DISTRIBUTION AGREEMENT

Exhibit 10.1

EXECUTION COPY

DISTRIBUTION AGREEMENT

          This Distribution Agreement (this “Agreement”) is made and entered into this 8th day of August, 2007, between The Sun-Times Company (“Sun-Times”), individually and on behalf of Chicago Sun-Times LLC, Chicago Group Acquisition LLC, Fox Valley Publications LLC, Midwest Suburban Publishing, Inc., Pioneer Newspapers Inc. and The Post-Tribune Company LLC (collectively, the “Sun Times Subsidiaries” and, together with Sun-Times, “STC”), and Chicago Tribune Company (“CTC”) (hereinafter jointly the “Parties”).

          WHEREAS, STC is in the business of publishing the Chicago Sun-Times as well as the other newspapers set forth in Schedule A (hereinafter the “Publications”); and

          WHEREAS, STC and CTC have determined that having CTC accomplish distribution of Publications for STC will result in substantial cost savings and improvements to customer service for both STC and CTC, will enhance the ability of both STC and CTC to market their publications and therefore increase distribution penetration, and will make it possible to offer advertisers of both CTC and STC greater choice with respect to zoned advertising.

NOW THEREFORE, the Parties agree as follows:

SECTION I — DEFINITIONS

1.1		“CTC Contractors” is defined as independent contractors and other third parties utilized by CTC to distribute its and other third party publications in the Distribution Area.
1.2		“CTC Distribution Center” is defined as the distribution centers listed on Schedule B and such other distribution centers as may be mutually agreed upon by the Parties.
1.3		“Distribution Area” is defined as the geographic area encompassed on the date hereof by the zip codes listed in Schedule F and such other zip codes as may be mutually agreed upon by the Parties.
1.4		“Force Majeure Event” is defined as any event that prevents a party from performing its obligations hereunder due to causes beyond the reasonable control of such party including, without limitation, acts of God, acts of civil or military authorities, riots or civil disobedience, wars, strikes, walk-outs, lock-outs or other labor or industrial disputes, fires, terrorist attacks, or interruptions in telecommunications or Internet services, which interruptions are specifically due to failure of regional Network Access Points or Internet backbones or other failure affecting a significant number of telecommunications or Internet users not accessing the CTC system. It is expressly agreed that interruptions, failures or delays caused by CTC bandwidth or security issues shall not be considered a Force Majeure Event.
1.5		“Hot Complaint” is defined as a delivery complaint that has escalated beyond normal notifications and is deemed “urgent”.

1.6		“Insert” is defined as an individual newspaper section and/or free standing advertising insert. The Publications themselves are not inserts, and cannot be delivered together for purposes of avoiding per copy distribution fees. Any other publication, reasonably considered to be a stand-alone publication, whether or not owned or controlled by STC, is also not an insert, and cannot be delivered with the Publications for purposes of avoiding per copy distribution fees; provided, however, that the Plainfield Sun, to the extent it is inserted in The Herald News and distributed in the 60435 zip code area, and the Lincolnway Sun, to the extent it is inserted in The Herald News and distributed in the 60442 and 60451 zip code areas, shall both be considered Inserts.
1.7		“Publications” is defined as set forth in the first recital above. If during the term of this Agreement, STC purchases or otherwise acquires or establishes additional daily or weekly newspapers to be delivered in the morning within the Distribution Area with similar delivery standards to those set forth in this Agreement, such publications will be added to the Publications set forth in Schedule A of this Agreement; provided, however, that if such additional publication(s) will increase the overall volume of copies to be delivered pursuant to this Agreement by fifteen percent (15%) or more over the volume of STC circulation as of the date of this Agreement, then the Parties will negotiate in good faith and will mutually agree upon (i) whether the additional publication(s) will be distributed under this Agreement and (ii) the terms and conditions relating to the delivery of such additional publication(s).
1.8		“Saturation Sample Copies” is defined as copies of the Publications distributed free for a limited time to non-subscribers or prospective advertisers and do not include copies delivered as part of a contractual agreement or opt in/opt out free subscriptions. To be eligible for reduced saturation sample copy delivery fees, saturation sample copies, plus all other copies must be delivered to ninety percent (90%) of the households in a specified carrier route.
1.9		“Bulk Copies” is defined as copies related to Newspaper in Education programs, and other programs where more than five (5) copies of the Publications are delivered to an individual address.

SECTION II — HOME DELIVERY

2.1

CTC’s Obligations and STC’s Obligations . CTC agrees to distribute the Publications, through the CTC Contractors, to STC’s home delivery subscribers in quantities and throughout areas agreed upon in accordance with the terms of this Agreement beginning on the dates set forth on Schedule H to the extent that STC shall make available on a consistent basis to each location requested by CTC, as described in Schedule B, a sufficient number of copies of the Publications (and such inserts or extra sections as may be required) and at such arrival times as described in Schedule B, to enable CTC to provide the Publications to CTC Contractors for delivery to all required locations and subscribers as identified by STC. STC will arrange for the delivery of all Publications from STC’s printing site(s) to the CTC Distribution Centers at STC’s sole expense. Publications will be delivered on pallets and the pallets will be unloaded by STC personnel into CTC-designated areas at the CTC Distribution Centers. CTC agrees to cause the Publications to be delivered in a dry and undamaged condition at or before the

		times enumerated on Schedule C. If STC requests delivery standards that exceed those in Schedule C and CTC agrees to provide them or if STC consents in writing to improved delivery standards proposed by CTC, CTC and STC shall jointly share the cost of implementing those improved standards on a pro rata basis (i.e. based upon the relative amounts of circulation provided by STC, CTC and other publications distributed by CTC). CTC will not, and will not permit or allow the CTC Contractors, through specific contractual commitments with the CTC Contractors, to stamp upon, attach to, or insert in copies of the Publications provided by STC any material not furnished by STC, nor will CTC insert such Publications within any imprinted wrapping, covering, or container not furnished or sold to CTC by STC.
2.2		Workplace Rules and Regulations . STC shall cause its employees and independent contractors to abide by CTC’s reasonable CTC Distribution Center rules and regulations at all times when such persons are on CTC’s premises.
2.3		Fees .

		(a) For the services to be provided under this Section II, CTC shall receive fees and other payments as described in Schedule D. Delivery fees include fees for clear plastic delivery bags to be used as part of the delivered Publications.
		(b) Additional or special inserting or delivery services to be provided by CTC (including, but not limited to, one or more parts, advertising, product samples, and/or CDs) shall be subject to mutual agreement of the Parties. On occasion STC will supply “Post-it” style advertising notes to be applied to the front page news section of STC publications prior to delivery. Application of such “Post-it” notes will be subject to a per piece rate as outlined in Schedule D. Any additional or special inserting or delivery services requested by STC shall require fourteen (14) days prior written notice to CTC, unless otherwise mutually agreed by the parties. Bonus Day copies or additional copies added under other special services that add more than twenty percent (20%) volume to any individual CTC Distribution Center will require twenty-one (21) days notice. At CTC’s option, any day with such event will not be counted in the complaint average for any service penalty or incentive provision.
		(c) STC reserves the right to require distribution under this Agreement of an additional copy of the Publications to STC subscribers who normally do not subscribe to a given delivery day. These “Bonus Day” copies shall be incorporated into existing delivery lists and shall be distributed to customers by the normal delivery requirements in this Agreement. Bonus Day copies shall be invoiced to STC at the agreed upon per copy rate and STC shall compensate CTC for these additional fees based on the payment terms outlined in Section 4.3. STC shall provide CTC fourteen (14) days notice prior to any Bonus Day.
		(d) During the term of this Agreement, if any of STC’s Publications convert in whole or part to a form of non-paid circulation, regular delivery fees set forth in Schedule D will still apply. Non-paid circulation includes, but is not limited to, the following categories: (i) “Controlled Circulation” is defined as a distribution to a specific end recipient, at a specific address, and for a pre-determined duration of time (opt in or opt out); (ii) “Requested Delivery” is defined as distribution to individuals who have made a specific

		request for delivery and includes documentation of the request and dates of delivery; and “Public Access Distribution” is defined as multiple copies of a publication intended for consumers and distributed to a public place, and may include but is not limited to retail establishments, street racks and apartments.
2.4		Late Deliveries and Redeliveries .

		(a) If CTC is notified by 10:00 A.M. on any delivery day that a copy of a Publication that was to be delivered that day has not been received by the subscriber, CTC shall deliver another (service) copy of that Publication to that subscriber (“redelivery”) within sixty (60) minutes of receipt of request for redelivery. Service copies will be supplied by STC for this purpose. CTC will be responsible for the cost of this redelivery unless the delay in the delivery of Publications is due to STC’s failure to deliver Publications to the specified CTC distribution facilities within sixty (60) minutes of the times specified on Schedule B attached hereto (or, in the case of deliveries of The Beacon News and The Courier News to the Elgin, North Aurora, Schaumburg and Woodstock CTC Distribution Centers, within thirty (30) minutes of the times specified on Schedule B attached hereto).
		(b) If STC fails to deliver the Publications to the specified CTC Distribution Centers within sixty (60) minutes of the times specified on Schedule B attached hereto (or, in the case of deliveries of The Beacon News and The Courier News to the Elgin, North Aurora, Schaumburg and Woodstock CTC Distribution Centers, within thirty (30) minutes of the times specified on Schedule B attached hereto) CTC shall not be obligated to deliver such late-delivered Publications to STC home delivery subscribers the same day but shall make commercially reasonable efforts through the CTC Contractors to deliver such late-delivered STC Publications to STC home delivery subscribers the same day. Where such efforts require a second delivery pass, and CTC is able to provide a second delivery pass, an additional per copy fee as detailed in Schedule D will apply. However, if CTC is unable to do so, the Publications will be delivered the next delivery day in conjunction with that day’s normal deliveries. In this event, CTC shall receive only the regular per copy fee for the normal delivery of each Publication and no additional per copy fee will be applied.
		(c) Notwithstanding anything to the contrary set forth in this Section 2.4, and without limiting this Section 2.4, if during the term of this Agreement STC’s delivery of any of the Publications to one or more specified CTC Distribution Centers consistently runs more than thirty (30) minutes later than the times specified on Schedule B, CTC shall be entitled to provide written notice of such late deliveries to STC and STC will promptly develop a plan intended to remediate such late deliveries and implement such plan within in one (1) month of receipt of CTC’s notice.
2.5		Subscriber Complaints . Upon receipt of notice in writing or by computer or other electronic transmission from STC of the name and address of a subscriber and the subject matter of the subscriber complaint, CTC shall take substantially similar measures to resolve the complaint as it takes to resolve similar complaints related to the delivery of non-CTC publications distributed by CTC or its affiliates. CTC shall communicate the resolution of all Hot Complaints to STC within twenty-four (24) hours following such resolution.

2.6		Delivery List .
		(a) CTC will receive from STC a delivery list containing the names and addresses of the Publications’ home delivery subscribers subject to this Agreement, and CTC acknowledges that this delivery list is and shall remain the property of STC and CTC will use the information on STC’s delivery list only in connection with its delivery obligations herein. STC may add to the delivery list new subscribers within the Distribution Area by providing notice in writing or by email or other electronic transmission to CTC of the names and addresses of such new subscribers and such other information as CTC may reasonably require. CTC shall take such steps as may be required to commence deliveries to such new subscribers within forty-eight (48) hours of receipt of notification from STC, unless delivery is scheduled for later than forty-eight (48) hours from receipt of notification, such as in a Sunday-only subscription. CTC shall notify STC promptly in the event the address of any subscriber that STC adds to its delivery list shall be undeliverable. CTC will receive from STC a daily start and stop report containing subscriber changes, which will be provided in writing or by email or other electronic transmission. STC will send all additions, deletions and other subscriber changes to the person(s) and addresses or numbers (physical, email or fax) as indicated in Schedule E hereto. The contact information for the person(s) listed in Schedule E may be changed by CTC from time to time upon notice to STC. These changes will be entered, updated, and implemented within CTC’s network on a daily basis.
		(b) CTC agrees that the delivery list (as it is updated from time to time) will not be transferred, exhibited or disclosed to any other person or firm, except that CTC may disclose or exhibit the list to those CTC employees or CTC Contractors (and their subcontractors and sub-agents) who require the information to fulfill the obligations under this Agreement. CTC agrees to protect the confidentiality of the information contained within the delivery list as provided in Section 4.6(b) below. CTC will permit STC to conduct a yearly audit of its security policies, procedures and systems, upon at least five (5) business days prior written notice and during normal business hours so as not to materially effect CTC’s operation of its business. The cost of any security audits that STC requests shall be paid for by STC.
		(c) Upon termination of this Agreement, CTC will promptly deliver to STC the delivery list(s) in both hard copy and electronic formats, and shall contractually require CTC Contractors to destroy all copies thereof. CTC will also destroy, and will contractually require CTC Contractors (and their subcontractors and sub-agents) to destroy, any database or other tangible or electronic media that contains such information. CTC will certify in writing compliance with the obligations set forth in this Section 2.6(c). Nothing in this Section 2.6 shall be deemed to restrict CTC’s rights with respect to its own subscribers and delivery list. Furthermore, STC acknowledges that CTC contacts all households in the Distribution Area to market its own products, and this Agreement does not restrict any CTC sales, marketing, and/or distribution efforts.
		(d) The provisions of this Section 2.6 are in addition to those set forth in Section 4.6 of this Agreement.

2.7		Complaint Ratios; Penalties; Incentives .
		(a) As used herein, the term “Complaint Ratio” shall mean the number of STC customer delivery complaints received per day per 1,000 home deliveries of the Publications provided by CTC.
		(b) As used herein, the terms “Complaint Target,” “Penalty Target” and Incentive Target” shall mean the number of delivery complaints per 1,000 home deliveries of the Publications provided by CTC as follows:

			COMPLAINT			PENALTY			INCENTIVE
TIME PERIOD			TARGET			TARGET			TARGET
From the date of this Agreement until 30 days after commencement of delivery services			3.5 — 4.5			None			None
From 30 days after commencement of delivery services to December, 2007			3.0 — 3.5			Over 3.5			None
January — March 2008			3.0 — 3.25			Over 3.25			None
April — December 2008			1.5 — 3.0			Over 3.25			None
January 2009 to end of Term			1.5 — 3.0			Over 3.0			Under 1.5

		(c) Beginning October 1, 2007, if at the end of any 4-week period, CTC’s average Complaint Ratio for such 4-week period for all Publications combined exceeds the applicable Penalty Target for the applicable time period set forth in the above table, CTC will pay STC as liquidated damages, the sum of $25,000; provided, however, that for each day during the relevant period an STC delivery to a CTC Distribution Center is over thirty (30) minutes beyond the time set forth on Schedule B, complaints relating to such day(s)’ distribution from the affected CTC Distribution Center, at CTC’s option, shall be excluded from the 4-week period. Additionally, should any Force Majeure Event occur, complaints relating to such day(s)’ distribution, at CTC’s option, shall also be excluded from the relevant 4-week period. Such $25,000 payment shall be made to STC within fourteen (14) days from the end of the applicable measurement period.
		(d) Beginning January 1, 2009, if at the end of any 4-week period, CTC’s average Complaint Ratio for such 4-week period for all Publications combined is less than the Incentive Target set forth in the above table, STC will pay CTC as an incentive payment the sum of $25,000; provided, however, that for each day during the relevant period an STC delivery to a CTC Distribution Center is over thirty (30) minutes beyond the time set forth on Schedule B, complaints relating to such day(s)’ distribution from the affected CTC Distribution Center, at CTC’s option, shall be excluded from the 4-week period. Additionally, should any Force Majeure Event occur, complaints relating to such day(s)’ distribution, at CTC’s option, shall also be excluded from the relevant 4-week period. Such $25,000 payment shall be made to CTC within fourteen (14) days from the end of the applicable measurement period.

		(e) CTC shall have the right to audit all STC late delivery complaint data upon five (5) days written notice and STC shall provide to CTC STC’s method of calculating Complaint Ratios. Any such audit by CTC will be conducted during normal business hours so as not to materially effect STC’s operation of its business. The cost of any security audits that CTC requests shall be paid for by CTC.
		(f) Notwithstanding anything to the contrary set forth in this Section 2.7, and without limiting this Section 2.7, if during the term of this Agreement one or more STC Publications experiences a Complaint Ratio in the Penalty Target range for two (2) consecutive weeks, STC shall be entitled to provide written notice to CTC of such problem and CTC will promptly develop a plan intended to remediate such problem and implement such plan within one (1) month of receipt of STC’s notice.
2.8		Bulk Deliveries . CTC agrees to provide distribution of STC Publications to specified schools, colleges, hotels and other Bulk Copy delivery recipients, at STC’s request, at or before the times set forth on Schedule C. CTC will receive from STC a delivery list containing addresses of Bulk Copy delivery recipients. STC shall make available on a consistent basis to each location requested by CTC, as described in Schedule B, a sufficient number of copies of the Publications (and such inserts or extra sections as may be required) and at such arrival times as described in Schedule B, to enable CTC to deliver the Publications, through the CTC Contractors, to Bulk Copy delivery recipients. STC shall pay CTC the fees for Bulk Copy deliveries described in Schedule D. Notwithstanding the otherwise exclusive nature of this Agreement, nothing contained herein shall require STC to use CTC for distribution of STC Publications to Bulk Copy delivery recipients within the limits of the City of Chicago. CTC’s exclusivity provisions apply to all Bulk Copy deliveries in the Distribution Area outside the limits of the City of Chicago.
2.9		Saturation Sample Deliveries . In the event STC offers a Saturation Sample Copy distribution opportunity to CTC and CTC elects to undertake such opportunity, CTC shall provide distribution of Saturation Sample Copies at or before the times set forth on Schedule C. CTC will receive from STC a delivery list containing addresses of Saturation Sample Copy delivery recipients. STC shall make available to each location requested by CTC, as described in Schedule B, a sufficient number of Saturation Sample Copies and at such arrival times as described in Schedule B, to enable CTC to deliver the Saturation Sample Copies, through the CTC Contractors, to Saturation Sample Copy recipients. STC shall pay CTC the fees for Saturation Sample Copy deliveries described in Schedule D. Notwithstanding the otherwise exclusive nature of this Agreement, nothing contained herein shall require STC to use CTC for distribution of Saturation Sample Copies within the Distribution Area.

SECTION III — SINGLE COPY

3.1

CTC’s Obligations and STC’s Obligations . CTC agrees, through its CTC Contractors, to distribute single copies of the Publications to single copy outlets in quantities and throughout areas agreed upon in accordance with the terms of this Agreement beginning on the dates set forth in Schedule H to the extent that STC shall make available on a consistent basis to each location requested by CTC, as described in Schedule B, a sufficient number of copies of the Publications (and such inserts or extra sections as may

		be required) and at such arrival times as described in Schedule B, to enable CTC to cause the delivery of the Publications to all sales outlets at the times outlined in Schedule C. CTC, through the CTC Contractors, shall collect leftover copies (or a report of leftover copies) of the Publications from retail outlets on a weekly basis. CTC will not be liable for the refusal or inability of a retailer to pay for sold copies. In the event that a retailer refuses or is unable to pay for copies sold, STC will remain at risk for collection of such amounts and will not seek to collect any such amounts from CTC. Notwithstanding the otherwise exclusive nature of this Agreement, within the City of Chicago, STC reserves the right to distribute copies of the Publications in any manner other than by means of home delivery. CTC shall have no rights, obligations or responsibilities in connection with STC’s distribution of these copies.
3.2		Fees . CTC shall receive fees for single copy delivery, inserting and other services as described in Schedule D.
3.3		Invoicing and Payment . CTC, through its CTC Contractors, shall be responsible for invoicing and collecting monies due for all single copies sold in sales outlets in the Distribution Area. The monies collected by CTC per this Section 3.3 shall be retained by CTC and applied as a credit against the monies STC owes CTC for fees per Sections 2.3 and 3.2 of this Agreement and shall in no event be remitted to STC directly by CTC or the CTC Contractors. On or before the 15 th of each month during the term hereof, CTC shall provide to STC an accounting and reconciliation of all amounts invoiced and collected in respect of Publications delivered by CTC hereunder during the prior month.
3.4		News Racks . STC shall provide newspaper vending racks to CTC, which remain the sole property of STC (“STC Racks”). CTC, through its CTC Contractors, shall be responsible for the basic appearance, safe placement and reporting of safe working condition of the STC Racks; provided, however, that CTC shall not be responsible for the current condition or placement of STC Racks currently in place. CTC agrees to contractually require the CTC Contractors to notify it, and CTC in turn will provide such information received to STC reasonably promptly in the event an STC Rack becomes unsafe or inoperable and cannot be repaired. CTC shall contractually require the CTC Contractors to refrain from placing any materials in STC’s Racks other than Publications made available to CTC by STC or newsrack cards and/or materials supplied to CTC by STC. CTC shall contractually require the CTC Contractors to comply with all municipal rack ordinances, including those municipalities with modular or common racks. All licensing, maintenance, repairs, and regulatory fees shall be the sole responsibility of STC. STC reserves the right to relocate the STC Racks within the Distribution Area at any time.
3.5		Audit Bureau of Circulations . The Parties acknowledge that STC must accurately report its circulation figures to the Audit Bureau of Circulations (“ABC”) and to the United States Postal Service (“USPS”) on terms and in the forms dictated by ABC or the USPS, as the case may be. Therefore, CTC agrees to provide to STC periodic and accurate reports of the numbers of each of the Publications reported to it as distributed by the CTC Contractors as well as the number of such Publications that were left over or remained unsold in forms and with such frequency as are reasonably required by STC to comply with ABC or USPS requirements. Without limiting the foregoing, CTC agrees to submit to STC’s office by Friday of each week, a data file that includes returns by outlet for the week ending the previous Sunday, and CTC agrees to submit to STC’s office within two

(2) weeks of the date of publication, an affidavit reporting the total number of leftover copies each day. CTC also agrees to permit ABC (or any Alternative Auditor (as defined herein)) and/or STC access to CTC Contractor draw/return and payment records, CTC Distribution Centers and CTC Contractors as needed to comply with the audit procedures of ABC or any Alternative Auditor. In addition, should the circulation of any of the Publications be audited by a group or entity other than ABC during the term hereof (an “Alternative Auditor”), CTC agrees to cooperate with STC to ensure that STC is able to comply with such Alternative Auditor’s reporting rules and regulations.

SECTION IV — GENERAL

4.1		Performance Standards . CTC shall be responsible for the accurate and timely distribution of each of the Publications to homes, offices, and sales outlets in the Distribution Area, and the provision of such other products and services as are contemplated hereby, in each case using the same general standard of care exercised with respect to other publications distributed by CTC (including, without limitation, publications owned by CTC or its affiliates). Late arrival of other papers distributed by CTC, including the Chicago Tribune , to CTC Distribution Centers shall not affect or delay CTC’s obligations hereunder to timely deliver the Publications in the manner contemplated hereby. Notwithstanding that certain of CTC’s obligations hereunder are designated herein as to be performed through the CTC Contractors, STC shall be entitled to hold CTC directly responsible for each such obligation undertaken by the CTC Contractors if CTC does not exercise the same general standard of care with respect to the CTC Contractors’ performance of such obligations hereunder as it exercises with respect to other publications distributed by CTC (including, without limitation, publications owned by CTC or its affiliates)..
4.2		Exclusive Rights . Subject to Sections 2.8, 2.9 and 3.1 hereof, CTC has exclusive rights to deliver the Publications in the Distribution Area.
4.3		Invoice and Payment . CTC agrees to invoice STC on a weekly basis for delivery services rendered during the preceding week (Monday-Sunday). Any payments due must be made in full within fourteen (14) days from the invoice date. Payment for all Publications will be itemized and shall be made in one payment; provided, however, that such payment shall reflect monies already retained by CTC per Section 3.3 of this Agreement. Interest on the unpaid balance shall accrue at an annual percentage rate of twelve percent (12%) until paid in full.
4.4		Indemnification .
		(a) Indemnification by STC . STC agrees to defend and indemnify CTC and its directors, officers, employees, independent contractors, affiliates, successors, or assigns (“CTC Indemnified Parties”), and hold them harmless against any and all liability, loss, and expense (including reasonable attorney’s fees, costs, and legal expenses), arising from (i) claims, arising either before or after the date of this Agreement, of libel, unfair competition, infringements of trademarks, copyrights and other proprietary rights, advertiser claims, claims by ABC, claims by any federal or state agency or department, claims of violations of rights of privacy, plagiarism, and any other claims of any nature,

in each case arising from, or attributable to, the publication or content of each of the Publications