Documentation

~.'' . ~ ...... ,, ..... , ' .

Court File No. CT90/1 THE COMPETITION TRIBUNAL IN THE MAT IER of an application by the Director of Investigation and Research for orders pursuant to section 92 of the Competition Act R.S.C. 1985, c. C-34,

AND IN TIIE MAT IER of the direct and indirect acquisitions by Southam Inc. of equity interests in the businesses of publishing The Vancouver Courier, the North Shore News and the Real Estate Weekly BETWEEN: - and -SOUTHAM INC., LOWER MAINLAND PUBLISHING LTD., RIM PUBLISHING INC., YELLOW CEDAR PROPERTIES LTD., NORTII SHORE FREE PRESS LTD., SPECIALTY PUBLISHERS INC., ELTY PUBLICATIONS LTD.

Respondents

DRAFT ORDER VARYING CONSENT INTERIM ORDER IBIS APPLICATION by the Respondents pursuant to section 106 of the Competition Act R.S.C. 1985, c. C-34, as amended, for an Order varying the Consent Interim Order dated March 18, 1991 as corrected by Order dated March 22, 1991 was heard this day at the Federal Court of Canada, 700 West Georgia Street, Vancouver, British Columbia.

Visitors\REK\Order I

COMPETITION TRIBUNAL TRIBUNAL DE U CONCUARENCE F p I R NOV 11 l''f1:. ;J 8 1 0 D AE"CllSTRAR • REGJST~ . u I T Applicant

- 2 -ON READING the Notice of Application dated November 10, 1992 and on hearing the submissions of counsel for the parties;

THIS TRIBUNAL ORDERS THAT: 1. The Consent Interim Order (the "Order") shall be and the same is hereby varied to provide that notwithstanding the terms of the Order:

(a) Lower Mainland Publishing Limited ("LMPL") shall be permitted to implement the plan of reorganization appended as Appendix "A" hereto. Without limiting the generality of the foregoing:

(i) LMPL shall be permitted to appoint Sam Grippo as Chief Executive Officer, to replace David Perks;

(ii) LMPL shall be permitted to appoint John Collison ("Collison") as Chief Operating Officer, with supervisory responsibility for the businesses controlled by LMPL, including the businesses of publishing the North Shore News, the Vancouver Courier and the Real Estate Weekly, provided that Collison will exercise no supervisory or management responsibility in respect of the "Homes" real estate advertising supplement to the North Shore News; and

(iii) Collison will be permitted access to all confidential business information in respect of the businesses owned by LMPL, including the North Shore News, the Vancouver Courier and the Real Estate Weekly necessary to the performance of his duties as Chief Operating Officer, provided that Collison shall neither directly or indirectly

Visitors\REK\Order

- 3 ­disclose to Southam or its affiliates, other than LMPL, any confidential business information in respect of the North Shore News, the Vancouver Courier or the Real Estate Weekly and further provided that Collison shall not have access to any confidential business information in respect of the "Homes" real estate advertising supplement to the North Shore News;

(b) LMPL shall be permitted to implement an Employee Stock Ownership Plan which will enable qualifying LMPL employees to acquire, in the aggregate, up to 20% of the common equity of LMPL upon such terms as LMPL shall determine in its sole discretion;

Visitors\REK\Order

........... to . J ._ -0 .. 9 .. -.. 1 992 0 1 3:03 FRCJ1 TD 86046313309 P.11 APPENDIX '!A" LMPL LOWER MAINLAND PUBLISHING LIMITED

Attach•ent l'. LOWBR HAIIJLABD PUBLXSBIIG LTD. Proposed Board, organization • Operating Structure ------------·························----·-······· ROABD or PIBICTQBS -coaposed of 5 or .6 persons -suau••t P~rks., Hills & Lambert fron Southa•: Grippo and Colli~o·n from· MVC -:-edd an eaployee representative when 1 shares are is•u•d? · t. MEETINGS OF DIRECTORS -se•iannual (schedule to be set to eonforw to travel sohedul•• o! South•• r@pr•B~"t~t.ives) -can sched\lle aore, if required -eostB ar• share.holders• costs (no eo•penBation) pyTIE! -•et polioY ~ 4ireot1on -reviev ov o e f r all re•ults of operationa -approval major expenditures & co••i~•ents -upprove~ senior •ane9emcnt oomp•ncation -will for• .. c:o•11ittee1, if needed. Cbange5 fro• the Status Quo ~he chan~•• here are to give ad41~ional representation to Southa•, to use the Board as a policy settin9 vehicled, have it revisw overall operations, and perfor• ~Leward•hip functiona for the shareholder•. 1970 Albcm St~er ''Vltnc1>11~. e.c. Can.la ~y lX~

Sl4 87Ul~5 l'llll: ~ 87}-'f'~' • • • • • • • • • • • • • • . . . . . . . . . Pave 1·. of ' NOV 9 '92 8:58 PAGE.01f

tor09-1992 13:04 FRa1 .. ... . ~ .._ _ :... ~ ·:·, .. ·~. .. . . :.,: \ :. . . . £HAIRMAB or THE B061JQ - fl!'! -southa• to appoint, (we assuae -DWP) -Duties1 -non-executive position -inT.erfaoe V1th eout.h·aa, BO LMPL operat..in9 strat;.e.g1es are not in eonf liot with SJfG. -open & maintain ~lear eo••unication ohann•ls with 8RG. -continues co••unication between shareholder• repreeentat1ves. -prot•cts the lndepend~nce of LKPL -aaintain eontact with PP -alert for aatual cost savings. ~general business and industry knowledge input -coapensa·tion for the pos1 t1on· based Sava9e review. -Short term Pro11gt1 -contact with Co•petitton Bureau -dealing with Courier & Worth Shore Hews res organization -Meetings -will chair Board Of Directors aeetings -attenc!ance at· selected operating co1111i ttee aeetin9s -travel costs to be reiabursed. -Transitional over the near tera to assist in coapleting projects. Chanqe s from th,t.. •S ~atus Ouo In the past, a.cquisitio~s, le9aliti~• and •trate9y of dealing ~1th the Co•petition Bureau/Tribunal. been the l~aison between LKPL and Speckr Hager and Ballard. The t1ae required activities in the future will be although designated CBO, 1t has been iapQssible for n~ve to, in fact, act as B~ch given where his h~ae ··base of interests are and where iLMPL is. NOV 9 '92 8:58

TD 86046313309 P.12 , .. ~. . . . .. .. . : ~ .. ':: : ·:· . ..: . . :· .. , .. •. . '"· . • .... upon . David ba$ b••n involved in He also ha~ t.o be spent on the.se. leeff.. · Also, Paqe 2 of 6 PAGE.012

toJ-09-1992 13:04 FRCl1 TD 86046313309 P.13 .... ··· :·:. .... ,. . . ~ . '":' ... . :" . . _. .•, : .. ·. .. ·.. .· .• ..· _: .. ·····".: . •·.. .. . .. . ... · · .. ':.:: ·. . ':. ~-: .. .· ._., .... ·..· .. :. ·~ .... . : .: .: .: ... ·";' ·.·.··_'.; ':-.· • • • • ' ," '.' '•' • .~ ',: ~' 0, I: : •,: •• • •, ' ' ; Cijl§K_flBCVTIV! orrICEB - GJtlffO -i11pleaent policy, liaison between Board & operations -1on9~ter11 planntnv --coapensation -ecquisitions & projeate -contact wi-th •ember• .of the industry -approv•ls of coaaitaents · -sounding board -real estate. (short~t•r• project of particular expertise) -shareholder coaaunicat.ion Changes fro• the Status Quo In the past,, Saa has been fulfillin9 the1e tasks,, •a well a1 exte-n1ivel"y being involved with the Coapetition Trib~nal/Bureau. The n•w task of liason between Board and operations would flow fro• the designation as CEO. . ......... . ' ... . . . . . . - . . . . . . . . . . . . . . . NOV 9 '92 8:59 PAGE.013

tnr09-1992 13:05 FR01 TD 86046313309 P.14 . :.. . :. ·. . ·· .· ·.. ":~ .... •', SHIE[ 2flRAtIIG gptlSIB - SPLLJSO! -eontrol and co-ordination of all t.h• operacing divisions -•arke't. &: prod.uci:. ena.1ya1s, aev proauc:t. aevelopaent. .-technolo9ical developaent -personnel -labour -policies & procedures Changes fro1 the Status Quo John·has been operatinq the REW, and as well )la.s provided the above servioes in the past. · Before · .. the foraation of LHPL, John was the chief operatinq officer of the •Madison• papers. He wae heavily involved in .preparation for the Co11petition hearing. Defacto, he ha• been chief operating officer of LMPL before the hold separate order was issued. We hited Rick O' Connor to fill t·he newspaper operations role. last July. The changes in John• s duties e.nta11 .... having t~.e Courier a.rid .I .s. News report to hill,, rather than to the Chairman. Although· tbia reporting· strueture aay appear to be a radical chan;e,lt ·1e really a formalization of what really aust 90 on at levels below·the publishers. As you .know neither of t·hese publirihers are physically at theae papers •ore than about a third of the ti••· NOV 9 '92 8:59 PAGE.014

to.>-09-1992 13:05 FRCl1 TO 86046313309 P.15 SHIBF FIWAN~Lftk OFFI£!R - Ap!GBR -f inanee -financial & opera~1D9 repor~ing -taxation -acquisiticrl\s -legal -systems pl•nning -credit policies -capital, operatin9 & 1ong-ter11 pl.anning -shareholders con•unication -adainistration -liaison with investaents -corporate secretary ,, -projects · · •• ~hanges frgi! the Stat.'1..UY.Q. There are no 1ubstantiative changes in assigned dut..i 11111 involve•ent with Co•peti tion issues will disappear. . .. . . . . . . . . . . . . , . . . . . . . . . . - . . . • P11cr-- s of.6 NOV 9 '92 9:00 PAGE.015

t-OJ-09-1992 13=06 FRCtl TD 86046313309 P.16 OfERATIJIG COMMITTIE Conposition -Perks~ Grippo. Collison, Aunger, o•connor, Speck, Balla·rd

Duties -forua.for a4dresa1n9 co-ordination i••ues -e•ployin; vroup resources -raising of issues -tea11 t>uilding -avenue for SRG t.o CJ&in a better understandinq of operations and .appraisal ofc personnel. .. operatin9 Meetings -•eets:every six weeks to eigbt weeks -atQncUng :ln'\t'it.ation to Board Me•bttrs to attend, if they are i~ Vancouver, otherwi••• -if necessary, •eetings can be scheduled for Board:. Keabere.

Change~ f roa the Stat~§ Ouo -frequency of •act.luCJ'lf -invi tat.ion to . . . . . .. . . . . . NOV 9 '92 9:00

Board meabers to at1:.enc2 • 7 . • :. Page 6 of 6 PAGE.016

toJ-09-1992 .13 =06 FRCJ'I TO 86046313309 P.17 -~ LMPt··· " . . .... ·. .. ':.. .·, LOWER MAINLAND PUBLISHING LIMITED

Planning for Hanageaen:t Cont1nu1 ty at the Courier And lort.h Shor• •ews · ························-------··-····-············--------(1) Peter Ballard and Phil Hager have e•plo~ent con~racts with the Courier which ezpire in May of 1993. Ar~an9eaents ehould be established now with the• as to their positions and continuing e•ployaent relationship. Their salaries should be adjusted to reflect that there are two co-publishers ina~ead of one. A level of 69\ each of the publishers salary, based UP.Qn Savage's r~r.n••And~~ionft,· Bppears"to be appropriate. ~ Their present vacation allot•ent is i w.eeks which can be continued~· 'How•v~rr · '-'S wt th t.h._ pr•••nt cont·ract, they should not ·take vaca't1ontJ at t.he sa11e ti•e. We exp•ct under the new ~rra~g•••nts each of t~PM would undertake a •ore active role in the day to day operations of th@ Courier. The new arrangeMents will be effective in Hay 1993. The new arrangem•nts should initially be for a one-year ter• ao that the· •ituation aan be evaluated. (2) Peter Speck is publisher of 'l'hc N. s .. 114!,,11. We understand that at most be works three or four half days per week, but draws a substantial fee and expenses. Peter's duties should be spelled out so that he is paid according to the t~me he 18 present at the job. There should be a transitional period of two years while Peter remains the publisher. During this period, the posting an~ h1r1ng of an asBucl~~e publi5her will be co•Pleted. Peter will train and guide this person to succeed as publisher.

After the t~o year period, the intention ~ould be tor Peter to re•~in on a consulting baais to LHPL, and ~ola .. the posi t:1o,. o'f publiBher e•~rltu~ of N. s. Ne"•· 1970 ~ Stttft Vancouftr, '8.C.. C"'AMda V5Y 3X4 «14 S72.SJ55 Page 1 of l h111 61>4 872~'61 NOV 9 '92 9:01 PAGE.017

t-O.r09-1992 13:07 FRCJ1 OROANIZATJONALALTERNATNES A. Senior Mangement 1. .......__,__. ........ __ _. - ntlWnnGRa -8)/fdng cperallonl'--__...._._ ____ . Business fJn/tS

V.P. Finance & 'st111t/0r1

NOV 9 '92 9:01 PAGE.018

TD 86046313309 P.18 ·long,.,,,. d1lfagy EncutJve V.P. linn:e ··'I. oorpcnta &A dminiStlaliOn auppott Melons

to.>-09-1992 13:07 FRCl1 ( . ): s. &usinees untt sncture 1. froduct/Set'Ylce Group Driv9n. I V.P. V.P. Speolall.y Comnllnity Publicaions ~

- Ven Net Publ/SherS *· 2. Size Orlven ' ... I I I I I I V.P. \!P. VJ? V.P.. V.P. VJ! REW HSN ~ NOWS Dl8t1ibutfOn Prlnlin(J . ~· . . . . r . . . . . . . . . I . .. . . , • I . I VMNt!tt etc. I : .f. PUblishets .. ··--- ..... ··- ·-·-··-··· ··--···-· ·-· ···--··--···- ··-·-··---· ···--- ·····---·· NOV 9 '92 9:01 PFIGE.019

TD 86046313309 P.19 ' .. . I. I v.P. ~ Dl!tributlon Prinling ·~