, the annual amount
of cash compensation paid by the Company to an Employee, including
overtime, bonuses, commissions or similar payments, and elective
contributions made by the Employee under Section 401(k) of the Internal
Revenue Code. Compensation does not include any benefits earned under this
plan, any severance or other payments made in respect of the termination of
an individual's employment, any stock option compensation, any employer
contribution made by the Company for the benefit of the Employee to any
pension or profit-sharing plan or any benefit earned by the Employee under
any such plan (including the federal Social Security program), any amount
paid by the Company on behalf of the Employee for life, accident, health or
medical insurance or for any other so called "fringe benefits" or "welfare
benefits," and any reimbursement (direct or indirect) of expenses, or any
expense paid on behalf of the Employee.
PULITZER PUBLISHING COMPANY
By: /s/ RONALD H. RIDGWAY
-----------------------------------
Ronald H. Ridgway
Senior Vice President-Finance
Dated: October 29, 1997
<PAGE> 1
EXHIBIT 10.10.2
AMENDMENT OF THE
PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED JUNE 23, 1992
The Pulitzer Publishing Company Supplemental Executive Benefit Pension Plan
(the "Plan") is hereby amended in the following respects:
1. The first two sentences of part E of ARTICLE I of the Plan are amended
in their entirety to read as follows:
"Compensation" means, with respect to any calendar year, the annual amount
of cash compensation paid by the Company to a Participant, including
overtime, bonuses, commissions or similar payments. Compensation does not
include any benefits earned under this Plan, any stock option compensation,
any amount contributed by the Company for the benefit of the participant to
any pension or profit-sharing plan or any benefit earned by the Participant
under any such plan (including the federal Social Security program), any
amount paid by the Company on behalf of the participant for life, accident,
health or medical insurance or for any other so called "fringe benefits" or
"welfare benefits," or any reimbursement (direct or indirect) of expenses,
or any expense paid on behalf of the Participant.
2. The following sentence is added at the end of part A of ARTICLE VII:
Notwithstanding anything to the contrary contained herein, if the Company,
acting upon the advice of counsel, determines that an individual's initial
or continued participation in the Plan may or would cause the Plan not to
qualify as a plan maintained "primarily for the purpose of providing
deferred compensation for a select group of management or highly
compensated employees" under Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA, or if a determination to that effect is made by a court or
governmental agency of competent jurisdiction, then, for purposes of
applying the provisions hereof, the individual's participation in the Plan
shall be rescinded as of the date it began or shall terminate as of such
other date as the Company, acting in its sole discretion, shall determine
to be necessary or appropriate in order to avoid the Plan's failure to so
qualify.
PULITZER PUBLISHING COMPANY
By: /s/ RONALD H. RIDGWAY
------------------------------------
Dated: June 23, 1992
<PAGE> 1
EXHIBIT 10.10.3
AMENDMENT OF THE
PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED JANUARY 1, 1992
The last sentence of subsection (c) of Section C. of ARTICLE III of the
Pulitzer Publishing Company Supplemental Executive Benefit Pension Plan is
amended to read as follows, effective as of January 1, 1992: "The Board, in its
sole discretion, reserves the right to modify or eliminate the early-retirement
reduction factor."
PULITZER PUBLISHING COMPANY
By: /s/ RONALD H. RIDGWAY
------------------------------------
<PAGE> 1
EXHIBIT 10.10.4
AMENDMENT OF THE
PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED JANUARY 18, 1990
Effective January 1, 1988 Section III.B of the Pulitzer Publishing Company
Supplemental Executive Benefit Pension Plan is amended by adding the following:
"Provided however, that for Participants who perform at least one hour of
service on or after January 1, 1988, in no event shall the amount of the
late retirement benefit payable be less than the Participant's Accrued
Benefit calculated to include all Years of Service and Compensation earned
following the Participant's Normal Retirement Date."
PULITZER PUBLISHING COMPANY
/s/ RONALD H. RIDGWAY
--------------------------------------
Ronald H. Ridgway
Senior Vice President -- Finance
<PAGE> 1
EXHIBIT 10.10.5
AMENDMENT OF
THE PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED OCTOBER 26, 1989
Effective January 1, 1986, Pulitzer Publishing Company hereby amends
Article I.G.(3) of the Pulitzer Publishing Company Supplemental Executive
Benefit Pension Plan by including the following as the third sentence of such
paragraph:
"In the event the Participant has had withdrawals or distributions from any
qualified defined contribution plan maintained by the Company, such
withdrawals or distributions will be included in the determination at the
specified date of benefits to determine the accumulated vested account
balance for purposes of the applicable offset."
PULITZER PUBLISHING COMPANY
By /s/ RONALD H. RIDGWAY
--------------------------------
Senior Vice President -- Finance
<PAGE> 1
EXHIBIT 10.10.6
AMENDMENT TO THE
PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
DATED NOVEMBER 6, 1987
Effective November 6, 1987, Pulitzer Publishing Company hereby amends the
Pulitzer Publishing Company Supplemental Executive Benefit Pension Plan as
contained herein.
All references to "The Pulitzer Publishing Company" are hereby deleted and
replaced by "Pulitzer Publishing Company."
IN WITNESS WHEREOF, this amendment was executed this 6th day of November,
1987, to be effective November 6, 1987.
ATTEST (SEAL) PULITZER PUBLISHING COMPANY
/s/ R. TAYLOR By /s/ RONALD H. RIDGWAY
- -------------------------------------------------------
--------------------------------------
Senior Vice President -- Finance
<PAGE> 1
EXHIBIT 10.10.7
THE PULITZER PUBLISHING COMPANY
Supplemental Executive Benefit Pension Plan
Plan Document
March 18, 1986
<PAGE> 2
THE PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
Effective January 1, 1986, The Pulitzer Publishing Company, a Missouri
corporation, desiring to provide an income for certain of its executives after
their retirement as well as pre- and post-retirement death benefits to the
surviving spouses of such executives, hereby establishes this Supplemental
Executive Benefit Pension Plan.
This Plan is for the benefit of only a select group of highly compensated and
key management employees of the Company. The purpose of the Plan is to reward
and retain key executive and to provide reasonable and equitable replacement of
pre-retirement income during retirement, when compared to rank and file
employees.
ARTICLE I
DEFINITIONS
A. "COMPANY" means The Pulitzer Publishing Company, its successor(s) and
assign(s) and any corporation(s) into which or with which it may be
liquidated, merged or consolidated. "PARENT COMPANY" refers to The
Pulitzer Publishing Company alone, excluding its subsidiaries, and
unless otherwise indicated, the unmodified term "Company" refers to the
parent company and all of its subsidiaries, taken collectively.
B. "BOARD" means the Board of Directors of the Parent Company.
C. "EMPLOYEE" means any salaried person employed full time by the Company.
D. "PARTICIPANT" means an Employee who is eligible to participate in
accordance with Article II and who has executed a Participation
Agreement in the form attached hereto in Exhibit A.
E. "COMPENSATION" means, with respect to any calendar year, the annual
amount of compensation from all Pulitzer sources, including overtime,
bonuses, commissions, or similar payments. Compensation does not
include any costs of this Plan, any amount contributed by the Company
for the benefit of such Participant to any pension or profit-sharing
plan (including the federal Social
- 1 -
<PAGE> 3
Security program), any amount paid by the Company on behalf of such
Participant for life, accident, health or medical insurance or for any
other so-called "fringe benefits", or any reimbursement (directly or
indirectly) of expenses, or any expense paid on behalf of such
Participant. Compensation shall include any contribution by the
employee under a salary reduction agreement to a plan which meets the
requirements of Section 401(k) of the Internal Revenue Code.
F. "FINAL AVERAGE COMPENSATION" generally means the average of a
Participant's annual Compensation over the three consecutive calendar
years immediately preceding the date of determination. However,
Compensation in the year of such determination shall be counted as one
of the years in such three-year average, if counting such year would
produce a higher Final Average Compensation. The date of determination
shall be the actual date the Participant ceases employment with the
Company.
G. "ACCRUED BENEFIT" AS OF A SPECIFIED DATE, with respect to a
Participant, means an annual benefit equal to (1) - (2) - (3), as
below:
(1) 40% of Final Average Compensation as of such specified date
multiplied by a ratio (not greater than 1.0), the numerator of
which is the Participant's Years of Service and the denominator
is twenty-five (25).
(2) The applicable offset as of such specified date for vested
accrued benefits payable under a qualified defined benefit
pension plan maintained by the Company. The applicable offset
shall be the actual vested accrued annual benefit amount, based
on a benefit commencement date at normal retirement at age 65
under such qualified program. Further, such offset shall be
determined based on the Life Only payment option if the
Participant is not married as of the specified date or shall be
based on the Joint and 50% Survivor payment option if the
Participant is married as of the specified date. The actuarial
equivalence factors used in providing such payment options for
the offset shall be based on the actuarial conversion factors
of the particular qualified plan.
(3) The applicable offset as of such specified date for benefits
under a qualified defined contribution plan maintained by the
Company. Such applicable offset will be determined based on the
accumulated vested account balance of the Participant derived
from employer contributions (excluding salary reduction
contributions under a 401(k) plan) and converted to an
actuarial equivalent annual benefit commencing at age 65.
Further, such offset shall be determined based on the life only
payment option if the Participant is not married as of the
specified date or shall be based on the joint and 50% survivor
payment option if the Participant is married as of the
specified date.
H. "YEARS OF SERVICE" means the period beginning with the date specified
in the Participation Agreement and continuing thereafter until the
Participant's date
- 2 -
<PAGE> 4
of termination from employment with the Company. In the event that a
Participant has a break in service, the Board of Directors shall
determine Years of Service on a reasonable and consistent basis.
I. "ACTUARIAL EQUIVALENCE" shall be calculated based on the Participant's
age at commencement of benefits, but not taking into account the sex of
the Participant. The mortality and interest assumptions underlying the
calculation of actuarial equivalence may be changed by the Company from
time to time, but shall otherwise be the same for all similarly
situated Participants at any given time.
ARTICLE II
PLAN PARTICIPATION
A. ELIGIBILITY TO PARTICIPATE IN THE PLAN
Those executive employees selected from time to time by the Board of
Directors shall be eligible to become Participants in accordance with
the purposes of the Plan. As a condition of participation, each
Participant so selected shall complete, execute and return to the Board
a Participation Agreement in the form attached hereto as Exhibit A and
comply with such further conditions as may be established by and in the
sole discretion of the Board. The provisions of the signed
Participation Agreement shall be final and shall supercede any
provision of this Plan. Exhibit B attached hereto sets forth the list
of Participants selected by the Board of Directors together with the
date of Board approval.
B. PERIODS OF NON-PARTICIPATION
In the event that, subsequent to commencement of participation in the
Plan, a Participant fails to maintain a position of employment in the
Company which, in the sole discretion of the Board, qualifies for
participation in the Plan, then such a Participant shall cease to
accrue further benefits under the Plan and shall no longer participate
hereunder. Service toward vesting requirements shall, however, continue
to accrue during continued service. Such Participant, however, shall be
entitled to receive his/her vested accrued benefit at the time and in
the manner provided by this Plan, and shall be notified of such
entitlement. If, at any further time, the former Participant again
becomes, in the sole discretion of the Board, eligible to participate
in the Plan, then such Participant's accrued benefit shall be
calculated by aggregating all Years of Service.
- 3 -
<PAGE> 5
C. VOLUNTARY PARTICIPATION
Participation in this Plan shall be wholly voluntary and no employee
shall be obligated to participate herein.
ARTICLE III
RETIREMENT BENEFITS AND PAYMENT
A. BENEFITS AT NORMAL RETIREMENT
For purposes of this Plan, a Participant's Normal Retirement Date is
the first of the month coincident with or next following the day on
which the Participant attains age 65. This shall not be construed as
establishing a mandatory retirement policy at age 65; however, it is
intended, instead, to establish a date on or after which a Participant
is entitled to normal retirement benefits. The amount of normal
retirement benefit payable on the Participant's Normal Retirement Date
shall equal the Accrued Benefit on that date and shall be payable in
accordance with Section D herein.
B. BENEFITS AT LATE RETIREMENT
In the case of a Participant working beyond normal retirement, payment
of benefits shall not commence until such Participant actually
terminates employment with the Company. A participant's Late Retirement
Date is the first of the month coincident with or next following the
date the Participant actually terminates employment with the Company,
such date being after his Normal Retirement Date. The amount of late
retirement benefit payable on such Late Retirement Date shall equal the
amount of Normal Retirement Benefit as of the Normal Retirement Date
multiplied by a late retirement increase factor and shall be payable in
accordance with Section D herein. "Late retirement increase factor"
means the actuarial equivalence factor adjusting the value of the
Normal Retirement Benefit commencing at normal retirement to the actual
retirement date.
C. BENEFITS AT EARLY RETIREMENT
A Participant who has completed ten (10) Years of Service with the
Company and has reached age 55 while employed by the Company may, with
the consent of the Company, retire under this Plan before the Normal
Retirement Date. The amount of such early retirement benefit shall be
equal to a. multiplied by b. multiplied by c., as defined below:
(a) the Accrued Benefit on the Early Retirement Date.
(b) Is the Vested Percentage defined in Article V, Section A.
- 4 -
<PAGE> 6
(c) An Early Retirement Reduction Factor which shall be equal to 1.0
minus 1/15 for each of the first five (5) years in which the Early
Retirement Date precedes the Normal Retirement Date and 1/30 for
each of the next five years. The Board, in its sole discretion,
reserves the right to eliminate the early retirement reduction
factor.
A Participant's Early Retirement Date shall be the first of the month
coincident with or following such Participant's termination of
employment. Such early retirement benefit as defined herein shall be
payable in accordance with the options set forth in Section D, herein.
D. FORM OF PAYMENT
The normal retirement benefits, early retirement benefits, and late
retirement benefits defined herein shall be payable monthly during the
life of the Participant. Such monthly benefit shall equal the annual
benefit divided by twelve (12).
Other options may be made available at the Board's discretion. The
benefit amounts payable under other available payment options shall be
actuarially equivalent to the "Life Only" form defined herein.
ARTICLE IV
SURVIVING SPOUSE DEATH BENEFITS
A. BENEFITS IN THE CASE OF DEATH OF A PARTICIPANT WHILE EMPLOYED
If a Participant dies while employed by the Company and prior to the
commencement of Plan retirement benefits, a surviving spouse death
benefit of either (1) or (2) below, whichever is applicable, shall be
payable to the Participant's surviving spouse, if any.
(1) This section is applicable if the death of the Participant
occurs on or after the date the Participant attains the age of
fifty-five (55). In such case, the surviving spouse death
benefit shall be payable monthly, commencing on the first of
the month following or coincident with the Participant's date
of death and shall be payable during the spouse's remaining
lifetime. Such monthly spouse benefit shall equal the annual
amount defined herein divided by twelve (12). The annual amount
of the surviving spouse death benefits shall be equal to 50% of
the Participant's Accrued Benefit as of the date of death
multiplied by the Early Retirement Reduction Factor, defined in
Article III Section C(c), using the Participant's date of death
as the Early Retirement Date for such factor.
(2) This section is applicable if the death of the Participant
occurs prior to the date the Participant attains the age of
fifty-five (55). In such case, the surviving spouse death
benefit shall be paid monthly, commencing on
- 5 -
<PAGE> 7
the first of the month following or coincident with the
Participant's date of death and shall be payable during the
spouse's remaining lifetime, with a maximum of 120 monthly
payments payable from this Plan. Such monthly spouse benefit
shall equal the annual amount defined herein divided by twelve
(12). The annual amount of the surviving spouse death benefit
shall equal 50% of the Participant's Accrued Benefit as of the
date of death multiplied by the Early Retirement Reduction
Factor, defined in Article III Section C(c), at the age of
fifty-five (55).
Surviving spouse, for purposes of this Plan, shall be the person to
whom the Participant was legally married for a period of at least one
year prior to the date of death.
B. BENEFITS IN THE CASE OF DEATH OF A PARTICIPANT AFTER TERMINATION OF
EMPLOYMENT
If a Participant terminates employment with the Company and dies before
commencement of benefits, no benefits are payable under this Plan.
C. BENEFITS IN THE CASE OF DEATH OF A PARTICIPANT AFTER RETIREMENT
If a Participant has retired under Article III and dies after benefits
have commenced, a surviving spouse benefit is payable to the spouse at
the time of benefit commencement, if any. The surviving spouse death
benefit shall be paid monthly, commencing on the first of the month
following or coincident with the Participant's date of death and shall
be payable during the spouse's remaining lifetime. The amount of the
monthly surviving spouse death benefit shall equal 50% of the monthly
benefit that was being made to the Participant. However, in the event
another available option was chosen at retirement pursuant to Article
III, Section C, the amount of the surviving spouse death benefit shall
be actuarially equivalent to the amount defined herein.
ARTICLE V
TERMINATION OF EMPLOYMENT
A. Upon termination of employment (other than by death or retirement), a
Participant shall be eligible to receive a percentage of his/her
accrued benefit payable under the Plan, such percentage equal to the
Participant's Vested Percentage. A Participant's Vested Percentage
shall be taken from the table below, based on the Participant's
completed Years of Service.
- 6 -
<PAGE> 8
Years of Service Vested Percentage
---------------- -----------------
10 50%
11 55%
12 60%
13 65%
14 70%
15 75%
16 80%
17 85%
18 90%
19 95%
20 or more 100%
B. Benefits payable in accordance with this subsection shall commence at
age 65. However, if the Participant otherwise satisfies the
requirements for early retirement, he or she may receive benefits
commencing on an Early Retirement Date, on the same basis of any other
Participant retiring early.
ARTICLE VI
NON-COMPETITION PROVISIONS AND OTHER PROVISIONS AFFECTING PAYMENT
A. The right and eligibility of every Participant and each person who has
or may derive rights hereunder to receive benefits through or from a
Participant are expressly conditioned upon the Participant refraining
and having refrained at all times, after beginning Participation in the
Plan, during employment with the Company and for (3) three years after
such employment ceases from competing with the Company. Competing with
the Company shall include competitive employment, ownership in a
Competitor, or the divulging of confidential information as defined
below:
(1) Competitive employment includes employment with, or rendering
services to, a Competitor, or serving as a director of or
consultant to a Competitor, in a capacity that is substantially
related to the operations of the Competitor which give rise to
its being a Competitor of the Company. Competitive employment
shall also include any activity which results in, or is
calculated to result in any substantial loss of business to the
Com pany.
(2) Ownership in a Competitor shall include the holding of any
beneficial interest, direct or indirect. The mere ownership of
a less than 1% debt and/or equity interest in a Competitor
whose stock is publicly held, or a less than 5% debt and/or
equity interest in a Competitor whose stock is not publicly
held, shall not be considered ownership in a competitor.
- 7 -
<PAGE> 9
(3) Divulging of confidential information includes divulging any
information concerning the Company which is or could be of aid
or assistance to a Competitor in its competition with the
Company. Divulging of confidential information includes,
without limitation, the divulging, to any person or
organization not specifically authorized by the Company to
receive such information, any information concerning the
Company's customers or the Company's processes and procedures,
including its administrative procedures.
(4) A Competitor is any organization or institution that offers any
major service at the time offered by the Company, or any of its
subsidiaries, and which conducts business in any location
within 100 miles of any offices of the Company or any of its
subsidiaries.
(5) Failure to observe the requirements of this Article VI, Section
A, may result in forfeiture of benefits.
B. Any Participant who is guilty of felonious theft from the Company, or
embezzlement of Company funds, or any other felonious fraud or
dishonesty in any dealings with the Company, or who has accepted any
bribe, kick-back or other item of substantial value from any person as
consideration for the taking or omission of any action on behalf of the
Company which is not in the Company's best interest, may forfeit the
right to receive benefits hereunder.
C. (1) Should the Company learn or have reason to believe that a
Participant has violated any of the foregoing conditions, it
may propose to enforce its above rights, and may withhold the
payment of all amounts which thereafter become payable to the
Participant or the Participant's Beneficiary, estate or any
other party whose rights are derived from the Participant, and
shall give written notice of its knowledge or belief to the
person(s) otherwise entitled to such payment(s). As
expeditiously thereafter as is reasonably possible, the Company
shall investigate the alleged violation and shall consider,
under such rules of procedure as the Company shall deem
reasonable, such evidence and/or testimony as the Company
and/or the Participant and/or other person or persons receiving
or otherwise entitled to receive the amounts in question may
desire to submit in support of or in refutation of the alleged
violation. The decision of the Company as to whether the
Participant violated any of the foregoing conditions shall be
final and conclusive. If the Company concludes that there has
been a violation of any of the foregoing conditions, the right
of such Participant and of each person claiming by, through or
under the Participant, to receive any amount hereunder shall
thereupon cease, and if any payment of any such amount had
theretofore been made, the recipient thereof shall become
indebted to the Company in an amount equal to the aggregate of
all such payments theretofore received. The Company shall have
the right, but shall not be obligated, to institute proceedings
in a court of competent jurisdiction, in the name and on behalf
of the Company, to recover the amount of such indebtedness,
together with all costs (including reasonable attorneys' fees)
incurred in effecting such recovery. If the Company concludes
that there has not
- 8 -
<PAGE> 10
been a violation of any of the foregoing conditions, the
amounts so withheld or suspended shall be payable as though the
Company had never instituted any proceedings or withheld or
suspended any payments, without, however, any interest for the
period during which such amounts were withheld or suspended.
(2) The foregoing provisions of this Section authorizing the
Company to give notice of an alleged violation or possible
violation of the above conditions shall not be interpreted as
requiring the Company to take such action in each and every
instance of a violation or suspected violation thereof, and in
determining whether an attempt to enforce the forfeiture
provisions of this Section shall be made, the Company may
consider the possible economic damage it might suffer, the
circumstances surrounding the discontinuance of the employment
of the Participant with the Company and the quantum of proof
which the Company may have of a violation of the aforesaid
conditions.
(3) The provisions of this Section shall in no way impair or
derogate from the right or remedies which the Company may
otherwise have under any employment contract or agreement with
a Participant, or which the Company may have at law or in
equity, to prevent the disclosure of trade secrets or to
recover damages for the disclosure thereof or to prevent a
Participant from engaging in competition with the Company or to
recover damages therefor, or to recover any restitution
properly owing the Company in the event a Participant has been
guilty of any fraud, embezzlement, misapplication of funds or
other illegal conduct.
ARTICLE VII
MISCELLANEOUS PROVISIONS
A. OBLIGATION TO PAY BENEFITS HEREUNDER
No trust fund, escrow account or other segregation of assets shall be
established or made by the Company to guarantee, secure or assure the
payment of any benefit hereunder. The Company's obligation to pay
benefits pursuant to this Plan shall constitute only a general
contractual liability of the Company to the Participants and other
payees hereunder in accordance with the terms hereof. Payment of
benefits by the Company hereunder shall be made only from the general
funds of the Company and no Participant or any other potential payee of
any amount hereunder shall have any interest in any particular asset of
the Company by reason of the existence of this Plan. It shall be
expressly understood and agreed by and between the Company and each
Participant that the parties do not intend to create a trust fund or
escrow account, or to segregate any assets of the Company in any
fashion, and that the
- 9 -
<PAGE> 11
amount payable hereunder shall be subject in all respects to claims of
general creditors of the Company until actually paid over to the
person(s) entitled to receive the same.
B. OTHER PROVISIONS CONCERNING PAYMENT
All amounts payable during the lifetime of a Participant shall be paid
directly to the Participant unless applied for the Participant's
benefit in accordance with Section E hereof. All amounts payable after
the death of a Participant shall be payable to the Surviving spouse,
pursuant to Article IV. However, in the event a payment form other than
the Normal form is in effect, pursuant to Article IV, Section C,
amounts payable after death shall be payable to the Beneficiary or
Beneficiaries designated by such Participant in the manner provided in
Section C hereof. All amounts payable, whether to a living person or to
the estate of a deceased person, shall be paid net after the
withholding of any Federal, state or local income, earnings and other
taxes which might be required to be withheld from such payments, and
the Company shall hold the payee of such net amounts harmless with
respect to the amounts so withheld as against any claim by the taxing
authorities in question that such amounts have not been properly and
timely paid, remitted or otherwise applied against the tax liability
which occasioned such withholding.
C. DESIGNATION OF A BENEFICIARY
Each Participant shall specifically designate, by name, on forms
provided by the Company, the Beneficiary(ies) who shall receive any
benefits which might be payable after his or her death. Such
designation may be made at any time satisfactory to the Company. If a
Participant has not designated a Beneficiary in the manner provided
above, the Participant's estate shall be the Beneficiary. A designation
of a Beneficiary may be changed or revoked without the consent of the
Beneficiary at any time or from time to time in such manner as may be
provided by the Company, and the Company shall have no duty to notify
any person designated as a Beneficiary of any change in any such
designation which might affect such person's present or future rights
hereunder. If the designated Beneficiary does not survive the
Participant, all amounts which would have been paid to such deceased
Beneficiary shall be paid to the alternative or successor Beneficiary
or Beneficiaries (if any) designated by the Participant or, if the
Participant has not designated any alternative or successor
Beneficiary, to the estate of the deceased Participant; but if a
designated Beneficiary, having survived the Participant, dies before
receiving the amount payable hereunder, the amount which such
Beneficiary would have received had he survived the Participant shall
be paid to the estate of such deceased Beneficiary unless a contrary
direction was made by the Participant, in which event such direction
shall control. Not more than five persons, or if a greater number, that
number of persons as shall be necessary to permit the Participant to
designate as simultaneous Beneficiaries any or all of the Participant's
surviving children and spouse, may be named as simultaneous
Beneficiaries of any Participant at any one time, and if two or more
persons are to be
- 10 -
<PAGE> 12
simultaneous beneficiaries, or if the Participant wishes to designate
alternative, successor, or contingent Beneficiaries, the Participant
shall specify the shares, terms and conditions upon which amounts shall
be paid to such multiple, alternative, successor or contingent
Beneficiaries, all of which must be satisfactory to the Company. Any
payment under this Plan which may be made to a Beneficiary after the
death of a Participant shall be made only to the person(s) designated
pursuant to this section by the Participant who would otherwise have
been paid benefits under the Plan.
D. CLAIMS PROCEDURES
In the event that any claim for benefits, which must initially be
submitted in writing to the Board of Directors of the Company, is denied
(in whole or in part) hereunder, the claimant shall receive from the
Company notice in writing, written in a manner calculated to be
understood by the claimant, setting forth the specific reasons for
denial, with specific reference to pertinent provisions of this
Agreement. The interpretations and construction hereof by the Board of
Directors shall be binding and conclusive on all persons and for all
purposes. Any disagreements about such interpretations and construction
may be appealed within a reasonable period of time to the Board of
Directors. No member of the Board of Directors shall be liable to any
person for any action taken hereunder except those actions undertaken
with lack of good faith.
E. PAYEES PRESUMED COMPETENT
Every person receiving or claiming amounts payable under this Plan shall
be conclusively presumed to be mentally competent and of legal age until
the Company receives a written notice, in form, manner and substance
acceptable to it, that any such person is incompetent or is a minor or
that a guardian or other person legally vested with the care of such
person's estate has been appointed. In such case, payments shall be made
to such appointed person on behalf of the recipient.
F. NOTICE OF ADDRESS; LOST PAYEES
(a) Every Participant shall file a notice of his or her post office
address, and of the post office address and Social Security
number of each beneficiary designated by him or her, and of each
change of any such address in writing, with the Company. Any
communication, statement or notice addressed to any such person
at the latest post office address on file shall be binding upon
such person for all purposes, and the Company shall not be
obliged to search for or attempt to ascertain the whereabouts of
any such person, except as hereinafter provided, and if a
Participant fails or neglects to file such addresses, the
Participant's address shall be presumed to be his or her last
address on file in the personnel records of the Company, and in
the case of a person whose rights accrued through or from a
Participant, his or her last address shall be presumed to be in
care
- 11 -
<PAGE> 13
of the last address of such Participant on file in the
personnel records of the Company.
(b) If the Company is unable to locate any person entitled to
receive a payment hereunder, or the estate of such person, if
deceased and if, under this Plan, such person's estate is
entitled to receive any amount hereunder, within two years
after the same becomes payable, during which period the Company
shall have made a reasonable search for such person and/or such
person's estate, the right and interest of such payee in and to
the amount payable shall terminate on the last day of such
two-year period, and the amount so payable shall be payable to
the estate of the Participant to whom such amount had
originally been payable; provided, however, that if the estate
of such Participant cannot be located within an additional
two-year period, the unclaimed amount shall be forfeited. In
its search for such payee, the Company shall mail a notice,
postage prepaid, by U.S. registered or certified mail, return
receipt requested and return postage guaranteed, to the last
known address of such payee or (if the payee is not the
Participant and if the address of the payee is not known or if
the notice sent to such payee is returned unclaimed or
addressee unknown) to such payee in care of the last known
address of the Participant from whom such payee's rights are
derived. If all notices sent as aforesaid are returned
unclaimed or addressee unknown, the Company shall publish a
notice in a newspaper having a general circulation in the same
general area as the last known address of the payee, stating
that the Company holds an amount of payment hereunder and
giving such additional information as may be reasonably
calculated to come to the notice of the parties having an
interest herein. Such actions shall constitute a reasonable
search for such payee; provided, however, that the Company
shall never be required to expend in such search an amount
greater than the amount payable hereunder, and all amounts so
expended shall be charged against the amounts held for payment.
G. NO LIABILITY FOR PARTICIPANT'S DEBTS (OTHER THAN INDEBTEDNESS TO THE
COMPANY
If at the time any benefit becomes payable hereunder and there is any
indebtedness due the Company from the payee thereof, the Company
(without being obligated to do so) may direct that some or all of the
amount payable to such party be applied against such indebtedness
(including any interest properly payable on such indebtedness) and only
the unapplied balance shall be paid to the party otherwise entitled to
receive such payment. Except to the extent amounts otherwise payable
are applied against indebtedness of the Participant or beneficiary to
the Company in accordance with the foregoing authority, this Plan and
the amounts payable hereunder shall not in any manner be liable for or
subject to the debts or liabilities of any payee, and no amount payable
hereunder shall at any time or in any manner be subject to
anticipation, alienation, sale, transfer, assignment, pledge or
encumbrance of any kind, whether to the Company or to any other party
whomsoever, and whether with or without consideration. If any payee
shall attempt to, or shall, anticipate,
- 12 -
<PAGE> 14
alienate, sell, transfer, assign, pledge or otherwise encumber any
amounts payable hereunder or any part thereof, or if by reason of
bankruptcy or other event, such amounts would at any time be received
or enjoyed by persons other than such payee, except as otherwise
permitted by this Plan, the Company in its sole discretion may
terminate such person's interest in any such amounts and hold or apply
such amounts to or for the use of such person, or such person's spouse,
children or other dependents, or any of them, as the company may
determine.
H. ADMINISTRATION
This Plan shall be administered by the Company, by its officers
thereunto duly authorized or by the Executive Committee of the Board of
Directors, who shall have full power and authority to do all things
necessary or appropriate to the proper administration hereof. Such
power and authority shall include, without limiting the generality of
the foregoing, full power and authority to construe the Plan and the
Participation Agreement and to determine all questions which may arise
thereunder relating to the administration of the Plan and said
agreement, including questions relating to the status and rights of
Participants, beneficiaries and other persons hereunder. If the
administrator(s) deem any language of this Plan or said Agreement so
ambiguous or unclear that its reasonable meaning or application cannot
be determined, they may, if they so desire and in their sole
discretion, submit such language to the Executive Committee with a
request that the Executive Committee adopt a resolution interpreting
such language or establishing rules for its application, and any
resolution by the Executive Committee shall be binding on any such
parties interested in the Plan. If the administrator(s) so desire, they
may (but need not) submit such language to counsel for interpretation
prior to requesting action by the Executive Committee. Unless the
Executive Committee has adopted a particular interpretation of any
language of this Plan or the Participation Agreement, or has
established rules for its application, any decision of, or action taken
by, the administrator(s) shall be final and binding upon all parties.
Any rules adopted by the Company or the Executive Committee shall be
administered uniformly and applied with equal effectiveness and in a
nondiscriminatory manner to all persons similarly situated.
I. NEGATION OF EMPLOYMENT CONTRACT
This Plan is intended to, and does, relate exclusively to benefits
payable after termination of employment, and does not create an
employment contract. Nothing contained herein shall be deemed (a) to
give a Participant the right to be retained in the employ of the
Company; (b) to interfere with the right of the Company to discharge a
Participant at any time; (c) to give the Company the right to require a
Participant to remain in its employ; or (d) to interfere with the right
of a Participant to terminate employment at any time.
- 13 -
<PAGE> 15
ARTICLE VII
MODIFICATION, AMENDMENT OR TERMINATION
A. The Company reserves the absolute right to modify or amend this Plan in
whole or in part, at any time and from time to time, effective as of
any specified prior, current or future date, by action of the Board;
provided, however, that except as expressly stated herein the Company
shall have no power to modify or amend the Plan in any manner which
would reduce any vested benefit accrued or then payable to Participants
or others hereunder, unless such action is necessary to prevent this
Plan from being subject to any provision of Title I, Subtitle B, Parts
2, 3 or 4 of the Employee Retirement Income Security Act of 1974.
B. The Company also reserves the right to terminate this Plan, in whole or
in part, voluntarily as of any specified current or future date by
action of its Board. However, it is the express intent of the Company
to maintain this Executive Plan, irrespective of any mergers,
consolidations, reorganizations or takeovers. In the event of Plan
termination, all Accrued Benefits of Participants shall immediately
vest 100%, regardless of the Years of Service of such Participants, and
such Accrued Benefits shall be payable under the same provisions as the
terminated Plan.
C. In any instance in which the Company, in its sole and uncontrolled
discretion, believes such action to be in the best interest of the
party entitled to receive any payment provided by this Plan, or to be
in the best interests of the Company (such as to eliminate small
account balances or to avoid the administrative inconvenience and
expense which might be incurred if relatively small amounts were to be
paid to multiple recipients over lengthy periods of time), amounts
payable in installments pursuant to the provisions of this Plan may be
paid in a single lump sum, the amount of which shall the actuarially
determined committed present value of the total amount of benefits
payable. It is intended by this paragraph to vest the Company with full
discretion to administer this Plan and to determine when and under what
circumstances deviations which accelerate the normal method of payments
of benefits are necessary, desirable or appropriate, and the Company
shall have full plenary power to authorize such deviations as regards
each payee separately, notwithstanding that one or more persons may be
payees of benefits relating to the same Participant. The Company will
normally consider the wishes of any payee who might request a deviation
from the normal method of payment, but shall not be obligated to honor
any request for deviation. In any case, any payment method which
deviates from the norm shall be the actuarial equivalent of the normal
method of payment as specified in Article III, Section C.
- 14 -
<PAGE> 16
D. In the event of the death of a Participant or any beneficiary
designated by him or her, the Company need not make any payment
provided for by this Plan until it shall have received proof
satisfactory to it of such death and of the identity, existence and
location of the party thereafter entitled to receive payments under
this Plan.
E. In making any payment or taking any action under this Plan, the Company
shall be absolutely protected in relying upon any finding or statement
of facts believed by it to be true, and on any written instrument
believed by it to have been signed by the proper party.
F. A Participant who becomes a part-time Employee or Consultant of the
Company after commencement of benefits under this Plan shall be
considered as having retired for purposes of Article III.
G. This Plan and all Participation Agreements entered into hereunder
shall be construed and enforced under and in accordance with the laws
of the State of Missouri.
H. All actuarial matters hereunder shall be decided by an actuary selected
by the Company in its sole discretion.
IN WITNESS WHEREOF, The Pulitzer Publishing Company has caused this Plan to be
executed, and its corporate seal to be hereunto affixed, by its officers
thereunto duly authorized this 20th day of June, 1986 , effective as of January
1, 1986.
THE PULITZER PUBLISHING COMPANY
By /s/ RONALD H. RIDGWAY
---------------------------------
Senior Vice-President - Finance
(Seal) Attest
/S/ JAMES V. MALONEY
- --------------------
Secretary
- 15 -
<PAGE> 17
EXHIBIT A
THE PULITZER PUBLISHING COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PENSION PLAN
Between
(The Participant)
and
The Pulitzer Publishing Company
(The Company)
I. In recognition of valuable services rendered and to be rendered to the
Company by the Participant, and as partial consideration for those
services, The Pulitzer Publishing Company and the Participant hereby
agree that, subject to any conditions herein, the Participant shall be
a Participant in The Pulitzer Publishing Company Supplemental
Executive Benefit Pension Plan ("the Plan"), and shall enjoy all
benefits due to the Participant under the terms of the Plan and this
agreement.
The Participant and the Company each agree to be bound by the terms
and conditions of the Plan as modified herein.
II. It is agreed that the Participant shall begin active participation in
the Plan on or as of January 1, 1986. The Participant shall
participate according to Article II while employed by the Company,
subject to the Company's right to terminate or amend the Plan in
accordance with Article VII of the Plan. Thereafter, the Participant
shall continue to be an active Participant until such time as all
benefits payable under the Plan with respect to the Participant have
been paid.
III. This Agreement is not an agreement by either party to continue the
employment of the Participant by the Company. The Company reserves the
right to terminate such employment at any time and for any reason that
it could otherwise lawfully terminate such employment. The Participant
reserves the right to terminate employment with the Company at any
time for any reason that the Participant could otherwise lawfully do
so.
IV. For purposes of determining Years of Service under this Supplemental
Plan, pursuant to Article I, Section H, and Article, Section A, the
date such Years of Service shall first be counted is defined to be
_________.
V. Name of Spouse Address and
(if any) Social Security Number
-------- ----------------------
_______________________________ _________________________________
_________________________________
S.S. No._________________________
VI. The Participant designates the following person or persons as primary
beneficiary or beneficiaries to receive any benefits payable after the
death of the Participant:
<PAGE> 18
EXHIBIT A
(Continued)
IX. The Officer of the Company who signs this Participation Agreement on
behalf of the Company affirms that:
1. He or she is an officer of The Pulitzer Publishing Company.
2. He or she has been properly authorized by the Board of Directors
to execute this Participation Agreement on behalf of the
Company.
3. The Participant named herein has properly been selected for
participation in accordance with the Plan.
In the event that any of the above affirmations are untrue, the Company shall
not be deemed a party to this Agreement and shall have no liability or
responsibility arising out of this Agreement to any person.
Executed by:
THE PULITZER PUBLISHING COMPANY
By:_________________________________________
Title:______________________________________
Date:_______________________________________
and:
The Participant:
____________________________________________
Date:_______________________________________
<PAGE> 19
EXHIBIT A
(Continued)
Primary Beneficiary(ies)
- ------------------------
<TABLE>
<CAPTION>
Share Address and
Name (%) Relationship Social Security Number
---- ----- ------------ ----------------------
<C> <C> <C> <C>
___________________________ _____ ____________ ______________________
______________________
S.S. No.______________
___________________________ _____ ____________ ______________________
______________________
S.S. No.______________
</TABLE>
The Participant designates the following person or persons as successor
beneficiary or beneficiaries to receive benefits payable after the death of the
Participant and the primary beneficiaries:
Successor Beneficiary(ies)
- --------------------------
<TABLE>
<CAPTION>
Share Address and
Name (%) Relationship Social Security Number
---- ----- ------------ ----------------------
<S> <C> <C> <C>
___________________________ _____ ____________ ______________________
______________________
S.S. No.______________
___________________________ _____ ____________ ______________________
______________________
S.S. No.______________
</TABLE>
The Participant may change the designation of beneficiaries at any time.
VII. The Participant has read this Participation Agreement and the Plan and
is aware of and accepts the terms of each. In particular, the
Participant understands that the benefits of the Plan are unsecured
contractual obligations, and the Company has no obligation whatsoever
to set aside funds in advance for the payment of benefits under the
Plan.
VIII. The Participant agrees to refrain from competition as provided for in
Article VI of the Plan as a condition of receiving benefits hereunder.
<PAGE> 1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
Agreement made as of this 1st day of October, 1986, by and
between Joseph Pulitzer, Jr. (the "Executive") and The Pulitzer Publishing
Company, a Missouri corporation with offices at 900 North Tucker Boulevard, St.
Louis, Missouri 63101 (the "Company").
WITNESSETH:
WHEREAS, the Company and the Executive executed an agreement
effective as of May 10, 1955 providing for the employment of the Executive by
the Company as editor and publisher of the St. Louis Post-Dispatch and as
president and chief executive officer of the Company upon the terms and
conditions therein stated;
WHEREAS, the Board of Directors of the Company believes that
the Company has substantially increased in value under the leadership of the
Executive and considers it vital to the interests of the Company to secure the
continued services of the Executive along with his special knowledge and
qualifications with respect to the business of the Company and its subsidiaries;
and
WHEREAS, the Board of Directors of the Company has approved
the terms and conditions of the employment of the Executive as set forth herein
and has authorized the execution and delivery of this Agreement.
<PAGE> 2
NOW, THEREFORE, in consideration of the mutual obligations
herein contained, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. Employment. (a) During the period of his employment
hereunder, the Company and the Executive agree that the Executive shall be
jointly responsible with the President of the Company for the general executive
management of the affairs of the Company reporting directly to the Board of
Directors of the Company (the "Board of Directors"), and shall continue to
serve, subject to his election as such, as Chairman of the Board of Directors
and Chairman of the Executive Committee of the Board of Directors. The Executive
further agrees, subject to his election as such and without additional
compensation, to serve as a member of any other committee of the Board of
Directors and as an officer and/or director of any subsidiary or affiliate of
the Company.
(b) The Executive hereby agrees that he will, during the
term hereof, continue to devote his best talents and abilities to the duties of
employment hereby accepted by him.
(c) The Company shall use its best efforts to cause the
Executive to be a member of its Board of Directors during the term hereof, shall
include him in the management slate for election as director at every
stockholder's meeting at which his term as a director would otherwise expire and
-2-
<PAGE> 3
shall not amend its By-Laws or take other action to reduce the scope of the
Executive's authorities and responsibilities without his prior consent.
(d) Unless the Executive otherwise consents, the
headquarters for the performance of his services shall be in the St. Louis
metropolitan area, subject to such reasonable travel as the performance of his
duties hereunder may require.
2. Term. The term of this Agreement shall be one (1) year,
commencing on the date hereof, and shall be automatically renewed for
successive one (1) year terms unless (i) at least ninety (90) days prior to
the expiration of the initial or any subsequent renewal term hereof, either
party notifies the other of its intention not to renew this Agreement, or (ii)
the Executive's employment hereunder is terminated in accordance with the
provisions of Section 8 of this Agreement.
3. Effect on Other Agreements. The employment agreement
between the Company and the Executive made on May 10, 1955 (the "1955
Agreement") shall terminate on the date hereof and shall be superseded by this
Agreement. This Agreement shall not supersede (i) the retirement arrangement
which the Company and the Executive agreed upon in 1984, as set forth in
Exhibit A hereto, and (ii) the Executive's
- 3 -
<PAGE> 4
rights to compensation under the 1955 Agreement for the period ended September
30, 1986.
4. Compensation. As compensation to the Executive for his
performance of the services to be rendered hereunder and for his performance of
all the additional obligations of employment hereunder, the Company hereby
agrees to pay the Executive and the Executive agrees to accept the following
salary, incentive compensation and benefits:
(a) Base Salary. The Company shall pay or cause
to be paid to the Executive during the initial term of this Agreement a base
salary of not less than $470,000 per annum (prorated for 1986), payable in
monthly or more frequent installments in accordance with the Company's regular
payroll practices for senior executives. The Executive's base salary hereunder
during any subsequent renewal term hereof shall be mutually agreed upon by the
Executive and the Company prior to the expiration of the initial or any
subsequent renewal term hereof.
(b) Incentive Bonus Compensation. In addition to
his base salary, the Executive shall be entitled to participate (prorated for
1986) in The Pulitzer Publishing Company Annual Incentive Compensation Plan as
effective on January 1, 1986 and as it may be amended from time to time (the
"Incentive Compensation Plan"), under which plan the
-4-
<PAGE> 5
Company currently anticipates awarding executives participating in the plans a
targeted bonus of not more than seventy-five percent (75%) of base salary
depending on the achievement of certain targeted performance goals to be
established pursuant to the terms of the Incentive Compensation Plan.
(c) Welfare, Retirement and Fringe Benefits.
The Executive shall be entitled to participate on the same basis as other senior
executives of the Company in any Company sponsored hospitalization, medical
health and accident, life insurance, disability or similar plan or program now
existing or hereafter established for the benefit of senior executives of the
Company.
The Executive shall not be eligible to participate in (i) the
Joseph Pulitzer Pension Plan, (ii) The Pulitzer Retirement Savings Plan, (iii)
the Company's Supplemental Executive Benefit Pension Plan, (iv) the Company's
1986 Employee Stock Option Plan, and (v) the Company's Key Employees' Stock
Purchase Plan.
(d) Reimbursement. The Company shall pay or
reimburse the Executive for all reasonable expenses actually incurred or paid by
the Executive during the term of this Agreement in the performance of his
services hereunder upon presentation of expense statements or vouchers or such
other supporting information as the Company customarily requires of
-5-
<PAGE> 6
its senior executives. The Company further agrees to furnish the Executive with
a private office and a private secretary and such other assistance and
accommodations as shall be suitable to the character of the Executive's position
with the Company and adequate for the performance of his duties hereunder.
5. Disability. If, during the period of his employment
hereunder, the Executive shall become mentally or physically (as determined by
the Board of Directors, whose determination shall be conclusive) disabled so
that he is unable to perform the regular duties of his employment on a full-time
basis for a period of six consecutive calendar months, he (i) shall continue to
receive the same base salary which he was receiving prior to such disability,
offset by payments under the Company's Long-Term Disability Plan, until the
expiration of the initial or any subsequent renewal term hereof or until his
death, whichever is the shortest period, and (ii) shall be eligible to receive
bonus compensation under the 1986 Bonus Plan, but such amount shall be prorated
according to the number of months of his employment by the Company during the
relevant bonus plan year of his disability.
6. Death. In the event of the Executive's death during the
initial or any subsequent renewal term hereof, his estate (i) shall receive
from the Company a monthly amount
-6-
<PAGE> 7
equal to his monthly base salary as of the date of his death for a period of
three (3) months from the date of death, and (ii) shall be eligible to receive
bonus compensation under the 1986 Bonus Plan, but such amount shall be prorated
according to the number of months of his employment by the Company during the
relevant bonus plan year of his death.
7. Vacation, Holidays and Sick Leave. The Executive shall be
entitled to such vacation per year as is consistent with past practice and such
additional leave for holidays, illness or other reasons, without loss of pay,
for such times as are consistent with the Company's current policy with respect
to such leaves.
8. Early Termination by the Company. The Executive's
employment hereunder may be terminated by the Company prior to the expiration of
the term hereof in the event of (i) the Executive's death, (ii) the Executive's
disability in accordance with Section 5 hereof and upon thirty (30) days advance
written notice, or (iii) the Company's determination that there is cause for
such termination upon ten (10) days prior written notice to the Executive. For
purposes of this Agreement, the Company shall have cause to terminate the
Executive's employment only in the event of (a) the Executive's conviction
(which, through the lapse of time or otherwise, is not subject to appeal) of any
crime or offense involving money or other property of the
-7-
<PAGE> 8
Company or its subsidiaries, (b) the Executive's performance of any act, or
failure to act, for which if he were prosecuted and convicted, a crime or
offense set forth in clause (a) of this sentence would have occurred, or (c) the
Executive's willful and continuous failure (other than as a result of
disability) to perform the duties and obligations of his employment in
accordance with the terms of this Agreement. Notwithstanding the foregoing, the
Executive's employment hereunder shall not be deemed to have been terminated for
cause unless and until there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less than two- thirds
(2/3) of the Board of Directors of the Company at a meeting called and held for
the purpose of considering the termination of his employment (after reasonable
notice to him and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board, he was
guilty of conduct set forth in the second sentence of this section and
specifying the particulars thereof in detail.
9. Withholding. All amounts payable hereunder which are or
may become subject to income tax withholding under pertinent provisions of law
or regulation shall be reduced by the amount of any income and/or employment
taxes required to be withheld.
-8-
<PAGE> 9
10. Assignability. Neither this Agreement nor any rights or
obligations hereunder may be assigned by the Executive or the Company without
the other party's written consent; provided, however, that nothing in this
Section 10 shall preclude (i) the Executive from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of the Executive or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.
11. Amendments; Waivers. This Agreement may be amended,
modified, superseded or cancelled, and the terms or covenants hereof may be
waived, only by a written instrument executed by both of the parties hereto, or
in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
-9-
<PAGE> 10
12. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to
anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, hypothecation, execution,
attachment, levy or similar process or by assignment by
operation of law and any attempt, voluntary or
involuntary, to effect any such action shall be null, void
and of no effect.
13. Notice. All notices, requests, demands and other
communications relating to this Agreement shall be in
writing and shall be personally delivered or mailed (by
registered or certified mail) to the address of the party
to whom intended as specified below or to such different
address as such party may have fixed by a notice sent in
accordance with this Section:
If to the Company, at:
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Board of Directors
-with a copy to-
Reavis & McGrath
345 Park Avenue
New York, New York 10154
Attention: Peter J. Repetti, Esq.
If to the Executive, to
him at his address on the
personnel records of Company.
-10-
<PAGE> 11
Any such notice shall be effective upon receipt, if personally delivered, or
one business day after mailing, if mailed.
14. Entire Agreement. This Agreement constitutes the entire
agreement of the parties relating to the subject matter hereof and there are no
provisions, conditions, representations or warranties, written or oral, made by
either party other than those set forth in this Agreement.
15. Governing Law. The validity, interpretation, performance
and enforcement of this Agreement shall be governed by the domestic laws of the
State of Missouri applicable to contracts negotiated, executed and to be
entirely performed within the State of Missouri, without giving effect to the
principles of conflicts of laws.
16. Severability. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provisions of this Agreement shall be held invalid in part, such invalidity
shall in no way affect the rest of such provision not held so invalid, and the
rest of such provision, together with all other provisions of this Agreement,
shall to the full extent consistent with law continue in full force and effect.
-11-
<PAGE> 12
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above set forth.
THE PULITZER PUBLISHING COMPANY
By /s/ Ronald H. Ridgway
---------------------
Ronald H. Ridgway
Senior Vice President -
Finance
Attest:
/s/ James V. Maloney /s/ Joseph Pulitzer, Jr.
- -------------------- ------------------------
James V. Maloney Joseph Pulitzer, Jr.
-12-
<PAGE> 13
ST. LOUIS POST-DISPATCH
JOSEPH PULITZER, JR. August 1, 1984
Mr. Peter J. Repetti
Reavis & McGrath
345 Park Avenue
New York, New York 10154
Dear Mr. Repetti:
Enclosed for your file is the original letter to Mr. Pulitzer from Glenn
Christopher regarding the Deferred Service Account. Also enclosed is the
original letter to Glenn Christopher from Mr. Pulitzer designating the
beneficiary.
Both Mr. Pulitzer and Glenn Christopher have machine copies of the enclosures
for their files.
Sincerely yours,
James Maloney
Administrative Assistant
Encls.
Blind copy to GAC
" " " RHR
<PAGE> 14
ST. LOUIS POST-DISPATCH
JOSEPH PULITZER, JR. [LETTERHEAD] July 31, 1984
Dear Glenn:
Pursuant to your letter of July 31, 1984, I hereby designate Emily Rauh
Pulitzer as beneficiary in the event of my death.
You have my acceptance on the original of your letter dated July 31, 1984.
Sincerely yours,
/s/ Joseph Pulitzer Jr.
Mr. Glenn A. Christropher
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
<PAGE> 15
EXHIBIT A
THE PULITZER PUBLISHING COMPANY
[GLENN A. CHRISTOPHER LETTERHEAD]
JULY 31, 1984
Mr. Joseph Pulitzer, Jr.
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Dear Mr. Pulitzer,
This will set forth the Company's (The Pulitzer Publishing Company)
understanding with respect to amounts which have been accrued in your deferred
account arising out of your employment agreement with the Company dated May 10,
1955 ("Agreement"). The deferred amount in your account as of January 1, 1984
was $1,179,144.33.
It is agreed as follows:
1. Deferred Service Account
The Company will maintain a Deferred Service Account in your name
consisting of the deferred amount set forth above as of January 1, 1984.
2. Commencement of Payments
Payment of the Deferred Service Account shall begin the month following the
cessation of your employment with the Company being, so long as your
survive, the later of (i) employment under Agreement, or (ii) employment
pursuant to any other arrangement including that as a full-time or
part-time consultant, but in any event upon your death. Monthly payments
shall be made for 120 months in the amount provided in paragraph 3. In the
event of your death prior to receiving the 120 payments, the remaining
payments shall be made to the beneficiary designated by you, or as
subsequently changed by notice filed with the Company. In the event of
your death prior to commencement of benefits, a death benefit shall be
payable to the beneficiary. The death benefit shall be 120 monthly
payments determined as if you had ceased your employment with the Company
on the first day of the month following death. In the event of the death
of a beneficiary who is receiving monthly payments, the balance of the
monthly payments shall be made to your estate.
3. Amount of Monthly Payments
Upon cessation of your employment with the Company the amount in your
Deferred Service Account shall be payable in 120 constant monthly
installments with interest at 9% per annum computed from the date of
cessation of your employment, the monthly payment being rounded to $15,000.
The Company shall not be under any obligation to you to set aside, in
advance, any funds or assets for the purpose of paying benefits hereunder.
The benefits under this agreement are unsecured promises to pay.
THE PULITZER PUBLISHING COMPANY
By /s/ GLENN A. CHRISTOPHER
---------------------------------
Glenn A. Christopher, President
AGREED AND ACCEPTED
/s/ JOSEPH PULITZER, JR.
- ------------------------
Joseph Pulitzer, Jr.
<PAGE> 16
SCHEDULE B
<TABLE>
<CAPTION>
Yearly
Monthly Interest
Payments Interest Principal Balance Payments
<S> <C> <C> <C> <C> <C>
Year 1 $14,936.91 $8,843.59 $6,093.32 $1,173,051.61
14,936.91 8,797.89 6,139.02 1,166,912.59
14,936.91 8,751.84 6,185.07 1,160,727.52
14,936.91 8,705.46 6,231.45 1,154,496.07
14,936.91 8,658.72 6,278.19 1,148,217.88
14,936.91 8,611.63 6,325.28 1,141,892.60
14,936.91 8,564.19 6,372.72 1,135,519.88
14,936.91 8,516.40 6,420.51 1,129,099.37
14,936.91 8,468.25 6,468.66 1,122,630.71
14,936.91 8,419.73 6,517.18 1,116,113.53
14,936.91 8,370.85 6,566.06 1,109,547.47
- ---------- 14,936.91 8,321.61 6,615.30 1,102,932.17 $103,030.16
Year 2 14,936.91 8,271.99 6,664.92 1,096,267.25
14,936.91 8,222.01 6,714.90 1,089,552.35
14,936.91 8,171.64 6,765.27 1,082,787.08
14,936.91 8,120.90 6,816.01 1,075,971.07
14,936.91 8,069.79 6,867.12 1,069,103.95
14,936.91 8,018.28 6,918.63 1,062,185.32
14,936.91 7,966.39 6,970.52 1,055,214.80
14,936.91 7,914.11 7,022.80 1,048,192.00
14,936.91 7,861.44 7,075.47 1,041,116.53
14,936.91 7,808.37 7,128.54 1,033,987.99
14,936.91 7,754.91 7,182.00 1,026,805.99
- ---------- 14,936.91 7,701.05 7,235.86 1,019,570.13 95,880.88
Year 3 14,936.91 7,646.78 7,290.13 1,012,280.00
14,936.91 7,592.10 7,344.81 1,004,935.19
14,936.91 7,537.01 7,399.90 997,535.29
14,936.91 7,481.51 7,455.40 990,079.89
14,936.91 7,425.60 7,511.31 982,568.58
14,936.91 7,369.27 7,567.64 975,000.94
14,936.91 7,312.51 7,624.40 967,376.54
14,936.91 7,255.32 7,681.59 959,694.95
14,936.91 7,197.71 7,739.20 951,955.75
14,936.91 7,139.67 7,797.24 944,158.51
14,936.91 7,081.19 7,855.72 936,302.79
- ---------- 14,936.91 7,022.27 7,914.64 928,388.15 88,060.94
Year 4 14,936.91 6,962.91 7,974.00 920,414.15
14,936.91 6,903.11 8,033.80 912,380.35
14,936.91 6,842.85 8,094.06 904,286.29
14,936.91 6,782.15 8,154.76 896,131.53
14,936.91 6,720.99 8,215.92 887,915.61
14,936.91 6,659.37 8,277.54 879,638.07
14,936.91 6,597.28 8,339.63 871,298.44
14,936.91 6,534.74 8,402.17 862,896.27
14,936.91 6,471.72 8,465.19 854,431.08
14,936.91 6,408.23 8,528.68 845,902.40
14,936.91 6,344.27 8,592.64 837,309.76
- ---------- 14,936.91 6,279.82 8,657.09 828,652.67 79,507.44
Year 5 14,936.91 6,214.90 8,722.01 819,930.66
14,936.91 6,149.48 8,787.43 811,143.23
14,936.91 6,083.58 8,853.33 802,289.90
14,936.91 6,017.17 8,919.74 793,370.16
14,936.91 5,950.28 8,986.63 784,383.53
14,936.91 5,882.88 9,054.03 775,329.50
14,936.91 5,814.97 9,121.94 766,207.56
14,936.91 5,746.55 9,190.36 757,017.20
14,936.91 5,677.63 9,259.28 747,757.92
14,936.91 5,608.19 9,328.72 738,429.20
14,936.91 5,538.22 9,398.69 729,030.51
</TABLE>
<PAGE> 17
SCHEDULE B (continued)
<TABLE>
<CAPTION>
Yearly
Monthly Interest
Payments Interest Principal Balance Payments
<S> <C> <C> <C> <C> <C>
- ---------- 14,936.91 5,467.73 9,469.18 719,561.33 70,151.58
Year 6 14,936.91 5,396.71 9,540.20 710,021.13
14,936.91 5,325.16 9,611.75 700,409.38
14,936.91 5,253.07 9,683.84 690,725.54
14,936.91 5,180.44 9,756.47 680,969.07
14,936.91 5,107.27 9,829.64 671,139.43
14,936.91 5,033.54 9,903.37 661,236.06
14,936.91 4,959.27 9,977.64 651,258.42
14,936.91 4,884.44 10,052.47 641,205.95
14,936.91 4,809.05 10,127.86 631,078.09
14,936.91 4,733.08 10,203.83 620,874.26
14,936.91 4,656.56 10,280.35 610,593.91
- ---------- 14,936.91 4,579.45 10,357.46 600,236.45 59,918.04
Year 7 14,936.91 4,501.78 10,435.13 589,801.32
14,936.91 4,423.51 10,513.40 579,287.92
14,936.91 4,344.66 10,592.25 568,695.67
14,936.91 4,265.22 10,671.69 558,023.98
14,936.91 4,185.18 10,751.73 547,272.25
14,936.91 4,104.54 10,832.37 536,439.88
14,936.91 4,023.30 10,913.61 525,526.27
14,936.91 3,941.45 10,995.46 514,530.81
14,936.91 3,858.98 11,077.93 503,452.88
14,936.91 3,775.90 11,161.01 492,291.87
14,936.91 3,692.18 11,244.73 481,047.14
- ---------- 14,936.91 3,607.86 11,329.05 469,718.09 48,724.56
Year 8 14,936.91 3,522.89 11,414.02 458,304.07
14,936.91 3,437.28 11,499.63 446,804.44
14,936.91 3,351.03 11,585.88 435,218.56
14,936.91 3,264.14 11,672.77 423,545.79
14,936.91 3,176.59 11,760.32 411,785.47
14,936.91 3,088.39 11,848.52 399,936.95
14,936.91 2,999.53 11,937.38 387,999.57
14,936.91 2,910.00 12,026.91 375,972.66
14,936.91 2,819.79 12,117.12 363,855.54
14,936.91 2,728.92 12,207.99 351,647.55
14,936.91 2,637.36 12,299.55 339,348.00
- ---------- 14,936.91 2,545.11 12,391.80 326,956.20 36,481.03
Year 9 14,936.91 2,452.17 12,484.74 314,471.46
14,936.91 2,358.54 12,578.37 301,893.09
14,936.91 2,264.19 12,672.72 289,220.37
14,936.91 2,169.16 12,767.75 276,452.62
14,936.91 2,073.39 12,863.52 263,589.10
14,936.91 1,976.92 12,959.99 250,629.11
14,936.91 1,879.72 13,057.19 237,571.92
14,936.91 1,781.79 13,155.12 224,416.80
14,936.91 1,683.13 13,253.78 211,163.02
14,936.91 1,583.72 13,353.19 197,809.83
14,936.91 1,483.57 13,453.34 184,356.49
- ---------- 14,936.91 1,382.68 13,554.23 170,802.26 23,088.98
Year 10 14,936.91 1,281.01 13,655.90 157,146.36
14,936.91 1,178.60 13,758.31 143,388.05
14,936.91 1,075.41 13,861.50 129,526.55
14,936.91 971.45 13,965.46 115,561.09
14,936.91 866.71 14,070.20 101,490.89
14,936.91 761.18 14,175.73 87,315.16
14,936.91 654.87 14,282.04 73,033.12
14,936.91 547.75 14,389.16 58,643.96
14,936.91 439.83 14,497.08 44,146.88
14,936.91 331.10 14,605.81 29,541.07
14,936.91 221.56 14,715.35 14,825.72
- ---------- 14,936.91 111.19 14,825.72 0.00 8,440.66
-------------- -------------- -------------- -------------- --------------
$ 1,792,429.20 $ 613,284.27 $ 1,179,144.93 xxxxxxx $ 613,284.27
============== ============== ============== ============== ==============
</TABLE>
<PAGE> 1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
Agreement made as of the 1st day of January, 1986, by and
between Michael E. Pulitzer (the "Executive") and The Pulitzer Publishing
Company, a Missouri corporation with offices at 900 North Tucker Boulevard, St.
Louis, Missouri 63101 (the "Company").
W I T N E S S E T H:
WHEREAS, the Executive serves as the President of the Board of
Directors of the Company and as editor and publisher of the Arizona Daily Star;
WHEREAS, the Board of Directors of the Company considers it
vital to the interests of the Company to secure the continued services of the
Executive along with his special knowledge and qualifications with respect to
the business of the Company and its subsidiaries; and
WHEREAS, the Board of Directors of the Company has approved
the terms and conditions of the employment of the Executive as set forth herein
and has authorized the execution and delivery of this Agreement.
NOW, THEREFORE, in consideration of the mutual obligations
herein contained, the parties hereto, intending to be legally bound hereby,
covenant and agree as follows:
1. Employment. (a) During the period of his
employment hereunder, the Company and the Executive agree
<PAGE> 2
that the Executive shall serve as President of the Company and as such shall be
jointly responsible with the Chairman of the Board of Directors of the Company
for the general executive management of the affairs of the Company, reporting
directly to the Board of Directors of the Company (the "Board of Directors").
The Executive shall continue to serve as editor and publisher of the Arizona
Daily Star and, subject to his election as such, as a director and officer of
Tucson Newspapers, Inc., all without additional compensation. The Executive
further agrees, subject to his election as such and without additional
compensation, to serve as a member of the Board of Directors, as a member of the
Executive and Finance Committees of the Board of Directors, as a member of any
other committee of the Board of Directors, and as an officer and/or director of
any other subsidiary or affiliate of the Company.
(b) The Executive hereby agrees that he will, during
the term hereof, devote his full time, best talents and abilities to the duties
of employment hereby accepted by him.
(c) The Company shall use its best efforts to cause
the Executive to be a member of its Board of Directors during the term hereof,
shall include him in the management slate for election as director at every
stockholder's meeting at which his term as a director would otherwise expire and
-2-
<PAGE> 3
shall not amend its By-Laws or take other action to reduce the scope of the
Executive's authorities and responsibilities without his prior consent.
(d) Unless the Executive otherwise consents, the
headquarters for the performance of his services shall be in the St. Louis
metropolitan area, subject to reasonable travel as the performance of his
duties hereunder may require.
2. Term. The term of this Agreement shall be one (1) year,
commencing on the date hereof, and shall be automatically renewed for successive
one (1) year terms unless (i) at least ninety (90) days prior to the expiration
of the initial or any subsequent renewal term hereof, either party notifies the
other of its intention not to renew this Agreement, or (ii) the Executive's
employment hereunder is terminated in accordance with the provisions of Section
9 of this Agreement.
3. Compensation. As compensation to the Executive for his
performance of the services to be rendered hereunder and for his performance of
all the additional obligations of employment hereunder, the Company hereby
agrees to pay the Executive and the Executive agrees to accept the following
salary, incentive compensation and benefits:
-3-
<PAGE> 4
(a) Base Salary. The Company shall pay or cause to
be paid to the Executive during the initial term of this Agreement a base
salary of not less than $300,000 per annum, payable in monthly or more frequent
installments in accordance with the Company's regular payroll practices for
senior executives. The Executive's base salary hereunder during any subsequent
renewal term hereof shall be mutually agreed upon by the Executive and the
Company prior to the expiration of the initial or any subsequent renewal term
hereof.
(b) Incentive Bonus Compensation. In addition to his
base salary, the Executive shall be entitled to participate in The Pulitzer
Publishing Company Annual Incentive Compensation Plan as effective on January 1,
1986 and as it may be amended from time to time (the "1986 Bonus Plan"), under
which plan the Company currently anticipates awarding executives participating
in the plan a targeted bonus of not more than seventy-five percent (75%) of base
salary depending on the achievement of certain targeted performance goals to be
established pursuant to the terms of the 1986 Bonus Plan.
4. Reimbursement of Expenses. The Company shall pay or
reimburse the Executive for all reasonable travel and other expenses incurred
by him in performing his obligations hereunder. The Company further agrees to
furnish the
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<PAGE> 5
Executive with a private office and a private secretary and such other
assistance and accommodations as shall be suitable to the character of the
Executive's position with the Company and adequate for the performance of his
duties hereunder.
5. Participation in Benefit Plans. Subject to applicable
eligibility requirements and in accordance with the terms thereof, the Executive
shall be entitled to participate in and receive benefits under all (i) group
hospitalization, health, dental care, long-term disability sick-leave plans,
(ii) life or other insurance or death benefit plans, (iii) travel or accident
insurance, auto allowance or auto lease plans, (iv) executive contingent
compensation plans, including, without limitation, the 1986 Bonus Plan, but
excluding the Company's Restricted Stock Purchase Plan and the Company's 1986
Employee Stock Option Plan, (v) retirement income or pension plans, including,
without limitation, the Joseph Pulitzer Pension Plan, The Pulitzer Retirement
Savings Plan, and The Pulitzer Publishing Company Supplemental Executive Benefit
Pension Plan, and (iv) any other present or future group employee benefit plans
or programs established and maintained by the Company for the benefit of its key
executives.
6. Disability. If, during the period of his employment
hereunder, the Executive shall become mentally or physically disabled (as
determined by the Board of Directors,
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<PAGE> 6
whose determination shall be conclusive) so that he is unable to perform the
regular duties of his employment on a full-time basis for a period of six
consecutive calendar months, he (i) shall continue to receive the same base
salary which he was receiving prior to such disability, offset by payments under
the Company's Long-Term Disability Plan, until the expiration of the initial or
any subsequent renewal term hereof or until his death, whichever is the shortest
period, and (ii) shall be eligible to receive bonus compensation under the 1986
Bonus Plan, but such amount shall be prorated according to the number of months
of his employment by the Company during the relevant bonus plan year of his
disability.
7. Death. In the event of the Executive's death during the
initial or any subsequent renewal term hereof, his estate (i) shall receive from
the Company a monthly amount equal to his monthly base salary as of the date of
his death for a period of three (3) months from the date of his death, and (ii)
shall be eligible to receive bonus compensation on the 1986 Bonus Plan, but such
amount shall be prorated according to the number of months of his employment by
the Company during the relevant bonus plan year of his death.
8. Vacation, Holidays and Sick Leave. The Executive shall be
entitled to a minimum of six (6) weeks of vacation per year and such additional
leave for holidays,
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<PAGE> 7
illness or other reasons, without loss of pay, for such times as are consistent
with the Company's current policy with respect to such leaves.
9. Early Termination by the Company. The Executive's
employment hereunder may be terminated by the Company prior to the expiration of
the term hereof in the event of (i) the Executive's death, (ii) the Executive's
disability for the period specified in accordance with Section 6 hereof and upon
thirty (30) days advance written notice, or (iii) the Company's determination
that there is cause for such termination upon ten (10) days prior written notice
to the Executive. For purposes of this Agreement, the Company shall have cause
to terminate the Executive's employment only in the event of (a) the Executive's
conviction (which, through the lapse of time or otherwise, is not subject to
appeal) of any crime or offense involving money or other property of the Company
or its subsidiaries, (b) the Executive's performance of any act, or failure to
act, for which if he were prosecuted and convicted, a crime or offense set forth
in clause (a) of this sentence would have occurred, or (c) the Executive's
willful and continuous failure (other than as a result of disability) to perform
the duties and obligations of his employment in accordance with the terms of
this Agreement. Notwithstanding the foregoing, the Executive's employment
hereunder shall not be deemed to
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<PAGE> 8
have been terminated for cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than two thirds (2/3) of the Board of Directors of the Company at a meeting
called and held for the purpose of considering the termination of his employment
(after reasonable notice to him and an opportunity for him, together with his
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, he was guilty of conduct set forth in the second sentence of this
section and specifying the particulars thereof in detail.
10. Effect of Prior Agreements. This Agreement contains the
entire understanding between the parties hereto and supersedes any prior
employment agreement between the Company, or any predecessor of the Company, and
the Executive, except that this Agreement shall not affect or operate to reduce
any benefit or compensation inuring to the Executive of a kind elsewhere
provided and not expressly provided herein.
11. Withholding. All amounts payable hereunder which are or
may become subject to income tax withholding under pertinent provisions of law
or regulation shall be reduced by the amount of any income and/or employment
taxes required to be withheld.
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12. Assignability. Neither this agreement nor any rights or
obligations hereunder may be assigned by the Executive or the Company without
the other party's written consent; provided, however, that nothing in this
Section 12 shall preclude (i) the Executive from designating a beneficiary to
receive any benefit payable hereunder upon his death, or (ii) the executors,
administrators or other legal representatives of the Executive or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.
13. Amendments; Waivers. This Agreement may be amended,
modified, superseded or cancelled, and the terms or covenants hereof may be
waived, only by a written instrument executed by both of the parties hereto, or
in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
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<PAGE> 10
14. No Attachment. Except as required by law, no right to
receive payments under this Agreement shall be subject to anticipation,
commutation, alienation, sale, assignment, encumbrance, charge, pledge,
hypothecation, execution, attachment, levy or similar process or by assignment
by operation of law, and any attempt, voluntary or involuntary, to effect any
such action shall be null, void and of no effect.
15. Notice. All notices, requests, demands and other
communications relating to this Agreement shall be in writing and shall be
personally delivered or mailed (by registered or certified mail) to the address
of the party to whom intended as specified below or to such different address as
such party may have fixed by a notice sent in accordance with this Section:
If to the Company, at:
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Chairman of the Board
-with a copy to-
Reavis & McGrath
345 Park Avenue
New York, New York 10154
Attention: Peter J. Repetti, Esq.
If to the Executive, to
him at his address on the personnel
records of Company.
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<PAGE> 11
Any such notice shall be effective upon receipt, if personally delivered, or one
business day after mailing, if mailed.
16. Entire Agreement. This Agreement constitutes the entire
agreement of the parties relating to the subject matter hereof and there are no
provisions, conditions, representations or warranties, written or oral, made by
either party other than those set forth in this Agreement.
17. Governing Law. The validity, interpretation, performance
and enforcement of this Agreement shall be governed by the domestic laws of the
State of Missouri applicable to contracts negotiated, executed and to be
entirely performed within the State of Missouri, without giving effect to the
principles of conflicts of laws.
18. Severability. If, for any reason, any provision of this
Agreement is held invalid, such invalidity shall not affect any other provision
of this Agreement not held so invalid, and each such other provision shall to
the full extent consistent with law continue in full force and effect. If any
provision of this Agreement shall be held invalid in part, such invalidity shall
in no way affect the rest of such provision not held so invalid, and the rest of
such provision, together with all other provisions of this Agreement, shall to
the full extent consistent with law continue in full force and effect.
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<PAGE> 12
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the day and year first above set forth.
THE PULITZER PUBLISHING COMPANY
By /s/ Ronald H. Ridgway
---------------------
Ronald H. Ridgway
Senior Vice President-
Finance
Attest:
/s/ James V. Maloney /s/ Michael E. Pulitzer
- -------------------- -----------------------
James V. Maloney Michael E. Pulitzer
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<PAGE> 1
EXHIBIT 10.22
FORM OF CONTRIBUTION AND ASSUMPTION AGREEMENT
This Contribution and Assumption Agreement (this "Agreement"), dated as
of ________ __, 1998, is made by and between Pulitzer Publishing Company, a
Delaware corporation (the "Company"), and Pulitzer Inc., a Delaware corporation
and wholly owned subsidiary of the Company ("Newco"). Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
ascribed thereto in the Agreement and Plan of Merger, dated as of May 25, 1998,
among the Company, Newco and Hearst-Argyle Television, Inc., a Delaware
corporation ("Acquiror") to which a form of this Agreement is annexed as Exhibit
C (the "Merger Agreement").
RECITALS
WHEREAS, pursuant to the Merger Agreement, the Company has agreed to
contribute to Newco and/or its wholly-owned Subsidiaries (collectively, the
"Newco Group") all of the assets of the Company, except those specifically
identified in Section 2.02(a) of the Merger Agreement, pursuant to the terms of
this Agreement, as a step in a series of transactions as a result of which (i)
Acquiror will acquire Broadcasting and the Broadcasting Assets by means of a
merger of the Company with and into Acquiror, and (ii) the Newco Group will
conduct the businesses previously conducted by the Company and its Subsidiaries
(other than the operations of Broadcasting).
NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereto agree as follows:
ARTICLE I
CONTRIBUTION AND ASSUMPTION
1.01 CONTRIBUTION OF ASSETS.
(a) Subject to Section 1.01(b), effective immediately prior to
the Distribution (the "Time of Contribution") the Company hereby contributes,
grants, conveys, assigns, transfers and delivers to the Newco Group, without
recourse (the "Contribution"), all of the Company's right, title and interest in
and to the following (collectively, the "Contributed Assets"): (i) any and all
assets of the Company, whether tangible or intangible and whether fixed,
contingent or otherwise, including, without limitation, the capital stock or
other equity interests of all its Subsidiaries, (ii) the name "Pulitzer" or any
part thereof whether alone or in combination with one or more other words (iii)
all real property, furniture, fixtures, equipment, tools, vehicles, supplies,
buildings, improvements, accounts receivable, notes, prepaid expenses,
securities,
<PAGE> 2
patents, trademarks, trade names, copyrights, Licenses, leases and contract
rights, and (iv) all other tangible or intangible assets of the Company wherever
located.
(b) Notwithstanding Section 1.01(a), the Company hereby retains
and does not contribute, grant, convey, assign, transfer or deliver to the Newco
Group (i) the issued and outstanding capital stock of PBC or the Broadcasting
Subsidiaries; (ii) the Broadcasting Assets; and (iii) the Company's rights
created pursuant to the Merger Agreement, this Agreement and the Transaction
Agreements.
(c) Notwithstanding anything contained in this Agreement or in
the Merger Agreement to the contrary, the Newco Group acknowledges and agrees
that the Company makes and has made no warranty, either express or implied,
including without limitation warranties of merchantability or fitness for a
particular purpose, with respect to any Contributed Assets.
1.02 ASSUMPTION OF LIABILITIES.
(a) Subject to Sections 1.02(b) and 1.07 hereof, effective as of
the Time of Contribution, the Newco Group, in partial consideration for the
Contribution, hereby unconditionally assumes and agrees to pay, satisfy and
discharge any and all liabilities of the Company of every kind whatsoever,
whether absolute, known, unknown, fixed, contingent or otherwise, that exist as
of the date hereof or exist as of, or otherwise relate to any period ending on
or prior to the Effective Time (the "Assumed Liabilities").
(b) Notwithstanding Section 1.02(a), the Company hereby retains,
and the Newco Group does not assume and will have no liability with respect to
the following (collectively, the "Retained Liabilities"): (i) the New Company
Debt; (ii) any liabilities associated with the radio and/or television business
operations of Broadcasting or the Broadcasting Assets except as otherwise
specifically provided in the Merger Agreement, including Sections 6.06(g), 6.09,
6.11, 6.25 and 6.28 thereof; and (iii) the Company's obligations created
pursuant to the Merger Agreement, this Agreement and the Transaction Agreements.
(c) It is expressly agreed by the parties hereto that all of the
obligations of Newco under the Merger Agreement this Agreement and the
Transaction Agreements shall be treated as Assumed Liabilities and not as
Retained Liabilities under this Agreement.
1.03 ISSUANCE OF NEWCO STOCK. In partial consideration for the
Contribution, at the Time of Contribution Newco shall issue and deliver to the
Company at the Company's request prior to the Distribution the following:
(i) such number of newly issued shares of Newco Common Stock as
will be required for the Distribution; and
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<PAGE> 3
(ii) such number of newly issued shares of Newco Class B Common
Stock as will be required for the Distribution.
1.04 TRANSFER AND ASSUMPTION DOCUMENTATION. In furtherance of the
contribution, grant, conveyance, assignment, transfer and delivery of the
Contributed Assets and the assumption of the Assumed Liabilities set forth in
this Article I, at the Time of Contribution or as promptly as practicable
thereafter, (i) the Company shall execute and deliver, and cause its
Subsidiaries to execute and deliver, such deeds, bills of sale, stock powers,
certificates of title, assignments of leases and contracts and other instruments
of contribution, grant, conveyance, assignment, transfer and delivery necessary
to evidence such contribution, grant, conveyance, assignment, transfer and
delivery and (ii) the Newco Group shall execute and deliver such instruments of
assumption as and to the extent necessary to evidence such assumption.
1.05 NONASSIGNABLE CONTRACTS. Anything contained herein to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
lease, license agreement, contract, agreement, sales order, purchase order, open
bid or other commitment or asset (each an "Applicable Asset") if an assignment
or attempted assignment of the same, without the consent of the other party or
parties thereto, would constitute a breach thereof or in any way impair the
rights of the Company or the Newco Group thereunder. The Company shall, prior to
the Time of Contribution, use reasonable best efforts (it being understood that
such efforts shall not include any requirement of the Company to expend money or
offer or grant any financial accommodation) as requested by the Newco Group, and
the Newco Group shall cooperate in all reasonable respects with the Company, to
obtain all consents and waivers and to resolve all impracticalities of
assignments or transfers necessary to convey the Contributed Assets to the Newco
Group. If any such consent is not obtained or if any attempted assignment would
be ineffective or would impair the Newco Group's rights with respect to any
Applicable Asset so that the Newco Group would not receive all such rights, then
(x) the Company shall use reasonable best efforts (it being understood that such
efforts shall not include any requirement of the Company to expend money or
offer or grant any financial accommodation) to provide or cause to be provided
to the Newco Group, to the extent permitted by law, the benefits of any such
Applicable Asset and the Company shall promptly pay or cause to be paid to the
Newco Group when received all moneys received by the Company with respect to any
such Applicable Asset and (y) in consideration thereof the Newco Group shall
pay, perform and discharge on behalf of the Company all of the Company's debts,
liabilities, obligations and commitments thereunder in a timely manner and in
accordance with the terms thereof. In addition, the Company shall take such
other actions (at Newco's expense) as may reasonably be requested by Newco in
order to place Newco, insofar as reasonably possible, in the same position as if
such Applicable Asset had been transferred as contemplated hereby and so all the
benefits and burdens related thereto, including possession, use, risk of loss,
potential for gain and dominion, control and command, shall inure to Newco. If
and when such consents and proposals are obtained,
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<PAGE> 4
the transfer of the Applicable Asset shall be effected in accordance with the
terms of this Agreement.
1.06 EMPLOYEE BENEFITS. All Company Employee Plans are subject to the
terms of SECTION 6.11 of the Merger Agreement, and all obligations of Newco
under such Section shall be treated as Assumed Liabilities and not as Retained
Liabilities under this Agreement.
1.07 EMPLOYEE STOCK OPTIONS. All plans and arrangements with respect to
the Company's employee stock options and restricted stock awards in place as of
the date hereof and all options and awards outstanding thereunder as of the date
hereof are subject to the terms of SECTION 6.12 of the Merger Agreement.
1.08 FURTHER ASSURANCES. Each of the parties hereto promptly shall
execute such documents and other instruments and take such further actions as
may be reasonably required or desirable to carry out the provisions hereof and
to consummate the transactions contemplated hereby.
1.09 TAX MATTERS. Notwithstanding anything to the contrary in this
Agreement, liabilities of the parties for Taxes are subject to the terms of
Section 6.09 of the Merger Agreement, and all obligations of Newco under Section
6.09 of the Merger Agreement shall be treated as Assumed Liabilities and not as
Retained Liabilities under this Agreement. The Contribution and the Merger are
intended to qualify as tax-free reorganizations within the meaning of Sections
368(a)(1)(D) and 368(a)(1)(A) of the Code, respectively, and the Distribution is
intended to be subject to Section 355(a) of the Code.
1.10 COOPERATION. The parties shall cooperate with each other in all
reasonable respects in order to ensure the smooth transfer of the Contributed
Assets, the Assumed Liabilities and the businesses related thereto, including,
without limitation, entering into any service or other sharing agreements that
may be reasonably necessary.
1.11 OTHER MATTERS. After the Effective Time and except as otherwise
provided herein or in the Merger Agreement, neither the Surviving Corporation
nor any of its Subsidiaries shall have any liability to the Newco Group in
respect of any intra-company contract, commitment or account in existence
immediately prior to the Effective Time among the Company, Newco and/or any of
their respective Subsidiaries.
ARTICLE I
INDEMNIFICATION
2.01 INDEMNIFICATION BY THE COMPANY. The Company shall indemnify,
defend and hold harmless the Newco Group and their respective
successors-in-interest and each of their respective past and present officers
and directors against
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<PAGE> 5
any losses, claims, damages or liabilities, joint or several, arising out of or
in connection with the Retained Liabilities, the Retained Assets or the
operations of Broadcasting, except as otherwise provided in the Merger
Agreement, including Sections 6.06(g), 6.09, 6.11, 6.25 and 6.28. The Company
shall reimburse the Newco group, each of its Subsidiaries, each of their
respective successors-in-interest, and each of their respective past and present
officers and directors for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage or liability referred to in the preceding sentence.
2.02 INDEMNIFICATION BY NEWCO. Newco shall indemnify, defend and hold
harmless the Company, PBC and each of the Broadcasting Subsidiaries and their
respective successors-in-interest, and each of their respective past and present
officers and directors against any losses, claims, damages or liabilities, joint
or several, arising out of or in connection with the Assumed Liabilities, the
Contributed Assets or the operations of any of the businesses contributed to the
Newco Group, except as otherwise provided in the Merger Agreement, including
SECTIONS 6.06(F), 6.09, and 6.25 thereof. Newco shall reimburse the Company, PBC
and each of the Broadcasting Subsidiaries, each of their respective
successors-in-interest and each of their past and present respective officers
and directors for any legal or any other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage
or liability referred to in the preceding sentence.
2.03 NOTIFICATION OF CLAIMS. For the purpose of this Article II, the
term "Indemnifying Party" shall mean the party having an obligation hereunder to
indemnify the other party pursuant to this Article II, and the term "Indemnified
Party" shall mean the party having the right to be indemnified pursuant to this
Article II. Whenever any claim shall arise for indemnification under this
Article II, the Indemnified Party shall promptly notify the Indemnifying Party
in writing of such claim and, when known, the facts constituting the basis for
such claim (in reasonable detail). Failure by the Indemnified Party to so notify
the Indemnifying Party shall not relieve the Indemnifying Party of any liability
hereunder except to the extent that such failure materially prejudices the
Indemnifying Party.
2.04 INDEMNIFICATION PROCEDURES.
(a) After receipt of the notice of claim required by Section
2.03, if the Indemnifying Party undertakes to defend any such claim, then the
Indemnifying Party shall be entitled, if it so elects, to take control of the
defense and investigation with respect to such claim and to employ and engage
attorneys of its own choice, reasonably acceptable to the Indemnified Party, to
handle and defend the same, at the Indemnifying Party's cost, risk and expense,
upon written notice to the Indemnified Party of such election, which notice
acknowledges the Indemnifying Party's obligation to provide indemnification
hereunder. The Indemnifying Party shall not settle any third-party claim that is
the subject of indemnification without the written consent of the Indemnified
Party, which consent shall not be unreasonably withheld; provided, however, that
the Indemnifying Party may settle a claim without the Indemnified
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<PAGE> 6
Party's consent if such settlement (i) makes no admission or acknowledgement of
liability or culpability with respect to the Indemnified Party, (ii) includes a
complete release of the Indemnified Party, and (iii) does not require the
Indemnified Party to make any payment or forego or take any action or otherwise
materially adversely affect the Indemnified Party. The Indemnified Party shall
cooperate in all reasonable respects with the Indemnifying Party and its
attorneys in the investigation, trial and defense of any lawsuit or action with
respect to such claim and any appeal arising therefrom (including the filing in
the Indemnified Party's name of appropriate cross-claims and counterclaims). The
Indemnified Party may, at its own cost and expense, participate in any
investigation, trial and defense of such lawsuit or action controlled by the
Indemnifying Party and any appeal arising therefrom.
(b) If, after receipt of a notice of claim pursuant to Section
2.03, the Indemnifying Party does not undertake to defend any such claim, the
Indemnified Party may, but shall have no obligation to, contest any lawsuit or
action with respect to such claim and the Indemnifying Party shall be bound by
the result obtained with respect thereto by the Indemnified Party (including,
without limitation, the settlement thereof without the consent of the
Indemnifying Party). If there are one or more legal defenses available to the
Indemnified Party that conflict with those available to the Indemnifying Party
or there is otherwise an actual or potential conflict of interest, the
Indemnified Party shall have the right, at the expense of the Indemnifying
Party, to assume the defense of the lawsuit or action; provided, however, that
the Indemnified Party may not settle such lawsuit or action without the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed.
2.05 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The parties hereto
irrevocably: (a) agree that any suit, action or other legal proceeding arising
out of this Agreement may be brought in the courts of the State of New York or
the courts of the United States located in New York County, New York, (b)
consent to the jurisdiction of each court in any such suit, action or
proceeding, (c) waive any objection which they, or any of them, may have to the
laying of venue of any such suit, action or proceeding in any of such courts,
and (d) waives the right to a trial by jury in any suit, action or other legal
proceeding. Each of the Company and Newco agrees that service of any and all
process which may be served in any such suit, action or other proceeding may be
made by written notice in accordance with the provisions of this Agreement, and
that such service of process on the Company or Newco (as the case may be) or
with respect to Newco, its successors or assigns and, to the extent permitted by
applicable law, shall be taken and held to be valid personal service.
2.06 SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify
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<PAGE> 7
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the fullest extent possible.
2.07 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any right preclude other or further exercises
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
ARTICLE I
MISCELLANEOUS
3.01 ENTIRE AGREEMENT. This Agreement, together with the Merger
Agreement, constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
3.02 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, regardless of the laws
that might otherwise govern under principles of conflicts of laws applicable
thereto.
3.03 DESCRIPTIVE HEADINGS. The descriptive headings herein are inserted
for convenience of reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
3.04 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopy with confirmation of transmission, by express or overnight mail
delivered by a nationally recognized air courier (delivery charges prepaid), or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:
If to the Company (prior to the Merger) or Newco:
Pulitzer Publishing Company
Pulitzer Inc.
900 North Tucker Boulevard
St. Louis, Missouri 63101
Attention: Michael E. Pulitzer
Telecopy: (314) 340-3125
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<PAGE> 8
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Richard A. Palmer, Esq.
Telecopy: (212) 752-5958
If to the Company (after the Merger):
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, New York 10106
Attention: Dean M. Blythe
Telecopy: (212) 489-2314
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Attention: Steven A. Hobbs
Telecopy: (212) 878-8375
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy or by air courier shall
be deemed effective on the first business day at the place at which such notice
or communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the fifth business day at the place
from which such notice or communication was mailed following the day on which
such notice or communication was mailed.
3.05 PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement, except
as provided in Sections
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3.07 and 3.08 and except for Article II (which are intended to be for the
benefit of the Persons provided for therein and may be enforced by such
Persons).
3.06 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
3.07 PERSONAL LIABILITY. This Agreement shall not create or be deemed
to create or permit any personal liability or obligation on the part of any
direct or indirect stockholder of any party hereto or any officer, director,
employee, agent, representative or investor of any party hereto.
3.08 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives and successors, including the Surviving Corporation in the
Merger. This Agreement may not be assigned by any party hereto and any purported
assignment in violation hereof shall be null and void.
3.09 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
3.10 LEGAL FEES, COSTS. If any party hereto institutes any action or
proceeding, whether before a court or arbitrator, to enforce any provision of
this Agreement, the prevailing party therein shall be entitled to receive from
the losing party reasonable attorneys' fees and costs incurred in such action or
proceeding, whether or not such action or proceeding is prosecuted to judgment.
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<PAGE> 10
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
PULITZER PUBLISHING COMPANY
By:
--------------------------------
Name: Michael E. Pulitzer
Title: Chairman and Chief
Executive Officer
PULITZER INC.
By:
--------------------------------
Name: Michael E. Pulitzer
Title: Chairman and Chief
Executive Officer
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<PAGE> 1
EXHIBIT 10.23
May 25, 1998
Hearst-Argyle Television, Inc.
959 Eighth Avenue
New York, New York 10106
Ladies and Gentlemen:
Reference is made to that certain Agreement and Plan of Merger by
and among Pulitzer Publishing Company (the "Company"), Pulitzer Inc. ("Newco")
and Hearst-Argyle Television, Inc. ("Acquiror"), dated of even date herewith
(the "Merger Agreement") (the Company, Newco, and Acquiror, collectively herein,
the "Parties"). Capitalized terms used and not defined herein will have the same
meanings assigned to them in the Merger Agreement.
On the Consummation Date (as defined below), Acquiror shall
acquire, and Newco shall cause to be transferred, assigned and delivered to
Acquiror (by delivery of the stock certificates therefor accompanied by stock
powers endorsed in favor of Acquiror), all the issued and outstanding shares of
capital stock (the "Shares") of Pulitzer Sports, Inc. ("PSI"), free and clear of
all Liens other than the Baseball Consents (as defined below).
In consideration of the transfer, assignment and delivery of the
Shares to Acquiror, Acquiror shall wire transfer to Newco, on the Consummation
Date, the sum of $5,000,000.00.
The Consummation Date shall be the later of (i) the Effective Time
or (ii) three (3) business days after all necessary consents and authorizations
of Major League Baseball and the National League with respect to the
transactions contemplated hereby (the "Baseball Consents").
Newco represents, warrants and covenants that:
1. On the date hereof, all of the Shares are, and on the
Consummation Date the Shares will be, duly authorized, validly issued, fully
paid and non-assessable. There are no, and on the Consummation Date there will
not be, any voting trusts, proxies or other agreements to which PSI is a party
with respect to the voting of the capital stock of PSI. PBC owns, and on the
Consummation Date Newco will own, and Newco will convey to Acquiror valid title
to, the Shares, free and clear of all Liens other than the Baseball Consents.
The Shares constitute, and on the Consummation Date will constitute, all of the
issued and outstanding capital stock of PSI, and there are, and on the
Consummation Date there will be, no outstanding options, warrants, rights or
other securities which upon conversion, exchange or exercise would require PSI
to issue any shares of its capital stock.
<PAGE> 2
2. PSI has, and on the Consummation Date will have, no liabilities
or obligations except pursuant to the Third Amended and Restated Agreement of
Limited Partnership of AZPB Limited Partnership, dated December 31, 1996, as it
may be amended from time to time (the "Partnership Agreement").
3. PSI owns, and on the Consummation Date will own, valid title to
partnership interests in AZPB Limited Partnership for which interests PSI paid
an aggregate of $6,000,000, free and clear of all Liens other than the Baseball
Consents, and subject to the terms and conditions of the Partnership Agreement.
The Parties will cooperate with one another and take commercially
reasonable steps to obtain the Baseball Consents.
The rights and obligations of the Parties hereunder shall
automatically terminate upon termination of the Merger Agreement in accordance
with Section 8.01 thereof, and thereafter no Party shall have any further
obligation or liability to any other Party hereto.
This Letter Agreement incorporates by reference the provisions of
Article IX of the Merger Agreement, provided that all references to "this
Agreement" therein shall be deemed to refer to this Letter Agreement and the
reference to the "Closing Date" in Section 9.01 thereunder shall be deemed to
refer to the Consummation Date.
If this Letter Agreement correctly sets forth our agreement, please
so indicate in the space provided below.
Very truly yours,
PULITZER PUBLISHING COMPANY
PULITZER INC.
By:/s/ Michael E. Pulitzer
------------------------
Name: Michael E. Pulitzer
Title: Chairman of the Board,
Agreed and Accepted President and Chief
Executive Officer
HEARST-ARGYLE TELEVISION, INC.
By:/s/ Dean H. Blythe
--------------------------
Name: Dean H. Blythe
Title: Senior Vice President -
Corporate Development,
Secretary and General Counsel
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<PAGE> 1
EXHIBIT 10.14
The Pulitzer Publishing Company
900 North Tucker Boulevard
St. Louis, Missouri 63101
October 21, 1986
Mr. David E. Moore
8 Bird Lane
Rye, New York 10580
Dear David:
This letter will confirm the mutual agreement between you and
The Pulitzer Publishing Company (the "Company") regarding your provision of
consulting services to the Company:
1. From January 1, 1986 through December 31, 1986 (the
"Consulting Period"), you agree to provide consulting and advisory services to
the Company and its subsidiaries as requested by the Chairman of the Board of
Directors or the President of the Company; provided, however, that any such
request will not interfere with your normal business activities. Such services
generally will consist of providing managerial advice regarding the business
operations of the Company and its subsidiaries and general business advice
<PAGE> 2
regarding long-term strategic planning, and may be rendered at the Company's
office in St. Louis, Missouri, or at any other mutually agreeable location. The
Consulting Period will be extended automatically on a year-to-year basis unless
a party furnishes written notice to the other party of its intent to terminate
this agreement not later than December 1 of any calendar year.
2. During the Consulting Period, the Company's management will
use its best efforts to cause you to be a member of the Board of Directors, the
Long-Range Planning Committee, the Executive Committee and the Compensation
Committee, and will include you on the management slate for election as a
director at every stockholder's meeting at which your term as a director would
otherwise expire. For such service, you will receive the fees, including
reimbursement for expenses, payable to an outside director of the Company or to
members of any such committee, as applicable.
3. In consideration of your services as a consultant as
described under paragraph 1, the Company will pay compensation to you as
described below:
(a) The Company will pay you, on a monthly basis, $50,000 per
calendar year. Payments will be made within ten days after the last business day
of the month during which such consulting services are performed.
Notwithstanding the foregoing, for 1986 $41,668 will be paid on the execution of
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<PAGE> 3
this agreement and $4,166 will be paid for each of November and December.
(b) Upon the presentation of receipts and other proper
documentation, the Company will reimburse you, as soon as practicable, for all
ordinary and necessary business expenses incurred by you while providing
consulting services to the Company.
(c) The Company will make available suitable office space and
secretarial services at its St. Louis office as you may reasonably require from
time to time in order to provide consulting services.
4. Notwithstanding paragraph 1, the Consulting Period and the
mutual obligations between you and the Company as described herein will
terminate upon your death or disability. For this purpose, "disability" means a
mental or physical condition as determined by the Board of Directors of the
Company which prevents you from providing the consulting services described
under paragraph 1 for six consecutive calendar months.
5. During the Consulting Period, you will not be precluded
from accepting employment with an employer unrelated to the Company and its
subsidiaries or from engaging in any business or other consulting arrangements;
provided, however, such other employment, business or arrangement must not be
competitive with any business of the
-3-
<PAGE> 4
Company and its subsidiaries. For this purpose, employment with American City
Business Journals shall not violate this agreement.
6. Any notice described herein will be sent to the Company, if
applicable, at its office in St. Louis, Missouri, and to you, if applicable, at
your residence in Rye, New York.
7. The mutual obligations described herein will be binding on
and inure to the benefit of the Company and any successor-in-interest to the
Company and be binding on and inure to the benefit of, and be enforceable by,
you and your personal or legal representative and heirs.
8. The mutual obligations described herein may not be
modified, except by a written instrument signed by you and the Company, and will
be construed in accordance with the laws of the State of Missouri.
If the foregoing provisions correctly describe the agreement
between you and the Company regarding your performance of consulting services
for the Company, please sign and return the enclosed copy of this letter.
Sincerely,
Joseph Pulitzer, Jr.
/s/ David E. Moore
- ------------------
David E. Moore
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<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF PULITZER INC.
- -----------------------------
The Registrant is currently a wholly-owned subsidiary of Pulitzer Publishing
Company ("Pulitzer").
On May 25, 1998, Pulitzer, the Registrant and Hearst-Argyle Television, Inc.
("Hearst-Argyle") entered into an Agreement and Plan of Merger pursuant to
which Hearst-Argyle will acquire Pulitzer's television and radio broadcasting
operations. Prior to the Merger and pursuant to the terms of a Contribution
and Assumption Agreement, Pulitzer will contribute, among other things, its
newspaper publishing and related new media assets and liabilities to the
Registrant (the "Contribution") and distribute (i) to each holder of Pulitzer
common stock one fully-paid and non-assessable share of the Registrant's common
stock for each share of Pulitzer common stock held and (ii) to each holder of
Pulitzer Class B common stock one fully-paid and non-assessable share of the
Registrant's Class B common stock for each share of Pulitzer Class B common
stock held (the "Distribution"). The Contribution and Distribution collectively
constitute the "Spin-off" of the Registrant from Pulitzer.
Immediately following the Spin-off, the following current subsidiaries of
Pulitzer will be subsidiaries of the Registrant:
Star Publishing Company
Pulitzer Technologies, Inc.
News Information, Inc.
WEJ Investment Company
Pulitzer Ventures, Inc.
Pulitzer Sports, Inc.
Lerner Newspapers, Inc.
Pulitzer Community Newspapers, Inc. and its wholly-owned subsidiaries:
PCN Service Company
Hanford Sentinel, Inc.
Pulitzer Missouri Newspapers, Inc.
Napa Valley Publishing Company
Flagstaff Publishing Company
Santa Maria Times, Inc.
Haverhill Publishing, Inc.
Sonoma-Marin Publishing Company
Kauai Publishing Company
Northern Lakes Publishing Company
Northern Illinois Publishing Company
Southwestern Oregon Publishing Company
Eastern Missouri Publishing Company
Southwest Montana Publishing Company
