Limited Liability Partnership Agreement
of
The Denver Newspaper Agency LLP
January 22, 2001
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TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions
ARTICLE II
The Limited Liability Partnership
2.1
Formation............................................................11
2.2
Name.................................................................12
2.3 Business
Purpose.....................................................12
2.4 Registered
Agent.....................................................12
2.5
Term.................................................................12
2.6 Principal
Place of Business..........................................12
2.7 Title to
Partnership Property........................................12
2.8 The
Partners.........................................................13
2.9 Fiscal
Year..........................................................13
2.10 Representations
and Warranties of the Parties........................13
2.11 Survival of
Representations and Warranties...........................14
ARTICLE III
Capital Structure and Contributions
3.1 Initial
Capital Contribution of Post Entities........................15
3.2 Certain
Additional Capital Contributions.............................15
3.3 Other
Capital
Contributions..........................................16
3.4 No Right
to Return of Capital Contributions..........................16
3.5 Loans by
Third Parties...............................................16
ARTICLE IV
Capital Accounts; Allocation of Profits and Losses
4.1 Capital
Accounts.....................................................16
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4.2 Book
Allocation......................................................17
4.3 Tax
Allocations......................................................21
ARTICLE V
Distributions
5.1 In
General...........................................................23
5.2 Periodic
Distributions...............................................23
5.3 Special
Distribution.................................................24
5.4
Distribution in Event of Sale of Interest in Colorado
Rockies........26
ARTICLE VI
Accounting and Reports
6.1 Books and
Records....................................................26
6.2 Reports to
Partners..................................................27
6.3 Tax
Matters Partner/Annual Tax
Returns...............................28
6.4 Actions in
Event of Audit............................................30
6.5 Tax
Election.........................................................31
ARTICLE VII
Actions by Partners
7.1
Meetings/Actions by
Partners.........................................31
7.2 Certain
Matters Requiring Approval of the Partners...................32
7.3 Action by
Consent....................................................33
ARTICLE VIII
Management Committee
8.1 The
Management
Committee.............................................33
8.2 Removal of
Members of the Management Committee; Vacancies............35
8.3 Meetings
of the Management Committee; Notice.........................36
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PAGE
8.4
Quorum...............................................................36
8.5
Voting...............................................................37
8.6 Certain
Matters Requiring an Absolute Majority Vote of the
Management
Committee.................................................37
8.7 Action by
Consent....................................................40
ARTICLE IX
Transfer of Partnership Interests;
Additional and Substitute Partners
9.1 Prohibited
Transfers.................................................40
9.2 Permitted
Transfers by Partners......................................41
9.3 Substitute
Partner...................................................42
9.4
Involuntary
Transfers................................................43
9.5 Right of
First Refusal...............................................45
ARTICLE X
Dissolution and Liquidation
10.1
Dissolution..........................................................48
10.2 Closing of
Affairs...................................................48
10.3 Orderly
Liquidation..................................................50
10.4 Deficit Upon
Liquidation.............................................50
ARTICLE XI
Amendments to Agreement
ARTICLE XII
Indemnification
12.1 Remedies for
Breach..................................................51
12.2 Limitation of
Liability..............................................51
12.3 Indemnification
by Partners for Breach of Representations or
Warranties...........................................................51
12.4 Indemnification
by Partnership.......................................54
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TABLE OF CONTENTS
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ARTICLE XIII
General Provisions
13.1
Arbitration..........................................................58
13.2
Notices..............................................................59
13.3
Confidentiality......................................................60
13.4 Public
Announcements.................................................61
13.5 Entire
Agreement, Amendments,
etc....................................61
13.6 Construction
Principles..............................................62
13.7
Counterparts.........................................................62
13.8
Severability.........................................................62
13.9
Expenses.............................................................62
13.10 Governing
Law........................................................62
13.11 Binding
Effect.......................................................63
13.12 Additional Documents
and Acts........................................63
13.13 No Third Party
Beneficiary...........................................63
13.14 Limited Liability
Partnership........................................63
EXHIBITS
Exhibit A Denver Newspaper
Agency Contribution and Sale Agreement
Exhibit B Denver Newspaper
Agency Joint Operating Agreement
<PAGE>
LIMITED LIABILITY PARTNERSHIP AGREEMENT
OF
THE DENVER NEWSPAPER AGENCY LLP
This
Limited Liability Partnership Agreement of the Denver Newspaper
Agency LLP is this 22nd day of January,
2001 hereby adopted by and among The
Denver Post Corporation, a Delaware
corporation ("Denver Post"), its wholly
owned subsidiary, Eastern Colorado
Production Facilities, Inc., a Delaware
corporation ("Eastern Colorado" and
together with Denver Post, the "Post
Entities") and The Denver Publishing
Company, a Colorado corporation ("Denver
Publishing"). Denver Post, Eastern Colorado
and Denver Publishing shall
hereafter be known as and referred to as
the "Partners" and individually as a
"Partner."
RECITALS
A. On
April 24, 2000, the Post Entities formed Denver Post Publishing
Facilities LLC, a Delaware limited
liability company (the "Company") by the
filing of a Certificate of Formation with
the Delaware Secretary of State.
B. On the
date hereof, the Post Entities, pursuant to a Certificate of
Conversion filed with the Secretary of
State of Delaware, converted the Company
into a Delaware limited liability
partnership (the Company, as converted, shall
hereinafter be referred to as the
"Partnership"), and in connection therewith,
changed the name of the Partnership to "The
Denver Newspaper Agency LLP."
C. After
the conversion described in Recital B above, (1) the Post
Entities desire to make certain additional
capital contributions to the
Partnership as set forth herein, (2) after
the capital contributions described
in the preceding clause (1), Denver
Publishing desires to purchase from Denver
Post, and Denver Post desires to sell to
Denver Publishing, an Interest in the
<PAGE>
Partnership, and (3) after the purchase by
Denver Publishing of an Interest in
the Partnership described in subparagraph
(2) above, Denver Publishing desires
to make certain additional capital
contributions to the Partnership as set forth
herein such that, immediately after such
occurrence, the Percentage Interests
shall be 49% for Denver Post, 1 % for
Eastern Colorado, and 50% for Denver
Publishing.
ARTICLE I
DEFINITIONS
"ABSOLUTE
MAJORITY VOTE OF THE MANAGEMENT COMMITTEE" means the
affirmative
vote of a majority of all of the appointed
members of the Management Committee
irrespective of whether all of the
appointed members of the Management Committee
are present at a duly constituted meeting
of the Management Committee.
"ACT"
means the Delaware Revised Uniform Partnership Act, as in
effect
from time to time.
"ADJUSTED
CAPITAL ACCOUNT DEFICIT" means, with respect to any Partner,
the
deficit balance, if any, in such Partner's
Capital Account as of the end of the
relevant Fiscal Year, after giving effect
to the following adjustments:
(i) such Capital Account shall be deemed to be increased by any
amounts that such Partner is deemed to be
obligated to restore pursuant to (A)
the penultimate sentence of Regulations
Section 1.704-2(g)(1), or (B) the
penultimate sentence of Regulations Section
1.704-2(i)(5); and,
(ii) such Capital Account shall be deemed to be decreased by
the
items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
<PAGE>
"AFFILIATE" means any person controlled by, controlling, or under
common
control with the entity in question.
"AGREEMENT" means this Limited Liability Partnership Agreement of
The
Denver Newspaper Agency LLP.
"BANKRUPTCY EVENT" means with respect to any Partner (i) the
application
for, or the consent to, the appointment of
a conservator, receiver, trustee,
liquidator or the like for itself or its
property; (ii) the admission in writing
of its inability to pay its debts as they
mature; (iii) the making of a general
assignment for the benefit of its
creditors; (iv) its being adjudicated as
bankrupt or insolvent; (v) its filing a
voluntary petition in bankruptcy or a
petition or answer seeking reorganization
or an arrangement with creditors or to
take advantage of any insolvency law, or an
answer admitting the material
allegations of a petition filed against it
in any bankruptcy, reorganization, or
insolvency proceedings, or corporate action
taken by it for the purpose of
effecting any of the foregoing or (vi) an
order, judgment, or decree being
entered against it by a court or
governmental agency of competent jurisdiction,
approving a petition seeking reorganization
of it or appointing a conservator,
receiver, trustee, liquidator, or the like
for it or for all or a substantial
part of its assets, and such order,
judgment, or decree continuing unstayed or
in effect for any period of thirty (30)
consecutive days, or an involuntary
petition being filed against it in
bankruptcy or seeking reorganization under
the Bankruptcy Act (and the same not having
been dismissed within sixty (60)
days).
"BOOK
VALUE" means, with respect to any asset of the Partnership, the
adjusted basis of such asset as of the
relevant date for federal income tax
purposes, except as follows:
(i) the initial Book Value of any asset contributed by a Partner
to
the Partnership shall be the fair market
value of such asset as determined by
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all of the Partners; provided, that the
Book Value of (x) all assets contributed
as part of the Post Entities' Initial and
Additional Capital Contributions and
(y) all assets contributed as a part of
Denver Publishing's Initial Capital
Contribution pursuant to the provisions of
The Denver Newspaper Agency
Contribution and Sale Agreement, as
amended, a copy of which is appended as
Exhibit A to this Agreement, after taking
appropriate account of Denver
Publishing's payment to Denver Post of the
Sixty Million Dollars ($60,000,000)
Purchase Price for a portion of its
Percentage Interest therein, and the True-Up
Contribution discussed and set forth in
Section 1.6 of The Denver Newspaper
Agency Joint Operating Agreement (as
respectively set forth and described in
Sections 1.1, 1.4 and 1.5 of that
agreement), a copy of which is appended as
Exhibit B to this Agreement, shall be
deemed to be equal.
(ii) the Book Value of all Partnership assets (including
intangible
assets such as goodwill) shall be adjusted
to equal their respective fair market
values as of the following times:
(A) the contribution of money or other property (other than a
de MINIMIS amount) to the Partnership by a
new or existing Partner as
consideration for an interest in the
Partnership;
(B) the distribution by the Partnership to a Partner of more
than a de MINIMIS amount of money or
Partnership property as consideration for
an Interest in the Partnership; and,
(C) the liquidation of the Partnership within the meaning of
Regulation Section 1.704-1
(b)(2)(ii)(g);
<PAGE>
(iii) The Book Value of any property distributed to any Partner
shall be adjusted to equal the gross fair
market value (taking into account Code
Section 7701(g)) of such asset on the date
of distribution as determined by the
distributee and all of the Partners;
(iv) the Book Value of the Partnership assets shall be increased
(or
decreased) to reflect any adjustments to
the adjusted basis of such assets
pursuant to Code Section 734(b) or Code
Section 743(b), but only to the extent
that such adjustments are taken into
account in determining Capital Accounts
pursuant to Regulation Section 1.704-1
(b)(2)(iv)(m), PROVIDED HOWEVER, that
Book Value shall not be adjusted pursuant
to this subsection (iv) to the extent
all of the Partners determine that an
adjustment pursuant to subsection (ii)
above is necessary or appropriate in
connection with a transaction that would
otherwise result in an adjustment pursuant
to this subsection (iv); and,
(v) if the Book Value of an asset has been determined or
adjusted
pursuant to subsections (ii), (iii) or (iv)
above, any such adjustment shall be
reflected in the Profits and/or Losses of
the Partnership (for book purposes but
not for tax purposes) and allocated among
the Partners in accordance with
Section 4.2, and such Book Value shall
thereafter be adjusted by the
Depreciation taken into account with
respect to such asset for purposes of
computing Profits and Losses and other
items allocated pursuant to Section 4.2.
The
foregoing definition of Book Value is intended to comply with
the
provisions of Regulation Section 1.704-1
(b)(2)(iv) and shall be interpreted and
applied consistently therewith.
"BUSINESS
DAY" means any day (other than a day which is a Saturday,
Sunday
or legal holiday in the State of
Colorado).
<PAGE>
"BUSINESS
PLAN" means the business plan, which shall include the
operating
and capital budgets, for the Partnership
for each fiscal year of the
Partnership, as adopted and/or amended from
time to time by the Management
Committee.
"CAPITAL
ACCOUNT" means, for each Partner, the capital account
maintained
by the Partnership for such Partner as
described in Section 4.1.
"CAPITAL
CONTRIBUTION" means the amount of money and the agreed fair
market value of other property (net of any
liabilities secured by such property
that the Partnership is considered to
assume or take subject to Code Section
752) contributed by a Partner to the
Partnership pursuant to Article III hereof.
"CODE"
means the Internal Revenue Code of 1986, as amended from time
to
time or any successor statute. A reference
to the Code shall be deemed to
include any mandatory or successor
provisions thereto.
"DENVER
NEWSPAPER AGENCY CONTRIBUTION AND SALE AGREEMENT" means that
certain Contribution and Sale Agreement,
dated as of May 11, 2000, by and among
the Post Entities, Denver Publishing, and
the Post LLC, as amended by that
certain First Amendment to Contribution and
Sale Agreement, dated January 22,
2001.
"DENVER
NEWSPAPER AGENCY JOINT OPERATING AGREEMENT" means that certain
Joint Operating Agreement, dated as of May
11, 2000, by and among the Post
Entities, Denver Publishing, and the Post
LLC, as amended by that certain First
Amendment to Joint Operating Agreement,
dated January 22, 2001.
"DEPRECIATION" means, for each Fiscal Year or part thereof, 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 part thereof, except that if
the Book Value of an asset differs
<PAGE>
from its adjusted basis for federal income
tax purposes, the depreciation,
amortization or other cost recovery
deduction for such Fiscal Year or part
thereof shall be an amount which bears the
same ratio to such Book Value as the
federal income tax depreciation,
amortization or other cost recovery deduction
for such Fiscal Year or part thereof bears
to such adjusted tax basis. If such
asset has a zero adjusted tax basis, the
depreciation, amortization or other
cost recovery deduction for each Fiscal
Year shall be determined under a method
reasonably selected by the Management
Committee.
"EFFECTIVE
DATE" shall have the meaning ascribed to it in The Denver
Newspaper Agency Joint Operating
Agreement.
"ERISA"
means the Employment Retirement Income Security Act of 1974, as
amended.
"EXCESS
LOSSES" shall have the meaning ascribed to it in Section
4.2(c)(i)
hereof.
"EXCLUDED
PAYABLES" means, with respect to the Post Entities or Denver
Publishing, the current liabilities of
either the Post Entities or Denver
Publishing (but excluding any such
liabilities of the LLP) in the nature of
accounts payable or other accrued
liabilities that are, as of the date hereof,
properly accrued in accordance with
generally accepted accounting principles,
consistently applied.
"EXECUTIVE
OFFICERS" means the following officers of the Partnership: its
president and chief executive officer,
chief financial officer and any other
individual who would be an "executive
officer" of the Partnership as determined
in accordance with Rule 3b-7 promulgated
under the Securities Exchange Act of
1934.
"FISCAL
YEAR" means the fiscal year of the Partnership as defined in
Section 2.9 hereof.
<PAGE>
"GAAP" means generally accepted
accounting principles, as in effect from
time to time.
"INTEREST"
means, with respect to any Partner at any time, such Partners
entire beneficial ownership interest in the
Partnership at such time, including
such Partners Capital Account, voting
rights (if any), and right to share in
Profits and Losses, all items of income,
gain, loss, deduction and credit,
distributions and all other benefits of the
Partnership as specified in this
Agreement, together with such Partner's
obligations to comply with all of the
terms of this Agreement. With respect to
any person other than a Partner,
"Interest" means the entirety of such
person's rights and obligations with
respect to the Partnership.
"NET
AVAILABLE CASH FROM OPERATIONS" has the meaning set forth in
Section
5.2 hereof.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Regulation
Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" shall mean any Partnership liability (or
portion
thereof) for which no Partner or a related
person (as defined in Regulation
Section 1.752-4(b)) bears the economic risk
of loss for that liability under
Regulation Section 1.752-2, as described in
Regulation Section 1.704-2(b)(3) and
Regulation Section 1.752-1(a)(2).
"PARTNER NONRECOURSE DEBT"
has the meaning ascribed to such term in
Regulation Section 1.704-2(b)(4).
"PARTNER
NONRECOURSE DEBT MINIMUM GAIN" means the aggregate amount of
gain
(of whatever character), determined for
each Partner Nonrecourse Debt, that
would be realized by the Partnership if it
disposed of the Partnership property
subject to such Partner Nonrecourse Debt in
a taxable transaction in full
satisfaction thereof (and for no other
consideration) determined in accordance
with the provisions of Regulation Section
1.704-2(i)(2) and Regulation Section
<PAGE>
1.704-2(i)(5) for determining a Partner's
share of minimum gain attributable to
a Partner Nonrecourse Debt.
"PARTNER
NONRECOURSE DEDUCTIONS" means the excess, if any, of (i) the
net
increase, if any, in the amount of Partner
Nonrecourse Debt Minimum Gain during
any Fiscal Year OVER (ii) the aggregate
amount of any distributions during such
Fiscal Year of proceeds of a Partner
Nonrecourse Debt that are allocable to an
increase in Partner Nonrecourse Debt
Minimum Gain, determined in accordance with
the provisions of Regulation Section
1.704-2(l)(1) and 1.704-2(l)(2) after
application of Regulation Section
1.704-2(k).
"PARTNERSHIP MINIMUM GAIN" means the aggregate amount of gain (of
whatever
character), determined for each Nonrecourse
Liability of the Partnership, that
would be realized by the Partnership if it
disposed of the Partnership property
subject to such liability in a taxable
transaction in full satisfaction thereof
(and for no other consideration) and by
aggregating the amounts so computed,
determined in accordance with Regulation
Sections 1.704-2(d) and (k).
"PERCENTAGE INTEREST" means, for Denver Post forty-nine percent
(49%), for
Eastern Colorado one percent (1%) and for
Denver Publishing, fifty percent
(50%), as may be adjusted from time to time
in accordance with this Agreement.
"PROFITS"
and "LOSSES" means, for each Fiscal Year or part thereof, the
taxable income or loss of the Partnership
for such Fiscal Year determined in
accordance with Code Section 703(a) (for
this purpose, all items of income,
gain, loss or deduction required to be
stated separately pursuant to Code
Section 703(a)(1) shall be included in
taxable income or loss), with the
following adjustments:
<PAGE>
(i) any income of the Partnership that is exempt from federal
income
tax shall be added to such taxable income
or loss;
(ii) any expenditures of the Partnership described in Code
Section
705(a)(2)(B) or treated as such pursuant to
Regulation Section
1.704-1(b)(2)(iv)(i) shall be subtracted
from such taxable income or loss;
(iii) any Depreciation for such Fiscal Year or part thereof shall
be
taken into account in lieu of the
depreciation, amortization and other cost
recovery deductions taken into account in
computing such taxable income or loss;
(iv) gain or loss resulting from any disposition of Partnership
property with respect to which gain or loss
is recognized for federal income tax
purposes shall be computed with reference
to the Book Value of the property
disposed of, rather than the adjusted tax
basis of such property;
(v) in the event the Book Value of any Partnership asset is
adjusted
pursuant to Section (ii), (iii) or (iv) of
the definition of Book Value hereof,
the amount of such adjustment shall be
taken into account as gain or loss from
the disposition of such assets for purposes
of computing Profits and Losses;
and,
(vi) such taxable income or loss shall be deemed not to include
any
income, gain, loss, deduction or other item
thereof allocated pursuant to
Section 4.2(c) or Section 4.3.
"REGULATIONS" means the income tax regulations promulgated under
the Code
by the Department of the Treasury, as such
regulations may be amended from time
to time.
"REMAINING
EXCLUDED PAYABLES" means, with respect to the Post Entities or
Denver Publishing, an amount equal to (a)
the aggregate amount of the Excluded
<PAGE>
Payables of the Post Entities or Denver
Publishing, respectively; less (b) the
aggregate amounts previously distributed to
the Post Entities or Denver
Publishing, respectively, pursuant to
Section 5.2(a).
"SUBSTITUTE PARTNER" shall have the meaning ascribed in Section
9.3.
"TAX MATTERS PARTNER" shall have
the meaning ascribed in Section 6.3.
"TRANSFER"
means any sale, assignment, gift, hypothecation, pledge,
encumbrance, alienation, mortgage or other
disposition, whether voluntary or by
operation of law, of an Interest or any
portion thereof.
"TRANSFEREE" means a purchaser, transferee, assignee (other
than
collateral assignees) or any other person
who takes, in accordance with the
terms of this Agreement, an Interest in the
Partnership, and who thereby becomes
bound by all the terms of this Agreement,
regardless of whether such person
becomes a Substitute Partner.
ARTICLE II
THE LIMITED LIABILITY PARTNERSHIP
2.1
FORMATION. The Partnership was formed on April 24, 2000 as a
limited
liability company by the filing of a
Certificate of Formation with the Delaware
Secretary of State. On January 22, 2000,
the Partnership was converted to a
limited liability partnership by the filing
of a Certificate of Conversion with
the Delaware Secretary of State. All of the
Partners undertake hereafter to
execute or cause to be executed from time
to time all other instruments,
certificates, notices and documents, and to
do or cause to be done all such
filing, recording, publishing and other
acts, in each case, as may be necessary
or appropriate from time to time to comply
with all applicable requirements for
the operation and, when appropriate,
termination of a limited liability
partnership in the State of Delaware and
all other jurisdictions where the
Partnership shall desire to conduct its
business.
<PAGE>
2.2 NAME.
The name of the Partnership shall be "The Denver Newspaper
Agency LLP," and its business shall
hereafter be carried on in this name with
such variations and changes, if any, as may
be necessary or appropriate to
comply with the requirements of the
jurisdictions in which the Partnership's
operations are conducted.
2.3
BUSINESS PURPOSE. The purpose of the Partnership (the "Business
Purpose") is to carry on any lawful
business and to engage in any lawful act or
activity for which a limited liability
partnership may be formed under the Act
or other applicable laws of the State of
Delaware; PROVIDED, HOWEVER, that
except as the Partners shall approve
otherwise the Partnership's activities
shall hereafter be limited to the
publication of THE DENVER POST and DENVER
ROCKY MOUNTAIN NEWS and such other
activities as are set forth in the Denver
Newspaper Agency Joint Operating Agreement
that is attached as Exhibit B to this
Agreement.
2.4
REGISTERED AGENT. The registered office of the Partnership in
the
State of Delaware and its registered agent
for service of process on the
Partnership in the State of Delaware shall
be as set forth in the Statement of
Existence of the Partnership, as filed with
the Secretary of State of the State
of Delaware, as the same may be amended
from time to time.
2.5 TERM.
The term of the Partnership shall continue until dissolved and
liquidated in accordance with Article X
hereof.
2.6
PRINCIPAL PLACE OF BUSINESS. The Partnership shall maintain its
principal place of business within the city
of Denver, Colorado at such location
or locations as it may from time to time
select.
2.7 TITLE
TO PARTNERSHIP PROPERTY. Legal title to all property of the
Partnership shall be held and conveyed in
the name of the Partnership.
<PAGE>
2.8 THE
PARTNERS. The name and place of residence of each Partner is as
follows:
NAME
ADDRESS
The Denver Post Corporation
The Denver Post Corporation
1560 Broadway, Suite 2100
Denver, CO 80202
Eastern Colorado Production
c/o The Denver Post Corporation
Facilities, Inc.
1560 Broadway, Suite 2100
Denver, CO 80202
The Denver Publishing Company
The Denver Publishing Company
400 West Colfax
Denver, CO 80204
2.9 FISCAL
YEAR. Unless the Management Committee shall at any time
otherwise determine, the fiscal year and
taxable year of the Partnership shall
hereafter end on December 31st of each year
unless otherwise required by Section
706 of the Code.
2.10
REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each of the
parties
represents and warrants, severally and not
jointly, that:
(a) It is a corporation duly organized, validly existing and in
good
standing under the laws of the jurisdiction
of its organization;
(b) It has all requisite power and authority to enter into this
Agreement; the execution and delivery by
such party of this Agreement and the
consummation by such party of the
transactions contemplated hereby have been
duly authorized by all necessary action on
the part of such party; and this
Agreement has been duly and validly
executed and delivered by such party and
constitutes (assuming the due and valid
execution and delivery of this Agreement
by the other party), the legal, valid and
binding obligation of such party,
enforceable against it in accordance with
its terms;
<PAGE>
(c) There is no litigation pending or, to the best knowledge of
such
party, threatened against such party which
has a reasonable likelihood of
materially and adversely affecting the
operations, properties or business of the
Partnership or any of such party's
obligations under this Agreement;
(d) The execution, delivery and performance by such party of
this
Agreement will not result in a breach of
any of the terms, provisions or
conditions of any agreement to which such
party is a party which has a
reasonable likelihood of materially and
adversely affecting the operations,
properties or business of the Partnership
or such party's obligations under this
Agreement;
(e) The execution and delivery by such party of this Agreement
and
the continuation of the Partnership as a
limited liability partnership does not
require any filing by such party with, or
approval or consent of, any
governmental authority which has not
already been made or obtained; and,
(f) It is acquiring or has acquired its Interest for its own
account
for investment, without a view to, or for,
resale in connection with the
distribution thereof in violation of U.S.
federal or state securities laws, and
with no present intention of distributing
or reselling any part thereof.
2.11
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and
warranties of each of the parties contained
in Section 2.10 of this Agreement
are each made as of the date of this
Agreement and shall survive until the
dissolution of the Partnership.
<PAGE>
ARTICLE III
CAPITAL STRUCTURE AND CONTRIBUTIONS
3.1
INITIAL CAPITAL CONTRIBUTION OF POST ENTITIES. Upon formation of
the
Partnership as a limited liability company,
Denver Post made initial capital
contributions on behalf of itself and
Eastern Colorado to the Partnership
equivalent to that set forth and described
in Section 1.1 of The Denver
Newspaper Agency Joint Operating Agreement
(the "Initial Capital Contribution of
Denver Post"); provided, however, that
Denver Post rescinded a portion of such
capital contributions pursuant to that
certain Rescission Agreement (the
"Rescission Agreement"), dated as of
January 22, 2001, by and among the Post
Entities, the Post LLC and Denver
Publishing.
3.2
CERTAIN ADDITIONAL CAPITAL CONTRIBUTIONS. On the Effective Date,
as
such term is defined in The Denver
Newspaper Agency Joint Operating Agreement,
but after the conversion of the Partnership
described in Recital B hereto, (a)
Post Entities shall make an additional
capital contribution to the Company
equivalent to (i) the Additional Capital
Contribution of Denver Post set forth
and described in Section 1.4 of The Denver
Newspaper Agency Joint Operating
Agreement, and (ii) any contributions that
were rescinded by Denver Post
pursuant to the Rescission Agreement (b)
immediately after the capital
contribution described in subparagraph (a)
above, Denver Publishing shall
purchase from Denver Post a Percentage
Interest in the Partnership equal to
$60,000,000 divided by the then fair market
value of the Partnership's net
assets and shall receive a Capital Account
credit and Capital Contribution
credit for such portion of Denver Post's
Interest, which the parties agree shall
for tax accounting purposes be $60,000,000,
and (c) then Denver Publishing shall
make a capital contribution equivalent to
the Initial Capital Contribution of
Denver Publishing set forth and described
in Section 1.5 of that Agreement, such
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that after such occurrence, the Percentage
Interests shall be 49% for Denver
Post, 1% for Eastern Colorado, and 50% for
Denver Publishing.
3.3 OTHER
CAPITAL CONTRIBUTIONS. In the event that the Partnership shall
subsequent to the Effective Date require
funds other than the Post Entities'
Initial and Additional Capital Contribution
and Denver Publishing's Initial
Capital Contribution (as hereinbefore
described) for any authorized business
purpose, all such funds, unless duly
authorized hereunder to be obtained from
outside sources, shall be contributed by
the Post Entities and Denver Publishing
on identical terms and in equal shares,
when and as such additional
contributions may be duly authorized as
otherwise provided herein.
3.4 NO
RIGHT TO RETURN OF CAPITAL CONTRIBUTIONS. No Partner shall
hereafter have the right to have returned
to it any portion of its Capital
Contributions or be paid any distributions
from the Partnership, except as
provided in Articles V or X hereof.
3.5 LOANS
BY THIRD PARTIES. Subject to the provisions of Section 8.6
hereof, the Partnership may borrow funds
from or enter into credit, guarantee,
financing or refinancing arrangements for
any purpose with any Partner (provided
that each of the Partners is given
reasonable notice and is afforded a pro rata
opportunity to participate therein) or from
any other person, upon such terms as
the Management Committee determines
appropriate.
ARTICLE IV
CAPITAL ACCOUNTS; ALLOCATION OF PROFITS AND LOSSES
4.1
CAPITAL ACCOUNTS. Each Partner shall have a capital account (a
"Capital Account") which account shall be
(1) increased by the amount of (a) the
Capital Contributions of such Partner, (b)
the allocations to such Partner of
Profits and items of income or gain
pursuant to Section 4.2, and (c) any
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positive adjustment to such Capital Account
by reason of an adjustment to the
Book Value of Partnership assets (but only
to the extent not included in (b)),
and (2) decreased by the amount of (x) any
cash and the Book Value of any
property (net of liabilities secured by
such property that such Partner is
considered to assume or take subject to
under Code Section 752) distributed to
such Partner, (y) the allocation to such
Partner of Losses and items of loss
pursuant to Section 4.2, and (z) any
negative adjustment to such Capital Account
by reason of an adjustment to the Book
Value of the Partnership assets (but only
to the extent not covered in (y)). The
provisions of this Agreement relating to
the maintenance of Capital Accounts are
intended to comply with Regulation
Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent
with such Regulation.
4.2 BOOK
ALLOCATION.
(a) IN GENERAL. This Section 4.2 sets forth the general rules
for
book allocations of Profits, Losses and
similar items to the Partners.
(b) PROFITS AND LOSSES. After giving effect to the special
allocations provided in Section 4.2(c),
Profits and Losses shall be allocated to
the Partners in proportion to their
Percentage Interests.
(c) SPECIAL RULES. Notwithstanding the general allocation rules
set
forth in Section 4.2(b), the following
special allocation rules shall apply
under the circumstances described.
(i) LIMITATION ON LOSS ALLOCATIONS. The Losses allocated to
any Partner pursuant to Section 4.2(b) with
respect to any Fiscal Year shall not
exceed the maximum amount of Losses that
can be so allocated without causing
such Partner to have an Adjusted Capital
Account Deficit at the end of such
Fiscal Year. All Losses in excess of the
limitation set forth in this Section
4.2(c)(i) (the "Excess Losses") shall be
allocated (1) first, to those Partners
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who will not be subject to this limitation,
in the ratio that their Percentage
Interests bear to each other, and (2)
second, any remaining amount to the
Partners in the manner required by the Code
and the Regulations.
(ii) QUALIFIED INCOME OFFSET. If in any Fiscal Year a Partner
unexpectedly receives an adjustment,
allocation or distribution described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6), and such adjustment,
allocation or distribution causes or
increases an Adjusted Capital Account
Deficit for such Partner, then, before any
other allocations are made under this
Agreement except for allocations under
4.2(c)(iii), (iv), (v) and (vi) of this
Agreement (which shall be made before any
other allocations under this
Agreement) or otherwise, such Partner shall
be allocated items of income and
gain (consisting of a pro rata portion of
each item of Partnership income,
including gross income and gain) in an
amount and manner sufficient to eliminate
such Adjusted Capital Account Deficit as
quickly as possible. This Section
4.2(c)(ii) is intended to comply with the
qualified income offset requirement of
Regulation Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently
therewith.
(iii) PARTNERSHIP MINIMUM GAIN CHARGEBACK. If there is a net
decrease in Partnership Minimum Gain during
any Fiscal Year, except as otherwise
provided in Regulation Section 1.704-2(f),
each Partner shall be allocated items
of income and gain for such Fiscal Year
(and, if necessary, for subsequent
Fiscal Years) in proportion to, and to the
extent of, such Partner's share of
the net decrease in Partnership Minimum
Gain during such Fiscal Year determined
in accordance with Regulation Section
1.704-2(g). This Section 4.2(c)(iii) is
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intended to comply with the minimum gain
chargeback requirement of Regulation
Section 1.704-2(f) and the ordering rules
set forth in Regulation Section
1.704-2(j) and shall be interpreted
consistently therewith.
(iv) PARTNER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. If
there is a net decrease in Partner
Nonrecourse Debt Minimum Gain during any
Fiscal Year, then, except as otherwise
provided in Regulation Section
1.704-2(i)(4), each Partner who has a share
of Partner Nonrecourse Debt,
determined in accordance with Regulation
Section 1.704-2(i)(5), shall be
allocated items of income and gain for such
Fiscal Year (and, if necessary, for
subsequent Fiscal Years) in proportion to,
and to the extent of, such Partner's
share of the net decrease in Partner
Nonrecourse Debt Minimum Gain during such
Fiscal Year determined in accordance with
Regulation Section 1.704-2(i)(4). This
Section 4.2(c)(iv) is intended to comply
with the chargeback of partner
nonrecourse debt minimum gain requirement
of Regulation Section 1.7042(i)(4) and
the ordering rules set forth in Regulation
Section 1.704-2(j) and shall be
interpreted consistently therewith.
(v) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions shall be allocated among the
Partners in accordance with the ratio in
which the Partners share the economic risk
of loss for the Partner Nonrecourse
Debt that gave rise to those deductions.
This allocation is intended to comply
with the requirements of Regulation Section
1.704-2(i) and shall be interpreted
consistently therewith.
(vi) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Fiscal Year shall be allocated to the
Partners in proportion to their Percentage
Interests.
(vii) LIMITED EFFECT AND INTERPRETATION. The special rules set
forth in Sections 4.2(c)(i), (ii), (iii),
(iv), (v) and (vi) (the "Regulatory
Allocations") shall be applied only to the
extent required by applicable
Regulations for the resulting allocations
provided for in this Section 4.2,
<PAGE>
taking into account such Regulatory
Allocations, to be respected for federal
income tax purposes. The Regulatory
Allocations are intended to comply with the
requirements of Regulation Sections
1.704-1(b), 1.704-2 and 1.752-1 through
1.752-5 and shall be interpreted and
applied consistently therewith.
(viii) CURATIVE ALLOCATIONS. The Regulatory Allocations may
not be consistent with the manner in which
the Partners intend to divide the
Partnership Profits, Losses and similar
items. Accordingly, Profits, Losses and
other items will be reallocated among the
Partners in a manner consistent with
Regulations Section 1.7041(b) and 1.704-2
so as to negate as rapidly as possible
any deviation from the manner in which
Partnership Profits, Losses and other
items are intended to be allocated among
the Partners pursuant to Section 4.2(b)
that is caused by the Regulatory
Allocations.
(ix) LIQUIDATING ALLOCATIONS. Upon the liquidation of the
Partnership, Profits and Losses (or, if
necessary, items thereof) shall be
allocated so as to cause capital accounts
to be in proportion to the Percentage
Interests of the Partners.
(x) CHANGE IN REGULATIONS. If the Regulations incorporating
the Regulatory Allocations are hereafter
changed or if new Regulations are
hereafter adopted, and such changed or new
Regulations, in the opinion of
independent tax counsel for the
Partnership, make it necessary to revise the
Regulatory Allocations or provide further
special allocation rules in order to
avoid a significant risk that a material
portion of any allocation set forth in
this Article IV would not be respected for
federal income tax purposes, the
Partners shall negotiate in good faith any
amendments to this Agreement as, in
the opinion of such counsel, are necessary
or desirable, taking into account the
interests of the Partners as a whole and
all other relevant factors, to avoid or
reduce significantly such risk to the
extent possible without materially
<PAGE>
changing the amounts allocable and
distributable to any Partner pursuant to this
Agreement.
(xi) CHANGE IN PARTNERS' INTERESTS. If there is a change in
any Partner's Percentage Interest during
any Fiscal Year, allocations among the
Partners shall be made in accordance with
their Percentage Interests from time
to time during such Fiscal Year in
accordance with Code Section 706, using the
closing-of-the-books method, except that
Depreciation shall be deemed to accrue
ratably on a daily basis over the entire
Fiscal Year during which the
corresponding asset is owned by the
Partnership.
(xii) SPECIAL ALLOCATION. Prior to the allocation of Profits
under Section 4.2(b) for any Fiscal Year,
an amount of Profits equal to the
special distribution described in Section
5.3 shall be allocated to Denver Post
and Eastern Colorado in the same proportion
as each participates in such special
distribution. If there are not sufficient
Profits in that Fiscal year, then
Profits shall be allocated to Denver Post
and Eastern Colorado in each such
succeeding Fiscal Year until the cumulative
Profits allocated under this Section
4.2(c)(xii) equal the Special
Distribution.
4.3 TAX
ALLOCATIONS.
(a) IN GENERAL. Except as set forth in Section 5.4(b),
allocations
for tax purposes of items of Profit, Loss
and other items of gain, deduction,
credit and distribution therefor, shall be
made in the same manner as
allocations for book purposes set forth in
Section 5.1 and Section 5.2.
Allocations pursuant to this Section 5.4
are solely for purposes of federal,
state and local income taxes and shall not
affect or in any way be taken into
account in computing, any Partner's Capital
Account or share of Profit, Loss,
other items or gain, deduction and
distribution pursuant to any provision of
this Agreement.
<PAGE>
(b) SPECIAL RULES.
(i)
ELIMINATION OF BOOK/TAX DISPARITIES. In determining a
Partner's allocable share of Partnership
taxable income, the Partner's allocable
share of each item of Profits and Losses
shall be properly adjusted to reflect
the difference between such Partner's share
of the adjusted tax basis and the
Book Value of Partnership assets used in
determining such item. For example,
items of depreciation, amortization, and
gain or loss with respect to any
contributed property, or with respect to
revalued property where Partnership
property is revalued pursuant to Regulation
Section 1.704-1(b)(2)(iv)(f), shall
be allocated to the Partners under the
remedial method as provided in Regulation
Section 1.704-3(d) unless Denver Publishing
shall, in its reasonable discretion
and with the consent of the Post Entities
(which consent shall not unreasonably
be withheld, provided that such other
method or methods shall not result in an
increase in the Special Distribution to
Denver Post described in Section 5.3
hereof), select another method or methods
allowable under Section 704(c) of the
Code with respect to any or all of the
Partnership's properties, in which case
such other method or methods shall be used
by the Partnership to determine the
Partners' allocable share of the
Partnership income. This Section 4.3(b)(i) is
intended to comply with the requirements of
Code Section 704(b) and Section
704(c) and Regulation Sections
1.704-1(b)(2)(iv)(d)(3) and 1.704-3 and shall be
interpreted and applied consistently
therewith.
(ii) ALLOCATION OF ITEMS AMONG PARTNERS. Except as otherwise
provided in Section 4.3(b)(i), each item of
income, gain, loss and deduction and
all other items governed by Code Section
702(a) shall be allocated among the
Partners in proportion to the allocation of
Profits, Losses and other items to
the Partners hereunder, provided that any
gain recognized from any disposition
of a Partnership asset that is treated as
ordinary income because it is
<PAGE>
attributable to the recapture of any
depreciation or amortization shall be
allocated among the Partners in the same
ratio as the prior allocations of tax
depreciation or amortization, but not in
excess of the gain otherwise allocable
to each Partner.
(iii) TAX CREDITS. Any tax credits shall be allocated among
the Partners in accordance with Regulation
Section 1.704-1 (b)(4)(ii), unless
the applicable Code provision shall
otherwise require.
(c) CONFORMITY OF REPORTING. The Partners are aware of the
income
tax consequences of the allocations made by
this Section 4.3 and hereby agree to
be bound by the provisions of this Section
4.3 in reporting their shares of
Partnership profits, gains, income, losses,
deductions, credits and other items
for income tax purposes.
(d) EXCESS
NONRECOURSE LIABILITIES. For purposes of determining a
Partner's proportionate share of the excess
nonrecourse liabilities of the
Partnership within the meaning of
Regulation Section 1.752-3(a)(3), the
Partners' interests in the Partnership
Profits are in proportion to their
Percentage Interests.
ARTICLE V
DISTRIBUTIONS
5.1 IN
GENERAL. Except as otherwise provided herein, all distributions
shall be made in proportion to the
Partners' Percentage Interests.
5.2
PERIODIC DISTRIBUTIONS. The Management Committee (or, at the
Management Committee's direction, the
President and Chief Executive Officer of
the Partnership), on or before the last day
of each month shall hereafter (i)
determine the amount (x) of earnings or
other Partnership funds available for
distribution to the Partners and (y) the
amount of working capital needed for
the continuing operations of the business
of the Partnership (including, without
<PAGE>
limitation, capital expenditures), and (ii)
cause the excess, if any, of (x)
over (y) (the "Net Available Cash From
Operations") to be distributed to the
Partners (subject to Section 1.8 of the
Denver Newspaper Agency Joint Operating
Agreement, and the provisions of this
Agreement relating to the Agency's
retention of sums otherwise distributable
to a Partner to discharge certain
unpaid capital contributions or other
obligations to the Agency and subject to
the Partnership's being reimbursed for any
Editorial Expenses it may have paid
in the first instance on the Partners'
behalf and any Total Excess Page Charges
or Total Excess Color Charges that may then
be owed by the Partners, as provided
in the Denver Newspaper Agency Joint
Operating Agreement). Except as otherwise
provided herein or in Section 1.8 of the
Denver Newspaper Agency Joint Operating
Agreement, all distributions shall be made:
(a) first, to each Partner with
Remaining Excluded Payables, to the extent
of any such Remaining Excluded
Payables, until such Remaining Excluded
Payables have been reduced to zero, and
(b) next, in proportion to the Partners'
Percentage Interests. If a distribution
of cash is deemed made pursuant to Section
5.2(b) and the distribution is not in
proportion to the Partners' Percentage
Interest, then the Management Committee
shall adjust subsequent distributions as
promptly as practicable so that the
cumulative distributions deemed made
pursuant to Section 5.2(b) are, in the
aggregate, in proportion to the Partners'
Percentage Interests.
5.3
SPEC
