EX-10.19 12 e809633ex10_19.txt THE YORK NEWSPAPER COMPANY PARTNERSHIP AGMT --------------------------------------------- THE YORK NEWSPAPER COMPANY ---------------- PARTNERSHIP AGREEMENT ---------------- DATED AS OF JANUARY 13, 1989 --------------------------------------------- PAGE 1. THE PARTNERSHIP 1.1 Partners.................................................................1 1.2 Name and Principal Office................................................1 1.3 Purpose of Partnership...................................................1 1.4 Commencement; Term.......................................................1 1.5 Definitions - General....................................................2 2. PARTNERSHIP INTERESTS, CONTRIBUTIONS AND DISTRIBUTIONS 2.1 Partnership Interests....................................................9 2.2 Capital Contributions and Maintenance of Capital Accounts................9 2.3 Distributions of Net Cash From Operations and Allocations of Net Income or Net Loss..................................................10 2.4 Special Allocations.....................................................10 2.5 Other Allocation Rules..................................................11 2.6 Binding Effect of Allocations...........................................12 2.7 Expenses Incurred Prior to the Formation of the Partnership.............12 2.8 Distributions to Partners; Funding of Losses............................12 3. MANAGEMENT OF THE PARTNERSHIP 3.1 Controlling Partner.....................................................12 3.2 Partner Representatives.................................................13 3.3 The Third Party.........................................................13 3.4 Meetings and Action of the Partner Representatives......................13 3.5 Actions by Partners.....................................................14 3.6 President and Other Management Personnel................................15 3.7 Indemnification.........................................................16 4. TRANSFER OF PARTNERSHIP INTERESTS 4.1 Prohibited Transfers....................................................18 4.2 Conditions to Transfer..................................................19 5. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP 5.1 Term....................................................................19 5.2 Termination of this Agreement; Dissolution of the Partnership...........20 5.3 Termination at End of Term..............................................22 6. MISCELLANEOUS 6.1 Notices.................................................................23 6.2 Non-Assignability.......................................................23 6.3 Entire Understanding....................................................23 PAGE 6.4 Headings................................................................23 6.5 Governing Law...........................................................23 6.6 Modification............................................................24 6.7 Severability............................................................24 6.8 Specific Performance....................................................24 6.9 No Third-Party Beneficiaries............................................24 6.10 No Waiver...............................................................24 6.11 Variation of Pronouns...................................................25 6.12 Survival................................................................25 6.13 Priority of Interpretation..............................................25 PARTNERSHIP AGREEMENT This PARTNERSHIP AGREEMENT (the "Agreement"), dated as of January 13, 1989, is entered into by and between York Newspapers, Inc., a Delaware corporation ("YNI") and a wholly-owned subsidiary of Garden State Newspapers, Inc., a Delaware corporation ("Garden") and York Daily Record, Inc., a Delaware corporation (the "Record") and an eighty percent subsidiary of Carlsbad Publishing Co., a Washington corporation ("Carlsbad"). 1. THE PARTNERSHIP. 1.1 PARTNERS. The Record and YNI (individually, a "Partner" and collectively, the "Partners") hereby form a general partnership under the laws of the Commonwealth of Pennsylvania (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 "THE YORK NEWSPAPER COMPANY" or such other name as shall be mutually agreeable to the Partners. The Partnership shall do business under the name "THE YORK NEWSPAPER COMPANY" and its principal office shall be located in York, Pennsylvania, 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 the Joint Operating Agreement, dated the date hereof, among the Record, YNI and the Partnership (the "JOA")) 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 JOA 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 business on the last day of the one hundredth full fiscal year of the Partnership following the Effective Date (as that term is defined in the JOA), unless earlier dissolved pursuant to Section 5.2 hereof, or unless continued in accordance with the following. This Agreement shall automatically renew for succeeding renewal periods of twenty-five years each, unless either of the Partners notifies the other at least five years before the end of the initial period, or at least five years before the end of the then current renewal period, of the election of the party giving such notice to terminate this Agreement. If such notice is given, then this Agreement shall terminate at the end of the initial period or the then current renewal period during which such notice is given. 1.5 DEFINITIONS - GENERAL. Capitalized words and phrases used in this Agreement have the following meanings: (a) "Act" means the Pennsylvania Uniform Partnership Act, as set forth in 59 Pa. Stat. Ann. Section 301 ET SEQ., as amended from time to time (or any corresponding provisions of succeeding law). (b) "Affiliate" means, with respect to any Person, (i) any Person directly or indirectly controlling, controlled by or under common control with such Person, (ii) any Person owning or controlling ten percent or more of the outstanding voting securities of such Person, (iii) any officer, director or general partner of such Person, or (iv) any Person who is an officer, director, general partner, trustee or holder of ten percent or more of the voting securities of any Person described in clauses (i) through (iii) of this sentence. (c) "Agreement" or "Partnership Agreement" means this Partnership Agreement, as amended from time to time. Words such as "herein," "hereinafter," "hereof," "hereto," and "hereunder" refer to this Agreement as a whole, unless the context otherwise requires. (d) "Capital Account" means, with respect to any Partner, the Capital Account maintained for such Partner in accordance with the following provisions: (1) To each Partner's Capital Account there shall be credited such Partner's Capital Contributions, such Partner's distributive share of Net Income and any items in the nature of income or gain which are specially allocated pursuant to Section 2.4 hereof, and the amount of any Partnership liabilities assumed by such Partner or which are secured by any Partnership Property distributed to such Partner. (2) To each Partner's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Partnership Property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of Net Loss and any items in the nature of expenses or losses which are specially allocated pursuant to Section 2.4 hereof, and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership. (3) In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferror to the extent that it relates to the transferred interest. (4) In determining the amount of any liability for purposes of Sections 1.5(d)(1) and 1.5(d)(2) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Treasury Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event the President shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership or Partners), are computed in order to comply with such Treasury Regulations, the President may make such modification, subject to Section 5.1(h)(ii) of the JOA, provided that the modification is not likely to have a material effect on the amounts distributable to any Partner pursuant to Section 5 hereof upon the dissolution of the Partnership. Subject to Section 5.1(h)(ii) of the JOA, the President also shall make any appropriate modifications required if unanticipated events occur that might otherwise cause this Agreement not to comply with Treasury Regulations Section 1.704-1(b) . (e) "Capital Contribution" means the amount of money and the initial Gross Asset Value of any property (other than money) contributed to the Partnership with respect to the interests in the Partnership of each Partner in accordance with Sections 1.4, 1.5, and 1.7 of the JOA. (f) "Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). (g) "Depreciation" means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis. (h) "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (1) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined pursuant to the JOA; (2) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined pursuant to Section 1.6 of the JOA, as of the following times: (i) the acquisition of an additional interest in the Partnership by any new or existing Partner in exchange for more than a DE MINIMIS Capital Contribution; (ii) the distribution by the Partnership to a Partner of more than a DE MINIMIS amount of Partnership Property as consideration for an interest in the Partnership if the President reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership, subject to Section 5.1(h)(ii) of the JOA; and (iii) the liquidation of the Partnership within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(G); (3) The Gross Asset Value of any Partnership asset distributed to any Partner shall be the gross fair market value of such asset on the date of distribution; and (4) The Gross Asset Values of 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 Treasury Regulations Section 1.704-1(b)(2)(iv)(M) and Section 2.4(d) hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this Section 1.5(h)(4) to the extent the President determines that an adjustment pursuant to Section 1.5(h)(2) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this Section 1.5(h)(4), subject to Section 5.1(h)(ii) of the JOA. (5) If the Gross Asset Value of an asset has been determined or adjusted pursuant to Sections 1.5(h)(1), 1.5(h)(2) or 1.5(h)(4) hereof, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income or Net Loss. (i) "JOA" means that certain Joint Operating Agreement entered into by and among The York Daily Record, Inc., York Newspapers, Inc., and The York Newspaper Company on the date hereof combining the business functions, but not news and editorial functions, of the Partners. (j) "Net Cash From Operations" means the gross cash proceeds from Partnership operations less the portion thereof used to pay or establish reserves for all Partnership expenses, debt payments, capital improvements, replacements, and contingencies, all as determined by the President. "Net Cash From Operations" shall not be reduced by depreciation, amortization, cost recovery deductions or similar allowances. (k) "Net Income" and "Net Loss" means, for each fiscal year or other period, an amount equal to the Partnership's taxable income or loss for such year or period, 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: (1) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this Section 1.5(k) shall be added to such taxable income or loss; (2) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(I), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this Section 1.5(k) shall be subtracted from such taxable income or loss; (3) In the event the Gross Asset value of any Partnership asset is adjusted pursuant to Sections 1.5(h)(2) or 1.5(h)(3) hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss. (4) 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 by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value: (5) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year or other period, computed in accordance with Section 1.5(g) hereof; and (6) Notwithstanding any other provision of this Section 1.5(k), any items which are specially allocated pursuant to Section 2.4 hereof shall not be taken into account in computing Net Income or Net Loss. (l) "Partners" means the Record and YNI, where no distinction is required by the context in which the term is used herein. "Partner" means any one of the Partners. (m) "Partnership" means the partnership continued pursuant to this Agreement and the partnership continuing the business of this Partnership in the event of dissolution as herein provided. (n) "Partnership Property" means all real and personal property acquired by or contributed to the Partnership and any improvements thereto, and shall include both tangible and intangible property. (o) "Person" means any individual, partnership, corporation, trust or other entity. (p) "Property" means the property which will be acquired and operated by or contributed to the Partnership in accordance with Sections 1.4 and 1.5 of the JOA. (q) "Treasury Regulations" means the Income Tax Regulations promulgated under the Code, as such Treasury Regulations may be amended from time to time (including corresponding provisions of succeeding Treasury Regulations). 2. PARTNERSHIP INTERESTS, CONTRIBUTIONS AND DISTRIBUTIONS. 2.1 PARTNERSHIP INTERESTS. Except as otherwise expressly provided herein or in the JOA, the respective interests of the Partners in the assets, liabilities, profits and losses of the Partnership (the "Partnership Interest") shall be as follows: Record: 42.5% YNI: 57.5% 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 CONTRIBUTIONS AND MAINTENANCE OF CAPITAL ACCOUNTS. (a) Between the date hereof and the Effective Date, each Partner shall contribute funds for the interim funding of the Partnership as set forth in Section 1.7 of the JOA. On the Effective Date, each Partner shall contribute to the Partnership the fair market value (determined in accordance with the valuation procedures set forth in Section 1.6 of the JOA) of non-cash assets required to be contributed by such Partner to the Partnership pursuant to Sections 1.4 or 1.5 of the JOA, as the case may be, plus the amount of cash (if any) required to be contributed pursuant to Section 1.6(d) of JOA. The Partnership shall assume the current liabilities of such Partner as set forth in Sections 1.4 or 1.5 of the JOA, as the case may be. (b) Each Partner's Capital Account shall be maintained in accordance with Section 1.5(d) hereof. (c) No interest shall be paid by the Partnership on any capital contributed to the Partnership unless the Partners otherwise agree. 2.3 DISTRIBUTIONS OF NET CASH FROM OPERATIONS AND ALLOCATIONS OF NET INCOME OR NET LOSS. (a) Net Cash From Operations shall be distributed to each Partner at such times and in such amounts as is provided in Sections 4.1(c) and 4.2(b) of the JOA. (b) Except as provided in Section 2.4 hereof, Net Income and Net Loss shall be allocated to the Partners in accordance with their respective Partnership Interests. 2.4 SPECIAL ALLOCATIONS. (a) In the event that any payments received by either or both of the Partners from the Partnership pursuant to the General and Administrative Services Contract dated as of January 13, 1989, and Section 6.1 of the JOA are not deemed to be received in a transaction between the Partnership on the one hand, and the Partners on the other, in a capacity other than as a member of the Partnership in accordance with Code Section 707(a)(1) or Code Section 707(c), an amount equal to the payments shall be specially allocated to the Partner receiving such payments (as an item in the nature of income or gain). (b) In the event that any payments received by the Partners from the Partnership pursuant to Section 2.4(b)(iii) of the JOA, relating to the Page Credit, are not deemed to be received in a transaction between the Partnership on one hand, and the Partners on the other, in a capacity other than as a member of the Partnership in accordance with Code Section 707(a)(1) or Code Section 707(c), an amount equal to the payments shall be specially allocated to the Partner receiving such payments (as an item in the nature of income or gain). (c) In the event that any payments paid by the Partners to the Partnership pursuant to Section 2.4(c) of the JOA, relating to the Total Excess Page Charge, or Section 2.4(e) of the JOA, relating to the Total Excess Color Charge, are not deemed to be received in a transaction between the Partnership on one hand, and the Partners on the other, in a capacity other than as a member of the Partnership in accordance with Code Section 707(a)(1) or Code Section 707(c), an amount equal to the payments shall be specially allocated to the Partner making such payment (as an item in the nature of deduction or loss). (d) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required to be taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(M), the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis. Such gain or loss shall be specially allocated to the Partners in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to the Treasury Regulations. 2.5 OTHER ALLOCATION RULES. (a) In the event additional Partners are admitted to the Partnership pursuant to Section 4.1 hereof, the Net Income or Net Loss allocated to the Partners for such fiscal year shall be allocated among the Partners in proportion to the Partnership Interest each Partner holds from time to time during such fiscal year in accordance with Code Section 706, using any convention permitted by law and selected by the President, subject to Section 5.1(h)(ii) of the JOA. (b) In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial Gross Asset Value (computed in accordance with Section 1.5(h) hereof). In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to Section 1.5(h)(2) hereof, subsequent allocations among the Partners of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as required by Code Section 704(c) and the Treasury Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the President; subject to Section 5.1(h)(ii) of the JOA. Allocations pursuant to this Section 2.5(b) are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Partner's Capital Account or share of Net Income, Net Loss or other items of distributions pursuant to any provision of this Agreement. 2.6 BINDING EFFECT OF ALLOCATIONS. The Partners are aware of the income tax consequences of the allocations made by this Section 2 and hereby agree to be bound by the provisions of this Section 2 in reporting their shares of Partnership income and loss for income tax purposes. 2.7 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 JOA or by agreement of the Partners. 2.8 DISTRIBUTIONS 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 JOA. 3. MANAGEMENT OF THE PARTNERSHIP 3.1 CONTROLLING PARTNER. YNI shall be the controlling partner, except in matters requiring Joint Action Without Recourse, as set forth in Section 5.1(g) of the JOA, and Joint Action With Recourse, as set forth in Section 5.1(h) of the JOA (collectively, "Joint Action"). In all matters other than those requiring Joint Action, the decision of YNI shall be final, conclusive, and binding upon the Partners and the Partnership. The Record shall be consulted in such matters; provided that YNI may choose to disregard the advice of the Record in its sole and absolute discretion. 3.2 PARTNER REPRESENTATIVES. The Partners will each appoint one representative to the Partnership, neither of whom will be employed by the Partnership. In addition, the Partners shall jointly appoint a third party to serve as a representative as set forth in Section 3.3 hereof. Collectively, the representatives appointed by the Partners are referred to as the "Partner Representatives." The initial Partner Representatives shall be appointed by the Partners on or prior to the date hereof. Except as provided in Section 3.3 hereof, each Partner Representative shall hold office until he shall die, resign or be removed (with or without cause), by the Partner that he represents, whereupon such Partner shall appoint such Partner Representative's successor. Each Partner Representative shall have one (1) vote as set forth in Section 5.1 hereof. 3.3 THE THIRD PARTY. Both Partners shall agree upon the choice of a third party (the "Third Party"), who is not and has not been affiliated with either Partner and who is, or has been, active in newspaper management. The Third Party shall be entitled to vote only in the event of a deadlock between the Partner Representatives in a matter requiring joint Action With Recourse as set forth in Section 5.1 hereof; otherwise, the Third Party shall not be entitled to vote on any joint Action. If the Partners cannot reach agreement on the Third Party, they shall jointly request that the President of the American Newspaper Publisher's Association select a qualified individual to serve as the Third Party. 3.4 MEETINGS AND ACTION OF THE PARTNER REPRESENTATIVES. (a) The initial meeting of the Partner Representatives shall take place at such time and place as the Partners shall agree. The Partner Representatives may establish meeting dates and requisite notice requirements, adopt rules of procedure 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. (b) The President may call a meeting of the Partner Representatives and the President to discuss decisions requiring Action on thirty days' notice ("Agency Meeting") and the Partner Representatives shall be present in person or by proxy. With respect to Partnership business specifically, but on any matter, either Partner may call a meeting of the Partner Representatives alone, or the Partner Representatives and the President, on 15 days' notice ("Partner Meeting"). The Partner Representatives shall be present in person or by proxy; the President shall attend in person, unless the President has a reasonable excuse, in which case the President shall appoint a proxy. 3.5 ACTIONS BY PARTNERS. (a) The Partner Representatives shall have no power, without action by the Partners themselves, (i) to amend this Agreement; (ii) to act other than in accordance with the purposes of the Partnership as set forth in Section 1.3 hereof; (iii) to admit a new partner; (iv) to merge or consolidate the Partnership with any other entity; or (v) to dissolve the partnership. (b) No Partner shall, except as authorized by this Agreement or by the JOA, take any action or assume any obligations or liabilities on behalf of the Partnership. (c) Nothing in this Agreement or in the JOA shall be construed to (i) restrict or prohibit either Partner or any Affiliate of either Partner from carrying on any business or activity, whether or not any such business or activity is competitive with the business of the Partnership except that (subject to the immediately following sentence) neither Partner shall use or permit any Affiliate to use any of their respective Names (as defined in Sections 1.4(b)(1) and 1.5(b)(1) of the JOA) in connection with the printing or distribution of a daily newspaper, the dissemination of news or editorial information, or the sale or dissemination of advertising, in each case in the York, Pennsylvania metropolitan area, or otherwise in competition with the activities of the Partnership contemplated or permitted by the JOA, or (ii) except as specifically provided in this Agreement or the JOA, create or be the occasion of the existence of any fiduciary or other obligation of either Partner (or Affiliate of such Partner) to the other Partner (or Affiliate of such other partner). Nothing in this Agreement or the JOA (including, without limitation, the immediately preceding sentence) 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 its own account as it deems in its best interest. (d) Each Partner shall give full information to the other partner regarding letters, accounts, writings or other things that shall come into its possession or to its knowledge concerning the Partnership. 3.6 PRESIDENT AND OTHER MANAGEMENT PERSONNEL. The initial President and all successor Presidents shall be appointed, removed and replaced pursuant to, and in the manner set forth in, the JOA. The President shall also appoint, remove (with or without cause) and replace such other management personnel as he deems necessary, proper or advisable. The President shall be responsible for the day-to-day management of the operations and activities of the Partnership and, in addition to the specific authorizations contained in this Agreement, shall be authorized to conduct and transact the business of the Partnership and, to execute in the name and on behalf of the Partnership all such instruments and documents and to do all such acts and things as may be incidental to, or necessary, proper or advisable for, the conduct and transaction of such business. Notwithstanding the foregoing, approval of the Partner Representatives shall be required with respect to the actions described in the JOA as requiring Joint Action. The President and the other management personnel shall act in accordance with the decisions of the Partner Representatives and shall have no authority to take any action requiring prior approval of the Partner Representatives without first obtaining the approval of the Partner Representatives. 3.7 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 an Affiliate of a Partner or any other person, whether civil or criminal, including an action by or on behalf 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 Partner Representative, the Third Party 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 Partner Representative, the Third Party 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 necessarily incurred as a result of such action or proceeding, or any appeal therein, if such Partner Representative, Third Party 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 Partner Representative, Third Party 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 3.7, 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 fiduciary duties on, or otherwise involves services by, such person with respect 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 3.7 shall be made by the Partnership in any specific case only: (1) 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 3.7; or (2) If YNI receives an opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in this Section 3.7 has been met by such Partner Representative, Third Party or officer. (e) The Partnership shall have the power, but shall not be obligated, to purchase and maintain insurance; (1) To indemnify the Partnership for any obligation which it incurs as a result of the indemnification of Partner Representatives, the Third Party, and officers under the provisions of this Section 3.7; (2) To indemnify such Partner Representatives, Third Party, and officers in instances in which they may be indemnified by the Partnership under the provisions of this Section 3.7; and (3) To indemnify such Partner Representatives, Third Party, and officers in instances in which they may not otherwise be indemnified by the Partnership under the provisions of this Section 3.7. 4. TRANSFER OF PARTNERSHIP INTERESTS. 4.1 PROHIBITED TRANSFERS. Without the advance written consent of the other Partner, which consent will not be unreasonably withheld, neither Partner shall sell, assign, pledge, encumber, dispose of or otherwise transfer any of its right, title or interest in or to its Partnership Interest, in whole or in part. Further, without the advance written consent of the other Partner, which consent shall not be unreasonably withheld, control of the Partners or Affiliates of the Partners shall not be transferred to any other person, corporation, partnership, trust or other entity. No such consent shall be deemed to have been withheld unreasonably if the proposed transferee (or those controlling such proposed transferee) does not have experience in and a good reputation within the publishing industry. Notwithstanding the foregoing, each party shall have the right to a veto of a single proposed transfer in its sole and absolute discretion. One and only one proposed transfer may be vetoed by each Partner; once the veto has been exercised, it shall not be exercised again. However, once a proposed transfer has been vetoed, the transferee and its Affiliates shall be deemed vetoed for all time and all purposes, unless the objecting party waives its veto in writing. The Record shall not be entitled to veto a proposed transfer if the transferee is William D. Singleton, a member of the Scudder Family, Media Central, Inc., or MediaNews Holdings, Inc. YNI shall not be entitled to veto a proposed transfer if the transferee is Philip F. Buckner and his family, Gerald G. Gose and his family or David H. Martens and his family. No attempted transfer of any Partnership interest or control of the Partners or Affiliates of the Partners in violation of any provision of this Agreement shall be effective to pass any right, title or interest therein, but shall instead be null, void, and of no effect. 4.2 CONDITIONS TO TRANSFER. Any transfer made under Section 4.1 hereof is subject to satisfaction of the following conditions: (a) The transferee shall be admitted as a Partner of the Partnership and this Agreement shall be amended accordingly; (b) The transferee shall in writing assume and agree to perform all of its duties and obligations as a Partner under this Agreement; and (c) The transferor shall fully indemnify on an after tax basis the other Partner against any adverse tax consequences to the other Partner that may result from any termination of the Partnership for tax purposes on account of such transfer. 5. DISSOLUTION AND TERMINATION OF THE PARTNERSHIP. 5.1 TERM. Unless renewed as provided in this Section 5.1 or terminated pursuant to Section 5.2 hereof, this Agreement and the JOA shall continue for a term ending at the close of business on the last day of the one hundredth full fiscal year following the Effective Date, whereupon this Agreement and the Partnership Agreement shall expire and terminate. This Agreement shall automatically renew for succeeding renewal periods of twenty-five years each, unless either of the Partners notifies the other at least five years before the end of the then current renewal period, of the election of the party giving the notice to terminate this Agreement. If such notice is given, this Agreement shall terminate at the end of the initial period or the then current renewal period during which the notice is given. 5.2 TERMINATION OF THIS AGREEMENT; DISSOLUTION OF THE PARTNERSHIP. (a) After the Effective Date, this Agreement shall terminate only as provided in this Section 5.2. (b) No Partner shall cause the Partnership to be dissolved except as provided herein. After the Effective Date, the Partnership shall continue until dissolved as herein provided. The Partnership shall be dissolved upon the occurrence of any of the following: (1) Expiration of the term of this Agreement as set forth in Sections 1.4 and 5.1 hereof; (2) Upon the bankruptcy of either Partner. For purposes hereof, "bankruptcy" means, with respect to any Partner, (i) the assignment by such Partner for the benefit of creditors or the admission in writing of its inability to pay its debts when due; or (ii) the commencement by such Partner with respect to itself or its assets of any liquidation, dissolution, bankruptcy, reorganization, insolvency or other proceeding for the relief of financially distressed debtors; or (iii) the appointment for such Partner, or a substantial part of such Partner's assets, of a receiver, liquidator, custodian or trustee, and, if any of the events referred to in this clause occur involuntarily, the failure of the same to be dismissed, stayed or discharged within ninety days; or (iv) the entry of an order for relief against such Partner under Title 11 of the United States Code, or any other similar law enacted by the United States Congress to regulate bankruptcies; or (v) the commencement against such Partner of any liquidation, dissolution, bankruptcy, reorganization, insolvency or other proceeding for the relief of financially distressed debtors if such proceeding remains undismissed for a period of ninety days; (3) At the written election of a Partner if the other Partner willfully or persistently commits one or more material breaches of this Agreement or the JOA, or otherwise so conducts itself in matters relating to the Partnership business that it is not reasonably practicable to carry on the business of the Partnership; PROVIDED, HOWEVER, that such election may be made only if the electing Partner has given written notice to the other Partner and its parent of such breaches or conduct and such breaches or conduct have not been substantially cured within ninety days after such notice has been given. (4) If the Partnership experiences a Net Loss, as determined in accordance with generally accepted accounting principles consistently applied (except as otherwise agreed by the Partners) for any three consecutive fiscal years or if either Partner does not, in respect of any three consecutive fiscal years, receive under Section 4.1(c) of the JOA aggregate monies sufficient to cover its aggregate Editorial Expenses (as defined in the JOA) for such three years, then at any time within six months following the end of any such three consecutive fiscal years, such Partner may give the other Partner written notice of its intention to terminate this Agreement and thereafter this Agreement shall terminate six months after the delivery of such notice, or earlier if mutually agreed by the Partners. (c) No termination of the JOA or dissolution of the Partnership shall be construed to release any Partner from liability at law or in equity to the other Partner or the Partnership arising out of any breach of the terms of this Agreement or the JOA. (d) As soon as practicable after the termination of this Agreement by lapse of time or otherwise, the Partnership shall liquidate as provided in Section 5.3 hereof. 5.3 TERMINATION AT END OF TERM. If both this Agreement and the JOA terminate by lapse of time or otherwise: (a) The Partners will meet with each other and use their best efforts to develop a just and equitable plan for discontinuing and dissolving the Partnership and distributing its assets in kind between the Partners (after payment of all indebtedness and liabilities of the Partnership and all costs of dissolution and liquidation), in accordance with their respective capital accounts in the Agency, so as to enable the Partners to resume separate publication of THE YORK DAILY RECORD/YORK SUNDAY RECORD and THE YORK DISPATCH/YORK SUNDAY NEWS, respectively, as independent businesses (a "Distribution Plan"). If the Partners agree on a Distribution Plan, the assets of the Partnership shall be distributed in accordance with the Distribution Plan, all Licenses shall automatically expire and terminate, and the Partnership shall thereupon be dissolved. Except as provided in the Distribution Plan and upon effective distribution of assets by the Partnership pursuant thereto, neither Partner shall have any separate right, title or interest in or to any asset of the Partnership. (b) If the Partners are unable to agree upon a Distribution Plan the business affairs and assets of the Partnership shall be liquidated as promptly as possible and receivables collected, all in an orderly and businesslike manner so as not to involve undue sacrifice, and the assets of the Partnership shall be converted into cash. The proceeds shall be applied and distributed in the following order: (1) To the payment and discharge of all of the Partnership's debts and liabilities (other than those to the Partners), including the establishment of any necessary reserves; (2) To the payment of any debts and liabilities to Partners; and (3) To the Partners in accordance with their Capital Accounts. 6. MISCELLANEOUS. 6.1 NOTICES. Each notice or other communication given pursuant to this Agreement shall be given as provided in Section 9.1 of the JOA. 6.2 NON-ASSIGNABILITY. Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto and their permitted assigns, but any attempt by any party to assign any of its rights or to delegate any of its duties hereunder shall be subject to Section 4.1 hereof. 6.3 ENTIRE UNDERSTANDING. This Agreement (including the Schedules attached hereto) embodies the entire understanding and agreement of the parties on the subject matter herein contained and supercedes any and all prior agreements, arrangements and understandings relative to the subject matter hereof. 6.4 HEADINGS. Titles, captions or headings contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. 6.5 GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the internal laws of the Commonwealth of Pennsylvania. 6.6 MODIFICATION. This Agreement shall be amended only by an agreement in writing and signed by the party against which enforcement of any waiver, modification or discharge is sought. 6.7 SEVERABILITY. Each provision of this Agreement shall be considered severable from the rest and if any provision of this Agreement or its application to an person or entity, or circumstance shall be held invalid and contrary to any existing or future law or unenforceable to any extent, the remainder of this Agreement and the application of any other provision to any person, entity or circumstance shall not be affected thereby and shall be interpreted and enforced to the greatest extent permitted by law so as to give effect to the original intent of the parties hereto. 6.8 SPECIFIC PERFORMANCE. In addition to any other remedies the Partners may have, each Partner shall have the right to enforce the provisions of this Agreement through injunctive relief or by a decree or decrees of specific performance. 6.9 NO THIRD-PARTY BENEFICIARIES. Nothing in the Agreement, expressed or implied, shall give to anyone other than the parties hereto and their respective permitted successors and assigns any benefit, or any legal or equitable right, remedy or claim, under or in respect of this Agreement. 6.10 NO WAIVER. No delay on the part of any Partner in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Partner of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. 6.11 VARIATION OF PRONOUNS. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity or identities of the antecedent person or persons may require. 6.12 SURVIVAL. This Agreement shall survive the consummation of the transactions contemplated hereby. 6.13 PRIORITY OF INTERPRETATION. If any provision of this Agreement conflicts with any provision in the JOA, the provision in the JOA shall control. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed as of the date first above written. RECORD: YORK DAILY RECORD, INC. By: /S/ DAVID B. MARTENS ------------------------- Name: David B. Martens Title: President YNI: YORK NEWSPAPERS, INC. By: /S/ T. J. JACKSON ------------------------- Name: T. J. Jackson Title: Exec V.P.