EXHIBIT 10.3
PARTNERSHIP AGREEMENT
PARTNERSHIP AGREEMENT, dated as of
December 22, 1988, between STAR PUBLISHING COMPANY
(“STAR”), an Arizona corporation, and CITIZEN
PUBLISHING COMPANY (“CITIZEN”), an Arizona
corporation.
1. FORMATION OF
PARTNERSHIP.
1. 1 Partners. STAR and CITIZEN
(individually, a “Partner” and collectively, the
“Partners”) hereby form a general partnership under the
laws of the State of Arizona (the “Partnership”) for
the purposes and on the terms set forth herein.
1.2 Name and Principal Office. The
name of the Partnership shall be “TNI PARTNERS”, or
such other name as shall be mutually agreeable to the Partners. The
Partnership shall do business under the name “TNI
PARTNERS” and its principal office shall be located at 4850
South Park Avenue, Tucson, Arizona 85726, or such other place as
the Partners shall designate from time to time.
1.3 Purpose of Partnership. The
purpose of the Partnership shall be (i) to be the Agency (as that
term is defined in that certain Amended and Restated Joint
Operating Agreement, dated the date hereof, between STAR and
CITIZEN (the “Agency Agreement”)) and to conduct all
the activities, have all of the rights and powers, and perform all
of the duties and obligations, of the Agency set forth in the
Agency Agreement, and (ii) to do any act and thing and to enter
into any contract incidental to, or necessary, proper or advisable
for, the accomplishment of such purposes, to the extent permitted
by law.
1.4 Commencement; Term. The
Partnership shall commence on the date hereof and continue for a
term ending at the close of business on June 1, 2015, and may be
renewed and extended for subsequent periods of twenty-five (25)
years each at the option of either STAR or CITIZEN. Unless two
years’ written notice is given by both STAR and CITIZEN that
they desire to end this Partnership or any renewal hereof, this
Partnership shall continue in force for subsequent periods of
twenty-five (25) years each. Only by mutual written consent shall
this Partnership Agreement or any renewal hereof be
terminated.
2. PARTNERSHIP INTERESTS,
CONTRIBUTIONS AND DISTRIBUTIONS.
2.1 Partnership Interests. Except as
otherwise expressly provided herein or in the Agency Agreement,
the
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respective interests of the Partners
in the assets, liabilities, profits and losses of the Partnership
(“Partnership Interest”) shall be as
follows:
Each Partner shall have at all times an interest
as a tenant in partnership in the assets and properties of the
Partnership equal to its Partnership Interest and neither Partner
shall have any separate right, title or interest in or to any asset
or property of the Partnership.
2.2 Capital Accounts and
Contributions.
(a) The initial capital account of
each Partner shall be the amount determined in accordance with
Section 1.4 of the Agency Agreement. Subsequently, each
Partner’s capital account shall be (i) increased by (x) the
amount of any net income of the Partnership allocable to such
Partner pursuant to Section 3.2 of the Agency Agreement and (y) the
amount of any cash plus the fair market value of any non-cash
assets subsequently contributed by such Partner to the Partnership,
and (ii) decreased by (a) the amount of any net loss of the
Partnership allocable to such Partner pursuant to Section 3.2 of
the Agency Agreement and (b) the amount of any cash and the fair
market value of any non-cash assets distributed by the Partnership
to such Partner.
(b) Each Partner shall make one or
more capital contributions to the Partnership in such amounts, and
upon such terms and conditions, as are provided in the Agency
Agreement. No interest shall be paid by the Partnership on any
capital contributed to the Partnership unless the Partners
otherwise agree.
2.3 Distributions of Cash and
Allocations of Taxable Income or Loss.
(a) Cash shall be distributed to
each Partner at such times and in such amounts as is provided in
Section 3.1 of the Agency Agreement.
(b) Net income and net loss shall be
allocated to the Partners in the amounts specified in Section 3.2
of the Agency Agreement.
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(c) For income tax purposes, taxable
income and loss and allocations thereof to each Partner will be
determined in accordance with Section 3.2 of the Agency
Agreement.
2.4 Expenses Incurred Prior to the
Formation of the Partnership. No expense or obligation incurred for
services performed or products supplied by either Partner prior to
the formation of the Partnership shall be considered to be a
contribution or loan to, or made on behalf of, the Partnership,
unless otherwise provided in the Agency Agreement or by agreement
of the Partners.
2.5 Distribution to Partners;
Funding of Losses. Cash and other property shall be distributed by
or withdrawn from the Partnership, and losses of the Partnership
shall be funded, on the terms and conditions (and pursuant to the
procedures) set forth in the Agency Agreement.
3. MANAGEMENT OF THE
PARTNERSHIP.
3.1 Board of Directors. There is
hereby established a Board of Directors of the Partnership
consisting of six members, or such even number of Directors as the
Partners may from time to time agree upon, to have and exercise
final authority, except as otherwise provided herein or in the
Agency Agreement, with respect to the affairs of the Partnership
specified in this Agreement. The initial members of the Board of
Directors shall be appointed by the Partners on or prior to
December 26, 1988, and shall consist of three members appointed by
STAR and three members appointed by CITIZEN. Each member shall hold
office until he shall die, resign or be removed (with or without
cause or notice) by the Partner that he represents, whereupon such
Partner shall appoint such member’s successor to the Board of
Directors. Each member shall have one vote.
3.2 Meetings and Action of the Board
of Directors.
(a) The initial meeting of the Board
of Directors shall take place at such time and place as the
Partners shall agree. The Board of Directors may establish meeting
dates and requisite notice requirements, adopt rules of procedure
it deems consistent herewith, and may meet by means of a conference
telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same
time.
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(b) Any member of the Board of
Directors may call a meeting. Unless waived, at least five business
days’ notice of a meeting is required. Notice to a director
shall be given to the Partner whom the director represents, and
shall be given in the manner described in Section 6.1 of the Agency
Agreement. If proper notice of a meeting is given to all directors
or waived, the presence at any meeting, in person or by proxy, of
both (i) a majority of the total authorized number of directors and
(ii) a majority of directors who were appointed by STAR and a
majority of directors who were appointed by CITIZEN, shall
constitute a quorum for the taking of any action, subject to
Section 3.3 hereof. Any member may, in writing, appoint a proxy to
act on his behalf and vote in his stead at any meeting. Subject to
Section 3.2(c) below, the Board of Directors shall act on all
matters by an affirmative vote of both (i) a majority of directors
present at any meeting in person or by proxy, and (ii) a majority
of directors who were appointed by STAR and a majority of directors
who were appointed by CITIZEN.
(c) Any action required or permitted
to be taken by the Board of Directors may be taken without notice
and without a meeting if a majority of the total authorized number
of directors, including at least a majority of directors who were
appointed by CITIZEN and at least a majority of directors who were
appointed by STAR, consent in writing to the adoption of a
resolution authorizing the action.
3.3 Actions By Partners.
(a) The Board of Directors shall
have no power, without action by the Partners themselves, (i) to
amend this Agreement; (ii) to act other than in accordance with the
purposes of the Partnership as. set forth in Section 1.3 hereof; to
admit a new partner; (iv) to merge or consolidate the Partnership
with any other entity; or (v) to dissolve the
Partnership.
(b) No partner shall, except as
authorized by the provisions hereof, take any action or assume any
obligations or liabilities on behalf of the Partnership.
(c) Nothing in this Agreement or the
Agency Agreement shall in any way restrict, prohibit or impair the
right of each Partner to sell or otherwise license its own news,
editorial and feature content to wire services or otherwise (for
the account of the Partnership) as it deems in its best
interest.
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(d) Any fiduciary or other duty that
either Partner (or any Affiliate thereof) may owe to the other with
respect to any of its businesses or operations that are allegedly
in competition with those of the Agency shall be determined as if
the legal relationship between the Partners were that which existed
under the Previous Operating Agreement, and without regard to any
subsequent agreement between the parties other than the express
contractual provisions under this Agreement or the Agency
Agreement. For purposes of this Section 3.3(d), “Previous
Operating Agreement” means that certain Operating Agreement
dated March 28, 1940, as amended by agreements dated June 15, 1953
and October 14, 1970.
3 .4 President and Other Officers.
The Agency shall have a President and such other officers as the
Board of Directors may from time to time determine. Officers shall
serve for a one-year term unless they earlier die, resign or are
removed. Any officer may be removed by the Board of Directors with
or without cause or notice. Subject to the Agency Agreement, this
Agreement and the determinations of the Board of Directors, the
President shall have full day-to-day operating authority, control
and management of, the business and affairs of the Agency, and any
other officers of the Agency shall have such authority as is from
time to time determined by the Board of Directors.
The President and such other
officers shall act in accordance with the decisions of the Board of
Directors and shall have no authority to take any action requiring
prior Board of Directors approval without first obtaining the
approval of the Board of Directors.
3.5 Indemnification.
(a) The Partnership shall indemnify
any person made, or threatened to be made, a party to an action or
proceeding, whether brought by a Partner or Affiliate of a Partner
or any other person, whether civil or criminal, including an action
by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any member of the
Board of Directors or officer of the Partnership served in any
capacity at the request of the Partnership, by reason of the fact
that he, his testator or intestate, is or was a member of the Board
of Directors or an officer of the Partnership, or served such other
corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise in any capacity, against judgments, fines,
amounts paid in settlement and reasonable expenses, including
attorneys’ fees actually and
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necessarily incurred as a result of such action
or proceeding, or any appeal therein, if such member of the Board
of Directors or officer acted, in good faith, for a purpose which
he reasonably believed to be in, or, in the case of service for any
other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best
interests of the Partnership and, in criminal actions or
proceedings, in addition, had no reasonable cause to believe that
his conduct was unlawful.
(b) The termination of any such
civil or criminal action or proceeding by judgment, settlement,
conviction or upon a plea of nolo contendere, or its equivalent,
shall not in itself create a presumption that any such member of
the Board of Directors or officer did not act, in good faith, for a
purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint
venture, trust, employee benefit plan or other enterprise, not
opposed to, the best interest of the Partnership or that he had
reasonable cause to believe that his conduct was
unlawful.
(c) For the purpose of this Section
3.5, the Partnership shall be deemed to have requested a person to
serve an employee benefit plan where the performance by such person
of his duties to the Partnership also imposes duties on, or
otherwise involves services by, such person to the plan or
participants or beneficiaries of the plan; excise taxes assessed on
a person with respect to an employee benefit plan pursuant to
applicable law shall be considered fines; and action taken or
omitted by a person with respect to an employee benefit plan in the
performance of such person’s duties for a purpose reasonably
believed by such person to be in the interest of the participants
and beneficiaries of the plan shall be deemed to be a purpose which
is not opposed to the best interests of the Partnership.
(d) Indemnification under this
Section 3.5 shall be made by the Partnership in any specific case
only:
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(i)
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if the
beneficiary thereof shall have prevailed in an action or proceeding
brought against him or shall have been found to have acted in
compliance with the applicable standard of conduct set forth in
this Section 3.5; or
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(ii)
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by the Board of Directors upon
the opinion in writing of independent legal counsel that
indemnification is proper in the circumstances because the
applicable standard of conduct set
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forth in this Section 3.5 has been
met by such member or officer.
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(e) The Partnership shall have the
power, but shall not be obligated, to purchase and maintain
insurance:
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(i)
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to indemnify
the Partnership for any obligation which it incurs as a result of
the indemnification of the Board of Directors and officers under
the provisions of this Section 3.5;
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(ii)
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to indemnify
such members and officers in instances in which they may be
indemnified by the Partnership under the provisions of this Section
3.5; and
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(iii)
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to indemnify
such members and officers in instances in which they may not
otherwise be indemnified by the Partnership under the provision of
this Section 3.5.
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4. TRANSFER OF PARTNERSHIP
INTERESTS.
4.1 Prohibited Transfers. Except as
expressly permitted by Section 4.2 hereof, neither Partner may
transfer any of its right, title or interest in or to its
Partnership Interest, in whole or in part. No attempted transfer of
any Partnership Interest in violation of any provision of this
Agreement or of the Agency Agreement shall be effective to pass any
right, title or interest therein, but shall instead be null, void
and of no effect.
4.2 Transfer to Affiliate. Subject
to Section 4.3 hereof, a Partner (the “Transferor
Part