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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 1, 2000
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PULITZER INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-9329 431819711
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
900 North Tucker Boulevard, St. Louis, Missouri 63101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 340-8000
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 1, 2000, Pulitzer Inc. ("Registrant"), Pulitzer Technologies,
Inc., a wholly-owned subsidiary of Registrant (together with Registrant, the
"Pulitzer Parties") and The Herald Company, Inc. ("Herald") completed the
transfer of their respective interests in the assets and operations of the St.
Louis Post-Dispatch and certain related businesses to a new joint venture, known
as St. Louis Post-Dispatch LLC ("PD LLC"). Registrant will control and manage PD
LLC.
Under the terms of the operating agreement governing PD LLC (the
"Operating Agreement"), the Pulitzer Parties hold a 95% interest in the results
of operations of PD LLC and Herald holds a 5% interest. Previously, under the
terms of the Agency Agreement which governed the operations of the St. Louis
Post-Dispatch since 1961, Pulitzer and Herald generally shared its operating
profits and losses, as well as its capital expenditures, on a 50-50 basis.
Under the terms of the Operating Agreement, Herald received a cash
distribution of $306 million from PD LLC. This distribution was financed by a
$306 million loan (the "Loan") to PD LLC from a group of institutional lenders
(the "Lenders") led by Prudential Capital Group, a division of The Prudential
Insurance Company of America. The aggregate principal amount of the Loan is
payable on April 28, 2009 and bears interest at an annual rate of 8.05%. The
Loan is guaranteed by Registrant pursuant to a Guaranty Agreement with the
Lenders. In turn, pursuant to an Indemnity Agreement entered into between
Herald and Registrant, Herald agreed to indemnify Registrant for any payments
that Registrant may make under the Guaranty Agreement.
On May 1, 2010, Herald has the one-time right to require PD LLC to
redeem Herald's interest in PD LLC. The redemption price for Herald's interest
is determined pursuant to a formula and will be an amount which will result in
the present value to May 1, 2000 of the after-tax cash flows to Herald (based on
certain assumptions) from PD LLC, including the initial distribution, being
equal to $275 million.
Upon termination of PD LLC, which will be on May 1, 2015 (unless Herald
exercises the redemption right described above), Herald will be entitled to the
liquidation value of its interest in PD LLC. Pulitzer may purchase Herald's
interest at that time for the amount Herald would be entitled to on
liquidation. That amount equals the amount of its capital account, after
allocating the gain or loss that would result from a cash sale of PD LLC's
assets for their fair market value. Herald's share of such gain or loss will
generally be 5%, but will be reduced (but not below 1%) to the extent that the
present value to May 1, 2000 of the after-tax cash flows to Herald, including
the initial distribution and the liquidation amount (based on certain
assumptions), from PD LLC exceeds $325 million.
In addition, in the event that PD LLC has an increase in the tax basis
of its assets as a result of Herald's recognizing taxable income from certain
transactions effected under the agreement governing the contributions of the
Pulitzer Parties and Herald to PD LLC (the "Joint Venture Agreement") and the
Operating Agreement, Herald will generally be entitled to receive a distribution
from PD LLC under a formula that corresponds, approximately, to the present
value after-tax benefit to the members of PD LLC of the additional tax basis.
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During the first ten years of its term, PD LLC will be restricted from
making distributions (except under specified circumstances), capital
expenditures and member loan repayments unless it has set aside out of its cash
flow a reserve (the "Reserve") equal to the product of $15 million and the
number of years since May 1, 2000, but not in excess of $150 million (the
"Reserve Requirement"). Neither of the Pulitzer Parties is required to make
contributions to allow PD LLC to meet the Reserve Requirement.
The foregoing description is qualified in its entirety by reference to
the Joint Venture Agreement, the Operating Agreement and the Indemnity Agreement
filed as Exhibits hereto, which agreements are incorporated by reference herein.
In connection with the transactions described above, the Registrant
issued the press release filed herewith as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION
To be provided by amendment.
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(c) EXHIBITS
Number Exhibit
2.1 Joint Venture Agreement, dated as of May 1, 2000,
among Pulitzer Inc., Pulitzer Technologies, Inc., The
Herald Company, Inc. and St. Louis Post-Dispatch
LLC.
2.2 Operating Agreement of St. Louis Post-Dispatch LLC,
dated as of May 1, 2000.
2.3 Indemnity Agreement, dated as of May 1, 2000, between
The Herald Company, Inc. and Pulitzer Inc.
The Registrant agrees to furnish supplementally to the Securities and
Exchange Commission, upon request, copies of any schedules and exhibits to the
foregoing exhibits that are not filed herewith in accordance with Item 601(b)(2)
of Regulation S-K.
99 Press release, dated May 1, 2000.
All other Items of this report are inapplicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PULITZER INC.
Date: May 2, 2000 By: /s/ Ronald H. Ridgway
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Ronald H. Ridgway
Senior Vice President - Finance
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EXHIBIT INDEX
2.1 Joint Venture Agreement, dated as of May 1, 2000, among
Pulitzer Inc., Pulitzer Technologies, Inc., The Herald
Company, Inc. and St. Louis Post-Dispatch LLC.
2.2 Operating Agreement of St. Louis Post-Dispatch LLC, dated as
of May 1, 2000.
2.3 Indemnity Agreement, dated as of May 1, 2000, between The
Herald Company, Inc. and Pulitzer Inc.
99 Press release, dated May 1, 2000.
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EXHIBIT 2.1
JOINT VENTURE AGREEMENT
AMONG
PULITZER INC.,
PULITZER TECHNOLOGIES, INC.,
THE HERALD COMPANY, INC.
AND
ST. LOUIS POST-DISPATCH LLC
DATED AS OF May 1, 2000
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TABLE OF CONTENTS
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Article I Organization of the Company............................................................2
1.1 Formation Of The Company...............................................................2
Article II Contribution and Assumption...........................................................2
2.1 Contribution of Assets; Assumption of Liabilities......................................2
2.2 Closing of Transaction.................................................................3
2.3 Retained Pulitzer Assets and Liabilities...............................................6
2.4 Retained Herald Assets And Liabilities.................................................6
2.5 Retained PTI Assets and Liabilities....................................................7
2.6 Agency Adjustment......................................................................7
2.7 Transfer Taxes and Recording Fees......................................................7
2.8 Consents 7
2.9 Closing Certificates...................................................................8
2.8 Consents 8
Article III Representations and Warranties of Herald Parties.....................................8
3.1 Organization And Qualification.........................................................9
3.2 Corporate Authorization................................................................9
3.3 Consents And Approvals.................................................................9
3.4 Non-Contravention......................................................................9
3.5 Binding Effect........................................................................10
3.6 Entire Business; Title To Property....................................................10
3.7 Finder's Fees.........................................................................10
3.8 Indebtedness For Borrowed Money.......................................................10
3.9 No Other Representations Or Warranties................................................10
Article IV Representations And Warranties Of The PI Parties.....................................11
4.1 Organization and Qualification........................................................11
4.2 Corporate Authorization...............................................................11
4.3 Consents And Approvals................................................................11
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4.4 Non-Contravention.....................................................................12
4.5 Binding Effect........................................................................12
4.6 Entire Business; Title To Property....................................................12
4.7 Finder's Fees.........................................................................13
4.8 Indebtedness For Borrowed Money.......................................................13
4.9 Organization Of Company...............................................................13
4.10 Authorization Of Company..............................................................13
4.11 No Other Representations Or Warranties................................................13
Article V Covenants.............................................................................13
5.1 Further Assurances....................................................................13
5.2 Records And Retention And Access......................................................14
5.3 W-2 Matters...........................................................................14
Article VI Survival; Indemnification............................................................14
6.1 Survival..............................................................................14
6.2 Indemnification By PI.................................................................14
6.3 Indemnification Procedures............................................................15
6.4 Characterization Of Indemnification Payments..........................................16
Article VII Miscellaneous.......................................................................16
7.1 Notices ..............................................................................16
7.2 Amendment; Waiver.....................................................................17
7.3 Assignment............................................................................17
7.4 Entire Agreement......................................................................17
7.5 Fulfillment Of Obligations............................................................18
7.6 Parties In Interest...................................................................18
7.7 Expenses..............................................................................18
7.8 Schedules.............................................................................18
7.9 Bulk Transfer Laws....................................................................18
7.10 Governing Law; Submission To Jurisdiction; Selection Of Forum.........................18
7.11 Counterparts..........................................................................19
7.12 Headings..............................................................................19
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7.13 Severability..........................................................................19
7.14 Injunctive Relief.....................................................................19
Article VIII Definitions and Terms..............................................................19
8.1 Specific Definitions..................................................................19
8.2 Other Terms...........................................................................28
8.3 Other Definitional Provisions.........................................................28
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JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") dated as of May 1, 2000,
among PULITZER INC., a Delaware corporation ("Pulitzer"), PULITZER TECHNOLOGIES,
INC., a Delaware corporation ("PTI" and together with Pulitzer, the "Pulitzer
Parties"), THE HERALD COMPANY, INC. a New York corporation ("Herald"), and ST.
LOUIS POST-DISPATCH LLC, a Delaware limited liability company (the "Company").
PRELIMINARY STATEMENTS
WHEREAS, on March 1, 1961 The Pulitzer Publishing Company, a Missouri
corporation ("TPPC"), then publisher of the St. Louis Post-Dispatch (the
"Post-Dispatch") and a predecessor of Pulitzer, and the Globe Democrat
Publishing Company, a Missouri corporation ("GDPC"), then publisher of the
Globe-Democrat (the "Globe-Democrat") and a predecessor of Herald, entered into
a joint operating agreement relating to the operations of their respective
newspapers (such agreement, as amended, modified and supplemented, the "Agency
Agreement");
WHEREAS, on April 12, 1979, TPPC and GDPC amended the Agency Agreement to
provide that TPPC would supervise, manage and perform all operations of the
Globe-Democrat other than its separate news (including photographic) and
editorial departments;
WHEREAS, on December 22, 1983, TPPC and Herald amended the Agency Agreement
to provide for the sale by Herald of certain assets of the Globe-Democrat to an
unrelated third party and the continuation of the rights and obligations of
Herald under the Agency Agreement;
WHEREAS, the Agency Agreement then and still provides that no provision
therein shall constitute the parties thereto as partners, joint venturers or an
unincorporated association; and
WHEREAS, Pulitzer and Herald have determined that it would promote and be
in the best interests of the Post-Dispatch to restructure its operations and
their relationship by conducting the various activities of the Post-Dispatch
through a limited liability company.
NOW, THEREFORE, the Pulitzer Parties, Herald and the Company agree as
follows:
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ARTICLE I
ORGANIZATION OF THE COMPANY
1.1 Formation of the Company. Pulitzer has caused each of the following to
occur:
(a) Organization of the Company. The Company has been organized as a
limited liability company under the laws of the State of Delaware.
(b) Organizational Documents. The Company's Certificate of Formation
was filed with the Secretary of State of Delaware on April 12, 2000, a copy
of which is set forth as Exhibit 1.1(b) hereto.
ARTICLE II
CONTRIBUTION AND ASSUMPTION
2.1 Contribution of Assets; Assumption of Liabilities. On the terms and
subject to the conditions set forth herein and in the Transaction Agreements, at
the Closing the parties shall take the following actions, which shall be deemed
to take place simultaneously:
(a) Herald Contribution; Assumption of Liabilities. Herald shall (i)
contribute, grant, convey, transfer, assign and deliver to the Company, and
the Company shall accept from Herald, all right, title and interest of
Herald in and to the Herald Contributed Assets, free and clear of all
Encumbrances (other than Permitted Encumbrances); and (ii) assign to the
Company, and the Company shall assume and agree to pay, honor, discharge
and perform, the Herald Assumed Liabilities. The parties agree that the
Herald Assumed Liabilities are intended to be, and the parties shall treat
them as, "qualified liabilities" under Regulations Section 1.707-5(a)(6)
unless different treatment is required under applicable law.
(b) Pulitzer Contribution; Assumption of Liabilities. Pulitzer shall
(i) contribute, grant, convey, transfer, assign and deliver to the Company,
and the Company shall accept from Pulitzer, all right, title and interest
of Pulitzer in and to the Pulitzer Contributed Assets, free and clear of
all Encumbrances (other than Permitted Encumbrances); and (ii) assign to
the Company, and the Company shall assume and agree to pay, honor,
discharge and perform, the Pulitzer Assumed Liabilities. The parties agree
that the Pulitzer Assumed Liabilities are intended to be, and the parties
shall treat them as, "qualified liabilities" under Regulations Section
1.707-5(a)(6) unless different treatment is required under applicable law.
(c) PTI Contribution; Assumption of Liabilities. PTI shall (i)
contribute, grant, convey, transfer, assign and deliver to the Company, and
the Company shall accept from PTI, all right, title and interest of PTI in
and to the
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PTI Contributed Assets, free and clear of all Encumbrances (other than
Permitted Encumbrances); and (ii) assign to the Company, and the Company
shall assume and agree to pay, honor, discharge and perform, the PTI
Assumed Liabilities. The parties agree that the PTI Assumed Liabilities are
intended to be, and the parties shall treat them as, "qualified
liabilities" under Regulations Section 1.707-5(a)(6) unless different
treatment is required under applicable law.
(d) Operating Agreement. The Pulitzer Parties and Herald shall enter
into an Operating Agreement, substantially in the form of Exhibit 2.1(d)
hereto, the terms of which shall govern the management and operations of
the Company.
(e) Company Debt. The Company will use the proceeds of the Company
Debt to fund the distribution to Herald of $306,000,000, as contemplated
under Section 3.11(a) of the Operating Agreement. The parties hereto agree
that the Company Debt is allocable to and shall be allocated to Herald
under Regulations Sections 1.752-2 and 1.707-5(b).
(f) License Agreement. Pulitzer and the Company shall enter into a
License Agreement, substantially in the form of Exhibit 2.1(f) hereto.
(g) Employee Plans. The Company shall (or, as the case may be, shall
cause each Contributed Entity to) assume or become a participating employer
in Employee Plans as provided in Section 2.10.
(h) Indemnity Agreement. Pulitzer and Herald shall enter into an
Indemnity Agreement, substantially in the form of Exhibit 2.1(h) hereto.
(i) Non-Confidentiality Agreement. The parties hereto shall enter into
a Non-Confidentiality Agreement, substantially in the form of Exhibit
2.1(i) hereto.
2.2 Closing of Transaction. The Closing of the transactions contemplated by
this Agreement shall take place at the New York offices of Fulbright & Jaworski
L.L.P. at 10:00 a.m. (New York time) on May 1, 2000. The date on which the
Closing occurs is called the "Closing Date." The Closing shall be deemed
effective at 11:59 p.m. (New York time), on April 30, 2000 (the "Effective
Time"). To effect the steps set forth in Section 2.1 hereof, the parties shall
execute and deliver to each other and to third parties, as appropriate, all
documents reasonably necessary to effect the Closing. Without limiting the
generality of the foregoing, at the Closing:
(a) Herald Deliveries. Herald shall execute and deliver:
(i) to the Company, limited warranty deeds, in form and substance
reasonably acceptable to the Pulitzer Parties, transferring all Herald
Owned Real Property to the Company;
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(ii) to the Company, certificates of title, assignments, and all
other instruments of transfer, in form and substance reasonably
acceptable to the Pulitzer Parties, transferring to the Company all
Herald Contributed Assets other than the Herald Real Property which is
being transferred to the Company pursuant to the conveyance documents
described in clause (i) above;
(iii) to the Company, such instruments of assumption and other
instruments or documents, in form and substance reasonably acceptable
to the Pulitzer Parties, as may be necessary to effect assignment of
the Herald Assumed Liabilities to the Company;
(iv) to the Company or Pulitzer, as appropriate, a duly executed
copy of each of the Transaction Agreements to which Herald is a party,
including the Operating Agreement, the Herald Indemnity and the
Non-Confidentiality Agreement;
(v) to the Pulitzer Parties and the Company, the opinion of
Sabin, Bermant & Gould LLP, counsel to Herald, substantially in the
form of Exhibit 2.2(a)(v) hereto;
(vi) to the Company, evidence reasonably satisfactory to the
Pulitzer Parties that all Encumbrances, if any, other than Permitted
Encumbrances on any of the Herald Contributed Assets have been
released; and
(vii) to the Pulitzer Parties and/or the Company, as appropriate,
such other instruments or documents, in form and substance reasonably
acceptable to the Pulitzer Parties and the Company, as may be
necessary to effect the Closing and the contribution of the Herald
Contributed Assets in accordance with this Agreement.
(b) Pulitzer Deliveries. Pulitzer shall execute and deliver:
(i) to the Company, limited warranty deeds, in form and substance
reasonably acceptable to Herald, transferring all Pulitzer Owned Real
Property to the Company;
(ii) to the Company, assignments or, where necessary, subleases,
in form and substance reasonably acceptable to Herald, assigning or
subleasing to the Company all Pulitzer Real Property Leases;
(iii) to the Company, certificates of title, assignments, and all
other instruments of transfer, in form and substance reasonably
acceptable to Herald, transferring to the Company all Pulitzer
Contributed Assets other than the Pulitzer Real Property which is
being transferred
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to the Company pursuant to the conveyance documents described in
clauses (i) - (ii) above;
(iv) to the Company, such instruments of assumption and other
instruments or documents, in form and substance reasonably acceptable
to Herald, as may be necessary to effect assignment of the Pulitzer
Assumed Liabilities to the Company;
(v) to the Company or Herald, as appropriate, a duly executed
copy of each of the Transaction Agreements to which Pulitzer is a
party, including the Operating Agreement, the Pulitzer Guaranty, the
License Agreement and the Non-Confidentiality Agreement;
(vi) to the Company and Herald, a copy of the opinion of
Fulbright & Jaworski L.L.P., counsel to the Pulitzer Parties,
substantially in the form of Exhibit 2.2(b)(vi) hereto;
(vii) to the Company, evidence reasonably satisfactory to Herald
that all Encumbrances, if any, other than Permitted Encumbrances on
any of the Pulitzer Contributed Assets have been released; and
(viii) to Herald and/or the Company, as appropriate, such other
instruments or documents, in form and substance reasonably acceptable
to Herald, as may be necessary to effect the Closing and the
contribution of the Pulitzer Contributed Assets in accordance with
this Agreement.
(c) PTI Deliveries. PTI shall execute and deliver:
(i) to the Company, certificates of title, assignments, and all
other instruments of transfer, in form and substance reasonably
acceptable to Herald, transferring to the Company all PTI Contributed
Assets;
(ii) to the Company, such instruments of assumption and other
instruments or documents, in form and substance reasonably acceptable
to Herald, as may be necessary to effect assignment of the PTI Assumed
Liabilities to the Company;
(iii) to the Company and Herald, a copy of the opinion of
Fulbright & Jaworski L.L.P., counsel to the Pulitzer Parties,
substantially in the form of Exhibit 2.2(b)(vi) hereto;
(iv) to the Company, assignments or, where necessary, subleases,
in form and substance reasonably acceptable to Herald, assigning or
subleasing to the Company all PTI Real Property Leases;
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(v) to the Company evidence reasonably satisfactory to Herald
that all Encumbrances, if any, other than Permitted Encumbrances on
any of the PTI Contributed Assets have been released;
(vi) to the Company or Herald, as appropriate, a duly executed
copy of each of the Transaction Agreements to which PTI is a party,
including the Operating Agreement and the Non-Confidentiality
Agreement; and
(vii) to Herald and/or the Company, as appropriate such other
instruments or documents, in form and substance reasonably acceptable
to Herald and the Company, as may be necessary to effect the Closing
and the contribution of the PTI Contributed Assets in accordance with
this Agreement.
(d) Deliveries by the Company. The Company shall execute and deliver:
(i) to Herald and the Pulitzer Parties, such instruments of
assumption and other instruments or documents, in form and substance
reasonably acceptable to Herald and the Pulitzer Parties, as may be
necessary to effect the Company's assumption of the Assumed
Liabilities;
(ii) to the Pulitzer Parties or Herald, as appropriate, a duly
executed copy of each of the Transaction Agreements to which the
Company is a party, including the Operating Agreement, the Note
Agreement, the License Agreement and the Non-Confidentiality
Agreement; and
(iii) to the Pulitzer Parties and Herald, as appropriate, such
other instruments or documents, in form and substance reasonably
acceptable to Herald and the Pulitzer Parties, as may be necessary to
effect the Closing.
2.3 Retained Pulitzer Assets and Liabilities. Notwithstanding anything
herein to the contrary, (i) from and after the Closing, each of Pulitzer and its
Affiliates shall retain all of its direct or indirect right, title and interest
in and to, and there shall be excluded from the Pulitzer Contributed Assets, the
Pulitzer Retained Assets, and (ii) the Pulitzer Retained Liabilities shall not
be assumed by the Company hereunder.
2.4 Retained Herald Assets and Liabilities. Notwithstanding anything herein
to the contrary, (i) from and after the Closing each of Herald and its
Affiliates shall retain all of its direct or indirect right, title and interest
in and to, and there shall be excluded from the Herald Contributed Assets, the
Herald Retained Assets, and (ii) the Herald Retained Liabilities shall not be
assumed by the Company hereunder.
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2.5 Retained PTI Assets and Liabilities. Notwithstanding anything herein to
the contrary, (i) from and after the Closing, each of PTI and its Affiliates
shall retain all of its direct or indirect right, title and interest in and to,
and there shall be excluded from the PTI Contributed Assets, the PTI Retained
Assets, and (ii) the PTI Retained Liabilities shall not be assumed by the
Company hereunder.
2.6 Agency Adjustment.
(a) All items of income, gain, loss, deduction and credit arising from
the operation and ownership of the Business for any tax period or portion
thereof beginning December 27, 1999 and ending at the Effective Time shall
be accounted for under and in accordance with the Agency Agreement and
prior practice thereunder, treating April 30, 2000 as the end of a period
for which income and loss is calculated under the Agency Agreement. Within
sixty (60) Business Days following the Closing Date, Pulitzer shall pay to
Herald its share of "Excess of Income over Expenses" (as defined in the
Agency Agreement and prior practice thereunder), if any, for such period to
the extent the amount due to Herald with respect to such period has not
previously been paid, or Herald shall pay to Pulitzer its share of "Excess
of Expenses over Income" (as defined in the Agency Agreement and prior
practice thereunder), if any, for such period to the extent the amount due
to Pulitzer with respect to such period has not previously been paid.
(b) Any payments made to or from the Company pursuant to Section
2.6(a) shall not result in any change in the value of any party's
Contributed Assets (as set forth in the Operating Agreement) or any party's
Capital Account or Percentage Interest (as both terms are defined in the
Operating Agreement).
2.7 Transfer Taxes and Recording Fees. Each party shall be responsible for
any and all taxes or fees imposed or incurred by reason of the filing or
recording of any instruments necessary to effect the transfer of its Contributed
Assets and Assumed Liabilities hereunder, including, without limitation, use,
value- added, excise, real estate transfer, lease assignment, stamp, documentary
and similar taxes and fees (the "Transfer Costs"). To the extent under
applicable law the Company is responsible for filing tax returns in respect of
Transfer Costs, the Company shall prepare all such tax returns. The parties
shall provide such certificates and other information and otherwise cooperate to
the extent reasonably required to minimize Transfer Costs.
2.8 Consents. None of the Pulitzer Parties or Herald shall have any
obligation to obtain any Consent prior to the Closing. If a party has not
obtained a Consent, the Closing shall not constitute a transfer, or any
attempted transfer, of any Contract or asset, the transfer of which requires
such Consent. Rather, following the Closing, such party shall use commercially
reasonable efforts and the Company shall cooperate in such efforts, to obtain
promptly such Consent or to enter into reasonable and lawful arrangements
(including subleasing or subcontracting if permitted) reasonably acceptable to
the other party to provide to the Company the full economic and operational
benefits
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and liabilities and for substantially similar time periods, as the
Company would have had if such Consent had been obtained as of Closing. Once
such Consent for the transfer of a Contributed Asset not transferred at the
Closing is obtained, the party receiving such Consent shall promptly transfer,
or cause to be transferred, such Contributed Asset to the Company for no
additional consideration and without changing any party's Capital Account or
Percentage Interest (as both terms are defined in the Operating Agreement).
2.9 Closing Certificates. The obligation of each of the parties hereto to
consummate the transactions contemplated by this Agreement shall be subject to
(i) the receipt of a certificate from each other party, executed by the
President, Vice President or managing member of such other party, attesting to
the fulfillment of each of the following conditions by such other party: (A)
that all representations and warranties of such other party to this Agreement
are true and correct in all material respects on and as of the Closing Date,
with the same force and effect as though such representations and warranties
were made on and as of the Closing Date and (B) that such other party has
fulfilled all of its obligations under this Agreement to be performed on or
prior to the Closing, and (ii) the Company's having borrowed at least $306
million on terms and conditions substantially similar to those set forth on
Exhibit 2.9.
2.10 Employee Matters. Each Employee will become an employee of the Company
or, where applicable, will continue to be employed by the same Contributed
Entity. The Company shall (or, as the case may be, shall cause each Contributed
Entity to) assume or become a participating employer under each Employee Plan
with respect to each Employee who, immediately after the Closing, is an Employee
of the Company or of a Contributed Entity and with respect to each former
Employee who is currently receiving or who is entitled in the future to receive
payments or benefits, as well as with respect to the covered dependents and
beneficiaries of any such Employee or former Employee. Notwithstanding the
foregoing, employees of the Company or any of the Contributed Entities may be
prohibited from participating in the Pulitzer Inc. Employee Stock Purchase Plan
if and to the extent that such participation would cause the plan to fail to
satisfy the requirements of Section 423 of the Code.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HERALD
Herald represents and warrants to the Pulitzer Parties, the Company and the
Lenders as follows:
3.1 Organization and Qualification.
(a) Herald is a corporation duly organized, validly existing and in
good standing under the laws of its state of organization as set forth on
Schedule 3.1(a). Herald has all requisite corporate power and authority to
own and operate the Herald Contributed Assets.
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(b) Herald is duly qualified to do business and is in good standing as
a foreign corporation in the jurisdictions listed on Schedule 3.1(b), which
are the only jurisdictions where the ownership or operation of the Herald
Contributed Assets requires such qualification, except where the failure to
be so qualified would not have a Material Adverse Effect.
3.2 Corporate Authorization. Herald has full power and authority to execute
and deliver this Agreement and to perform its obligations hereunder and under
any agreement or contract contemplated hereby, including the Transaction
Agreements to which Herald is or becomes a party. The execution, delivery and
performance by Herald of this Agreement and any agreement or contract
contemplated hereby, including the Transaction Agreements to which Herald is or
becomes a party, have been duly and validly authorized by all necessary
corporate action, and no additional corporate authorization is required in
connection with the execution, delivery and performance by Herald of this
Agreement and any agreement or contract contemplated hereby, including the
Transaction Agreements to which Herald is or becomes a party.
3.3 Consents and Approvals. Except as specifically set forth in Schedule
3.3, no Consent is required to be obtained by Herald from, and no notice or
filing is required to be given by Herald to, or made by Herald with, any
Governmental Authority or other Person in connection with the execution,
delivery and performance by Herald of this Agreement, each of the Transaction
Agreements to which Herald is or becomes a party, any other agreement or
contract contemplated hereby and the contribution to the Company of the Herald
Contributed Assets, except where the failure to obtain any such Consent or
Consents, give any such notice or notices or make any such filing or filings
would not have a Material Adverse Effect.
3.4 Non-Contravention. Except as set forth on Schedule 3.4, the execution,
delivery and performance by Herald of this Agreement and each of the Transaction
Agreements to which Herald is or becomes a party, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
any provision of the certificate of incorporation or bylaws of Herald, (ii)
subject to obtaining the Consents referred to in Section 3.3, conflict with, or
result in the breach of, or constitute a default under, or result in the
termination, cancellation or acceleration (whether after the filing of notice or
the lapse of time or both) of any right or obligation of Herald under, or to a
loss of any benefit to which Herald is entitled under, any Contract or result in
the creation of any Encumbrance (other than a Permitted Encumbrance) upon the
Herald Contributed Assets, or (iii) assuming compliance with the matters set
forth in Section 3.3, violate, or result in a breach of or constitute a default
under any Law, rule, regulation, judgment, injunction, order, decree or other
restriction of any court or Governmental Authority to which Herald is subject,
including any Governmental Authorization, except in each case, such matter or
matters that would not have a Material Adverse Effect.
3.5 Binding Effect. This Agreement constitutes, and each of the Transaction
Agreements to which Herald is or becomes a party when executed and delivered by
the
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parties thereto will constitute, a valid and legally binding obligation of
Herald, enforceable with respect to Herald in accordance with its terms, except
as the enforceability thereof may be limited or otherwise effected by
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
applicability Relating to, or affecting, creditors rights and to general equity
principles.
3.6 Entire Business; Title to Property.
(a) Except as set forth in Schedule 3.6(a), the Herald Contributed
Assets and the rights specifically provided or made available to the
Company under the Transaction Agreements to which Herald is or becomes a
party, include all of Herald's right, title and interest in the buildings,
machinery, equipment and other assets (whether tangible or intangible)
utilized in connection with the operations of the Business immediately
before Closing (subject to changes expressly permitted by the terms hereof
to be made after the date hereof).
(b) Herald has good (and, in the case of its Owned Real Property,
marketable) title to, or a valid and binding leasehold interest in, the
Herald Contributed Assets, free and clear of all Encumbrances, except (i)
as set forth in Schedule 3.6(b), and (ii) any Permitted Encumbrances.
3.7 Finder's Fees. There is no investment banker, financial advisor, broker
or finder which has been retained by or is authorized to act on behalf of Herald
which might be entitled to any fee, commission or other compensation from the
Pulitzer Parties or the Company in connection with the transactions contemplated
by this Agreement.
3.8 Indebtedness for Borrowed Money. There is no indebtedness for borrowed
money included in the Herald Assumed Liabilities.
3.9 No Other Representations or Warranties. Except for the representations
and warranties contained in this Article III, neither Herald nor any other
Person makes any other express or implied representation or warranty, including
warranties of merchantability or fitness for a particular purpose, on behalf of
Herald.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PULITZER PARTIES
The Pulitzer Parties, jointly and severally, represent and warrant to
Herald, the Company and the Lenders as follows:
4.1 Organization and Qualification. Pulitzer and PTI each is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its Contributed Assets. Pulitzer and PTI each is duly qualified to do
business and is in good standing as a foreign corporation in the jurisdictions
respectively listed on Schedule 4.1,
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which are the only jurisdictions where the ownership or operation of its
Contributed Assets or the conduct of the Business requires such qualification,
except where the failure to be so qualified would not have a Material Adverse
Effect.
4.2 Corporate Authorization. Pulitzer and PTI each has full corporate power
and authority to execute and deliver this Agreement, and to perform its
obligations hereunder and under any agreement or contract contemplated hereby,
including the Transaction Agreements to which Pulitzer or PTI is or becomes a
party. The execution, delivery and performance by Pulitzer and PTI of this
Agreement and the agreements and contracts contemplated hereby, including the
Transaction Agreements to which Pulitzer or PTI is or becomes a party, have been
duly and validly authorized by all necessary corporate action, and no additional
corporate authorization is required in connection with the execution, delivery
and performance by Pulitzer and PTI of this Agreement and the agreements and
contracts contemplated hereby, including the Transaction Agreements to which
Pulitzer or PTI is or becomes a party.
4.3 Consents and Approvals. Except as specifically set forth in Schedule
4.3, no Consent is required to be obtained by Pulitzer or PTI from, and no
notice or filing is required to be given by Pulitzer or PTI to or made by
Pulitzer or PTI with, any Governmental Authority or other Person in connection
with the execution, delivery and performance by Pulitzer or PTI of this
Agreement, each of the Transaction Agreements to which Pulitzer or PTI is or
becomes a party, any other agreement or contract contemplated hereby and the
contribution to the Company of its Contributed Assets, except where the failure
to obtain any such Consent or Consents, give any such notice or notices or make
any such filing or filings would not have a Material Adverse Effect.
4.4 Non-Contravention. Except as set forth on Schedule 4.4, the execution,
delivery and performance by Pulitzer or PTI of this Agreement and each of the
Transaction Agreements to which Pulitzer or PTI is or becomes a party, and the
consummation of the transactions contemplated hereby and thereby, does not and
will not (i) violate any provision of the certificate of incorporation or bylaws
of Pulitzer or PTI, (ii) subject to obtaining the Consents referred to in
Section 4.3, conflict with, or result in the breach of, or constitute a default
under, or result in the termination, cancellation or acceleration (whether after
the filing of notice or the lapse of time or both) of any right or obligation of
Pulitzer or PTI under, or to a loss of any benefit to which Pulitzer or PTI is
entitled under, any Contract or result in the creation of any Encumbrance (other
than a Permitted Encumbrance) upon any of its Contributed Assets, or (iii)
assuming compliance with the matters set forth in Section 4.3, violate, or
result in a breach of or constitute a default under any Law, rule, regulation,
judgment, injunction, order, decree or other restriction of any court or
Governmental Authority to which Pulitzer or PTI is subject, including any
Governmental Authorization, except in each case, such matter or matters that
would not have a Material Adverse Effect.
4.5 Binding Effect. This Agreement constitutes, and each of the Transaction
Agreements to which Pulitzer or PTI is or becomes a party when executed and
delivered by the parties thereto will constitute, a valid and legally binding
obligation of each of
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Pulitzer and PTI (to the extent it is or becomes a party to such Transaction
Agreement), enforceable with respect to Pulitzer and PTI in accordance with
their respective terms, except as the enforceability thereof may be limited or
otherwise effected by bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability Relating to, or affecting, creditors
rights and to general equity principles.
4.6 Entire Business; Title to Property.
(a) Except as set forth in Schedule 4.6(a), the Pulitzer Contributed
Assets and the PTI Contributed Assets, and the rights specifically provided
or made available to the Company under the Transaction Agreements, include
all of Pulitzer's and PTI's respective right, title and interest in and to
all the buildings, machinery, equipment and other assets (whether tangible
or intangible) utilized in connection with the operations of the
Post-Dispatch and the Contributed Entities immediately before Closing
(subject to changes expressly permitted by the terms hereof to be made
after the date hereof); provided, however, that no representation is made
as to the assignability of Government Authorizations.
(b) Pulitzer and PTI each have good (and, in the case of its Owned
Real Property, marketable) title to, or a valid and binding leasehold
interest in, the Pulitzer Contributed Assets and PTI Contributed Assets, as
the case may be, free and clear of all Encumbrances, except (i) as set
forth in Schedule 4.6(b) and (ii) any Permitted Encumbrances.
4.7 Finder's Fees. Except for Goldman, Sachs & Co. and Huntleigh Securities
Corporation, whose fees, commissions or other compensation will be paid by
Pulitzer, there is no investment banker, financial advisor, broker or finder
which has been retained by or is authorized to act on behalf of Pulitzer or PTI
which might be entitled to any fee or commission from Herald or the Company in
connection with the transactions contemplated by this Agreement.
4.8 Indebtedness for Borrowed Money. Except as set forth in Schedule 4.8,
there is no indebtedness for borrowed money included in the Pulitzer Assumed
Liabilities or the PTI Assumed Liabilities.
4.9 Organization of Company. The Company is a limited liability company,
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
4.10 Authorization of Company. The Company has full power and authority to
execute and deliver this Agreement, and to perform its obligations hereunder and
under any agreement or contract contemplated hereby, including the Transaction
Agreements to which it is or becomes a party. The execution, delivery and
performance by the Company of this Agreement and the agreements and contracts
contemplated hereby, including the Transaction Agreements to which it is or
becomes a party, have been duly and validly authorized, and no additional
authorization or consent is required in connection with the execution, delivery
and performance by the Company of this
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Agreement and the agreements and contracts contemplated hereby, including the
Transaction Agreements to which it is or becomes a party.
4.11 No Other Representations or Warranties. Except for the representations
and warranties contained in this Article IV, none of Pulitzer, PTI and any other
Person makes any other express or implied representation or warranty including
warranties of merchantability or fitness for a particular purpose, on behalf of
Pulitzer or PTI.
ARTICLE V
COVENANTS
5.1 Further Assurances. At any time after the Closing Date, Herald, the
Pulitzer Parties and the Company shall promptly execute, acknowledge and deliver
any other assurances or documents reasonably requested by the Company, the
Pulitzer Parties or Herald, as the case may be, and necessary for them or it to
satisfy their respective obligations hereunder or obtain the benefits
contemplated hereby.
5.2 Records and Retention and Access. The Company shall keep and preserve
in an organized and retrievable manner the Books and Records it receives from
any party for at least seven years from the Closing Date.
5.3 W-2 Matters. Herald, Pulitzer and PTI agree that the Company will
acquire hereunder substantially all of the property used in the Business and
that in connection therewith the Company will employ individuals who immediately
before the Closing Date were employed in such trade or business under the Agency
Agreement or by Herald, Pulitzer or their respective Affiliates. Accordingly,
pursuant to the Alternate Procedure permitted by Rev. Proc. 96-60, 1996-2 C.B.
399, provided that all necessary payroll records for the calendar year that
includes the Closing Date are made available to the Company, the Company will
furnish a Form W-2 to each Employee employed by the Company who had been
employed by the Business or any of the Contributed Entities, disclosing all
wages and other compensation paid for such calendar year, and taxes withheld
therefrom.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
6.1 Survival. All of the representations and warranties of Herald,
Pulitzer, PTI and the Company contained in this Agreement and all claims and
causes of action with respect thereto shall terminate on the second anniversary
of the date hereof(the "Survival Period"). Any claim for indemnification for
breach of a representation and warranty must be made during the applicable
Survival Period. In the event notice (within the meaning of Section 6.3) of any
claim for indemnification for a breach of a representation or warranty is given
within the applicable Survival Period, an
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Indemnifying Party's obligations with respect to such indemnification claim
shall survive until such time as such claim is finally resolved.
6.2 Indemnification.
(a) Indemnification by Pulitzer Parties. The Pulitzer Parties shall
indemnify, defend and hold harmless Herald, its Affiliates and, if
applicable, their respective directors, officers, shareholders, partners,
members, attorneys, accountants, agents and Employees and their heirs,
successors and assigns (the "Herald Indemnified Parties") and the Company
from, against and in respect of any damages, claims, losses, charges,
actions, suits, proceedings, deficiencies, taxes, interest, penalties, and
reasonable costs and expenses (including reasonable attorneys' fees, and
expenses of investigation and ongoing monitoring) (collectively, the
"Losses") imposed on, sustained, incurred or suffered by or asserted
against any of the Herald Indemnified Parties or the Company, directly or
indirectly, Relating to or arising out of any breach of any representation,
warranty or covenant made by the Pulitzer Parties in this Agreement.
(b) Indemnification by Herald. Herald and its Affiliates shall,
jointly and severally, indemnify, defend and hold harmless the Pulitzer
Parties and their respective Affiliates and, if applicable, their
respective directors, officers, shareholders, partners, members, lenders,
attorneys, accountants, agents and Employees and their heirs, successors
and assigns (the "Pulitzer Indemnified Parties") and the Company from,
against and in respect and to the extent of any Losses imposed on,
sustained, incurred or suffered by or asserted against each of the Pulitzer
Indemnified Parties or the Company, directly or indirectly, Relating to or
arising out of any breach of any representation, warranty or covenant made
by Herald in this Agreement.
(c) Indemnification by the Company. The Company shall indemnify,
defend and hold harmless the Pulitzer Indemnified Parties and the Herald
Indemnified Parties, as the case may be, from and against and in respect
and to the extent of any Losses imposed on, sustained, incurred or suffered
by or asserted against either the Pulitzer Indemnified Parties or the
Herald Indemnified Parties, directly or indirectly, Relating to or arising
out of any breach of any representation, warranty or covenant of the
Company in this Agreement.
6.3 Indemnification Procedures.
(a) Any Indemnified Person making a claim for indemnification pursuant
to Section 6.2 above (an "Indemnified Party") must give the party from whom
indemnification is sought (an "Indemnifying Party") notice of such claim
(in a manner consistent with Section 7.1 hereof) describing such claim with
reasonable particularity and the nature and amount of the Loss to the
extent that the nature and amount of such Loss is known at such time (an
"Indemnification Claim Notice") promptly after the Indemnified Party
discovers the liability, obligations or facts giving rise to such claim for
indemnification; provided that
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the failure to notify or delay in notifying an Indemnifying Party will not
relieve the Indemnifying Party of its obligations pursuant to Section 6.2
except to the extent that (and only to the extent that) such failure shall
have (i) caused or materially increased the Indemnifying Party's liability,
(ii) resulted in the forfeiture by the Indemnifying Party of substantial
rights and defenses or (iii) otherwise materially prejudiced the
Indemnifying Party.
(b) The Indemnifying Party shall have 60 days from the date the
Indemnification Claim Notice is deemed given pursuant to Section 7.1 hereof
(the "Notice Period") to notify the Indemnified Party (i) whether or not
the Indemnifying Party disputes the liability of the Indemnifying Party to
the Indemnified Party with respect to such claim or demand and (ii) whether
or not it desires to defend the Indemnified Party against such claim or
demand. If the Indemnifying Party elects to defend any such claim or
demand, the Indemnifying Party shall have the sole power to direct and
control such defense. If any Indemnified Party desires to participate in
any such defense, it may do so at its sole cost and expense.
6.4 Characterization of Indemnification Payments. (i) To the extent the
Company is an Indemnified Party, any payments to the Company pursuant to this
Article VI shall not result in an adjustment to any party's Capital Account or
Percentage Interest in the Company (each as defined in the Operating Agreement),
and (ii) all amounts paid to the Pulitzer Parties or Herald, as the case may be,
under this Article VI shall not be treated as adjustments to the amount
contributed to the Company by the Pulitzer Parties or Herald, pursuant to
Section 2.1 hereof.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices and other communications required or permitted by
this Agreement shall be in writing and shall be delivered by personal delivery,
by nationally recognized overnight carrier service, by facsimile, by first class
mail or by certified or registered mail, return receipt requested, addressed to
the party for whom it is intended at its address below, or such other address as
may be designated in writing hereafter by such Person. Notices shall be deemed
given one day after when sent, if sent by overnight courier; when delivered and
receipted for, if hand delivered; when received, if sent by facsimile or other
electronic means or by first class mail; or when receipted for (or upon the date
of attempted delivery when delivery is refused or unclaimed), if sent by
certified or registered mail, return receipt requested.
To Pulitzer or PTI: PULITZER INC.
900 North Tucker Blvd.
St. Louis, MO 63101
Attn: Ronald H. Ridgway
Facsimile: (314) 340-3133
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With a copy to: Richard A. Palmer, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Facsimile: 212-318-3400
To Herald: THE HERALD COMPANY, INC.
c/o Newark Morning Ledger Co.
Star-Ledger Plaza
Newark, New Jersey 07102
Attn: Donald E. Newhouse
Facsimile: 973-621-2604
With a copy to: Craig D. Holleman, Esq.
Sabin, Bermant & Gould LLP
4 Times Square - 23rd Floor
New York, New York 10036
Facsimile: 212-381-7226
To the Company: ST. LOUIS POST-DISPATCH LLC
900 North Tucker Blvd.
St. Louis, MO 63101
Attn: Ronald H. Ridgway
Facsimile: (314) 340-3133
With a copy to: Richard A. Palmer, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Facsimile: 212-318-3400
7.2 Amendment; Waiver. Any provision of this Agreement may be amended or
waived if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by each of the parties hereto, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by Law.
7.3 Assignment. No party to this Agreement may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
parties hereto (which consent shall not be unreasonably withheld), except that
(i) Pulitzer may collaterally assign its rights and obligations under this
Agreement to a lender as security for the Company Debt and (ii) following
Closing, Pulitzer, PTI and Herald may assign their respective rights, but not
their obligations, to any Person to whom Pulitzer, PTI or
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Herald may transfer their Interests (as defined in the Operating Agreement) if
permitted under the Operating Agreement.
7.4 Entire Agreement. This Agreement (including the Preliminary Statements,
all Schedules and Exhibits hereto and the Transaction Agreements) contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings, oral or written,
with respect to such matters; provided, however, that, notwithstanding anything
to the contrary in this Agreement or any of the Transaction Agreements, the
Agency Agreement shall apply and shall have full force and effect with respect
to all costs or expenses Relating to or arising from the operations of the
Business for any period or portion thereof through and including the Effective
Time, including all liabilities with respect to all actions, suits, proceedings,
disputes, claims or investigations Relating to or arising from the operations of
the Business on or before the Effective Time.
7.5 Fulfillment of Obligations. Any obligation of any party to any other
party under this Agreement or any of the Transaction Agreements, which
obligation is performed, satisfied or fulfilled by an Affiliate of such party,
shall be deemed to have been performed, satisfied or fulfilled by such party.
7.6 Parties in Interest. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and permitted
assigns. Except with respect to the Lenders in the case of Articles III and IV,
nothing in this Agreement, express or implied, is intended to confer upon any
Person other than Pulitzer, PTI, Herald, the Company and their respective
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
7.7 Expenses. Except as otherwise expressly provided in this Agreement
whether or not the transactions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party incurring such
expenses.
7.8 Schedules. The disclosure of any matter in any Disclosure Schedule
shall not be deemed to constitute an admission by the Pulitzer Parties or Herald
or to otherwise imply that any such matter is material for the purposes of this
Agreement.
7.9 Bulk Transfer Laws. The parties acknowledge that none of them has
taken, and none of them intends to take, any action required to comply with
applicable bulk transfer laws or similar laws, if any.
7.10 Governing Law; Submission to Jurisdiction; Selection of Forum. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Delaware. Each party hereto agrees that it shall bring any action
or proceeding in respect of any claim arising out of or Related to this
Agreement or the transactions contained in or contemplated by this Agreement,
whether in tort or contract or at law or in equity, exclusively in the United
States District Court or the state court sitting in New Castle County, Delaware
(the "Chosen Court") and (i) irrevocably submits to the
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exclusive jurisdiction of the Chosen Court, (ii) waives any objection to laying
venue in any such action or proceeding in the Chosen Court, (iii) waives any
objection that the Chosen Courts are an inconvenient forum or do not have
jurisdiction over any party hereto, and (iv) agrees that service of process upon
such party in any such action or proceeding shall be effective if notice is
given in accordance with Section 7.1 of this Agreement.
7.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
7.12 Headings. The heading references herein and the table of contents
hereto are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
7.13 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (i) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (ii) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction. If Herald, the Pulitzer Parties and the
Company are unable to agree on the substitution of a provision pursuant to
clause (i) above, the dispute shall be submitted to binding arbitration in
accordance with the rules of the American Arbitration Association.
7.14 Injunctive Relief. The parties hereto acknowledge and agree that in
the event of breach or non-compliance with any of the provisions of this
Agreement monetary damages shall not constitute a sufficient remedy.
Consequently, in the event of such a breach, Pulitzer, PTI, the Company or
Herald, as the aggrieved party shall be entitled to injunctive or other
equitable relief, including specific performance, in order to enforce or prevent
any violation of such provisions, in addition to any other rights or remedies to
which it may be entitled at law or otherwise.
ARTICLE VIII
DEFINITIONS AND TERMS
8.1 Specific Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
8.1.1 "Affiliate" of a Person shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person as
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of the date on which, or at any time during the period for which, the
determination of affiliation is being made. For the purpose of this definition,
"control" means (i) the direct or indirect ownership or control of more than 50%
of the voting stock or other voting interest in any Person, or (ii) the ability
to direct or cause the direction of the management or affairs of a Person,
whether through the direct or indirect ownership of voting interests, by
contract or otherwise.
8.1.2 "Agency Agreement" shall have the meaning set forth in the preamble
to this Agreement.
8.1.3 "Agreement" shall mean this Agreement (including the Preliminary
Statements set forth above and all Schedules and Exhibits), as the same may be
amended or supplemented from time to time in accordance with the terms hereof.
8.1.4 "Assumed Liabilities" shall mean all debts, liabilities, commitments,
or obligations whatsoever, other than Retained Liabilities, Related to the
Business or Related to any of Herald's, PTI's or Pulitzer's Contributed Assets,
whether arising before or after the Closing and whether known or unknown, fixed
or contingent, including the following:
(i) all debts, liabilities, obligations or commitments Related to or
arising under the Contracts to the extent such Contracts are assigned to
the Company, including the Real Estate Leases, and the Employee Plans with
respect to Employees, former Employees or their covered dependents and
beneficiaries;
(ii) all debts, liabilities, obligations or commitments Related to the
Real Property;
(iii) the current liabilities of the Business, including trade
accounts payable, current lease obligations, salaries, wages and
commissions, and workers compensation obligations;
(iv) all liabilities under environmental Laws Related to the
ownership, operation or conduct of the Business or the Real Property; and
(v) subject to Section 7.4, all liabilities with respect to all
actions, suits, proceedings, disputes, claims or investigations Related to
the Business or that otherwise are Related to the Contributed Assets, at
law, in equity or otherwise.
8.1.5 "Books And Records" shall mean originals or true and correct copies
of all lists, files, data and databases and documents Relating to customers,
suppliers and products of the Business, the Contributed Assets, or the Assumed
Liabilities, all personnel records or files regarding any Employee of the
Business or the Contributed Entities, and all general ledgers and underlying
books of original entry and other financial records of the Business, except to
the extent included in the Retained Assets.
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8.1.6 "Business" shall mean the assets, operations and activities of the
Post-Dispatch and the Contributed Entities.
8.1.7 "Business Day" shall mean a day, other than a Saturday or Sunday, on
which banks generally are open in New York, New York, St. Louis, Missouri and
Wilmington, Delaware for a full range of business.
8.1.8 "Chosen Court" shall have the meaning set forth in Section 7.10.
8.1.9 "Closing" shall mean the closing of the transactions contemplated by
this Agreement.
8.1.10 "Closing Date" shall have the meaning set forth in Section 2.2.
8.1.11 "Code" shall mean the Internal Revenue Code of 1986, as amended.
8.1.12 "Company" shall have the meaning set forth in the preamble to this
Agreement.
8.1.13 "Company Debt" shall mean the loan in the aggregate principal amount
of $306 million to the Company pursuant to the Note Agreement.
8.1.14 "Consent" shall mean any consent, approval, authorization, waiver,
permit, grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to
any Person, including any Governmental Authority Relating to the transactions
contemplated by this Agreement.
8.1.15 "Contracts" shall mean all agreements, contracts, leases, purchase
orders, trade billback, refund and other arrangements, incentive agreements,
commitments, collective bargaining agreements, and licenses that are Related to
the Business or the Contributed Assets or to which such Contributed Assets are
subject, except to the extent included in any party's Retained Assets.
8.1.16 "Contributed Assets" shall mean all of the assets of a party which
Relate to the Business, whether tangible or intangible, real or personal, as
they exist on the date hereof, with such changes, deletions or additions thereto
as may occur from the date hereof to the Closing Date in the ordinary course of
business or are otherwise permitted by this Agreement (except, in each case, for
the Retained Assets), including the following:
(i) the Real Property;
(ii) the Fixtures and Equipment;
(iii) the current assets, including cash and deposits, trade accounts
receivable, newsprint inventory and prepaid expenses;
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(iv) Intellectual Property;
(v) the Books and Records;
(vi) the Contracts;
(vii) the stock or other ownership interests of the Contributed
Entities;
(viii) all Governmental Authorizations which are transferable without
obtaining any Consent;
(ix) subject to Section 7.4, the Agency Agreement; and
(x) any other assets of the kind or similar to those set forth on
the balance sheet attached hereto as Schedule 8.1.16.
8.1.17 "Contributed Entities" shall mean post-net.com LLC, Arch
Distribution, Gateway Consumer Services and SCR Associates LLC, or their
respective successors in interest.
8.1.18 "Disclosure Schedules" shall mean the Disclosure Schedules dated the
date hereof delivered by Pulitzer or Herald in connection with this Agreement.
8.1.19 "Effective Time" shall have the meaning set forth in Section 2.2.
8.1.20 "Employee" shall mean, with respect to the Business, an individual
who is or was employed directly and primarily in the Business by Pulitzer, PTI,
any Contributed Entity or their respective predecessors, whether salaried or
hourly and whether, at the time of the Closing, on lay-off or medical, family or
other authorized leave of absence; provided, however, that any individual who is
designated as a "corporate employee" of Pulitzer will be deemed not to be an
Employee notwithstanding the participation by such individual in the Business.
8.1.21 "Employee Plans" shall mean any "employee welfare benefit plans" and
"employee pension benefit plans" as defined in Sections 3(1) and 3(2) of the
Employee Retirement Income Security Act of 1974, as amended, and any other
compensatory plan, program or arrangement with or for the benefit of Employees,
former Employees and their covered dependents and beneficiaries, but only to the
extent Related to the Business.
8.1.22 "Encumbrances" shall mean liens, charges, encumbrances, security
interests, options or any other restrictions or third-party rights, including
any third party Consents.
8.1.23 "Fixtures And Equipment" shall mean all furniture, fixtures,
furnishings, machinery, vehicles, equipment (including computer hardware,
computer terminals, network servers, and research and development equipment) and
other tangible personal property Related to the Business.
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8.1.24 "Governmental Authority" shall mean any nation or government, any
state, province or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency,
department, board, commission or instrumentality of the United States, any State
of the United States or any political subdivision thereof.
8.1.25 "Governmental Authorizations" shall mean all licenses, permits,
franchises, certificates of occupancy, other certificates and other
authorizations and approvals required to carry on a Business as currently
conducted under the applicable laws, ordinances or regulations of any
Governmental Authority.
8.1.26 "Herald" shall have the meaning set forth in the preamble to this
Agreement.
8.1.27 "Herald Assumed Liabilities" shall mean all Assumed Liabilities
transferred to the Company by Herald.
8.1.28 "Herald Contributed Assets" shall mean all Contributed Assets, owned
by Herald or in which Herald has a beneficial interest either directly or
indirectly through the Contributed Entities, Related to the Business.
8.1.29 "Herald Indemnity" shall mean the Indemnity Agreement between Herald
and Pulitzer, substantially in the form of Exhibit 2.1(h) hereto, pursuant to
which Herald has agreed to indemnify Pulitzer against certain amounts which may
be incurred or paid by, or assessed against, Pulitzer under the Pulitzer
Guaranty.
8.1.30 "Herald Indemnified Parties" shall have the meaning set forth in
Section 6.2(a).
8.1.31 "Herald Leased Real Property" shall mean the Leased Real Property of
Herald.
8.1.32 "Herald Owned Real Property" shall mean the Real Property owned in
whole or in part by Herald and utilized in the Business.
8.1.33 "Herald Real Property" shall mean the Real Property owned by Herald
and utilized in the Business.
8.1.34 "Herald Retained Assets" shall mean the Retained Assets of Herald.
8.1.35 "Herald Retained Liabilities" shall mean the Retained Liabilities of
Herald.
8.1.36 "Indemnification Claim Notice" shall have the meaning set forth in
Section 6.3.
8.1.37 "Indemnified Parties" shall have the meaning set forth in Section
6.3.
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8.1.38 "Indemnifying Party" shall have the meaning set forth in Section
6.3.
8.1.39 "Intellectual Property" shall mean (except to the extent included in
the Retained Assets) all of the intellectual property (and the rights associated
therewith) Related to the Business or the Contributed Assets, including:
(a) trademarks, service marks, brand names, certification marks, trade
dress, assumed names, Internet domain names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing (including any extension, modification or
renewal of any such registration or application);
(b) non-public information, trade secrets, confidential information,
know how, proprietary technology and rights in any jurisdiction to limit
the use or disclosure thereof by any Person;
(c) copyrighted works and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof;
(d) any similar intellectual property or proprietary rights; and
(e) any claims or causes of action arising out of or Related to any
infringement or misappropriation of any of the foregoing occurring before
or after the Closing.
8.1.40 "Laws" shall mean any federal, state, foreign or local law, statute,
ordinance, rule, code, regulation, order, judgment or decree of any Governmental
Authority.
8.1.41 "Leased Real Property" shall mean all land, buildings, fixtures and
other Real Property leased on the date hereof by any of the Pulitzer Parties,
Herald or any of the Contributed Entities as lessee and used in the Business.
8.1.42 "Lenders" shall mean the Purchasers (as defined in the Note
Agreement).
8.1.43 "License Agreement" means the License Agreement between Pulitzer and
the Company, substantially in the form of Exhibit 2.1(f).
8.1.44 "Losses" shall have the meaning set forth in Section 6.2.
8.1.45 "Material Adverse Effect" shall mean any and all events, changes or
effects that have occurred which would materially and adversely affect the value
of the Contributed Assets as a whole or the Business as a whole.
8.1.46 "Note Agreement" shall mean the Note Agreement entered into as of
the Closing Date by and among the Company, The Prudential Insurance Company of
America and certain other institutional lenders Relating to the Company Debt.
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8.1.47 "Notice Period" shall have the meaning set forth in Section 6.3.
8.1.48 "Operating Agreement" shall mean that certain Operating Agreement
among Pulitzer, PTI and Herald to be dated as of the Closing substantially in
the form of Exhibit 2.1(d), that shall govern the rights and obligations of the
Members of the Company.
8.1.49 "Owned Real Property" shall mean all land and all buildings,
fixtures, and other improvements owned by any of the Pulitzer Parties, Herald or
any of the Contributed Entities and utilized in the Business.
8.1.50 "Permitted Encumbrances" shall mean, with respect to any party's
Encumbrances, (i) liens for taxes (which are not related to income, sales or
withholding taxes), assessments and other governmental charges not yet due and
payable or due but not delinquent as of the Closing Date or being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established on the Final Statement; (ii) mechanics', workmen's, repairmen's,
warehousemen's, carrier's, or other like liens arising or incurred in the
ordinary course of business for amounts which are not delinquent and which will
not individually or in the aggregate have a Material Adverse Effect, original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business; (iii) with respect to
either the Pulitzer Real Property, PTI Real Property or the Herald Real
Property, (A) easements, quasi-easements, licenses, covenants, rights-of-way and
other similar restrictions, including any other agreements, conditions,
restrictions, or other matters which would be shown by a current title report or
other similar report or listing, (B) any conditions that may be shown by a
current survey, title report or physical inspection, and (C) zoning, building
and other similar restrictions; (iv) the failure to obtain or give any Consent;
and (v) Encumbrances not described in the foregoing clauses (i) through (iv) and
which, individually or in the aggregate, would not have a Material Adverse
Effect, including any matter set forth in Schedules 3.6(a) and (b) or 4.6(a) and
(b).
8.1.51 "Person" shall mean an individual, a corporation, a partnership, a
limited liability company, an association, a trust or other entity or
organization.
8.1.52 "Post-Dispatch" shall have the meaning set forth in the preamble to
this Agreement.
8.1.53 "PTI" shall have the meaning set forth in the preamble to this
Agreement.
8.1.54 "PTI Assumed Liabilities" shall mean the Assumed Liabilities
transferred to the Company by PTI.
8.1.55 "PTI Contributed Assets" shall mean the Contributed Assets, owned by
PTI or in which PTI has a beneficial interest either directly or indirectly
through the Contributed Entities, Related to the Business.
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8.1.56 "PTI Real Property Leases" shall mean the leases Relating to the
Leased Real Property entered into by PTI and utilized in the Business.
8.1.57 "PTI Retained Assets" shall mean the Retained Assets of PTI.
8.1.58 "PTI Retained Liabilities" shall mean the Retained Liabilities of
PTI incurred in connection with the Business.
8.1.59 "Pulitzer" shall have the meaning set forth in the preamble to this
Agreement.
8.1.60 "Pulitzer Assumed Liabilities" shall mean the Assumed Liabilities
transferred to the Company by Pulitzer.
8.1.61 "Pulitzer Contributed Assets" shall mean the Contributed Assets,
owned by Pulitzer or in which Pulitzer has a beneficial interest either directly
or indirectly through the Contributed Entities, Related to the Business.
8.1.62 "Pulitzer Guaranty" shall mean the Guaranty Agreement made as of the
Closing by Pulitzer in connection with the Note Agreement.
8.1.63 "Pulitzer Indemnified Parties" shall have the meaning set forth in
Section 6.2.
8.1.64 "Pulitzer Owned Real Property" shall mean the Owned Real Property of
any of the Pulitzer Parties and utilized in the Business.
8.1.65 "Pulitzer Parties" shall have the meaning set forth in the preamble
to this Agreement.
8.1.66 "Pulitzer Real Property" shall mean the Real Property owned by any
of the Pulitzer Parties and utilized in the Business.
8.1.67 "Pulitzer Real Property Leases" shall mean the leases Relating to
the Leased Real Property entered into by Pulitzer or any of the Contributed
Entities and utilized in the Business.
8.1.68 "Pulitzer Retained Assets" shall mean the Retained Assets of
Pulitzer.
8.1.69 "Pulitzer Retained Liabilities" shall mean the Retained Liabilities
of Pulitzer incurred in connection with the Business.
8.1.70 "Real Property" shall mean the Owned Real Property and the Leased
Real Property.
8.1.71 "Regulations" shall mean the regulations promulgated by the U.S.
Treasury Department pursuant to the Code.
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8.1.72 "Related to" or "Relating to" shall mean primarily related to, or
used primarily in connection with.
8.1.73 "Retained Assets" shall mean all of the assets of a party which do
not Relate to the Business, whether tangible or intangible, real or personal, as
they exist on the date hereof, (except, in each case, for the Contributed
Assets), including the following:
(a) the assets (including Real Property, tangible personal property,
accounts receivable, intellectual property and contracts) Related to any
business conducted by Herald, Pulitzer or PTI and any of their respective
Affiliates other than the Business;
(b) the stock or other ownership interests of all subsidiaries of
Pulitzer, PTI or Herald other than the Contributed Entities;
(c) all cash and cash accounts, disbursement accounts, outstanding
checks and disbursements, investment securities and other short-term and
medium-term investments;
(d) all deferred tax assets of Pulitzer, PTI or Herald;
(e) all tax returns and related work papers of Pulitzer, PTI, Herald
or any of their respective Affiliates;
(f) all assets held by or under any funded Employee Plans to the
extent such Employee Plans and the assets thereunder are not specifically
assumed by the Company or a Contributed Entity hereunder;
(g) all Governmental Authorizations to the extent not transferable
without obtaining a Consent;
(h) the Retained Real Property and any financial instruments Related
to the Retained Real Property;
(i) all of Pulitzer's or Herald's insurance policies, subject to their
rights under such insurance policies and the rights of the Company if any
under such policies;
(j) all of Pulitzer's right, title and interest in and to the name
"Pulitzer" or any part thereof whether alone or in combination with one or
more other words;
(k) all of Pulitzer's right, title and interest in the name "St. Louis
Post-Dispatch" and certain other rights as set forth in the License
Agreement;
(l) all rights of the Pulitzer Parties under this Agreement and the
Transaction Agreements, and all rights of Herald under this Agreement and
the Transaction Agreements; and
(m) all contracts which are not transferred to the Company in
accordance with Section 2.8 hereof, subject to the provisions thereof.
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<PAGE> 31
8.1.74 "Retained Liabilities" shall mean all of the following debts,
liabilities, commitments or obligations, whether arising before or after the
Closing and whether known or unknown, fixed or contingent, not Related to the
Business, including the following:
(a) all liabilities Related to the Retained Assets;
(b) all liabilities which are retained by Pulitzer, PTI or Herald
under the Transaction Agreements or this Agreement;
(c) all liabilities under the Employee Plans, except to the extent
such liabilities are specifically assumed by the Company or a Contributed
Entity hereunder;
(d) all liabilities for taxes imposed with respect to the taxable
periods, or portions thereof, ending on or before the Closing Date;
(e) all liabilities for indebtedness for borrowed money and any other
obligation which are fixed as to amount and certainty as of the Closing or
which are secured by a lien that is not a Permitted Encumbrance on any of
the Contributed Assets, but not including liabilities under Contracts
included in the Contributed Assets and Assumed Liabilities; and
(f) all other debts, liabilities or obligations whatsoever that do not
Relate to the Business or that do not otherwise Relate to the Contributed
Assets.
8.1.75 "Retained Real Property" shall mean the Real Property retained by
Herald or Pulitzer.
8.1.76 "Survival Period" shall have the meaning set forth in Section 6.1.
8.1.77 "Transaction Agreements" shall mean the Operating Agreement, the
Pulitzer Guaranty, the Herald Indemnity, the Non-Confidentiality Agreement, the
License Agreement and the Note Agreement.
8.1.78 "Transfer Costs" shall have the meaning set forth in Section 2.7.
8.2 Other Terms. Other terms may be defined elsewhere in the text of this
Agreement, and unless otherwise indicated shall have such meanings throughout
this Agreement.
8.3 Other Definitional Provisions.
(a) The words "whereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provision of this Agreement. The word
"including" means "including without limitation."
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<PAGE> 32
(b) The terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
[The remainder of this page is intentionally left blank]
28
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IN WITNESS WHEREOF, the parties have executed this Joint Venture Agreement
as of the date first written above.
PULTIZER INC.
By: /S/ RONALD H. RIDGWAY
---------------------
Name: Ronald H. Ridgway
Title: Senior Vice President - Finance
PULITZER TECHNOLOGIES, INC.
By: /S/ JON H. HOLT
---------------
Name: Jon H. Holt
Title: Treasurer
THE HERALD COMPANY, INC.
By: /S/ S.I. NEWHOUSE, JR.
----------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
ST. LOUIS POST-DISPATCH LLC
By: /S/ ROBIN L. SPEARS
-------------------
Name: Robin L. Spears
Title: Vice President - Finance
29
<PAGE> 34
SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 3.1(a) Herald State of Organization
Schedule 3.1(b) Herald Qualification in Foreign Jurisdictions
Schedule 3.3 Herald Consents
Schedule 3.4 Herald Non-Contravention
Schedule 3.6(a) Herald Title
Schedule 3.6(b) Herald Leases
Schedule 4.1 Pulitzer and PTI Qualification in Foreign
Jurisdictions
Schedule 4.3 Pulitzer and PTI Consents
Schedule 4.4 Pulitzer and PTI Non-Contravention
Schedule 4.6(a) Pulitzer and PTI Title
Schedule 4.6(b) Pulitzer and PTI Leases
Schedule 4.8 Pulitzer and PTI Indebtedness
Schedule 8.1.16 Balance Sheet
30
<PAGE> 35
EXHIBITS
Exhibit 1.1(b) Certificate of Formation
Exhibit 2.1(d) Form of Operating Agreement
Exhibit 2.1(f) Form of License Agreement
Exhibit 2.1(h) Form of Herald Indemnity
Exhibit 2.1(i) Form of Non-Confidentiality Agreement
Exhibit 2.2(a)(v) Opinion of Sabin, Bermant & Gould LLP
Exhibit 2.2(b)(vi) Opinion of Fulbright & Jaworski L.L.P.
Exhibit 2.9 Draft Forms of Note Agreement and Pulitzer Guaranty
31
<PAGE> 1
EXHIBIT 2.2
OPERATING AGREEMENT
OF
ST. LOUIS POST-DISPATCH LLC
Dated As Of:
May 1, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS 1
ARTICLE I DEFINITIONS AND TERMS..........................................................1
SECTION 1.1 Certain Definitions.......................................................1
SECTION 1.2 Rules of Construction.....................................................6
ARTICLE II GENERAL MATTERS...............................................................7
SECTION 2.1 Formation.................................................................7
SECTION 2.2 Purposes and Business.....................................................7
SECTION 2.3 Offices...................................................................7
SECTION 2.4 Name......................................................................8
SECTION 2.5 Term......................................................................8
SECTION 2.6 Members...................................................................8
ARTICLE III FINANCIAL AND TAX MATTERS....................................................8
SECTION 3.1 Capital Contributions.....................................................8
SECTION 3.2 Loans from Members........................................................9
SECTION 3.3 Restrictions Relating to Capital; Company Property........................9
SECTION 3.4 Tax Treatment............................................................10
SECTION 3.5 Allocation of Profits and Losses.........................................10
SECTION 3.6 Other Allocation Rules...................................................10
SECTION 3.7 Tax Elections............................................................10
SECTION 3.8 Tax Allocations; Code Section 704(c).....................................11
SECTION 3.9 Tax Matters Member.......................................................12
SECTION 3.10 Regular Distribution Policy..............................................12
SECTION 3.11 Special Distributions....................................................12
SECTION 3.12 Permanent Company Debt...................................................13
SECTION 3.13 Allocations Upon Liquidation of the Company..............................13
SECTION 3.14 Reimbursement of Certain Expenses........................................13
ARTICLE IV MANAGEMENT 13
SECTION 4.1 General..................................................................13
SECTION 4.2 Standard of Care; Indemnification........................................14
SECTION 4.3 Capital Expenditures.....................................................14
SECTION 4.4 Reserves.................................................................15
ARTICLE V ACCOUNTING, BOOKS AND RECORDS.................................................15
SECTION 5.1 Fiscal Year..............................................................15
SECTION 5.2 Books and Records........................................................15
SECTION 5.3 Auditors.................................................................15
SECTION 5.4 Reporting................................................................15
SECTION 5.5 Banking..................................................................16
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 5.6 Tax Return Information...................................................16
SECTION 5.7 Six Year Projections.....................................................16
ARTICLE VI CONFIDENTIALITY; NONCOMPETITION..............................................16
SECTION 6.1 Confidentiality Obligation...............................................16
SECTION 6.2 Noncompetition...........................................................16
ARTICLE VII TRANSFER OF INTERESTS; PUT RIGHT............................................17
SECTION 7.1 General..................................................................17
SECTION 7.2 Put Right................................................................18
SECTION 7.3 Termination of a Member's Interest.......................................18
ARTICLE VIII DISSOLUTION AND WINDING UP.................................................18
SECTION 8.1 Dissolution..............................................................18
SECTION 8.2 Winding Up...............................................................19
SECTION 8.3 Pulitzer Purchase........................................................19
ARTICLE IX MISCELLANEOUS................................................................20
SECTION 9.1 Notices..................................................................20
SECTION 9.2 Amendment; Waiver........................................................20
SECTION 9.3 Assignment...............................................................20
SECTION 9.4 Entire Agreement.........................................................20
SECTION 9.5 Parties in Interest......................................................20
SECTION 9.6 Governing Law; Submission to Jurisdiction; Selection of Forum............21
SECTION 9.7 Counterparts.............................................................21
SECTION 9.8 Severability.............................................................21
SECTION 9.9 No Agency................................................................21
SECTION 9.10 Limitation of Liability..................................................22
SCHEDULE 1 . Identification of Members
SCHEDULE 2 . Permitted Transactions
APPENDIX A . Definition of Deemed Value
</TABLE>
ii
<PAGE> 4
OPERATING AGREEMENT
OF
ST. LOUIS POST-DISPATCH LLC
THIS OPERATING AGREEMENT of ST. LOUIS POST-DISPATCH LLC, a Delaware limited
liability company (the "Company"), is made and entered into as of May 1, 2000,
among The Herald Company, Inc., a New York corporation ("Herald"), Pulitzer
Inc., a Delaware corporation ("Pulitzer" or the "Managing Member"), Pulitzer
Technologies, Inc., a Delaware corporation ("PTI"), and such other Persons that
become Members as herein provided.
RECITALS
WHEREAS, the Company, Pulitzer, PTI and Herald are parties to that certain
Joint Venture Agreement, dated as of May 1, 2000 (the "Joint Venture
Agreement");
WHEREAS, Herald and Pulitzer have entered into that certain Indemnity
Agreement (the "Herald Indemnity"), dated as of May 1, 2000;
WHEREAS, pursuant to and subject to the terms and conditions of the Joint
Venture Agreement, each of Herald, Pulitzer and PTI will contribute, or cause to
be contributed, to the Company their respective interests in certain assets and
liabilities relating to the St. Louis Post-Dispatch in exchange for equity
interests in the Company;
WHEREAS, the Members desire to enter into this Agreement, which shall
constitute the limited liability company agreement of the Members under the
Delaware Act, for the purpose of setting forth the agreements of the Members as
to the affairs of the Company and the conduct of its business;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and undertakings contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
SECTION 1.1 Certain Definitions.
As used herein, the following terms shall have the meanings set forth or as
referenced below:
"Affiliate" of a Person means any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such
Person as of the date on which, or at any time during the period for which, the
determination of affiliation is being made. For the purpose of this definition,
"control" means (i) the direct or indirect ownership or control of more than 50%
of the voting stock or other voting interest in any Person, or (ii) the ability
to
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<PAGE> 5
direct or cause the direction of the management or affairs of a Person, whether
through the direct or indirect ownership of voting interests, by contract or
otherwise.
"Agency Agreement" has the meaning set forth in the Joint Venture
Agreement.
"Agreed Value" means the Fair Market Value of Contributed Assets net of
Assumed Liabilities, as set forth in, or determined pursuant to, Section 3.1 of
this Agreement.
"Agreement" shall mean this Operating Agreement, including the schedules
and exhibits hereto, as the same may be amended or supplemented from time to
time in accordance with the terms hereof.
"Assumed Liabilities" means the Pulitzer Assumed Liabilities, the PTI
Assumed Liabilities and the Herald Assumed Liabilities, each as defined in the
Joint Venture Agreement.
"Business Day" means a day, other than a Saturday or Sunday, on which banks
generally are open in New York City, St. Louis and Wilmington, Delaware for a
full range of business.
"Capital Account" means, with respect to any Member, the Capital Account
maintained for such Member in accordance with the following provisions:
(i) To each Member's Capital Account there shall be added the amount
of money and the initial Gross Asset Value of any property (other than
money) contributed to the Company by such Member (or its predecessors in
interest), such Member's distributive share of Profits, and the amount of
any Company liabilities assumed by such Member or which are secured by any
Company Property distributed to such Member.
(ii) From each Member's Capital Account there shall be subtracted the
amount of money and the Gross Asset Value of any Company Property
distributed to such Member pursuant to any provision of this Agreement,
such Member's distributive share of Losses, and the amount of any
liabilities of such Member assumed by the Company or which are secured by
any property contributed by such Member to the Company.
(iii) In the event all or a portion of an Interest is Transferred in
accordance with the terms of this Agreement, the Transferee shall succeed
to the Capital Account of the Transferor to the extent it relates to the
Transferred Interest.
"Capital Contribution" means, with respect to any Member, the amount of
money and the Gross Asset Value of any property (other than money) contributed
by such Member to the Company.
"Certificate of Formation" shall have the meaning set forth in Section 2.1.
"Closing" and "Closing Date" shall have the respective meanings set forth
in the Joint Venture Agreement.
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<PAGE> 6
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor to such statute.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Business" means the operations and activities carried on by the
Company and its subsidiaries, including the operations of the St. Louis
Post-Dispatch, the operations of any entities or businesses contributed by the
Members to the Company pursuant to the Joint Venture Agreement and any
businesses subsequently operated by the Company.
"Company Debt" means the loan in the aggregate principal amount of $306
million to the Company from the Prudential Insurance Company of America and
certain other institutional lenders.
"Company Property" means any and all property of whatever nature, tangible
or intangible, real or personal, of the Company from time to time.
"Contributed Assets" means the Pulitzer Contributed Assets, the PTI
Contributed Assets and the Herald Contributed Assets, each as defined in the
Joint Venture Agreement.
"CPA Firm" means the independent public auditor of the Company's books and
records designated by Pulitzer pursuant to Section 5.3.
"Debt" means any liability of the Company (including, without limitation,
liabilities to Members) for borrowed money, or any liability for the payment of
money by the Company in connection with any guarantees, surety agreements,
letters of credit, or other interest-bearing liabilities evidenced by any bond,
debenture, note or other similar instrument, excluding any trade liabilities or
any non-interest-bearing liabilities or obligations.
"Deemed Tax Benefit" shall have the meaning set forth in Section 3.11.
"Deemed Value" has the meaning set forth in Appendix A to this Agreement.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del. C.
18-101 et seq., as amended from time to time, and any successor to such statute.
"Depreciation" means, for each Fiscal Year or other period, an amount equal
to the depreciation, amortization or other cost recovery deduction allowable for
federal income tax purposes with respect to an asset for such Fiscal Year or
other period, except that if the Gross Asset Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of such Fiscal
Year or other period, Depreciation shall be determined by the Managing Member in
the manner described in Regulations Section 1.704-1(b)(2)(iv)(g)(3).
"Fair Market Value" means, with respect to Company Property, as of any date
of determination, the price for such Company Property that could be negotiated
in an arm's-length transaction, for cash, between a willing seller and a willing
buyer, neither of whom is under pressure or compulsion to complete the
transaction, as of such date of determination. The Fair Market Value of Company
Property shall be determined by the Members. If the Members are
3
<PAGE> 7
unable to reach agreement on such determination, each of Pulitzer and Herald
shall select an independent and nationally recognized investment banking firm
and such investment banking firms shall select a third independent and
nationally recognized investment banking firm, as they may deem appropriate and
in the best position to determine the Fair Market Value of such property, whose
determination of the Fair Market Value shall be final and binding.
"Final Determination" means (i) a binding decision, judgment, decree or
other order by any court of competent jurisdiction, which has become final and
not subject to further appeal, (ii) a closing agreement entered into under
Section 7121 of the Code or any other binding settlement agreement with the
Internal Revenue Service entered into in connection with or in contemplation of
an administrative or judicial proceeding, or (iii) the completion of Internal
Revenue Service administrative proceedings if a judicial contest is not or is no
longer available or, in the sole discretion of the Managing Member, is not to be
commenced or continued.
"Fiscal Year" means the fiscal year of the Company as specified in Section
5.1.
"Gross Asset Value" means, with respect to any Company Property, its
adjusted basis for federal income tax purposes, except as follows:
(i) The Gross Asset Value of Contributed Assets at the time of their
contribution to the Company pursuant to the Joint Venture Agreement and in
accordance with Section 3.1, net of Assumed Liabilities, shall be their
Agreed Value.
(ii) The initial Gross Asset Value of any other Company Property
contributed by a Member to the Company shall be its Fair Market Value on
the date of contribution.
(iii) The Gross Asset Value of any Company Property distributed to any
Member shall be adjusted to equal its Fair Market Value on the date of
distribution.
(iv) The Gross Asset Value of all Company Properties shall be
adjusted to equal their respective Fair Market Values in accordance
with the rules set forth in, and at such times as provided under,
Regulations Section 1.704-1(b)(2)(iv)(f).
(v) If the Gross Asset Value of Company Property has been determined
or adjusted pursuant to this definition, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect
to such Company Property for purposes of computing Profits and Losses.
"Herald" shall have the meaning set forth in the preamble hereto.
"Herald Indemnity" has the meaning set forth in the recitals to this
Agreement.
"Herald Put" shall have the meaning set forth in Section 7.2(a).
"Indemnitee" shall have the meaning set forth in Section 4.2(a).
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"Interest" means the membership interest of a Member in the Company
(which shall be considered personal property for all purposes), consisting
of (i) such Member's interest in Profits, Losses and distributions, (ii)
such Member's right to vote or grant or withhold consents with respect to
Company matters as provided herein or in the Delaware Act and (iii) such
Member's other rights and privileges as provided herein or under the
Delaware Act, in each case subject to the obligations of such Member under
this Agreement or applicable Law.
"Joint Venture Agreement" shall have the meaning set forth in the
recitals hereto.
"Law" means any federal, state, foreign or local law, constitutional
provision, code, statute, ordinance, rule, regulation, order, judgment or
decree of any governmental authority.
"Managing Member" means Pulitzer (acting through any Person or Persons
properly designated by it), and its successors, assigns or transferees.
"Member Loan" shall mean any loan from a Member to the Company in
accordance with Section 3.2.
"Members" mean Herald, Pulitzer, PTI and all other Persons admitted as
additional or substituted Members pursuant to this Agreement, so long as
they remain Members. Each Member shall constitute a "member" of the
Company, as such term is defined in Section 18-101 of the Delaware Act.
"Minimum Reserve Amount" shall mean (i) at any time on or prior to the
tenth anniversary of the Closing Date, an amount equal to the product of
(A) $15 million and (B) the time since the Closing Date (expressed in years
and quarters of a year to the end of the last preceding quarter) and (ii)
after the tenth anniversary of the Closing Date, zero.
"Percentage Interest" means initially: for Pulitzer, 94%, for PTI, 1%,
and for Herald, 5%; and thereafter as adjusted to reflect any permitted
Transfers.
"Permanent Company Debt" shall mean the Company Debt and any
replacement or refinancing of the Company Debt or any Permanent Company
Debt in accordance with Section 3.12.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust, a limited liability company, a governmental authority
or any other entity or organization.
"Profits" or "Losses" means, for each Fiscal Year or other period, an
amount equal to the Company's taxable income or loss for such Fiscal Year
or other period, determined in accordance with Code Section 703(a) and
assuming the tax basis of each asset contributed to the Company had been
equal to its Gross Asset Value at the date of such contribution. Profits
and Losses shall be adjusted as follows: (i) any income of the Company that
is exempt from federal income tax and not otherwise taken into account in
computing Profits and Losses shall be added to such taxable income or loss;
(ii) any expenditures of the Company described as Code Section 705(a)(2)(B)
expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits and Losses, shall be
subtracted from such
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taxable income or loss; (iii) in lieu of depreciation, amortization and
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Fiscal Year or other period, computed in accordance with the definition of
"Depreciation"; and (iv) if the Gross Asset Value of any Company Property
differs from its adjusted tax basis for federal income tax purposes, any
gain or loss resulting from a disposition of such Company Property shall be
calculated with respect to such Gross Asset Value.
"PTI" shall have the meaning set forth in the preamble hereto.
"Pulitzer" shall have the meaning set forth in the preamble hereto.
"Put Price" shall have the meaning set forth in Section 7.2(a).
"Put-Related Covenants" shall mean (i) that Herald and its Affiliates
will report the transactions contemplated by this Agreement and the Joint
Venture Agreement in a manner consistent with the Company's tax returns and
(ii) the covenants of Herald set forth in Section 5 of the Herald
Indemnity.
"Regulations" means the regulations promulgated by the U.S. Treasury
Department pursuant to the Code.
"Reserve Asset Value" shall mean, at any time, the value of all cash,
U.S. Treasury obligations and other obligations backed by the full faith
and credit of the United States then held by the Company.
"Special Distributions" shall have the meaning set forth in Section
3.11 hereof.
"Subsidiary" means any Contributed Entity (as defined in the Joint
Venture Agreement) or any other Person controlled by the Company.
"Tax Matters Member" shall have the meaning set forth in Section 3.9.
"Transaction Agreements" shall have the meaning set forth in the Joint
Venture Agreement.
"Transfer" shall have the meaning set forth in Section 7.1(a).
"Transferee" means a Person to whom a Member has Transferred its
Interest pursuant to Section 7.1.
SECTION 1.2 Rules of Construction.
(a) Words used herein, regardless of the number and gender used, shall
be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context
requires, and, as used herein, unless the context requires otherwise, the
words "hereof", "herein", and "hereunder" and words of similar import shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement.
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(b) The terms "dollars" and "$" shall mean United States dollars.
(c) The term "including" shall be deemed to mean "including without
limitation."
(d) Article and section headings used in this Agreement are for
convenience of reference only and shall not affect the interpretation of
this Agreement.
(e) This Agreement is among financially sophisticated and
knowledgeable parties and is entered into by the parties in reliance upon
the economic and legal bargains contained herein and shall be interpreted
and construed in a fair and impartial manner without regard to such factors
as the party who prepared, or caused the preparation of, this Agreement or
the relative bargaining power of the parties.
ARTICLE II
GENERAL MATTERS
SECTION 2.1 Formation.
The Members have caused the formation of the Company as a Delaware limited
liability company pursuant to the Delaware Act by filing a Certificate of
Formation of the Company (the "Certificate of Formation") on April 12, 2000 with
the Delaware Secretary of State in accordance with the Delaware Act. The rights
and liabilities of the Members shall be as provided in the Delaware Act, except
as otherwise provided in this Agreement.
SECTION 2.2 Purposes and Business.
Except as may otherwise be approved by the Members, the purpose of the
Company shall be to own and operate the St. Louis Post-Dispatch and other
businesses directly or indirectly related thereto, including certain businesses
contributed to the Company pursuant to the Joint Venture Agreement, as
determined by the Managing Member. The Company shall have all powers necessary
or desirable to accomplish the aforesaid purposes. In connection therewith, the
Company may engage in and enter into any and all activities, contracts and
agreements related or incident to the above-stated purposes as the Managing
Member may determine to be appropriate from time to time. The Company shall have
the power to do all things necessary, appropriate, advisable, convenient, or
incidental in connection with the fulfillment of its business purposes.
SECTION 2.3 Offices.
(a) The principal executive offices of the Company shall be located at
900 North Tucker Boulevard, St. Louis, Missouri 63101 at the offices of
Pulitzer or such other location as determined by the Managing Member from
time to time.
(b) The registered office of the Company in the State of Delaware is
located at The Corporation Trust Company, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The registered agent of the Company
for service of process at such address is The
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Corporation Trust Company. The Managing Member may change such registered
office or registered agent from time to time.
SECTION 2.4 Name.
The name of the Company shall be St. Louis Post-Dispatch LLC or such other
name as the Managing Member may from time to time select.
SECTION 2.5 Term.
The existence of the Company commenced on the date its Certificate of
Formation was filed with the Secretary of State of the State of Delaware, and
shall continue, unless earlier dissolved and terminated pursuant to Section 8.1,
through the close of business on the fifteenth anniversary of the Closing Date.
SECTION 2.6 Members.
The name and business or mailing address of each Member of the Company are
set forth on Schedule 1 to this Agreement. The Managing Member shall cause
Schedule 1 to be amended from time to time to reflect the addition or retirement
of Members, or transfers of Interests, in accordance with the terms of this
Agreement. Except in connection with a permitted redemption or transfer of a
Member's entire Interest in accordance with the terms of this Agreement, no
Member shall have the right to retire from the Company prior to the termination
of the Company following dissolution and winding up.
ARTICLE III
FINANCIAL AND TAX MATTERS
SECTION 3.1 Capital Contributions.
(a) Simultaneously with the execution of this Agreement, Herald is
contributing to the Company the Herald Contributed Assets and assigning to
the Company the Herald Assumed Liabilities (each as defined and identified
in the Joint Venture Agreement), with an aggregate Agreed Value of
$340,000,000.
(b) Simultaneously with the execution of this Agreement, Pulitzer and
PTI are contributing to the Company the Pulitzer Contributed Assets and the
PTI Contributed Assets, respectively, and are assigning to the Company the
Pulitzer Assumed Liabilities and the PTI Assumed Liabilities, respectively
(each as defined and identified in the Joint Venture Agreement), with an
aggregate Agreed Value of $340,000,000. Of Pulitzer and PTI's $340,000,000
aggregate Capital Contribution, $336,600,000 and $3,400,000 have been
contributed by Pulitzer and PTI, respectively.
(c) The Gross Asset Value of each Contributed Asset which is tangible
property shall be equal to the tax basis thereof as of the date
contributed. The Gross Asset Value of any intangible Contributed Assets
shall be equal to the difference between the total Gross Asset
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Value of such Member's Contributed Assets and the Gross Asset Value of the
tangible Contributed Assets of such Member.
(d) Except as may otherwise be unanimously agreed in writing by the
Members and except for payments, if any, under the Herald Indemnity (which
payments would be treated as Capital Contributions), the Members shall have
no obligation to make any additional Capital Contributions to the Company,
and except as contemplated hereunder or in the Joint Venture Agreement, no
Member shall contribute any property to the Company other than the
Contributed Assets.
SECTION 3.2 Loans from Members.
The Managing Member, in its sole discretion, may permit a Member to advance
funds to the Company as a loan (a "Member Loan"). Member Loans shall not be
considered Capital Contributions. Each Member Loan shall be unsecured and shall
bear a floating rate of interest (adjusted at the beginning of each fiscal
quarter of the Company) equal to the sum of the six month LIBOR rate plus 0.75%
and may contain other customary commercial terms as agreed by the Company and
the Member making such Member Loan; provided, however, that any such Member
Loans shall be fully subordinate in right of payment to the Company Debt, the
Permanent Company Debt, any other indebtedness of the Company and the Herald
Put. A Member Loan shall be a debt of the Company to such Member and shall be
payable or collectible only out of Company assets in accordance with the terms
and conditions upon which such Member Loan is made and subject to the terms and
conditions of this Agreement. The repayment of a Member Loan upon liquidation of
the Company shall be subject to the order of priority set forth in Section 8.2.
Any Member Loan shall provide that any payment of interest or principal thereon
may be made only to the extent that the Reserve Asset Value will equal or exceed
the Minimum Reserve Amount after taking such payment into account.
SECTION 3.3 Restrictions Relating to Capital; Company Property.
(a) Except as otherwise provided herein (including under Section 7.2)
or by the Delaware Act, no Member shall have the right to withdraw, or
receive any return of, all or a portion of such Member's Capital
Contribution, nor shall any Member have the right to demand and receive
property other than cash in return for its Capital Contribution.
(b) No interest shall be paid by the Company on Capital Contributions
or on balances in Members' Capital Accounts.
(c) All Company Property, whether contributed by a Member or otherwise
acquired by the Company, shall be owned by the Company as a separate legal
entity and no Member shall have any right of partition with respect to any
Company Property.
(d) Except as specifically set forth in this Agreement, no Member
shall have priority over any other Member, either as to the return of its
Capital Contribution or as to income, losses, returns, or distributions.
(e) The Company shall not enter into any transaction, other than
transactions contemplated by the Joint Venture Agreement or the Transaction
Agreements, with any Member
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or any Affiliate of any Member (other than any Subsidiaries of the Company)
except on arm's-length terms or otherwise in a manner consistent with prior
practice under the Agency Agreement relating to the kinds of items set
forth in Schedule 2 hereto. The Company shall provide Herald with notice of
any material transaction between the Company and either Pulitzer or any
other Affiliate of Pulitzer (other than any Subsidiary of the Company),
other than a transaction the terms of which are consistent with other prior
practice under the Agency Agreement.
SECTION 3.4 Tax Treatment.
It is the intention of the Members that the Company be treated as a
"partnership" for United States federal, state and local income tax purposes,
and, except as otherwise required by Law, no Member shall take any action
inconsistent with the classification of the Company as a partnership for U.S.
income tax purposes, including any action to cause the Company to be treated as
an association taxable as a corporation for U.S. income tax purposes.
SECTION 3.5 Allocation of Profits and Losses.
Except as provided in Section 3.13, Profits and Losses for any Fiscal Year
or other period shall be allocated among the Members in proportion to their
respective Percentage Interests.
SECTION 3.6 Other Allocation Rules.
(a) Profits, Losses, and any other items of income, gain, loss or
deduction shall be allocated to the Members pursuant to this Article III as
of the last day of each Fiscal Year; provided that Profits, Losses and such
other items shall also be allocated at such times as the Gross Asset Value
of Company Property is adjusted pursuant to Regulations Section
1.704-1(b)(2)(iv)(f). In addition, if any Company Property is distributed
in-kind to a Member, Capital Accounts shall be adjusted as if such Company
Property had been sold for its Fair Market Value at the time of such
distribution.
(b) Profits, Losses and any other items of income, gain, loss or
deduction shall be determined on a daily, monthly or other basis by the
Managing Member, using any permissible method under Code Section 706 and
the Regulations thereunder, and shall be allocated to a particular Fiscal
Year or other period accordingly.
(c) Solely for purposes of determining a Member's proportionate share
of the "excess nonrecourse liabilities" of the Company within the meaning
of Regulations Section 1.752-3(a)(3), the Members' respective interests in
Profits shall be based on their respective Percentage Interests.
SECTION 3.7 Tax Elections.
The Company shall make the following elections on the appropriate tax
returns:
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(a) to have the provisions of subchapter C of Chapter 63 of Subtitle F
of the Code (i.e., Sections 6221 through 6234 of the Code and the
Regulations thereunder regarding the tax treatment of partnership
items) apply to the Company;
(b) to adjust the basis of Company Property in the circumstances
described in Section 754 of the Code; and
(c) any other election not inconsistent with this Agreement or the
Joint Venture Agreement that the Tax Matters Member may deem appropriate
and in the best interest of the Company and the Members.
Neither the Company nor any Member may make an election for the Company to
be excluded from the application of the provisions of subchapter K of chapter 1
of subtitle A of the Code or any similar provisions of applicable state Law.
Herald agrees not to extend the statute of limitations with respect to
partnership items (as defined in Section 6231 of the Code) of the Company unless
an extension specific to such items is expressly requested by the Internal
Revenue Service. At the request of the Managing Member, Herald will confirm to
the Managing Member whether any such statute of limitations has been extended
and the date to which any such statute of limitations has been extended.
SECTION 3.8 Tax Allocations; Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Regulations
thereunder, income, gain, loss, and deduction with respect to any Company
Property contributed to the Company by a Member, including any Contributed
Asset, shall, solely for tax purposes, be allocated among the Members so as
to take account of any variation between the adjusted tax basis of such
Company Property to the Company for federal income tax purposes and its
Gross Asset Value at the time of contribution. Allocations pursuant to this
Section 3.8 are solely for purposes of federal, state and local income
taxes and shall not be taken into account in computing any Member's share
of Profits, Losses or distributions pursuant to any provision of this
Agreement.
(b) The Company shall adopt and use only the "traditional method"
permitted by the Regulations under Code Section 704(c), and therefore shall
not make any curative allocations and/or remedial allocations.
(c) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction and any other items taken into
account in computing Profits and Losses for a particular Fiscal Year or
other period shall be allocated among the Members based on their respective
Percentage Interests for such Fiscal Year or other period as determined by
the Managing Member in accordance with applicable provisions of the Code
and Regulations.
(d) Except as otherwise provided above, all Company allocations shall
be made in accordance with Section 704(b) of the Code.
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SECTION 3.9 Tax Matters Member.
Pulitzer shall be the tax matters partner (the "Tax Matters Member") of the
Company pursuant to Section 6231(a)(7) of the Code. The Company agrees to
defend, indemnify and hold harmless the Tax Matters Member from and against all
claims, damages, costs and expenses relating to actions taken in good faith in
discharging its responsibilities as Tax Matters Member.
SECTION 3.10 Regular Distribution Policy.
(a) Subject to Section 3.11, the Managing Member shall determine from
time to time, in its complete discretion, whether and to what extent the
Company shall distribute any portion of Company Property to the Members in
cash; provided, however, that, except as provided in Section 3.11, the
Company shall not make any distribution to the extent that, after giving
effect to such distribution, the Reserve Asset Value would be less than the
Minimum Reserve Amount.
(b) All distributions (other than pursuant to Section 3.11, Section
7.2 or Section 8.2) of Company Property shall be made to the Members based
on their respective Percentage Interests.
(c) The Members acknowledge that distributions pursuant to this
Section 3.10 in excess of the Company's "net cash flow from operations," as
determined under Regulations Section 1.707-4(b), are not anticipated on or
before the second anniversary of the Closing Date.
SECTION 3.11 Special Distributions.
(a) Simultaneous with the Closing, the Company shall distribute to
Herald $306,000,000.
(b) Notwithstanding Section 3.10, in the event of an increase in the
tax basis of Company Property (other than any increase in tax basis under
Section 743 of the Code) by reason of a Final Determination resulting in an
increase in the taxable income of Herald attributable to its Interest,
including as a result of a Final Determination that Herald's contribution
of its Contributed Assets constituted a taxable sale for federal income tax
purposes as of the date it was made, the Company shall distribute to Herald
an amount equal to 100% of the "Deemed Tax Benefit" (as defined in the next
sentence) arising as a result of such increase in the tax basis of Company
Property. The "Deemed Tax Benefit" of any increase in the tax basis of
Company Property shall be equal to the present value, computed based on an
8% annual discount rate to the date on which such increase in tax basis
applies for tax purposes, of a series of 15 annual amounts, each equal to
39% of one-fifteenth of such increase in tax basis, with such amounts being
taken into account commencing on the last day of the first tax year to
which such increase in tax basis is applicable and continuing on the last
day of each of the following 14 consecutive tax years.
(c) Notwithstanding anything herein to the contrary, no distribution
shall be made to Herald pursuant to Section 3.11(b) either prior to the day
after the second anniversary of the Closing Date or subsequent to the
exercise of the Herald Put.
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SECTION 3.12 Permanent Company Debt.
The Company shall refinance the Company Debt (or Permanent Company Debt)
from time to time with non-amortizing indebtedness that remains outstanding for
an aggregate term (taking into account the initial refinancing and any
subsequent refinancings) expiring on or after the 15th anniversary of the
Closing Date. The principal amount of any Permanent Company Debt shall be not
less than the Company Debt and not more than the sum of (i) the principal amount
of the Company Debt, plus (ii) the aggregate amount of expenses incurred in
obtaining any Permanent Company Debt. After deducting such expenses, the net
proceeds of any Permanent Company Debt shall be used solely to repay in full the
principal amount of the Company Debt (or, in the case of refinancings of
Permanent Company Debt, such refinanced Permanent Company Debt). The terms of
any Company Debt and Permanent Company Debt shall not restrict any distribution
by the Company under Section 3.11(b) or the payment by the Company of the Put
Price.
SECTION 3.13 Allocations Upon Liquidation of the Company.
In connection with the liquidation of the Company pursuant to Section 8.2,
any income or gain realized upon liquidation shall be allocated among the
Members based on their respective Percentage Interests pursuant to Section 3.5;
provided, however, that Herald's share of any such income or gain shall be
reduced, but not below 1% of all such income and gain, to the extent that the
allocations of income and gain to Herald in connection with the liquidation of
the Company would cause the Deemed Value of Herald's Interest to exceed $325
million as of the Closing Date.
SECTION 3.14 Reimbursement of Certain Expenses.
The Company will be responsible for and shall pay or reimburse any Member
or any Affiliate of a Member for any expenses (including reasonable attorney
fees) incurred by such Person in contesting or litigating any matter arising out
of (x) the actions or activities of the Company or (y) the transactions
contemplated by the Joint Venture Agreement (including the costs of any tax
contests, but not the tax, interest or penalties related thereto); provided,
that in the case of any Member other than the Managing Member, such Member shall
give the Company prompt written notice of any matter which may give rise to any
claim that the Company is responsible for any payment or reimbursement under
this Section 3.14.
ARTICLE IV
MANAGEMENT
SECTION 4.1 General.
The Managing Member shall have the sole right to manage the business of the
Company and shall have all powers and rights necessary, appropriate or advisable
to effectuate and carry out the purposes and business of the Company, including
the appointment of officers of the Company and the delegation thereto of such
duties as the Managing Member deems necessary, appropriate or advisable. The
Managing Member shall constitute and shall have all of
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the rights of a "manager" of the Company as such term is defined in Section
18-101 of the Delaware Act. No other Member, by reason of its status as such,
shall have any authority to act for or bind the Company or otherwise take part
in the management of the Company, but shall have only the right to vote on or
approve the matters specifically provided herein or required in the Delaware Act
to be voted on or approved or determined by the Members.
SECTION 4.2 Standard of Care; Indemnification.
(a) In carrying out their duties, each Member (including the Managing
Member) and its respective directors, officers and agents and the officers
or agents of the Company (each, an "Indemnitee") shall not be liable to the
Company or to any Member for any actions taken in good faith and reasonably
believed by the Indemnitee to be in, or not opposed to, the best interests
of the Company, or for errors of judgment, neglect or omission, including
any losses sustained, liabilities incurred, or benefits not derived by
Members in connection with any action or inaction of the Indemnitee,
provided, however, that the Indemnitee shall be liable for his willful
misconduct or fraud.
(b) Each Indemnitee shall be indemnified and held harmless by the
Company from and against any and all losses, claims, damages, liabilities,
expenses (including legal fees and disbursements), judgments, fines,
settlements and all other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or
investigative, in which the Indemnitee may be involved, or threatened to be
involved, as a party or otherwise by reason of the Indemnitee's status as
the Managing Member or his status as a director, officer or agent of the
Managing Member or of the Company and his management of the affairs of the
Company, or which relate to the Company, its property, business or affairs,
whether or not the Indemnitee continues to be the Managing Member or a
director, officer or agent of the Managing Member or of Company at the time
any such liability or expense is paid or incurred, if the Indemnitee acted
in good faith and in a manner it or he reasonably believed to be in, or not
opposed to, the best interests of the Company.
(c) Expenses (including legal fees and disbursements) incurred in
defending any proceeding shall be paid by the Company in advance of the
final disposition of such proceeding upon receipt of an undertaking by or
on behalf of the Indemnitee to repay such amount if it is ultimately
determined by a court of competent jurisdiction that the Indemnitee is not
entitled to be indemnified by the Company as authorized hereunder.
SECTION 4.3 Capital Expenditures.
The Managing Member may cause the Company to incur capital
expenditures, and may fund any such capital expenditures out of the assets of
the Company or out of funds provided by Member Loans; provided, that the Company
may not fund a capital expenditure out of the assets of the Company unless,
after the expenditure, the Reserve Asset Value is at least equal to the Minimum
Reserve Amount.
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SECTION 4.4 Reserves.
The Managing Member may establish and maintain reserves for actual,
anticipated or contingent liabilities and obligations of the Company. The
Company may pledge its cash and U.S. Treasury obligations and other obligations
backed by the full faith and credit of the United States, but only to the extent
the value of such cash, U.S. Treasury obligations and other obligations backed
by the full faith and credit of the United States exceed the Minimum Reserve
Amount at such time. The Company may not incur any obligations which are
reasonably expected to cause the Reserve Asset Value to be less than the Minimum
Reserve Amount.
ARTICLE V
ACCOUNTING, BOOKS AND RECORDS
SECTION 5.1 Fiscal Year.
The Fiscal Year and fiscal periods of the Company shall be the same as the
fiscal year and fiscal periods of Pulitzer, as the same may be changed or
modified from time to time.
SECTION 5.2 Books and Records.
The Company shall keep the books and records of the Company at its
principal executive offices. Such books and records shall be kept in conformity
with accounting principles generally accepted in the United States of America.
Each of the Members and its authorized representatives shall have the right, at
all reasonable times and upon reasonable advance written notice to the Company,
at such Member's expense, to inspect, audit and copy the books and records of
the Company for any purpose reasonably related to the Member's Interest. A
Member requesting access to the Company's books and records shall reimburse the
Company for any costs reasonably incurred by the Company in connection
therewith.
SECTION 5.3 Auditors.
The CPA Firm of the Company shall be designated by the Managing Member and
such CPA Firm may be changed from time to time so long as it is an auditing firm
of international standing.
SECTION 5.4 Reporting.
The Company shall use reasonable commercial efforts to deliver to each
Member (i) within 30 days after the close of each fiscal month, an unaudited
balance sheet and statement of income for the Company for such fiscal month and
(ii) within one-hundred twenty (120) days after the close of each Fiscal Year,
an audited balance sheet, statement of income and statement of cash flows for
the Company for such Fiscal Year.
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SECTION 5.5 Banking.
All funds of the Company received from any and all sources shall be
deposited in such checking or other such accounts as shall be determined by the
Managing Member. In connection with the maintenance of such bank accounts, the
Managing Member shall designate those individuals who will have authority to
write checks or otherwise disburse funds from such bank accounts on behalf of
the Company in connection with its activities.
SECTION 5.6 Tax Return Information.
The Managing Member shall cause the Company to prepare all federal,
foreign, state and local income tax returns that it is required to file. The
Managing Member shall use reasonable commercial efforts to deliver to each
Member within 120 days following the close of each Fiscal Year such tax
information as shall reasonably be required for the preparation by such Person
of its federal, foreign, state and local income and other income tax returns.
For each taxable year of the Company with respect to which Herald owns an
Interest, the Managing Member shall provide Herald with a copy of the draft
federal income tax return of the Company for such year at least twenty (20) days
prior to the filing of such return for comment and consultation, provided that
Herald's approval shall not be required for the filing of any tax return of the
Company.
SECTION 5.7 Six Year Projections.
Within thirty (30) days following the ninth anniversary of the Closing
Date, the Managing Member shall cause the Company to deliver to Herald projected
balance sheets, statements of income and statements of cash flow of the Company
for the six annual periods beginning on the ninth anniversary of the Closing
Date. The projections shall set forth all underlying material assumptions in
respect thereof, and the Company shall make available representatives of the
Company and the Managing Member to review the projections with representatives
of Herald.
ARTICLE VI
CONFIDENTIALITY; NONCOMPETITION
SECTION 6.1 Confidentiality Obligation.
Herald shall not, directly or indirectly, disclose or use at any time any
confidential or proprietary business, financial or other information pertaining
to the Company, Pulitzer or any of its respective Affiliates.
SECTION 6.2 Noncompetition.
Notwithstanding anything herein to the contrary, the parties hereto agree
that neither Herald nor any of its Affiliates shall, directly or indirectly,
during the term of this Agreement (a) own, operate, publish, sell or distribute
any daily, general interest newspaper that is principally sold or distributed
within the greater St. Louis metropolitan area or (b) purchase any group of
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weekly newspapers (regardless of their frequency of publication within any week)
consisting of five or more weeklies with aggregate weekly circulation of more
than 175,000 copies that are principally sold or distributed within the greater
St. Louis metropolitan area.
ARTICLE VII
TRANSFER OF INTERESTS; PUT RIGHT
SECTION 7.1 General.
(a) Any Member may sell, assign or transfer (collectively, "Transfer")
all or any portion of its Interest to any of its Affiliates that would be
treated as a "related person" to such Member within the meaning of
Regulations Section 1.752 (any such Affiliates of such Member, a "Related
Person") without the consent of any other Member, but may not Transfer,
pledge or otherwise encumber all or any portion of its Interest to any
Person who is not a Related Person to such Member (or take or allow to be
taken any action as a result of which the Related Person is no longer an
Affiliate of such Member) without the prior written consent of the other
Members, which consent may be granted or withheld in the other Members'
sole discretion.
(b) Notwithstanding Section 7.1(a), Pulitzer may, without the consent
of any other Member, Transfer all, but not less than all, of its and its
Affiliates' Interests, together with all of their obligations, to any
Person and designate that Person to be the Managing Member of the Company;
provided, that such Transferee (i) is, or is an Affiliate of, a nationally
recognized daily newspaper publisher which, together with its Affiliates,
has an aggregate paid daily circulation equal to at least 3,000,000 copies,
(ii) has a net worth at least equal to Pulitzer's net worth at such time,
(iii) assumes Pulitzer's obligations under this Agreement and the
Transaction Agreements and (iv) assumes Pulitzer's obligations under the
Pulitzer Guaranty (as defined in the Joint Venture Agreement).
(c) Notwithstanding Section 7.1(a), Pulitzer may, without the consent
of any other Member, Transfer all, but not less than all, of its and its
Affiliates Interests, together with all of their obligations, to any Person
and designate that Person to be the Managing Member of the Company;
provided, that (i) such Transferee is, or is an Affiliate of, a nationally
recognized daily newspaper publisher which, together with its Affiliates,
has an aggregate paid daily circulation of at least 500,000 copies, (ii)
such Transferee or its ultimate parent has "investment grade" rated debt,
as determined by either Standard & Poor's or Moody's, or, if such
Transferee's or its ultimate parent's debt is not so rated, such Transferee
or its ultimate parent (calculated on a consolidated basis) has a debt to
EBITDA ratio of not more than 3.5 to 1, (iii) such Transferee assumes
Pulitzer's obligations under this Agreement and the Transaction Agreements,
(iv) such Transferee assumes Pulitzer's obligations under the Pulitzer
Guaranty and (v) if such Transferee satisfies either condition under the
foregoing subsection (ii) only because its ultimate parent satisfies such
condition, the ultimate parent of such Transferee shall guarantee its
performance of Pulitzer's obligations under this Agreement and the
Transaction Agreements and also Pulitzer's obligations under the Pulitzer
Guaranty.
17
<PAGE> 21
(d) PTI must Transfer all of its Interest to the Person (or to an
Affiliate of the Person) to whom Pulitzer may Transfer its Interest under
Section 7.1(b) or Section 7.1(c)
(e) Any purported Transfer by a Member which does not comply with the
provisions of this Section 7.1 shall be null and void and of no force and
effect. Any Transferee under this Section 7.1 shall become a substitute
member in the Company, and shall take the place of the Transferor under
this Agreement as fully and completely as if such Transferee had been a
party hereto, provided that such Transferee executes and delivers to the
Company such documents and instruments of conveyance as may be reasonably
necessary to effect such Transfer and to confirm the agreement of the
Transferee to be bound by the provisions of this Agreement and the
Transaction Agreements.
SECTION 7.2 Put Right.
(a) Upon not less than six months prior written notice and, provided
that Herald and its Affiliates are not in breach of any of the Put-Related
Covenants, Herald shall have a one-time right to require the Company to
redeem all (but not less than all) of its Interest, effective on the tenth
anniversary of the Closing Date (the "Herald Put"). The redemption price
(the "Put Price") for Herald's Interest will be the amount necessary to
result in the Deemed Value of the Herald Interest after receipt of such
payment being equal to $275 million as of the Closing Date; provided,
however, that if, at the time the Herald Put is exercised, a contest with a
governmental authority exists as to the tax treatment of any item of income
taken into account in computing Deemed Value, the Put Price will be
adjusted after the closing of the exercise of the Herald Put to reflect the
ultimate tax treatment as well as any additional unreimbursed contest costs
and penalties of Herald and its Affiliates and the corrected interest
calculation. The Company may, in the Managing Member's sole and absolute
discretion, assign its obligations under the Herald Put to Pulitzer. The
closing of the exercise of the Herald Put shall take place at a time and
place to be designated by mutual agreement of the Company and Herald, but
not later than thirty (30) days after the tenth anniversary of the Closing.
At the closing, Herald shall execute and deliver such documents as
reasonably requested by the Company or Pulitzer to fully transfer title to
its Interest, including documents representing and warranting good and
marketable title to its Interest and that its Interest is owned free and
clear of all liens, charges and encumbrances.
SECTION 7.3 Termination of a Member's Interest.
Any Member that Transfers its entire Interest pursuant to the terms hereof
shall be deemed to have retired and to have ceased to be a Member as of the
effective date of such Transfer.
ARTICLE VIII
DISSOLUTION AND WINDING UP
SECTION 8.1 Dissolution.
The Company shall be dissolved and its affairs wound up and terminated upon
the first to occur of the following:
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<PAGE> 22
(a) the expiration of its term as set forth in Section 2.5; and
(b) the unanimous written consent of the Members to dissolve the
Company.
SECTION 8.2 Winding Up.
If the Company is dissolved pursuant to Section 8.1, this Agreement shall
remain in full force and effect and shall continue to govern the rights and
obligations of the Members and the Managing Member and the conduct of the
Company during the period of winding up the Company's affairs. Except as
provided in Section 8.3 below, the Managing Member shall cause Company Property
to be distributed in-kind or to be sold for cash and the proceeds distributed as
provided herein. The Managing Member shall apply and distribute Company Property
in the following order of priority (subject to Section 8.3), unless otherwise
required by mandatory provisions of applicable Law:
(a) to repayment of the Company Debt or the Permanent Company Debt;
(b) to repayment of other creditors (other than Members who are
creditors), to the extent otherwise permitted by Law, in satisfaction of
the liability of the Company to such creditors (whether by payment, by the
establishment of reserves of cash or other Company Property for contingent
liabilities in amounts, if any, determined by the Managing Member to be
appropriate for such purposes or by other reasonable provision for
payment);
(c) to repayment of Member Loans (whether by payment, by the
establishment of reserves of cash or other Company Property for contingent
liabilities in amounts, if any, determined by the Managing Member to be
appropriate for such purposes or by other reasonable provision for
payment); and
(d) thereafter to the Members in proportion to the positive balances
of their respective Capital Accounts. Such Capital Account balances shall
be determined after allocating all income, gain, deduction, loss and other
like items arising in connection with the liquidation of Company Property
(or if Company Property is not sold, after adjusting the Capital Accounts
in the same manner as such accounts would have been adjusted if all Company
Property had been sold for its Fair Market Value) and otherwise making all
Capital Account adjustments required hereunder. No Member shall have any
obligation to restore any deficit in its Capital Account.
SECTION 8.3 Pulitzer Purchase.
In connection with the liquidation of the Company, Pulitzer
will pay to Herald, in lieu of any amount that otherwise would be distributed to
Herald pursuant to Section 8.2(d), cash in the same amount.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Notices.
All notices and other communications required or permitted by this
Agreement shall be in writing and shall be delivered by personal delivery, by
nationally recognized overnight courier service, by facsimile, by first class
mail or by certified or registered mail, return receipt requested, addressed to
any Member at its address as set forth on Schedule 1 (as the same may be updated
from time to time at the direction of such Member) or to the Company at 900
North Tucker Boulevard, St. Louis, Missouri 63101 (or to such other address as
the Company shall have designated to each of the Members by written notice given
in the manner hereinabove set forth). Notices shall be deemed given one day
after sent, if sent by overnight courier; when delivered and receipted for, if
hand delivered; when received, if sent by facsimile or other electronic means or
by first class mail; or when receipted for (or upon the date of attempted
delivery where delivery is refused or unclaimed), if sent by certified or
registered mail, return receipt requested.
SECTION 9.2 Amendment; Waiver.
Any provision of this Agreement may (i) be amended if, and only if, such
amendment is in writing and signed by each Member, or (ii) be waived if such
waiver is contained in a writing, and signed by the party against whom the
waiver is to be effective. No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single exercise thereof preclude any other or further exercise thereof or of
any other right, power or privilege. Except as otherwise provided, rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
SECTION 9.3 Assignment.
Except as otherwise expressly provided herein, no party to this Agreement
may assign any of its rights or obligations under this Agreement without the
prior written consent of the other parties hereto.
SECTION 9.4 Entire Agreement.
This Agreement, the Joint Venture Agreement and the Transaction Agreements
(including the schedules and exhibits hereto and thereto) contain the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters.
SECTION 9.5 Parties in Interest.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns or
Transferees. Nothing in this
20
<PAGE> 24
Agreement, express or implied, is intended to confer upon any Person other than
the Company, Herald, Pulitzer, PTI or their respective successors or permitted
assigns or Transferees, any rights or remedies under or by reason of this
Agreement. The Company is executing this Agreement as a party, and this
Agreement shall constitute a contract among the Members and between the Company
and each of the Members.
SECTION 9.6 Governing Law; Submission to Jurisdiction; Selection of Forum.
This Agreement shall be governed by, and construed and enforced in
accordance with, the Laws of the State of Delaware without giving effect to any
choice of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the Laws of any jurisdiction
other than the internal Laws of the State of Delaware. Each of the parties
agrees that any legal action between the parties, or any of them, relating to
this Agreement, the interpretation of the terms hereof or the performance hereof
or the consummation of the transactions contemplated hereby, whether in tort or
contract or at law or in equity, shall exclusively be brought in a Federal or
State Court located in New Castle County, Delaware, having jurisdiction of the
subject matter thereof, and each party irrevocably (i) consents to personal
jurisdiction in any such Federal or State Court, (ii) waives any objection to
laying venue in any such action or proceeding in any such Court, (iii) waives
any immunity from suit and any objection that any such Court is an inconvenient
forum or does not have jurisdiction over any party hereto and (iv) agrees that
service of complaint or other process may be made by certified or registered
mail addressed to such party at its address determined in accordance with
Section 9.1 of this Agreement.
SECTION 9.7 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, and all of which shall constitute one and the same
Agreement.
SECTION 9.8 Severability.
The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof. If any provision of this
Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable (i) a suitable and equitable provision shall be
substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other Persons or circumstances shall not be affected by such invalidity or
unenforceability, nor shall such invalidity or unenforceability affect the
validity or enforceability of such provision, or the application thereof, in any
other jurisdiction. If Herald and Pulitzer are unable to agree on the
substitution of a provision pursuant to clause (i) above, such dispute shall be
submitted to binding arbitration in accordance with the rules of the American
Arbitration Association.
SECTION 9.9 No Agency.
This Agreement shall not constitute an appointment of any party as the
agent of any other party, nor shall any party have any right or authority to
assume, create or incur in any
21
<PAGE> 25
manner any obligation or other liability of any kind, express or implied,
against, or in the name or on behalf of, any other party.
SECTION 9.10 Limitation of Liability.
The debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and, except as otherwise expressly provided herein,
no Member (including the Managing Member) or officer of the Company shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being a Member, Managing Member and/or officer.
[The remainder of this page is intentionally left blank]
22
<PAGE> 26
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as of
the date first written above.
PULITZER INC.
By:/S/ RONALD H. RIDGWAY
---------------------
Name: Ronald H. Ridgway
Title: Senior Vice President - Finance
PULITZER TECHNOLOGIES, INC.
By:/S/ JON H. HOLT
---------------
Name: Jon H. Holt
Title: Treasurer
THE HERALD COMPANY, INC.
By:/S/ S.I. NEWHOUSE, JR.
----------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
23
<PAGE> 1
EXHIBIT 2.3
INDEMNITY AGREEMENT
INDEMNITY AGREEMENT (the "Agreement"), dated as of May 1, 2000, between THE
HERALD COMPANY, INC., a New York corporation ("Herald" or the "Indemnitor"), and
PULITZER INC., a Delaware corporation ("Pulitzer"). Capitalized terms used but
not otherwise defined herein shall have the respective meanings given to such
terms in the Joint Venture Agreement or the Operating Agreement, each referred
to below.
W I T N E S S E T H:
WHEREAS, Pulitzer, Herald, Pulitzer Technologies, Inc. ("PTI") and St.
Louis Post-Dispatch LLC, a Delaware limited liability company (the "Company"),
are parties to a Joint Venture Agreement, dated as of May 1, 2000 (the "Joint
Venture Agreement");
WHEREAS, Pulitzer, PTI and Herald are parties to the Operating Agreement of
the Company, dated as of May 1, 2000 (the "Operating Agreement");
WHEREAS, the Company is a party to a Credit Agreement, dated as of May 1,
2000, between the Company and The Prudential Insurance Company of America and
certain other institutional lenders (collectively, the "Lenders"), as amended,
supplemented or otherwise modified from time to time (the "Credit Agreement"),
pursuant to which the Lenders have agreed to make a loan to the Company in the
principal amount of $306,000,000 (the "Company Debt");
WHEREAS, the Company has executed a promissory note, dated as of May 1,
2000, evidencing the Company Debt;
WHEREAS, Pulitzer has provided to the Lenders a full and unconditional
guaranty of payment of the Company Debt pursuant to a Guaranty Agreement, dated
as of May 1, 2000 (the "Pulitzer Guaranty");
WHEREAS, as contemplated by and as more fully described in Section 3.12 of
the Operating Agreement, the parties thereto intend that the Company Debt will
be refinanced on one or more occasions with Permanent Company Debt (as defined
in the Operating Agreement); and
WHEREAS, the Indemnitor has agreed to indemnify Pulitzer against amounts
that may be actually paid by Pulitzer under the Pulitzer Guaranty, subject to
the terms and limitations set forth herein.
<PAGE> 2
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. INDEMNITY.
(a) Subject to Sections 3 and 4 hereof, the Indemnitor unconditionally
agrees to indemnify Pulitzer for any payments of principal and interest with
respect to the Company Debt that Pulitzer may make under the Pulitzer Guaranty,
and any reasonable costs and expenses incurred by Pulitzer in connection with
Indemnitor's performance of its obligations under this Agreement, if Pulitzer
shall have (i) exhausted all of its rights (whether by subrogation or otherwise)
to reimbursement or recovery from the Company or the Company's assets and (ii)
assigned its Interest (as defined in the Operating Agreement), and caused PTI
and all other Affiliates of Pulitzer to assign their Interests, to Herald (or to
an Affiliate of Herald designated by Herald). Such indemnification payment shall
be made within 30 days after the Indemnitor's receipt of written notice from
Pulitzer of Pulitzer's right to such payment.
(b) For purposes of this Agreement, the term "Company Debt" shall include
any Permanent Company Debt; the term "Credit Agreement" shall include any
similar agreement entered into by the Company in respect of any Permanent
Company Debt; and the term "Pulitzer Guaranty" shall include any similar
agreement entered into by Pulitzer in connection with any Permanent Company
Debt.
SECTION 2. SUBROGATION.
(a) Upon the Indemnitor's payment in full to Pulitzer pursuant to Section
1(a) hereof, the Indemnitor shall be subrogated to the remaining rights of
Pulitzer against the Company to the extent of such payment. For purposes of the
Operating Agreement, on the day such payment is made, the Indemnitor shall be
treated as if it contributed an amount equal to the amount of the payment to the
capital of the Company.
(b) Notwithstanding any provision of applicable Law, the Indemnitor hereby
agrees that the assignment by Pulitzer, PTI and any other Affiliate of Pulitzer
of their respective Interests to Herald pursuant to Section 1(a) above shall
constitute full satisfaction of any and all claims and other rights (whether
legal or equitable) that Indemnitor may have or thereafter acquire against
Pulitzer, the Company, any Member of the Company or any other Person by reason
of making a payment pursuant to Section 1(a) hereof (other than any rights under
the Operating Agreement in respect of the deemed capital contribution described
in Section 2(a) above), including, without limitation, any right of
indemnification, subrogation, reimbursement, exoneration, or contribution or any
right to participate in any claim or remedy of the Lenders or Pulitzer against
any person.
SECTION 3. LIMITATION ON AMOUNT OF INDEMNITY. Notwithstanding any provision
of this Agreement to the contrary, the aggregate obligation of the Indemnitor
hereunder shall in no event exceed the sum of (i) $306,000,000 and (ii) in the
event Indemnitor does not make payment in full of its indemnification
obligations hereunder to Pulitzer within ten (10) Business Days after the date
such payment is due pursuant to
2
<PAGE> 3
Section 1(a) above, the reasonable costs and expenses incurred by Pulitzer in
connection with Indemnitor's performance of its obligations under this
Agreement.
SECTION 4. TERMINATION. Except as otherwise provided in this Section 4,
this Agreement shall survive and be in full force and effect so long as any
principal amount of, or accrued interest on, the Company Debt is outstanding and
has not been paid in full. This Agreement shall terminate upon the first to
occur of the following (the "Cessation Date"): (i) the closing of the exercise
of the Herald Put (as defined in the Operating Agreement); (ii) the repayment in
full of the Company Debt, other than a repayment out of refinancing proceeds;
(iii) the liquidation and winding up of the Company pursuant to the terms of the
Operating Agreement or otherwise under the Delaware Act or (iv) a sale by
Herald, in accordance with the terms and conditions set forth in Section 7.1 of
the Operating Agreement, of its entire Interest to any Person who is not a
Related Person (as defined in Section 7.1 of the Operating Agreement) with
respect to Herald; provided, that any such transferee of Herald's Interest has
agreed in writing to assume all of Herald's obligations hereunder. As of the
Cessation Date, the Indemnitor shall be released from any and all liabilities
hereunder; provided, however, that the Indemnitor shall not be released from any
unpaid liability of the Indemnitor if (x) a Default (as defined in the Credit
Agreement) relating to the nonpayment of principal or interest on the Company
Debt or Event of Default (as defined in the Credit Agreement) is pending under
the Credit Agreement, or (y) Pulitzer has made or is then entitled to make a
demand pursuant to Section 1 hereof, or Pulitzer then would be so entitled to
make a demand upon exhaustion of its rights to reimbursement or recovery from
the Company or the Company's assets.
SECTION 5. NET WORTH OF INDEMNITOR.
(a) Herald represents that the information set forth in the letter from
Herald to Pulitzer dated as of the date hereof concerning the assets and
liabilities of Herald is true, correct and complete.
(b) Herald covenants that, until the Termination Date or Cessation Date, it
will not, directly or indirectly, dispose of any assets or incur any liability
or obligation that could be deemed to be part of a "plan to circumvent or avoid"
(within the meaning of Regulations Section 1.752-2(b)(6) and Section
1.752-2(j)(3)) Herald's indemnity obligation under this Agreement.
SECTION 6. NO THIRD PARTY RELIANCE. Nothing in this Agreement, expressed or
implied, is intended to confer upon any person other than the parties hereto and
their respective permitted successors and assigns any rights or remedies under
or by reason of this Agreement. Without limiting the foregoing, it is expressly
understood that the Lenders shall have no rights against the Indemnitor
hereunder.
SECTION 7. GOVERNING LAW. This agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, without giving
effect to any choice of law provision or rule.
3
<PAGE> 4
SECTION 8. NO WAIVER; AMENDMENT.
(a) No failure on the part of the Indemnitor or Pulitzer to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy by the Indemnitor or Pulitzer preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any other remedies
provided by law. Neither the Indemnitor nor Pulitzer shall be deemed to have
waived any rights hereunder unless such waiver shall be in writing and signed by
such parties.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement entered into between both
parties hereto.
SECTION 9. NOTICES. All communications and notices hereunder between and
among the parties hereto shall be in writing and given as provided in the Joint
Venture Agreement and addressed as specified therein.
SECTION 10. BINDING AGREEMENT. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
permitted successors and assigns of such party; and all covenants, promises and
agreements by or on behalf of the parties that are contained in this Agreement
shall bind and inure to the benefit of their respective permitted successors and
assigns.
SECTION 11. ASSIGNMENT. Pulitzer may assign or transfer its rights and
obligations hereunder to any Person to which it may assign or transfer its
rights and obligations under the Operating Agreement or the Pulitzer Guaranty.
Except as provided herein, no party hereto may assign or transfer any of its
rights or obligations hereunder (and any such attempted assignment or transfer
shall be void) without the prior written consent of the other party hereto.
SECTION 12. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, neither party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid, illegal or
unenforceable, but the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 13. COUNTERPARTS; EFFECTIVENESS; EXECUTION. This Agreement may be
executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually signed counterpart of this Agreement.
4
<PAGE> 5
SECTION 14. RULES OF INTERPRETATION. The rules of interpretation specified
in Section 1.2 of the Operating Agreement shall be applicable to this Agreement.
[The remainder of this page is intentionally left blank]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the date
first appearing above.
THE HERALD COMPANY, INC.
By: /S/ S.I. NEWHOUSE, JR.
----------------------
Name: S.I. Newhouse, Jr.
Title: Vice President
PULITZER INC.
By: /S/ RONALD H. RIDGWAY
----------------------
Name: Ronald H. Ridgway
Title: Senior Vice President - Finance
6
<PAGE> 1
EXHIBIT 99.1
[PULITZER INC. LETTERHEAD]
FOR IMMEDIATE RELEASE
PULITZER INC. AND THE HERALD COMPANY ANNOUNCE
JOINT VENTURE COMBINING INTERESTS IN ST. LOUIS POST-DISPATCH
Pulitzer to receive a 95 percent interest in results of joint venture:
Board authorized new stock buyback program
ST. LOUIS, May 1, 2000 - Pulitzer Inc. (NYSE:PTZ) and The Herald
Company announced today an agreement under which each will transfer its
interest in the assets and operations of the St. Louis Post-Dispatch to a new
joint venture to be managed by Pulitzer. Under the agreement, Pulitzer's
interest in the results of the operations of the Post-Dispatch will increase
from 50 percent to 95 percent.
Michael E. Pulitzer, chairman of Pulitzer, said, "This transaction
has special meaning to me, because the St. Louis Post-Dispatch was the first
newspaper owned by my grandfather, Joseph Pulitzer. I am pleased that we are
making this additional investment in the St. Louis community."
Robert C. Woodworth, president and chief executive officer of
Pulitzer, said, "The new joint venture arrangement is important because it
aligns our responsibility for operations more closely with the results we
achieve. We believe the Post-Dispatch represents a significant growth
opportunity for Pulitzer. Pulitzer will be the primary beneficiary as we work
to realize that potential."
-more-
<PAGE> 2
Add one
Pulitzer/Herald joint venture
"Acquisitions have been a major component of our growth strategies,"
Woodworth noted. "We view this transaction as part of that effort. We are
expanding our ownership of a property that we know well and making a
substantial investment in the St. Louis market, which we believe has great
potential."
Donald E. Newhouse, president of Advance Publications, Inc., parent of
The Herald Company, said: "Our involvement with the Post-Dispatch, unlike all
our other newspaper ownership, has been one of passive investment. When our
partners at Pulitzer indicated their desire to create a joint venture which
would more appropriately reflect their continuing operating responsibility for
the paper, we agreed that these unique circumstances fully justified the new
arrangement."
On a pro forma basis, assuming the transaction occurred on January 1,
2000, it is estimated that Pulitzer's cash flow (EBITDA) would increase by
approximately $29 million based on estimated 2000 results. The transaction is
expected to be immediately accretive to earnings before goodwill amortization.
On a GAAP accounting basis, it is expected to dilute Pulitzer's reported
earnings 6 percent to 8 percent during the first 12 months, and to become
earnings neutral in the fourth year.
Under terms of the joint venture agreement, The Herald Company will
receive an initial cash distribution from the joint venture of $306 million and
will retain a 5 percent interest in the results of operations of the
Post-Dispatch. Upon termination, which will occur no later than 2015, Pulitzer
will acquire The Herald Company's remaining interest in the joint venture for a
cash payment determined in accordance with the agreement.
The initial cash distribution from the joint venture to The Herald
Company will be financed by a loan to the joint venture from a group led by
Prudential Capital Group, a division of Prudential Insurance Company of
America. The loan will be guaranteed by Pulitzer. Pulitzer, which had
approximately $400 million of cash on its balance sheet as of March 31, 2000,
will remain in a strong financial position following the transaction.
-more-
<PAGE> 3
Add two
Pulitzer/Herald joint venture
Since 1961, the Post-Dispatch has been operating under an agency
agreement between Pulitzer and The Herald Company. Under the agency agreement,
Pulitzer manages the operations of the paper and the two companies evenly split
the operating income or loss, as well as capital expenditures.
The new joint venture is effective today, Monday, May 1, 2000. Under
accounting rules, the transaction will be treated as a purchase, and The Herald
Company's interest will be reported as a minority interest on Pulitzer's
financial statements.
Goldman, Sachs & Co. and Huntleigh Securities Corporation acted as
financial advisors to Pulitzer Inc. on the transaction.
Separately, Pulitzer announced that its Board of Directors authorized
the repurchase of up to $50 million of its common stock. The new authorization
is in addition to $28 million remaining under an earlier $50 million buy-back
program announced in July 1999. "We continue to believe that our stock is an
attractive investment," Woodworth said.
The Company said that the shares will be repurchased at management's
discretion in the open market over the next 12 to 24 months. The decision to
buy back the stock will depend upon price, availability and other corporate
developments, and no maximum or minimum purchase prices have been set.
Pulitzer Inc. is engaged in newspaper publishing and related new media
activities. The Company's newspaper operations include two major metropolitan
dailies, the St. Louis Post-Dispatch and the Arizona Daily Star in Tucson,
Arizona, and 12 other dailies: The Pantagraph, Bloomington, Ill.; The Daily
Herald Provo, Utah; the Santa Maria Times, Santa Maria, Calif.; The Napa Valley
Register, Napa, Calif,; The World, Coos Bay, Ore.; The Hanford Sentinel,
Hanford, Calif.; the Arizona Daily Sun, Flagstaff, Ariz.; the Troy Daily News,
Troy, Ohio; The Daily Chronicle, DeKalb, Ill.; The Garden Island, Lihue, Hawaii;
The Daily Journal, Park Hills, Mo.; and The Daily News, Rhinelander, Wisc.
-more-
<PAGE> 4
Add three
Pulitzer/Herald joint venture
Through its Pulitzer Technologies subsidiary, Pulitzer Inc. also
engages in a variety of new media and interactive initiatives, including web
sites related to the newspapers in St. Louis and Tucson and a number of its
other dailies. Pulitzer Inc. is the successor to the company originally
founded by Joseph Pulitzer in St. Louis in 1878.
For further information, contact James V. Maloney, director of
shareholder relations, Pulitzer Inc. at (314) 340-8406.
NOTE:
The above statements include forward-looking statements which are based on
current management expectations of the Company. Forward-looking statements are
subject to risks, uncertainties and other factors that could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and other 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 (including newsprint), capital or similar
requirements, and general economic conditions, any of which may impact
advertising and circulation revenues and various types of expenses. Although
the Company believes that the expectations reflected in the forward-looking
statement are reasonable, it cannot guarantee future results, levels of
activity, performance or achievements.
SPECIAL NOTICE:
Pulitzer Inc. will conduct a conference call for investors to discuss this
transaction beginning at 10:00 a.m. EDT today. Investors wishing to listen to
the call may contact James V. Maloney, director of shareholder relations,
Pulitzer Inc. at (314) 340-8406 prior to 9:30 a.m. EDT to obtain access
information.
