Opinion ID: 2576158
Heading Depth: 1
Heading Rank: 12

Heading: agency expense

Text: B.1 Agency Expense  Elements. The term Agency Expense as used in this Agreement shall mean and include all expenses of carrying out Times' obligations under this Agreement and in producing, promoting and distributing the Newspapers and their contents. Agency Expense shall include, but without limitations: B.1.1 Costs and expenses incurred by Times in printing, selling and distributing the Newspapers, in soliciting and selling advertising space in the Newspapers, in collecting the circulation and advertising accounts receivable of the Newspapers, and in write-offs of receivables or providing a reasonable allowance for doubtful receivables; B.1.2 Compensation, including, but without limitations, retirement, health, death and other fringe benefits, workers' compensation coverage and group insurance of Times' non-news and non-editorial employees; B.1.3 Severance pay of Times' non-news and non-editorial employees; B.1.4 Non-news and non-editorial executive, administrative and promotional expenses; provided, that salary of Times' personnel and related expenditures shall be includable as long as such person's duties are primarily devoted to Agency matters; B.1.5 Costs and expenses incurred by Times in keeping records necessary and incidental to said operations, and in preparing and rendering statements as required under the terms of this Agreement; B.1.6 A monthly charge for rental value of all Times' real property except that devoted to non-Agency activities such as Times news and editorial operations. The charge shall be based on the historical cost of such property and improvements and of further additions and improvements thereto (after having given effect to deductions for depreciation or amortization taken by the Times for financial statement purposes and after having deducted the amount of investment tax credit actually used by Times in its federal income tax returns in regard to such real property and improvements). The monthly charge shall be computed on the first day of each month and shall be one-twelfth (1/12) of a rate equal to the prime rate for the best commercial customers of Seattle-First National Bank in effect on the last day of the previous month, applied to the net book value as of such last day (after having given effect to deductions for depreciation or amortization taken by the Times for financial statement purposes and after having deducted the amount of investment tax credit actually used by Times in its federal income tax returns in regard to such real property and improvements) of such real property. B.1.7 A monthly charge for the working capital of Times, computed as follows: The monthly charge shall be computed on the first day of each month and shall be one-twelfth (1/12) of a rate equal to the prime rate for the best commercial customers of Seattle-First National Bank in effect on the last day of the previous month, applied to Times' net working capital as of such last day, determined in accordance with generally accepted accounting principles. B.1.8 A monthly charge for a return on investment in machinery, equipment and other personal property (excluding inventory and any other personal property included in working capital as defined in Section B.1.7) provided by Times and used in Agency operations. The monthly charge shall be computed on the first day of each month and shall be one-twelfth (1/12) of a rate equal to the prime rate for the best commercial customers of Seattle-First National Bank in effect on the last day of the previous month, applied to the net book value as of such last day (after having given effect to deductions for depreciation or amortization taken by the Times for financial statement purposes and after having deducted the amount of investment tax credit actually used by Times in its federal income tax returns in regard to such machinery, equipment and personal property) of such machinery, equipment and other property (excluding any items used in news and editorial operations such as typewriters, video terminals and news editing systems). B.1.9 A monthly charge for depreciation. Depreciation shall be computed on a straight-line basis based on the historical cost of machinery, equipment and other depreciable personal property of Times used in non-news and non-editorial agency operations hereunder. The cost of all additions to machinery, equipment and other depreciable personal property used in Agency operations after the Effective Date shall be depreciated on a straight-line basis over the estimated useful life of such equipment as determined by the Times, and such depreciation shall be charged monthly to the Agency. B.1.10 All sales and use taxes on equipment and personal property purchased for use by Times in or otherwise applied to newspaper operations under this Agreement to the extent that such taxes are not capitalized for purposes of depreciation or amortization; B.1.11 All taxes or license fees paid by Times with respect to or resulting from the conduct of business under this Agreement or with respect to property used by Times in the operations under this Agreement, except Federal taxes, and state and local taxes if any, measured by net income; B.1.12 Charitable or business contributions by Times, deductible for federal income tax purposes, to charitable organizations or business promotional organizations. Charitable contributions hereunder (excluding contributions in kind to charitable organizations) shall not exceed a maximum of 2% of projected Agency operating profit after deducting projected news and editorial costs of Times and an amount equal to such Times costs multiplied by the ratio of the number of P-I news and editorial employees to Times news and editorial employees as of January 1 of the year in question, which number shall be supplied by Hearst to Times. On all such charitable contributions, appropriate credit shall be given to both parties. Times may make charitable contributions beyond the 2% limitations which will not be considered Agency Expense. B.1.13 The cost of initiation fees and periodic dues for Times non-news and non-editorial executives in business related social clubs such as the Rainier Club and the Washington Athletic Club; the cost of two memberships (i.e., initiation fees and periodic dues) in business related social clubs such as the Rainier Club and the Washington Athletic Club for P-I non-news and non-editorial executives; provided that Hearst may designate the same executive to hold both such memberships. B.1.14 The cost of membership for Times in the Better Business Bureau, Seattle Chamber of Commerce, and other business-oriented memberships which shall be determined by Times to be in the best interests of the Agency; B.1.15 The cost of Times and P-I membership in the Bureau of Advertising, Allied Daily Newspapers and American Newspaper Publishers Association; provided, that in regard to Bureau of Advertising membership, the P-I can be designated as a member thereof without any increase in dues which otherwise would be payable for Times membership alone; in the event that an amount of additional dues shall be required for such P-I membership, Hearst shall pay such additional dues if it shall elect to effect or maintain such membership. B.1.16 The cost of public liability insurance and insurance against interruption or suspension of publication of the Newspapers, and the cost of libel, privacy and related insurance covering advertising printed in the Newspapers. Insurance costs relating to the news or editorial activities of the Seattle Times or the P-I shall not be considered Agency Expenses and such costs shall be borne separately by the parties; provided, that each party shall attempt to add the other as an additional named insured under such insurance, but Times may procure libel, privacy and related insurance to cover any otherwise inadequately insured exposure it may have as republisher of P-I news, editorial or advertising copy, and the cost of such additional insurance shall be Agency Expense; B.1.17 Costs and expenses incurred by Times in obtaining legal and other professional services which it deems necessary in performing its obligations under the Agreement, including but not limited to the costs and fees related to any defense against third party claims, charges, complaints and related matters asserted against the Times related to the Agreement or such performance; provided, that such costs and fees related to news and editorial liabilities as defined in Section 6.1 shall not be Agency Expense, except insofar as such liabilities are asserted against Times solely due to its republication of P-I news, editorial or feature material; B.1.18 Settlements, liabilities and other costs related to the matters described in Section B.1.17, above, except as limited in Section 6.1; B.1.19 Any cost sharing agreed by the parties to be assignable to Agency Expense under Section 1.1; B.1.20 Promotional expenses for circulation, advertising and company promotion (excluding news and editorial promotion expenses) as defined in Section 3.1; B.1.21 The cost of advertising supplements, defined as purchased supplements which include both news and advertising content over which neither newspaper has control of news content; and B.1.22 Interest on loans for the purpose of carrying on Times' non-news and non-editorial operations under the Agreement, to the extent interest on such loans exceeds the then prime rate as specified in Section B.1.8. B.1.23 Effective on the Newspaper Cessation Date, should such date ever occur (and only on and after such date), any limitations of expenses to non-news and non-editorial expenses as outlined in paragraphs B.1.1 through B.1.22 of this Appendix B or in the body of the Agreement itself shall terminate, and all expenses incurred by the Continuing Newspaper for news and editorial purposes, including those expenses meeting the guidelines set forth in Appendix C to the Agreement, shall be included in Agency Expense thereafter.