Star-Bulletin/Advertiser JOA

Joint Operating Agreement

AMENDMENT AND RESTATEMENT
of
MUTUAL PUBLISHING PLAN AGREEMENT
JANUARY 30, 1993

TABLE OF CONTENTS
Introduction and Recitals

I. The Partnership

(A) Formation
(B) Capital Contribution by Advertiser
(C) Capital Contribution by Star-Bulletin
(D) Liens; Liabilities
(E) Future Capital Contributions; Capital Assets
(F) Partnership as Signatory
(G) Obligations of Partnership and Advertiser, etc.
(H) Employees

II. Editorial Independence

III. Term

IV. Continuing Operations

(A) General
(B) Production
(C) Advertising and Circulation
(D) Newspaper Editions
(E) Office Space and Equipment
(F) Other Services
(G) Future Purchases
(H) Editorial Matters
(I) Accounting Matters
(J) Distribution to Partners
(K) Special Profits

V. Termination

(A) Cessation of Publication
(B) Bankruptcy
(C) Default
(D) Action After Termination

VI. Certain Covenants of Advertiser

VII. Miscellaneous Provisions

(A) Certain Liabilities; Force Majeure
(B) Liabilities for Published or Excluded Material
(C) Contravention of Law
(D) Further Assurances
(E) Sale of Newspaper
(F) Entire Agreement
(G) Notices
(H) Captions
(I) Law Governing
(J) Waiver of Provisions
(K) Counterparts

Exhibit A: Agreement of Limited Partnership

HAWAII JOA
AMENDMENT AND RESTATEMENT OF
MUTUAL PUBLISHING PLAN AGREEMENT

THIS AMENDMENT AND RESTATEMENT OF MUTUAL PUBLISHING PLAN AGREEMENT is dated as of January 30, 1993 and is by and between HONOLULU ADVERTISER, INC., a Hawaii corporation (“Advertiser”), and LIBERTY NEWSPAPERS LIMITED PARTNERSHIP, an Arkansas limited partnership (“Star-Bulletin”) . WHEREAS, Advertiser publishes The Honolulu Advertiser, a morning daily newspaper, and Star-Bulletin (or its predecessor) publishes Honolulu Star-Bulletin, an afternoon daily newspaper, both in Honolulu, Hawaii (together the “Newspapers”);

WHEREAS, Advertiser and Star-Bulletin, or their respective predecessors, entered into that certain Mutual Publishing Plan Agreement dated May 31, 1962, as amended from time to time thereafter (collectively, the “Mutual Agreement”), pursuant to which Hawaii Newspaper Agency, Inc. (“Old HNA”), as agent, has managed, operated and produced the Newspapers, except for the news and editorial departments of each Newspaper, which have remained separate and independent;

WHEREAS, Advertiser and Star-Bulletin desire to amend various provisions of the Mutual Agreement and to restate it in its entirety to provide, among other things, that the functions previously performed by Old HNA will be performed by a limited partnership formed by Advertiser and Star-Bulletin pursuant to this Agreement;

WHEREAS, the following transactions have occurred on and as of the date hereof and shall be deemed to have occurred simultaneously with the execution and delivery of this Agreement: (i) Star-Bulletin has acquired certain assets of Honolulu Star-Bulletin from Gannett ?Pacific Corporation (“Gannett Pacific”), a wholly-owned subsidiary of Gannett Co., Inc. (“Gannett”);

(ii) Advertiser has become a wholly-owned subsidiary of Gannett; (iii) Gannett Pacific has transferred to Advertiser all of Gannett Pacific’s capital stock of Old HNA; (iv) all capital assets that are used or intended for use primarily in the conduct of the joint business operations of the Newspapers (whether previously owned by Advertiser, Gannett Pacific or both) are as of the date hereof being contributed to or otherwise made available to the Partnership described herein; (v) Old HNA has transferred all of its assets to Advertiser ; (vi) Advertiser has assumed all of Old HNA’s liabilities; and (vii) Old HNA’s authority to act as agent for the Newspapers has been terminated.

WHEREAS, the purpose and intent of the Mutual Agreement is to provide a plan of common operation of the Newspapers published by Advertiser and Star-Bulletin, so as to afford economy in money and effort, produce high quality newspapers for their readers, improve acceptance for their advertisers, subserve public interests by maintaining the separate identities, individuality and editorial and news freedom and integrity of each Newspaper, and assist each Newspaper in maintaining its journalistic characteristics and meeting the highest standards of editorial quality and journalistic excellence; and .

WHEREAS, the Mutual Agreement, as amended and restated hereby, continues to maintain as separate and independent the respective news, editorial and reportorial operations, departments and staffs of Advertiser and Star-Bulletin, consistent with the requirements of the Newspaper Preservation Act, 15 U.S.C. §§ 1801 et seq.

NOW THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the parties hereby agree that the Mutual Agreement shall be amended and restated as follows:

I. THE PARTNERSHIP

(A) Formation. Advertiser and Star-Bulletin will on the date hereof, and effective upon the execution and delivery of this Agreement, cause to be formed under the laws of the State of Delaware a limited partnership named “Hawaii Newspaper Agency Limited Partnership” (the “Partnership”) by executing and delivering to each other the Limited Partnership Agreement (“Partnership Agreement”) in the form set forth as Exhibit A hereto, and by making such filings as are appropriate under applicable law.

(B) Capital Contribution by Advertiser. Upon execution of this Agreement, and in return for its general partnership interest in the Partnership as described in the Partnership Agreement, Advertiser shall contribute and hereby does contribute the following to the capital of the Partnership:

(i) 100% of the assets of Old HNA;

(ii) 100% of its interest in the tangible capital assets that, immediately prior to the date hereof, were used or intended for use primarily in the conduct of the business and operations of the Newspapers (except for those tangible capital assets which as of the date hereof are used or intended for use solely by the editorial department of The Honolulu Advertiser);

(iii) Any and all lists owned by Advertiser of subscribers to or advertisers in The Honolulu Advertiser;

(iv) The name, title and masthead of The Honolulu Advertiser, together with all names, titles and slogans used exclusively in connection with The Honolulu Advertiser and all intangible rights and privileges of whatever kind belonging to or incidental thereto, including any and all copyrights and trademarks relating thereto, and any and all rights to renew the same, on issues of The Honolulu Advertiser published before, on or after the date hereof, and the right to reprint all or any part thereof (collectively the “Advertiser Names”); and

(v) $100 in cash.

(C) Capital Contribution by Star-Bulletin. Upon execution of this Agreement, and in return for its limited partnership interest in the Partnership as described in the Partnership Agreement, Star-Bulletin shall contribute and hereby does contribute the following to the capital of the Partnership:

(i) Any and all lists owned by Star-Bulletin of subscribers to or advertisers in Honolulu Star-Bulletin;

(ii) The name, title and masthead of Honolulu Star-Bulletin, together with all names, titles and slogans used exclusively in connection with Honolulu Star-Bulletin and all intangible rights and privileges of whatever kind belonging to or incidental thereto, including any and all copyrights and trademarks relating thereto, and any and all rights to renew the same, on issues of Honolulu Star-Bulletin published before, on or after the date hereof, and the right to reprint all or any part thereof (collectively the “Star-Bulletin Names”); and

(iii) $100 in cash.

(D) Liens; Liabilities. The assets described in Sections 1 (B) and 1(C) shall be contributed to the Partnership free and clear of all liens, security interests, mortgages and encumbrances of any nature except that the Partnership shall, and by its execution of this Agreement hereby does, agree to pay, perform and discharge all liabilities, contingent or otherwise, of Old HNA (as agent or otherwise) that were on the date hereof previously assumed by Advertiser.

(E) Future Capital Contributions; Capital Assets. Star-Bulletin shall have no obligation to make any further contributions to the capital of the Partnership. Advertiser shall in the future make such additional contributions to the capital of the Partnership as shall be necessary in its reasonable judgment to (i) fund acquisitions of capital assets necessary for the business and operations of the Partnership (it being understood that, without limitation of the foregoing, it is the obligation of Advertiser to contribute or otherwise make available to the Partnership all the tangible capital assets that, immediately prior to the date hereof, were used or intended for use primarily in the conduct of the business and operations of the Newspapers, and in the event that the Partnership is required to make any payments to Gannett Pacific or Advertiser in connection therewith, no such payments shall be made at any time when the Partnership is not current in making the distributions to Star-Bulletin described in Section IV(J) (i) through (iv) hereof, nor shall such payments be considered a “Contract Expense,” as defined herein), (ii) fund acquisitions of tangible capital assets necessary for the business and operations of the editorial departments of The Honolulu Advertiser and Honolulu Star Bulletin to the extent the editorial department tangible capital assets owned by Advertiser or Star-Bulletin on the date hereof require supplementation or replacement, (iii) provide the Partnership with adequate working capital, including such working capital as is necessary to fund the liabilities of Old HNA assumed by the Partnership pursuant to Section 1(D) hereof so as to avoid any material adverse impact from such assumed liabilities on the cash flow of the Partnership and the Partnership’s ability to make on a timely basis the cash distributions to Star-Bulletin contemplated by Section IV (J) (i) through (v) hereof, and (iv) ensure that the Partnership has adequate funds to make on a timely basis the cash distributions to Star-Bulletin contemplated by Section IV(J) (i) through (v) hereof. Advertiser may from time to time cause the Partnership to distribute and transfer to it one or more capital assets of the Partnership so long as after such transfer the Partnership shall have, as a result of its remaining capital assets and any other capital assets which Advertiser shall at the time contribute or make available to the Partnership pursuant to this Section 1(E), capital assets whose adequacy and suitability for the Partnership’s performance of the business and operations of the Newspapers is substantially the same as prior to such transfer .

(F) Partnership as Signatory. Advertiser, as general partner of the Partnership, shall cause the Partnership to become a party to this Agreement as of the date hereof and to agree to perform all the obligations herein to be performed by it by signing this Agreement and delivering executed copies hereof to Advertiser and Star-Bulletin.

(G) Obligations of Partnership and Advertiser, etc. To the extent that any provision of this Agreement or the Partnership Agreement or applicable law requires or authorizes the Partnership to perform any obligation, make any determination, give any notice, exercise any right or take any action, Advertiser shall in its capacity as general partner of the Partnership be required or authorized to do so on behalf of the Partnership. In doing so, Advertiser shall as general partner conduct the business and operations of the Partnership and of the Newspapers (including incurring indebtedness of the Partnership) in a manner which it believes, in the good faith exercise of business judgment, is in the best interest of the overall economic performance of the Partnership and the Newspapers considered together and does not have a material adverse impact on the cash flow of the Partnership and the Partnership’s ability to make on a timely basis the cash distributions to Star-Bulletin contemplated by Section IV(J) (i) through (v) hereof. Subject to the foregoing, Advertiser may make reasonable distinctions between the two Newspapers regarding the non-editorial business, operations and promotion of each of them that are intended to enhance such overall economic performance. Advertiser shall have no liability to the Partnership or Star-Bulletin for any action it may take or fail to take in the absence of bad faith or willful misconduct.

(H) Employees. On the date hereof, the Partnership will employ, or offer to employ, all those who were employees of Old HNA immediately before the date hereof. The terms and conditions of such employment by the Partnership shall be the same or substantially the same as those in effect with Old HNA immediately before the date hereof. The Partnership shall take such actions as are appropriate with respect to any pension or employee benefit plans applicable to such employees in order to ensure that such plans (or their substantial equivalent), including accrued benefits and credit for years of service, will be applicable to such employees in their capacity as employees of the Partnership. Nothing herein, however, is intended to confer on any employee of Old HNA or the Partnership any legal or contractual right (as a third party beneficiary or otherwise) to be or remain employed by the Partnership, to be or remain employed by the Partnership on any particular terms and conditions of employment, or to be entitled to the continuation of, or to participate in, any pension or employee benefit plan.

II. EDITORIAL INDEPENDENCE

Advertiser and Star-Bulletin agree to maintain the separateness of their respective corporate identities, and to retain the editorial independence of their respective Newspapers. Star-Bulletin agrees that it shall have no connection with the editorial conduct of Advertiser. The editorial and reportorial staffs of the respective Newspapers shall be independent and shall not be merged, combined or amalgamated, and their editorial policies shall be independently determined. Advertiser agrees that it shall have no connection with the editorial conduct of Star-Bulletin, and that operations of Advertiser with respect to Honolulu Star-Bulletin shall be confined exclusively to its role as general partner of the Partnership and causing the Partnership to print, sell and distribute the Newspapers, and to solicit and sell advertising space therein, and to perform such other functions as are described in this Agreement.

III. TERM

Unless sooner terminated in accordance with the terms hereof, this Agreement shall continue in effect from the date hereof through the close of business on the last Sunday in December, 2012. This Agreement shall thereupon be automatically renewed for additional five-year terms unless either Advertiser or Star-Bulletin gives written notice to the contrary to the other at least 24 months prior to the end of the term or the then-current term.

IV. CONTINUING OPERATIONS

(A) General. On and after the date hereof the Partnership, using its own employees, shall control, supervise, manage and perform all operations (other than the news and editorial operations of The Honolulu Advertiser and Honolulu Star-Bulletin) involved in producing, printing, selling and distributing the Newspapers; shall determine press runs, press times, page sizes and cutoffs of the Newspapers; shall determine whether supplemental products will be distributed in or with one or both Newspapers, including whether and how certain products will be distributed to non-subscribers; shall purchase newsprint, materials and supplies as required; shall solicit and sell advertising space in the Newspapers; shall collect the Newspapers’ circulation and advertising accounts receivable; shall provide or make available to each Newspaper such parking, subscriptions, messenger services, data process services and photo usage services as the Partnership deems reasonable and appropriate (the costs for which shall not be an Editorial Expense); and shall make all determinations and decisions and do any and all acts and things necessarily connected with the foregoing activities, including maintaining insurance coverage that is normal and appropriate for similarly-situated businesses. Except for seasonal or other changes in accordance with historical practices, or except as contemplated by Section IV(D) below, no change shall be made in the field of publication (morning or afternoon, as the case may be) of either Newspaper from those described in Section IV(D) without the mutual consent of Advertiser and Star-Bulletin. The parties recognize that the President or General Manager of Advertiser, who may also be the Publisher of The Honolulu Advertiser, shall have general charge and supervision of the business of the Newspapers, but shall treat each of the Newspapers as separate and distinct editorial products, and shall have no duties or authority with respect to the news or editorial functions of Honolulu Star-Bulletin. If the President or General Manager of Advertiser shall also be the Publisher of The Honolulu Advertiser, then eighty percent (80%) of his or her salary shall be charged as a Contract Expense under Section IV(K) (iv) below. If he or she is not the Publisher of The Honolulu Advertiser, then one hundred percent (100%) of his or her salary shall be charged as a Contract Expense under Section IV(K) (iv) below. Expenses of the President or General Manager of Advertiser shall be charged as a Contract Expense under Section IV(K) (iv) below.

(B) Production. On and after the date hereof, the Partnership, using its own employees, shall print the Newspapers on equipment owned or leased by the Partnership in the Partnership’s plant or plants located at such place or places as the Partnership may determine, and all operations under this Agreement, except the operation of Advertiser’s and Star- Bulletin’s editorial departments, shall be carried on and performed by the Partnership with equipment and from the Partnership’s said plant or plants or by independent contractors or agents selected by the Partnership. During the term of this Agreement, Star-Bulletin agrees to produce Honolulu Star- Bulletin’s editorial and news copy, and Advertiser agrees to produce The Honolulu Advertiser’s editorial and news copy, on equipment which is compatible with the equipment used by the Partnership in its production facilities.

(C) Advertising and Circulation. On and after the date hereof, the Partnership shall have complete control of and the right to determine for both Advertiser and Star-Bulletin advertising and circulation rates for both The Honolulu Advertiser and Honolulu Star-Bulletin, and the Partnership shall use its reasonable efforts to sell advertising space in each Newspaper and to sell, promote and distribute each Newspaper as widely as practicable consistent, however, with the objective of enhancing the overall economic performance of the Partnership and the Newspapers considered together in a manner that does not have a material adverse impact on the cash flow of the Partnership and the ability of the Partnership to make on a timely basis the cash distributions to Star-Bulletin contemplated by Section IV(J) (i) through (v) hereof. The senior news executive of Star-Bulletin or Advertiser, as the case may be, may reject any advertising for Honolulu Star-Bulletin or The Honolulu Advertiser, as the case may be, which is in his or her opinion undesirable or inappropriate for publication therein. The Partnership shall be free to select and alter from time to time the national advertising representative(s) for The Honolulu Advertiser and Honolulu Star-Bulletin, and the commission payable to such national advertising representative(s) and the other terms of such arrangement(s) shall be determined by the Partnership.

(D) Newspaper Editions. Advertiser shall publish The Honolulu Advertiser daily on weekday, Saturday and Sunday mornings. Star-Bulletin shall publish Honolulu Star-Bulletin daily (except Sunday) on weekday and Saturday afternoons; provided, however, that if at any time the continued publication of the Saturday afternoon edition of the Honolulu Star-Bulletin is detrimental to the overall economic performance of The Honolulu Advertiser and Honolulu Star-Bulletin considered together, then, within thirty days after written notice by the Partnership to Star-Bulletin, either (i) publication of such edition shall be discontinued or (ii) if the Partnership shall in its sole discretion give its written consent, publication of such edition shall be converted into a Saturday morning edition and such edition shall continue to be published on Saturday morning unless and until the Partnership shall in its sole discretion and by written notice to Star-Bulletin withdraw such consent, in which event publication of such edition shall be discontinued within thirty days after such notice.

(E) Office Space and Equipment. On and after the date thereof, the Partnership shall furnish each of Advertiser and Star-Bulletin with reasonably adequate, built-out and furnished office space for the separate use of their respective editorial departments and editorial employees. Such space furnished to Star-Bulletin will be reasonably comparable in general location, function, square footage (on a per-employee basis) and general appearance to the office space furnished to Advertiser’s editorial department and editorial employees, but need not be in the same building as Advertiser’ s editorial department. Such space shall be furnished with furniture and equipment which in the Partnership’s reasonable judgment is sufficient and technologically adequate for news and editorial operations. Star-Bulletin acknowledges that its existing office space, furniture and equipment complies with these provisions.

(F) Other Services. The parties recognize that in addition to the operations with respect to the Newspapers contemplated by this Agreement, the Partnership may also utilize its production and other facilities, personnel, and agents for any other lawful activities it deems appropriate, including distributing news, advertising or other information to non-subscribers; distributing or making available all or a portion of the information or advertising in the Newspapers to subscribers by means of electronic distribution, microfilm, microfiche or mail; commercial printing, including commercial printing of other newspapers; distribution services; and any other activities not inconsistent with its principal business; provided, however, that such activities shall not unreasonably interfere with the selling, printing or distribution of the Newspapers and that revenues and expenses related to the services or products described above ?will be treated as Contract Revenues or Contract Expenses under Paragraph IV(K) below.

(G) Future Purchases. On and after the date hereof, the Partnership shall be responsible for the purchase of all inventory, supplies, equipment and services as it deems to be necessary or desirable in connection with the operation of the Newspapers and other, functions as are described in this Agreement; provided, however, that if any such purchases or service contracts having a term in excess of one year or having a value of more than $250,000 (as escalated from January 1, 1992 in accordance with the U.S. all items Consumer Price Index for All Urban Consumers (1982-84 – 100), or in accordance with a successor index thereto) are made through an entity affiliated with Advertiser, the price to be paid shall not be higher than the annualized prevailing market contract price for equivalent purchases by comparable, independent newspapers, unless Star- Bulletin consents. In the event of shortages of inventory, supplies, equipment or services, neither Newspaper shall be unfairly favored or discriminated against as regards the other.

(H) Editorial Matters. (i) Each of Advertiser and Star-Bulletin shall have complete and exclusive control and direction of the editorial department and editorial policies of its respective Newspaper and shall be responsible for and shall bear all of its respective Editorial Expense, as defined below. Without limiting the generality of the foregoing, each of Advertiser and Star-Bulletin shall have the exclusive right to determine the editorial format, dress, makeup and news and feature content of its respective Newspaper (including the content of all advertisements and advertising matter), and each shall have complete control and authority over the editors and editorial employees of its respective Newspaper, including the exclusive right to hire and fire its own editors and editorial employees. The term “editorial department” as used herein shall mean the news, editorial, editorial promotion and photographic departments. Advertiser and Star-Bulletin recognize that editorial quality is the essence of this Agreement and each of them agrees to use all reasonable efforts and to incur appropriate Editorial Expense to preserve high standards of newspaper quality and journalistic excellence throughout the period of this Agreement.

(ii) The amount of reading content, sometimes known as “news hole,” and the amount of color usage of the Newspapers shall be determined by the Partnership during the annual budgeting process, in consultation with Star-Bulletin and Advertiser. The news hole allocation and color usage shall take into account relevant distinguishing characteristics of the two Newspapers, including among other things whether one of the Newspapers carries supplemental products not carried in the other, historic and projected levels of advertising and editorial content, color and editorial and advertising layout practices of The Honolulu Advertiser and Honolulu Star-Bulletin, with total usage and the allocations thereof to be determined by the Partnership. If either Newspaper exceeds its budgeted news hole allocation or color usage, then any newsprint and other production costs attributable to such excess shall be considered an Editorial Expense of such Newspaper.

(iii) Advertiser shall independently develop standards for determining the acceptability of advertising copy for publication in The Honolulu Advertiser. Star-Bulletin shall independently develop standards for determining the acceptability of advertising copy for publication in Honolulu Star-Bulletin.

(iv) The term “Editorial Expense” as used in this Agreement shall mean all costs and expenses associated with the editorial department of a Newspaper, including but not limited to: (a) compensation including payroll taxes, retirement, pension, health and death benefits, worker’s compensation insurance and group insurance of editorial employees; (b) severance pay of editorial employees; (c) travel and other expenses of editorial employees; (d) press association assessments and charges; (e) charges for news services, photo services and supplies and editorial wire services; (f) charges for the right to publish editorial features, daily comics and other editorial material of every kind and character; (g) the cost of editorial materials, printing, stationery, office supplies and postage for the editorial department; (h) donations, scholarships, minority newsroom recruitment and community affairs programs, dues not included in Contract Expense, and editorial promotion expense; (i) telegraphic, telephone and long-distance telephone charges of such editorial department; (j) charges for the purchase, rental, repair and maintenance of editorial department cameras and photographic equipment; provided however, that the term “Editorial Expense” shall not include any cost, charge or expense related to office space, furniture or equipment made available pursuant to Section IV(E) of this Agreement or related to any editorial department tangible capital assets owned by either Newspaper, all of which shall be included within the meaning of the term “Contract Expense” (as defined below); (k) the cost of liability insurance and insurance with respect to libel and right of privacy and similar hazards (which insurance coverage the Partnership will use reasonable efforts to make available to Star-Bulletin) and the payment of any deductibles related thereto; (l) any payments described in Section IV(H) (ii) or the proviso to Section IV(H) (v) below; (in) the cost of executive-level supervisory management and support of Honolulu Star-Bulletin, such expenses not to exceed 1% (for any fiscal year from 1993 through 1997) or .75% (for any fiscal year from 1998 through 2002) or .5% (for any subsequent fiscal year) of the Editorial Expense budget for such year as determined in accordance with Schedule A hereto, and (m) payments required to be made by Star-Bulletin pursuant to contracts entered into by Gannett Pacific or liabilities of Gannett Pacific that are assumed by Star-Bulletin on the date of this Agreement. Notwithstanding the foregoing, the following shall not be included in “Editorial Expense” and shall be separately borne by the Newspaper which incurs them: (A) any interest, indebtedness, amortization, organizational costs or other costs or expenses relating to the acquisition by Star-Bulletin on or after the date hereof of any assets of or relating to Honolulu Star-Bulletin, and (B) except as described in (m) above, any management fee or any portion of any salaries, expenses, overhead or corporate allocation attributable to any non-resident ownership, management or supervision of such Newspaper.

(v) All Editorial Expense of the editorial department of The Honolulu Advertiser shall be borne by Advertiser and all Editorial Expense of the editorial department of Honolulu Star-Bulletin shall be borne by Star-Bulletin; provided, however, that costs resulting from departures by either Newspaper from usual or customary practices that result in additional non-Editorial Expense items shall be considered an Editorial Expense of such Newspaper.

(I) Accounting Matters. The Partnership shall maintain full and accurate books of account and records showing all transactions hereunder. Such books and records shall be kept on the basis of Advertiser’s fiscal year and under the accounting methods currently employed by Advertiser or Advertiser’s parent corporation in accordance with generally accepted accounting principles, and shall be kept at all times at the principal place of business of the Partnership. Any changes in accounting method shall be consistent with generally accepted accounting principles and with changes made generally by Advertiser’s parent corporation. Star-Bulletin, Advertiser and their respective authorized agents or representatives shall have access to and may inspect such books and records related to Contract Expenses and Contract Revenues hereunder at any time and from time to time during ordinary business hours. Statements shall be rendered and settlements under this Agreement shall be made,on a monthly basis on the 15th day following the end of each Advertiser accounting period, with annual adjustments as soon as practicable at the conclusion of each Advertiser fiscal year during the term of this Agreement. An annual statement shall be furnished by the Partnership to Star-Bulletin and Advertiser not later than the 31st day of March of each year, summarizing in reasonable detail and fairly reflecting the transactions and the results of operations under this Agreement during the preceding fiscal year (or portion thereof beginning the date hereof), together with a letter from the Partnership’s independent certified public accountants to the effect that said statement has been prepared in accordance with this Agreement. All payments shown to be due by either Advertiser or Star-Bulletin to the other shall be paid within thirty (30) days after the delivery of the applicable statement .

(J) Distributions to Partners

(i) The Partnership shall distribute to Star- Bulletin, in equal weekly installments, the following annual cash amounts for each applicable fiscal year:

Remainder of 1993: $1,422,857
1994: $1,610,000
1995: $1,660,000
1996: $1,710,000
1997: $1,760,000
1998: $1,810,000
1999: $1,860,000
2000: $1,910,000
2001: $1,960,000
2002: $2,010,000
2003: $2,060,000
2004: $2,110,000
2005: $2,160,000
2006: $2,210,000
2007: $2,260,000
2008: $2,310,000
2009: $2,360,000
2010: $2,410,000
2011: $2,460,000
2012 and thereafter: $2,510,000

(ii) For each fiscal year, the Partnership shall also distribute to Star-Bulletin cash equal to the amount actually expended or accrued as a current liability in accordance with generally accepted accounting principles by Star-Bulletin for Editorial Expenses for such year; provided, however, that: (a) the amount distributed to Star-Bulletin pursuant to this Section IV(J) (ii) shall not, in respect of any fiscal year, exceed the budgeted amount for such fiscal year determined in accordance with Schedule A hereto; and (b) with respect to contributions by Star-Bulletin in any fiscal year to any defined benefit pension or retirement plan covering editorial employees, the Partnership shall distribute to Star-Bulletin only that portion of such contribution that has actually been contributed in cash for such year.

(iii) If, with the prior written concurrence of Advertiser, Star-Bulletin makes a permanent reduction in its editorial work force in accordance with the requirements of applicable laws, regulations and agreements, and if and to the extent the severance costs associated with such reduction are not included within the applicable budgeted amount determined in accordance with Schedule A hereto, then (a) the Partnership shall distribute to Star-Bulletin an amount equal to that portion of such severance costs that is reasonable and required to be incurred pursuant to applicable laws, regulations or agreements and that in any event does not exceed the costs Advertiser would incur if Advertiser had made corresponding reductions, and (b) the budgeted amount determined in accordance with Schedule A shall be appropriately reduced by the Partnership to reflect the cost savings resulting from such work force reduction.

(iv) The distributions described in subsection (ii) above shall be made on a weekly basis in increments of 1/52 of the applicable budgeted amount determined in accordance with Schedule A hereto (or, in the case of fiscal 1993, in equal weekly increments of the 1993 Editorial Expense budget), subject to adjustment by the Partnership at the end of each fiscal year so that such aggregate distributions for the year are in such amounts as the Partnership shall determine (based on such records and evidence as the Partnership may request from Star-Bulletin) are equal to the amounts expended (or, if applicable, accrued) by Star-Bulletin for such year. The distributions described in subsection (iii) above shall be made on a weekly basis and shall be in such amounts as the Partnership shall determine (based on such records and evidence as the Partnership may request from Star-Bulletin) are equal to the amounts expended (or, if applicable, accrued) by Star-Bulletin for such period, with such subsequent adjustments as are appropriate .

(v) If for any fiscal year the Partnership has Special Profits (as defined in Section IV(K) hereof), then as soon as practicable after such fiscal year the Partnership shall distribute to Star-Bulletin cash in an amount equal to three percent (3%) of such Special Profits.

(vi) Except for the foregoing distributions to Star-Bulletin, and except for such cash as Advertiser may from time to time determine is necessary or desirable to retain in the Partnership for working capital purposes, the Partnership shall distribute all cash of the Partnership to Advertiser, including without limitation (and so long as Advertiser is in compliance with the last sentence of Section I (E) hereof) the proceeds from any sale or disposition of capital assets by the Partnership. Such distributions shall be made from time to time as determined by Advertiser, but no distributions to Advertiser shall be made at any time when the Partnership is not current in making the distributions to Star-Bulletin described in Section IV(J) (i) through (iv) hereof.

(vii) Pending the distributions contemplated by this Section IV(J), Advertiser shall be authorized to manage the Partnership’s cash pursuant to the corporate-wide policies of Advertiser’s parent corporation. The Partnership shall neither pay interest on working capital provided to it by Advertiser pursuant to Section I (E) hereof nor earn interest on cash managed by Advertiser in accordance herewith.

(K) Special Profits.

(i) For purposes of this Agreement, “Special Profits” means the amount (if at all) by which Partnership Profits (as defined below) for any of the following fiscal years are greater than the applicable amount listed on Schedule B hereto .

(ii) For purposes of this Agreement, “Partnership Profits” means, for any fiscal year, the excess, if any, of “Contract Revenue” over “Contract Expense” for such year.

(iii) For purposes of this Agreement, “Contract Revenue” means, for any fiscal year, advertising and circulation revenues of the Newspapers, revenues derived from commercial printing or other services or products referred to in Section IV(F) hereof, and amounts received by the Partnership from other sales incidental to the publication of Newspapers, such as sales of wastepaper, plastics, press plates and other used production materials, sales of patterns, books, booklets, tickets, photographic prints, and comparable items by the editorial department of a Newspaper, and sales of items from the library or “morgue” of the Partnership or of either Newspaper; provided, however, that the proceeds from any sale or disposition by the Partnership of any capital asset shall not constitute Contract Revenue.

(iv) For purposes of this Agreement, “Contract Expense” means, for any fiscal year, all expenses reasonably necessary or desirable to carry out the Partnership’s obligations and functions under this Agreement, including but not limited to: (a) costs and expenses (other than Editorial Expense) incurred by the Partnership in producing, selling and distributing the Newspapers including Sunday supplements, in commercial printing and other services or products referred to in Section IV(F) hereof, in soliciting and selling advertising space in the Newspapers, in collecting the circulation and advertising accounts receivable of the Newspapers, in making purchases of non-capital assets as contemplated by Section IV(G) hereof, in maintaining the assets used in such operations, in complying with applicable environmental and laws, rules and regulations, and in discharging the liabilities of Old HNA that were assumed by the Partnership pursuant to Section 1(D) hereof; (b) compensation, including but not limited to retirement, pension, health and death benefits, worker’s compensation insurance, and group insurance of non-editorial employees, and such other employee benefits as may be desirable in the Partnership’s judgment; (c) severance costs for non-editorial employees; (d) administrative expenses, non-editorial promotional expenses and all Federal, state and local taxes imposed on the Partnership (including without limitation taxes based on gross receipts); (e) the amounts referred to in Section IV(H) (iv) (j) as being included within the meaning of “Contract Expense”, (f) all franchise, permit or license taxes based upon gross receipts, and all license, permit and registration fees for use of equipment, including but not limited to motor vehicles, used by the Partnership in the operations contemplated by this Agreement; (g) book depreciation and amortization on the buildings, equipment and all tangible property owned by the Partnership or made available to the Partnership pursuant to the parenthetical clause in Section I (E) hereof (together with book depreciation and amortization on the editorial department tangible capital assets owned by either Newspaper on the date hereof), it being understood that as of the date of this Agreement, the book value of such property shall be its historical carryover net book value without giving effect to any transactions occurring on the date hereof; (h) the cost and expense of operating a newspaper library and “morgue”; and (i) costs and expenses incurred by the Partnership in keeping records necessary and incidental to its operations under this Agreement, in preparing and rendering statements as required under the terms of this Agreement and in paying national advertising representatives. Notwithstanding the foregoing, the following items of expenditure shall be excluded from the meaning of the term “Contract Expense”: (1) use, sales, franchise, excise and permit taxes based on capital investments to the extent that such taxes are capitalized for purposes of depreciation or amortization on the Partnership’s financial statements; and (2) interest paid of every kind (except interest on carrier deposits, which shall be a Contract Expense) .

(v) Notwithstanding subsection (ii) above, the amount of Partnership Profits shall be reduced for any fiscal year if, as of the last day of such year, Net Capital Assets exceeds the net book value of Net Capital Assets as of the date of this Agreement. The amount of such reduction shall be the product of (i) the amount of such excess multiplied by (ii) the sum of 200 basis points plus the prime rate for best commercial customers as of such date charged by Chemical Bank, New York, New York. “Net Capital Assets” means the net book value of the capital assets referred to in Section IV(K) (iv) (g) hereof (which, as of the date of this Agreement, shall be the historical carryover net book value of such assets without giving effect to any transactions occurring on the date hereof) reduced in fiscal 1993 and thereafter by book depreciation or amortization. Net Capital Assets shall include without limitation plant, property and equipment, including the portions thereof used by the Newspapers’ respective editorial departments.

V. TERMINATION

(A) Cessation of Publication. This Agreement shall terminate if and when Star-Bulletin ceases the daily publication of Honolulu Star-Bulletin.

(B) Bankruptcy. If either Advertiser or Star-Bulletin makes an assignment of its assets for the benefit of its creditors, is adjudged a bankrupt by a court of competent jurisdiction or has a receiver appointed for its business and property by a court of competent jurisdiction, then this Agreement may be terminated by the other such party upon fifteen (15) days prior written notice.

(C) Default. If either Advertiser or Star-Bulletin defaults by failing to make any payment hereunder when due or by otherwise failing to fulfill in any material respect any of its obligations under this Agreement and the party in default does not correct its default within sixty (60) days after receipt from the other of written notice specifying the default, then the non-defaulting party may, at its election, terminate this Agreement upon ninety (90) days’ prior written notice.

(D) Action After Termination. As soon as practicable after the termination of this Agreement by lapse of time or otherwise, the Partnership shall deliver and restore to Star- Bulletin all editorial property of Star-Bulletin then owned by Star-Bulletin which may then be in possession of the Partnership, and the Partnership will distribute to Star-Bulletin: (i) the Star-Bulletin Names; (ii) any and all lists of subscribers to or advertisers in Honolulu Star-Bulletin, including copies of any contracts with such subscribers or advertisers and the unearned portion of any prepaid subscriptions and prepaid advertisers attributable to Honolulu Star-Bulletin; (iii) $100; and (iv) that portion of any distributions to which Star-Bulletin may be entitled for the period up to the date of termination pursuant to Section IV(J) (i) through (iv) hereof. All other assets of the Partnership shall be distributed tot Advertiser. A partial accounting and partial settlement under this Agreement shall be made as promptly as practicable and a final accounting and final settlement shall be made not later than the 15th day of May of the year following the year in which this Agreement is terminated. In addition, and for so long as Honolulu Star- Bulletin remains a continuing daily newspaper after termination of this Agreement, Advertiser will, at Star-Bulletin’s expense, either provide Star-Bulletin with copies of or reasonable access to back issues of Honolulu Star-Bulletin that are maintained in Advertiser’s morgue; provided, however, that such back issues shall be used by Star-Bulletin for no purpose other than assisting its editorial staff to continue publication of Honolulu Star-Bulletin in the ordinary course of business.

VI. CERTAIN COVENANTS OF ADVERTISER

Within 45 days after the end of each fiscal quarter, Advertiser will furnish to Star-Bulletin a balance sheet of Advertiser as of the end of such quarter prepared in accordance with generally accepted accounting principles. If such balance sheet shows that the net worth of Advertiser is less than $100,000,000, then Advertiser will promptly deliver to Star- Bulletin either (i) an absolute and unconditional guarantee of the obligations of Advertiser under Section I (E) (iii) of this Agreement issued by an entity whose net worth shall, during the term of the guarantee, be not less than $100,000,000, together with quarterly balance sheets (as described above) for such entity, or (ii) other collateral reasonably satisfactory to Star- Bulletin securing on a first priority basis the remaining obligations of the Partnership through fiscal 2012 to make the distributions described in Section IV(J) (i) through (iv) hereof, such collateral to have and continue to have a fair market value not less than the present value (using an 8% discount rate) of such remaining distributions.

Such guarantee or collateral shall remain in effect until such time as the net worth of Advertiser exceeds $100,000,000. If and for so long as Advertiser fails to provide and maintain any guarantee or collateral that is required by this Section VI, then all distributions of Partnership cash that would otherwise be made to Advertiser (except distributions equal in amount to Editorial Expenses incurred by Advertiser up to a maximum, for any fiscal year, equal to 120% of the budgeted amount of Editorial Expenses for such year for Star-Bulletin as determined in accordance with Exhibit A hereto) shall be deposited in a separate Partnership bank account and shall serve as collateral for the Partnership’s obligations to make distributions to Star-Bulletin pursuant to Section IV(J) (i) through (iv) hereof. The obligations of Advertiser under this Section VI shall be continuing obligations and shall be applicable on each occasion when the net worth of Advertiser falls below $100,000,000.

VII. MISCELLANEOUS PROVISIONS

(A) Certain Liabilities; Force Majeure. Except as otherwise provided in this Agreement, no party shall be charged with or held responsible for any contract, debt, claim, demand, damage, suit, action, obligation or liability arising by reason of any act or omission on the part of any other party, and no party shall be liable to any other for any failure or delay in performance under this Agreement occasioned by war, riot, act of God or the Public enemy, strike, labor dispute, shortage of any supplies, failure of supplier or workmen, or any cause beyond the control of the party required to perform, and such failure or delay shall not be considered a default hereunder.

(B) Liabilities for Published or Excluded Material. The entire cost and expense of defending, settling or paying and discharging any liability or other claim on account of anything published in or excluded from The Honolulu Advertiser, or arising by reason of anything done or omitted to be done by the editorial department of Advertiser shall be borne by Advertiser as part of its Editorial Expense; and any such cost and expense on account of anything published in or excluded from Honolulu Star-Bulletin, or arising by reason of anything done or omitted to be done by the editorial department of Star-Bulletin shall be borne by the Star-Bulletin as part of its Editorial Expense. Each such party agrees to indemnify and hold the other such party and the Partnership harmless against any cost, expense or liability which such other party or the Partnership may suffer or incur as a result of any such action or inaction for which the indemnifying party is responsible as provided above.

(C) Contravention of Law. The parties hereto mutually agree that if any part or provision of this Agreement shall hereafter become, or be determined by action in any proper court to be, in contravention of law, this Agreement shall not thereby be considered or adjudged to be a nullity, but that all parties shall, and each hereby agrees, immediately to take, or authorize such action to be taken, to reform this Agreement, or to modify, alter or supplement any of its provisions, as may be necessary to permit the intention and purpose of the parties hereto to be properly and lawfully carried out.

(D) Further Assurances. From time to time on and after the effective date hereof, each party hereto will execute all such instruments and take all such actions as the other party shall reasonably request in connection with carrying out and effectuating the intention and purpose hereof and all transactions and things contemplated by this Agreement, including, without limitation, the execution and delivery of any and all confirmatory and other instruments and the taking of any and all actions which may reasonably be necessary or desirable to complete the transactions contemplated thereby.

(E) Sale of Newspaper. Neither this Agreement nor any interest in the Partnership may be assigned by Star-Bulletin, nor may a controlling interest in the capital stock of Star-Bulletin be directly or indirectly sold or transferred, without the prior written consent of Advertiser, which will not be unreasonably withheld. Advertiser may, without the consent of Star-Bulletin, sell all or substantially all of the assets of The Honolulu Advertiser (including its interest in the Partnership) as a going concern and assign this Agreement to the purchaser thereof, or all or substantially all of the capital stock of Advertiser may, without the consent of Star-Bulletin, be sold to a purchaser thereof, so long as (i) at the time of such sale the Partnership is current in the distributions required to be made to Star- Bulletin pursuant to Section IV(J) (i) through (v) hereof, and (ii) the purchaser assumes (in the case of an assets sale) or Advertiser remains subject to (in the case of a stock sale) all of the obligations of Advertiser pursuant to this Agreement, and (iii) at the time of the sale, and after giving effect thereto, the purchaser or Advertiser, as the case may be, is in compliance with the provisions of Section VI of this Agreement. In the event Advertiser engages in an assets sale contemplated by this Section VII(E), Advertiser shall, effective on the closing thereof, be released and discharged from any further liability under this Agreement or the Partnership Agreement.

(F) Entire Agreement. This Agreement amends and restates the Mutual Agreement in its entirety. This Agreement, together with the Partnership Agreement, embodies the entire agreement and understanding of the parties and supersedes any and all prior agreements, arrangements and understandings relative to the subject matter hereof.

(G) Notices. All notices, demands and other communications which may or are to be given hereunder or with respect hereto shall be in writing, shall be given either by personal delivery or by certified or special express mail or recognized overnight delivery service, return receipt requested, and shall be deemed to have been given or made when personally delivered, when deposited in the mail, first class postage prepaid, or when delivered to such delivery service, charges prepaid, addressed as follows:

(i) If to Advertiser or the Partnership:

Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, Virginia 22209
Attention: Chief Financial Officer

or such other addresses as Advertiser or the Partnership may from time to time designate.

(ii) If to Star-Bulletin:

Liberty Newspapers Limited Partnership
215 Mountain Drive
Suite 101-102
Destin, Florida 32541
Attention: Rupert Phillips .

and to:

Douglas H. Martin
111 Center Street
Suite 2500
Little Rock, Arkansas 72201

with a copy to:

Rose Law Firm
120 East Fourth Street
Little Rock, Arkansas 72201
Attention: Jackson Farrow, Jr.

or such other addresses as Star-Bulletin may from time to time designate

(H) Captions. The captions of Articles and sections of this Agreement are for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement.

(I) Law Governing. This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware, without regard to its conflicts of laws principles.

(J) Waiver of Provisions. The terms and provisions of this Agreement may be waived only by a written instrument executed by the party waiving compliance. The failure of any party at any time or times to require performance of any provision of this Agreement shall in no manner affect the right at a later date to enforce the same. No waiver by any party of any breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver thereof or of any other terms or provision of this Agreement .

(K) Counterparts. This Agreement may be executed in several counterparts, and all counterparts so executed shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all the parties are not signatory to the original or the same counterpart.

LIBERTY NEWSPAPERS LIMITED PARTNERSHIP

By: Phillips Media Services, Inc., General Partner
By: __________________________
Title: _______________________

Hawaii Newspaper Agency Limited Partnership, being the Partnership referred to in the foregoing Agreement, hereby becomes a party thereto and agrees to perform all of the obligations therein to be performed by it and to be bound by all of the terms and provisions thereof.

HAWAII NEWSPAPER AGENCY
LIMITED PARTNERSHIP

By: Honolulu Advertiser, Inc.,
General Partner

SCHEDULE #A

For fiscal 1993, the budgeted Editorial Expenses are $5,940,418, which is the pro rata portion of $6,532,665 allocable to the period from the Closing Date to the end of fiscal 1993. Such $5,940,418 was calculated from the following components:

Payroll $4,159,581
Benefits $703,317
Pension Expense $0
FAS 106 Accrual $35,000
Employee Relocations $20,000
Wire Services $ 300,734
Management and Supervisory $58,816
All Other $662,970
Total $5,940,418

The parties acknowledge that the foregoing budget for fiscal year 1993 is subject to revision by the Partnership in order to take into account (i) any actual cash contributions for Pension Expense that Star-Bulletin is required to make during fiscal 1993, (ii) a more appropriate pro ration of $6,532,665 for the period from the Closing Date to the end of fiscal 1993, it being understood that such appropriate pro ration is likely to increase somewhat the amount of such budget, and (iii) any other adjustments contemplated by this Schedule A.

For fiscal 1994, the budgeted Editorial Expenses shall be an amount determined by the Partnership after one or more meetings with Star-Bulletin toward the end of fiscal 1993 during which the actual 1993 experience of Star-Bulletin with respect to Editorial Expenses, and any necessary or desirable adjustments to the 1994 budget for Editorial Expenses, are discussed and considered in good faith.

In addition:

(a) For each fiscal year after 1994, those portions of the Payroll and Benefits components of the budget that are governed by a collective bargaining agreement shall be adjusted to reflect the applicable terms of that agreement, provided, however, that such adjustment shall be limited to reflect changes in average hourly rates that do not exceed corresponding changes in any similar collective bargaining agreement to which Advertiser is a party.

(b) For each fiscal year after 1994, those portions of the Payroll and Benefits components of the budget that are not governed by a collective bargaining agreement shall be adjusted from the prior year’s budget to reflect the most recent annual change in Advertiser’s average hourly rates for non-union payroll and non-union benefits, respectively.

(c) For each fiscal year, the Pension Expense component of the budget shall be the actual cash contributions required to be made for the applicable fiscal year, and shall not include, nor shall the budget be charged with, any non-cash accrual or credit for pension expense that may be required; in addition, the calculation of the amount of actual cash contributions for any fiscal year shall be made on the basis of actuarial assumptions that are reasonably acceptable to the Partnership and that are designed to eliminate any overfunding of the applicable pension plans over a period of time reasonably acceptable to the Partnership, and Star-Bulletin shall cause the assets of its pension plans to be invested in a sound and prudent manner in investments that are reasonably acceptable to Advertiser.

(d) For each fiscal year, the FAS 106 Accrual component of the budget will be determined on a basis reasonably satisfactory to the Partnership that is designed to phase in the required accrual for future post-retirement benefits over the twenty year initial term of the Mutual Agreement; provided that the FAS 106 Accrual component of the Editorial Expense budget for any fiscal year shall not include the amount of cash expended for such fiscal year in order to pay or fund the benefits related thereto. Such cash payments shall be charged to the FAS 106 liability account.

(e) For each fiscal year, the Partnership will determine the Employee Relocations component of the budget in good faith and after due consideration of the anticipated needs and circumstances of Star-Bulletin.

(f) For each fiscal year, the Wire Services component of the budget shall be the actual contractual cost for the applicable fiscal year of wire services that are substantially the same as those in effect on the date of this Agreement;

(g) For each fiscal year, the Management and Supervisory component of the budget will be determined as provided in Section IV(H) (iv) (in) .

(h) For each fiscal year after 1994, the All Other component of the budget shall be adjusted from January 1, 1993 in accordance with the U.S. all items Consumer Price Index for All Urban Consumers (1982-84-100), or in accordance with a successor index thereto.

(i) For each fiscal year that is a 53 week year, appropriate adjustments will be made to reflect the additional week in such year.

In addition, the Partnership shall from time to time make such adjustments to any budget for Editorial Expenses to appropriately reflect the cost impact of any permanent reduction in Star-Bulletin’s editorial work force, to reflect any increase in Star-Bulletin’s editorial work force that the Partnership deems necessary in light of future developments in products or technologies, to appropriately reflect the costs of job positions which have been unfilled for a temporary but unusual and excessive period of time, and (subject to the proviso in (a) above), to reflect the cost impact of any collective bargaining agreement entered into during the course of a fiscal year.

If, for any fiscal year, the Editorial Expense budget is greater than the distributions required to be made by the Partnership pursuant to Section IV(J) (ii), then such excess (up to a maximum of 3% of such budget, in the case of the 1993 budget, and up to a maximum of 2% of such budget, in all other cases) shall be added to the subsequent year’s budget.

If, for any fiscal year, actual Editorial Expenses are greater than the Editorial Expense budget, then such excess (up to a maximum of 3% of such budget, in the case of the 1993 budget, and up to a maximum of 2% of such budget, in all other cases) may be charged against the subsequent year’s budget, but such subsequent year’s budget shall not be increased as a result.

SCHEDULE B

1993: $60,801,826
1994: $63,841,917
1995: $67,034,013
1996: $70,385,714
1997: $73,905,000
1998: $77,600,249A
1999: $81,480,262
2000: $85,554,275
2001: $89,831,989
2002: $94,323,588
2003: $99,039,768
2004: $103,991,756
2005: $109,191,344
2006: $114,650,911
2007: $120,383,456
2008: $126,402,629
2009: $132,722,761
2010: $139,358,899
2011: $146,326,844
2012: $153,643,186

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