<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - - --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - - --- EXCHANGE ACT OF 1934
For the transition period from to
------------ -------------
Commission File No. 1-8911
TURNER BROADCASTING SYSTEM, INC.
- - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-0950695
- - - -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
One CNN Center
Atlanta, Georgia 30303
- - - -------------------------------- ------------------------------------
(Address of principal (Zip Code)
executive offices)
(404) 827-1700
- - - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class September 30, 1994
- - - ------------------------------- ---------------------------
Class A Common Stock, par
value $0.0625 68,330,388
Class B Common Stock, par
value $0.0625 137,347,470
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
------------ ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,404 $ 162,858
Accounts receivable, less allowance of
$28,252 and $23,083
Unaffiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492,766 378,228
Affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,208 94,011
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518,776 314,637
Installment contracts receivable, less
allowance of $12,595 and $11,915 . . . . . . . . . . . . . . . . . . . 51,500 56,563
Prepaid expense and other current assets . . . . . . . . . . . . . . . . . 70,396 68,196
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 1,269,050 1,074,493
Film costs, less current portion . . . . . . . . . . . . . . . . . . . . . 1,689,139 1,633,731
Property and equipment, less accumulated
depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285,554 225,228
Installment contracts receivable, less
discount of $226 and $1,123 . . . . . . . . . . . . . . . . . . . . . 3,477 15,077
Goodwill and other intangible assets . . . . . . . . . . . . . . . . . . . 407,686 111,202
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,700 185,131
----------- -----------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,829,606 $ 3,244,862
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . $ 247,063 $ 168,975
Deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94,138 106,496
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,673 28,808
Participants' share and royalties payable . . . . . . . . . . . . . . . . . 53,438 33,922
Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,465 32,128
Film contracts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 35,486 28,096
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . 1,315 2,051
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 62,246 13,432
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 598,824 413,908
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . 2,371,399 2,294,557
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 378,471 395,668
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . 160,429 141,832
----------- -----------
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . 3,509,123 3,245,965
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) . . . . . . . . . . . . . . . 320,483 (1,103)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,829,606 $ 3,244,862
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE> 3
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -----------------------
1994 1993 1994 1993
------------- ----------- ------------ ----------
Revenue
<S> <C> <C> <C> <C>
Unaffiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 625,527 $ 420,373 $1,674,270 $1,117,237
Affiliated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,362 80,916 309,570 269,337
---------- ---------- ---------- ----------
738,889 501,289 1,983,840 1,386,574
---------- ---------- ---------- -----------
Cost of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 466,756 288,584 1,266,844 716,618
Selling, general and administrative . . . . . . . . . . . . . . . . . . . 166,947 130,382 498,393 388,754
Gain on sale of equity investment . . . . . . . . . . . . . . . . . . . . - - (21,746) -
Depreciation of property and equipment and
amortization of goodwill and other
intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . 16,077 9,630 43,186 27,395
Interest expense, net of interest income . . . . . . . . . . . . . . . . 52,425 48,271 157,801 138,205
Equity in loss of unconsolidated entities . . . . . . . . . . . . . . . . 1,572 12,745 5,435 16,442
---------- ---------- ---------- ----------
703,777 489,612 1,949,913 1,287,414
---------- ---------- ---------- ----------
Income before provision for income
taxes, extraordinary item and the cumulative
effect of a change in accounting for
income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35,112 11,677 33,927 99,160
Provision for income taxes. . . . . . . . . . . . . . . . . . . . . . . . 14,729 4,523 14,249 40,800
---------- ---------- ---------- ----------
Income before extraordinary item and the
cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . 20,383 7,154 19,678 58,360
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . . (24,996) (6,136) (24,996) (6,136)
---------- ---------- ---------- ----------
Income (loss) before the cumulative effect of a
change in accounting for income taxes. . . . . . . . . . . . . . (4,613) 1,018 (5,318) 52,224
Cumulative effect of a change in accounting for
income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - (306,000)
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . $ (4,613) $ 1,018 $ (5,318) $ (253,776)
========== ========== ========== ==========
Earnings (loss) per common share and common stock
equivalents
Income before extraordinary item and the
cumulative effect of a change in accounting
for income taxes. . . . . . . . . . . . . . . . . . . . . . . . $ 0.07 $ 0.02 $ 0.07 $ 0.22
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . (0.09) (0.02) (0.09) (0.02)
Cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . - - - (1.16)
---------- ---------- ---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . $ (0.02) $ 0.00 $ (0.02) $ (0.96)
========== ========== ========== ==========
Weighted average number of common shares
outstanding, including conversion of common
stock equivalents, when dilutive . . . . . . . . . . . . . . . . . . 282,532 264,574 280,994 264,239
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
3
<PAGE> 4
TURNER BROADCASTING SYSTEM, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------
1994 1993
------------- -------------
<S> <C> <C>
Cash provided by operations before changes
in film costs and liabilities, net, interest payments,
payments of accreted amounts, and debt issue costs . . . . . . . . . . . . . $ 146,740 $ 315,951
Change in film costs and liabilities, net
Purchased program rights . . . . . . . . . . . . . . . . . . . . . . . . . 65,008 56,042
Produced programming . . . . . . . . . . . . . . . . . . . . . . . . . . . (87,818) (29,944)
Licensed program and distribution rights . . . . . . . . . . . . . . . . . 8,744 (3,221)
Interest payments, net of interest received . . . . . . . . . . . . . . . . (134,107) (83,647)
Payment of accreted amounts upon redemption of
related securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . - (74,683)
Debt issue costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,705) (12,334)
---------- ----------
Net cash provided by (used for) operations . . . . . . . . . . . . . . . . . . . (10,138) 168,164
---------- ----------
Cash provided by (used for) investing activities
Sale of equity investment . . . . . . . . . . . . . . . . . . . . . . . . . 107,978 -
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (146,097) (24,552)
Additions to property and equipment . . . . . . . . . . . . . . . . . . . . (80,825) (31,383)
---------- ----------
Net cash used for investing activities . . . . . . . . . . . . . . . . . . . . . (118,944) (55,935)
---------- ----------
Cash provided by (used for) financing activities
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609,610 297,371
Payments of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (576,346) (304,759)
Payments of cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . (9,802) (9,193)
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . 1,166 7,026
---------- ----------
Net cash provided by (used for) financing activities . . . . . . . . . . . . . . 24,628 (9,555)
---------- ----------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . (104,454) 102,674
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . 162,858 126,256
---------- ----------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 58,404 $ 228,930
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,359 $ 13,729
Dividends declared but unpaid . . . . . . . . . . . . . . . . . . . . . . . . . . 4,901 4,606
The Company acquired New Line Cinema Corporation and assumed and incurred liabilities as of January 28, 1994 (in thousands) as
follows:
Fair value of assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . $ 667,600
Less: common stock issued or issuable . . . . . . . . . . . . . . . . . . . . . . 416,700
Less: cash paid for debt and other acquisition costs . . . . . . . . . . . . . . 139,600
----------
Liabilities assumed and incurred . . . . . . . . . . . . . . . . . . . . . . . . $ 111,300
==========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 5
TURNER BROADCASTING SYSTEM, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1. PREPARATION OF INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed financial statements included herein have
been prepared by Turner Broadcasting System, Inc. (the "Company")
pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of management, the accompanying consolidated
condensed financial statements contain all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of such financial
statements. Although certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, management believes that the disclosures are adequate to make the
information presented not misleading. For further information, reference is
made to the consolidated financial statements and the notes thereto in the
Company's Form 10-K for the year ended December 31, 1993.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
NOTE 2. FILM COSTS
The following table sets forth the components of unamortized film
costs (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
----------------- -----------------
<S> <C> <C>
Purchased program rights . . . . . . . . . . . . . . . . . . . . . . . $ 1,119,110 $ 1,172,921
Produced programming
Released . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287,581 166,768
Completed and not released . . . . . . . . . . . . . . . . . . . . . 48,216 17,654
In process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297,850 153,630
Episodic television . . . . . . . . . . . . . . . . . . . . . . . . 102,640 89,077
Licensed program and distribution rights . . . . . . . . . . . . . . . 242,751 231,385
Prepaid licensed program rights . . . . . . . . . . . . . . . . . . . 109,767 116,933
-------------- -------------
2,207,915 1,948,368
Less current portion . . . . . . . . . . . . . . . . . . . . . . . . . 518,776 314,637
-------------- -------------
$ 1,689,139 $ 1,633,731
============== =============
</TABLE>
Episodic television includes serial television program costs. Prepaid
licensed program rights represent licensed program rights for which payments
have been made but the programming is not currently available for use. As
these programs become available for use they are reclassified to licensed
program rights.
On the basis of the Company's anticipated total gross revenue
estimates, over 80% of released and episodic television produced programming
costs at September 30, 1994 will be amortized within the three-year period
ending September 30, 1997.
Amortization of film costs included in Cost of Operations is composed
of the following (in thousands):
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------------ ----------------------------
1994 1993 1994 1993
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Purchased program rights . . . . . . . . . . . . . . $ 22,226 $ 18,975 $ 66,565 $ 56,834
Produced programming . . . . . . . . . . . . . . . . 249,965 110,029 627,480 234,432
Licensed program and distribution
rights . . . . . . . . . . . . . . . . . . . . . 19,100 17,640 58,281 52,336
Participants' share and royalties . . . . . . . . . . 13,831 10,555 37,230 25,566
------------- ------------- ------------ -------------
$ 305,122 $ 157,199 $ 789,556 $ 369,168
============= ============= ============ =============
</TABLE>
5
<PAGE> 6
NOTE 3. EARNINGS (LOSS) PER COMMON SHARE AND COMMON STOCK EQUIVALENT
Net income (loss) per common share and common stock equivalent is
computed by dividing net income (loss) applicable to common stock by the
weighted average number of outstanding shares of common stock and common stock
equivalents, when dilutive, during the applicable periods in 1994 and 1993.
Common stock equivalents are principally the incremental shares associated with
the Class C Convertible Preferred Stock (the "Class C Preferred Stock") and the
outstanding stock options. Fully-diluted income (loss) per share amounts are
similarly computed, but include the effect, when dilutive, of the Company's
other potentially dilutive securities. The Company's zero coupon subordinated
convertible notes and the convertible subordinated debentures of a wholly-owned
subsidiary are excluded from the fully-diluted calculations of net income
(loss) per common share for the three-month and nine-month periods ended
September 30, 1994 and 1993 (when applicable) due to their anti-dilutive
effect. The difference between the primary and fully-diluted earnings per
share is not significant. Per share extraordinary items include an after-tax
charge for early extinguishment of debt in 1994 and 1993. See Note 4 of Notes
to Consolidated Condensed Financial Statements.
NOTE 4. LONG-TERM DEBT
Long-term debt is summarized as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
-------------------- ----------------
<S> <C> <C>
Bank credit facilities . . . . . . . . . . . . . . . . . . . . $ 810,000 $ 1,225,000
12% senior subordinated debentures . . . . . . . . . . . . . . 536,967 536,732
8 3/8% Senior Notes . . . . . . . . . . . . . . . . . . . . . 297,367 297,325
Zero coupon subordinated convertible notes . . . . . . . . . . 241,237 228,688
7.4% Senior Notes . . . . . . . . . . . . . . . . . . . . . . 249,630 -
8.4% Senior Debentures . . . . . . . . . . . . . . . . . . . . 199,845 -
Convertible subordinated debentures of
a wholly-owned subsidiary . . . . . . . . . . . . . . . . . . 29,075 -
Obligations under capital leases . . . . . . . . . . . . . . . 7,195 6,353
Other long-term debt . . . . . . . . . . . . . . . . . . . . . 1,398 2,510
------------ -----------
2,372,714 2,296,608
Less current portion . . . . . . . . . . . . . . . . . . . . . 1,315 2,051
------------ -----------
$ 2,371,399 $ 2,294,557
============ ===========
</TABLE>
On May 6, 1993, the Company filed a shelf registration statement with the
Securities and Exchange Commission (the "Shelf Registration") to allow the
Company to offer, from time to time, for sale up to $1,100,000,000 of unsecured
senior debt or unsecured senior subordinated debt securities, consisting of
notes, debentures or other evidences of indebtedness.
On February 3, 1994, the Company sold $250,000,000 of 7.4% Senior Notes
due 2004 (the "Senior Notes") and $200,000,000 of 8.4% Senior Debentures due
2024 (the "Senior Debentures" and, together with the Senior Notes, the
"Securities") under the Shelf Registration. The net proceeds to the Company
were approximately $246,282,000 and $196,680,000, respectively, after market
and underwriting discounts. The Senior Notes and Senior Debentures bear
interest at the rates of 7.4% and 8.4% per annum, respectively, payable
semi-annually on February 1 and August 1 of each year, commencing on August 1,
1994. The Senior Notes are not redeemable at the option of the Company. The
Senior Debentures are redeemable,
6
<PAGE> 7
at the Company's option, at any time after February 1, 2004, at a redemption
price of 104.161% of the principal amount, plus accrued and unpaid interest to
the date of redemption, which redemption price reduces over 10 years to a
redemption price of 100% of the principal amount in 2014 and thereafter. Each
holder has the right to require the Company to repurchase such holder's
Securities in whole, but not in part, at a redemption price, payable in cash,
equal to 101% of the principal amount, plus accrued and unpaid interest to the
date fixed for redemption, upon the occurrence of certain triggering events,
including a change in control, certain restricted payments or certain
consolidations, mergers, conveyances or transfers of assets, each as defined in
the indenture relating to the Securities. The Company is not required to make
mandatory redemption or sinking fund payments with respect to the Securities
prior to maturity.
On September 7, 1994, the banks participating in the Company's
$1,500,000,000 revolving credit facility (the "1993 Credit Agreement") provided
a new $500,000,000 unsecured revolving credit facility (the "1994 Credit
Agreement"). The terms and covenants that govern the new facility are
identical to those provided in the 1993 Credit Agreement. The 1994 Credit
Agreement was used in its entirety to partially finance the redemption of the
Company's 12% Senior Subordinated Debentures discussed below.
By notice dated September 16, 1994, the Company called for redemption on
October 17, 1994, all of its outstanding 12% Senior Subordinated Debentures due
2001 (the "Subordinated Debentures"). The Subordinated Debentures were redeemed
in cash at a redemption price of 104.500% of the principal amount plus accrued
interest. The Company used its unsecured revolving credit facilities to redeem
the Subordinated Debentures, of which $536,981,000, net of unamortized discount
of $3,019,000, was outstanding on the redemption date. The redemption of the
Subordinated Debentures resulted in an extraordinary charge of $24,996,000, net
of $15,981,000 of tax benefit, which includes the write-off of unamortized debt
issue costs of $13,658,000, and was recorded in the results of operations for
the period ended September 30, 1994.
NOTE 5. STOCKHOLDERS' EQUITY (DEFICIT)
Stockholders' equity (deficit) consists of the following components (in
thousands, except share data):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1994 1993
-------------------- -------------------
<S> <C> <C>
Class C Convertible Preferred Stock, par
value $0.125; authorized 12,600,000 shares;
issued and outstanding 12,396,976 shares . . . . . . . . . . $ 260,438 $ 260,438
Class A Common Stock, par value $0.0625;
authorized 75,000,000 shares; issued and
outstanding 68,330,388 shares . . . . . . . . . . . . . . . . 4,271 4,271
Class B Common Stock, par value $0.0625;
authorized 300,000,000 shares; issued and
outstanding 137,347,470 and 120,887,672
shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,584 7,555
Capital in excess of par value . . . . . . . . . . . . . . . . 1,071,578 731,042
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . (1,024,388) (1,004,409)
--------------- ---------------
Total stockholders' equity (deficit) . . . . . . . . . . . $ 320,483 $ (1,103)
=============== ===============
</TABLE>
7
<PAGE> 8
See Note 6 of Notes to Consolidated Condensed Financial Statements
for a discussion of the increase of approximately 16,000,000 shares of
outstanding Class B Common Stock in connection with the merger of New Line
Cinema Corporation ("New Line") with a wholly-owned subsidiary of the Company
in the first quarter of 1994, which increased Class B Common Stock and Capital
in excess of par value by approximately $1,000,000 and $340,000,000,
respectively.
On March 15, 1994, June 15, 1994, and September 15, 1994, the Board of
Directors declared a cash dividend on the Company's outstanding shares of Class
A Common Stock and Class B Common Stock, payable at the rate of $0.0175 for
each share held on the record date. In addition, holders of the Company's
outstanding Class C Preferred Stock were entitled to an equivalent cash
dividend of $0.105 for each share held on the record date based on the number
of shares of Class B Common Stock which would be issued upon conversion of each
share of Class C Preferred Stock. Cash dividends of $4,901,000 each were paid
on April 15, 1994, July 15, 1994 and October 15, 1994 to shareholders of record
at the close of business on March 30, 1994, June 30, 1994, and September 30,
1994, respectively.
The Company's ability to pay cash dividends to holders of shares of the
Class A and Class B Common Stock and the Class C Preferred Stock is subject to
certain covenants in the Company's outstanding debt instruments. Currently the
most restrictive of such covenants limits the maximum aggregate amount of
dividends permitted to be paid annually to such holders to $30,000,000.
NOTE 6. ACQUISITION
The Company and New Line, a motion picture production and distribution
company, completed a merger of New Line with a wholly-owned subsidiary of the
Company on January 28, 1994 (the "Merger"). As a result of the Merger, each
share of New Line Common Stock has been converted into the right to receive
0.96386 of a share of the Company's Class B Common Stock. The valuations used
by New Line and the Company for purposes of arriving at the exchange ratio were
$20 per share of New Line Common Stock and $20.75 per share of the Company's
Class B Common Stock. The maximum number of shares of Class B Common Stock
issuable pursuant to the Merger is approximately 21,300,000 shares, valued at
approximately $442,000,000. Cash will be distributed in lieu of any fractional
shares. At September 30, 1994 approximately 16,200,000 shares of the Company's
Class B Common Stock had been issued in connection with the Merger. The
remaining shares are issuable upon the exercise of New Line stock options and
warrants and the conversion of the New Line convertible subordinated debentures
discussed below. Additionally, the Company assumed and incurred liabilities of
approximately $111,000,000 and paid debt and certain other acquisition costs of
approximately $140,000,000 in connection with the Merger. Among the
liabilities assumed in the Merger were $29,125,000 of New Line 6 1/2%
convertible subordinated debentures (the "Convertible Debentures"). The
Convertible Debentures are convertible at the option of the holders into an
aggregate of approximately 1,700,000 shares of Class B Common Stock.
At the time of the Merger, New Line owned approximately 3,000,000
shares, or 37.4%, of the outstanding capital stock of RHI Entertainment, Inc.
("RHI"). In April 1994, New Line entered into an agreement to tender for cash
its equity interest in RHI to an unaffiliated entity for $36 per share. In
June 1994, the Company received approximately $108,000,000 in cash in
connection with the transaction and recognized a pre-tax gain of approximately
$22,000,000.
8
<PAGE> 9
The Merger was accounted for by the purchase method of accounting.
Goodwill and other intangible assets in the amount of approximately
$300,000,000 were recognized in the transaction, and are amortized using a
straight-line basis over 40 years. The Company has not received final
appraisals or valuations from independent third parties of the assets or
properties of New Line. Therefore, goodwill and other intangible asset amounts
may be adjusted once complete information on the fair value of all of New
Line's assets and liabilities is available.
The following unaudited pro forma condensed combined results of
operations for the three and nine months ended September 30, 1993, are not
intended to reflect results of operations which would have actually resulted
had the Merger been effective on the dates indicated. Moreover, this
information is not intended to be indicative of results of operations which may
be obtained in the future. The pro forma condensed combined results of
operations for the three and nine months ended September 30, 1993 include the
Merger and the December 1993 acquisitions of Castle Rock Entertainment ("Castle
Rock") and the 50% interest in Hanna-Barbera Holding Co. ("Hanna-Barbera") not
already owned by the Company, and assumes that the Company acquired all of the
outstanding stock of New Line pursuant to the Merger and completed the
acquisitions at January 1, 1993. The pro forma effect of the Merger for the
three and nine months ended September 30, 1994 is not considered significant.
The unaudited pro forma condensed combined results of operations for
the three and nine months ended September 30, 1993 are as follows (in
thousands, except per share data):
<TABLE>
<CAPTION>
Three months Nine months
ended ended
September 30, September 30,
1993 1993
------------ ------------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 628,622 $ 1,766,231
============= ===========
Income (loss) before extraordinary item and the
cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . $ (10,501) $ 26,599
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . . . (6,136) (6,136)
Cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . - (306,000)
------------- -----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (16,637) $ (285,537)
============= ===========
Earnings (loss) per common share and common stock
equivalents
Income (loss) before extraordinary item and the
cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . $ (0.04) $ 0.09
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . (0.02) (0.02)
Cumulative effect of a change in accounting
for income taxes . . . . . . . . . . . . . . . . . . . . . . . . - (1.09)
------------- -----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.06) $ (1.02)
============= ===========
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES OF CASH
Cash used for operations for the nine months ended September 30, 1994
aggregated $10 million, net of interest payments and debt issue costs of $143
million and a net change in film costs and liabilities of $14 million. Other
significant sources of cash included proceeds of $108 million from the sale of
an equity investment, borrowings under the 1993 Credit Agreement of $160
million, and approximately $250 million and $200 million of gross proceeds from
the issuance of the 7.4% Senior Notes (the "Senior Notes") and the 8.4% Senior
Debentures (the "Senior Debentures," and together with the Senior Notes, the
"Securities"), respectively. Primary uses of cash during the period were
payments of indebtedness of $576 million, payments of debt and certain other
acquisition costs primarily in connection with the Merger of $146 million and
additions to property and equipment of $81 million.
See the Consolidated Condensed Statements of Cash Flows for additional
details regarding sources and uses of cash and Note 4 of Notes to Consolidated
Condensed Financial Statements for additional information about the Company's
indebtedness.
CREDIT FACILITIES AND FINANCING ACTIVITIES
The Company had approximately $2.4 billion of outstanding indebtedness at
September 30, 1994, of which $810 million was outstanding under the Company's
$1.5 billion unsecured revolving credit facility (the "1993 Credit Agreement").
On September 7, 1994, the banks participating in the 1993 Credit Agreement
provided a new $500 million unsecured revolving credit facility (the "1994
Credit Agreement"). The terms and covenants provided in the 1994 Credit
Agreement are identical to those provided in the 1993 Credit Agreement. The
1994 Credit Agreement was used in its entirety to partially finance the
redemption of the Company's 12% Senior Subordinated Debentures discussed below.
Approximately $810 million of the Company's indebtedness bears
interest on a floating basis tied to short-term market indices. As of
September 30, 1994, the Company had interest rate swap agreements with
commercial banks with an aggregate notional principal amount of $530 million to
mitigate possible rising interest rates. A contract with an aggregate notional
principal amount of $250 million expired in March 1994, and the remaining
contracts have expiration dates ranging from November 1994 to March 1995.
These agreements are designated as hedges against interest rate fluctuations,
and the differential to be paid or received on such interest rate swaps is
accrued as an adjustment to interest expense as interest rates change.
On May 6, 1993, the Company filed a registration statement with the
Securities and Exchange Commission (the "Shelf Registration") to allow the
Company to offer, from time to time, for sale up to $1.1 billion of unsecured
senior debt or unsecured senior subordinated debt securities, consisting of
notes, debentures or other evidences of indebtedness.
On February 3, 1994, the Company sold $250 million of Senior Notes and
$200 million of Senior Debentures under the Shelf Registration. The net
proceeds to
10
<PAGE> 11
the Company were approximately $246 million and $197 million, respectively,
after market and underwriting discounts. The Senior Notes and Senior
Debentures bear interest at the rates of 7.4% and 8.4% per annum, respectively,
payable semi-annually on February 1 and August 1 of each year, commencing on
August 1, 1994. The Senior Notes are not redeemable at the option of the
Company. The Senior Debentures are redeemable, at the Company's option, at any
time after February 1, 2004, at a redemption price of 104.161% of the principal
amount, plus accrued and unpaid interest to the date of redemption, which
redemption price reduces over 10 years to a redemption price of 100% of the
principal amount in 2014 and thereafter. Each holder has the right to require
the Company to repurchase such holder's Securities in whole, but not in part,
at a redemption price, payable in cash, equal to 101% of the principal amount,
plus accrued and unpaid interest to the date fixed for redemption, upon the
occurrence of certain triggering events, including a change in control, certain
restricted payments or certain consolidations or mergers and certain
conveyances or transfers of assets, each as defined in the indenture relating
to the Securities. The Company is not required to make mandatory or sinking
fund payments with respect to the Securities prior to maturity.
By notice dated September 16, 1994, the Company called for redemption on
October 17, 1994, all of its outstanding 12% Senior Subordinated Debentures due
2001 (the "Subordinated Debentures"). The Subordinated Debentures were redeemed
in cash at a redemption price of 104.500% of the principal amount plus accrued
interest. The Company used its unsecured revolving credit facilities to redeem
the Subordinated Debentures, of which $537 million, net of unamortized discount
of $3 million was outstanding on the redemption date. The redemption of the
Subordinated Debentures resulted in an extraordinary charge of $25 million, net
of $16 million of tax benefits, which includes the write-off of unamortized
debt issue costs of $14 million, and was recorded in the results of operations
for the period ended September 30, 1994.
CAPITAL RESOURCES AND COMMITMENTS
During the next 12 months, the Company anticipates making cash
expenditures of approximately $250 million for sports programming, primarily
rights fees, approximately $850 million for original entertainment programming
(excluding promotional and advertising costs) and approximately $130 million
for licensed programming. Also, during the next 12 months, the Company expects
to make total expenditures of approximately $105 million for additional or
replacement property and equipment. Of the anticipated programming and capital
expenditures described above, firm commitments exist for approximately $590
million. Other capital resource commitments consist primarily of lease
obligations, some of which are contingent on revenues derived from usage.
Management expects to continue to lease satellite facilities, sports facilities
and office facilities not already owned by the Company.
Management expects to finance these commitments from working capital
provided by operations and financing arrangements with lessors, vendors, film
suppliers and additional borrowings.
OTHER
On August 12, 1994, members of the Major League Baseball Players
Association, which includes the Atlanta Braves players, began a strike over
certain unresolved collective bargaining agreement issues. On September 14,
1994, as a result of the strike, the Office of the Commissioner announced that
11
<PAGE> 12
the 1994 Major League Baseball season had ended. The impact of the strike on
the Company's operating profit and cash flows for 1994 is estimated to be $14
million. The strike is not expected to have a material impact on the Company's
financial condition.
12
<PAGE> 13
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1994 VS. THREE MONTHS
ENDED SEPTEMBER 30, 1993
SELECTED QUARTERLY SEGMENT INFORMATION
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
------------------ ------------------
Revenue
<S> <C> <C>
Networks $ 275,256 $ 239,153
Production & Distribution 288,071 77,466
Intrasegment revenue elimination (21,456) (8,876)
----------- ----------
Entertainment 541,871 307,743
News 163,546 139,044
Other 37,750 61,932
Intersegment revenue elimination (4,278) (7,430)
----------- ----------
$ 738,889 $ 501,289
=========== ==========
Operating profit (loss)
Networks $ 54,748 $ 37,185
Production & Distribution 1,070 (6,348)
Intrasegment elimination 2,097 1,664
----------- ----------
Entertainment 57,915 32,501
News 52,611 43,846
Other (21,417) (3,654)
Equity in loss of
unconsolidated entities (1,572) (12,745)
----------- ----------
Operating profit $ 87,537 $ 59,948
=========== ==========
</TABLE>
ENTERTAINMENT SEGMENT
Entertainment Segment revenue increased $234 million to $542 million, of
which $178 million was contributed by New Line, Castle Rock and the
consolidated operations of Hanna-Barbera, which were not owned as of September
30, 1993. Home video and subscription revenues associated with other
operations increased a total of $34 million. The remaining increase was
primarily related to the 1994 Goodwill Games, which were completed in the
third quarter.
Operating profit for the Entertainment Segment increased $25 million, or
78%, to $58 million principally due to a $22 million net decrease in network
sports and entertainment programming costs and overall favorable results from
theatrical and home video releases. As losses for the 1994 Goodwill Games were
recognized in prior periods, the Games had no impact on operating profit in the
third quarter.
NEWS SEGMENT
News Segment revenue increased $25 million, or 18%, to $164 million.
The increase related to a $12 million, or 21%, increase in domestic advertising
revenue due to higher viewership levels, and an $8 million, or 16%, increase in
domestic subscription revenue due to increased sales to the home satellite dish
market. The remaining increase in overall revenue was primarily generated by
CNN
13
<PAGE> 14
International, where third quarter revenue increased $5 million, or 23%, from
$21 million to $26 million due primarily to increased worldwide viewership.
As a result of the revenue increases, which outpaced cost increases,
operating profit for the News Segment increased $9 million, or 20%, to $53
million.
OTHER SEGMENT
Revenue decreased $24 million, or 39%, to $38 million primarily as a
result of reduced revenue for the Atlanta Braves due to the Major League
Baseball Players Association strike. Overall, the Braves operating results
decreased by approximately $15 million in the third quarter compared with the
prior year, primarily related to the strike. Primarily as a result of the
strike and additional planned investment in the Company's information
technology systems, operating losses for the Segment increased $18 million to
$21 million.
EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES/OTHER CONSOLIDATED
INFORMATION
The Company's share of operating losses decreased $11 million to $2
million due primarily to improved operating results for n-TV, a 24-hour German
news network in which the Company holds a 22.5% interest.
Consolidated depreciation and amortization increased approximately
$6 million primarily due to the inclusion of New Line and Castle Rock in 1994.
Consolidated interest expense increased approximately $4 million
primarily due to the increase in debt associated with the purchase of Castle
Rock and Hanna-Barbera as well as assumed debt associated with the New Line
acquisition.
The redemption of the Subordinated Debentures resulted in an
extraordinary after-tax charge of approximately $25 million representing the
write-off of unamortized debt issue costs and premiums associated with early
redemption. See Note 4 of Notes to Consolidated Condensed Financial
Statements.
As a result of the information discussed above, the Company reported a
net loss of $5 million in the third quarter of 1994 ($0.02 net loss per common
share and common share equivalent). This compares to net income of $1 million
in the third quarter of 1993 ($0.00 net income per common share and common
share equivalent).
14
<PAGE> 15
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1994 VS. NINE MONTHS
ENDED SEPTEMBER 30, 1993
SELECTED YEAR-TO-DATE SEGMENT INFORMATION
<TABLE>
<CAPTION>
UNAUDITED UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1994 SEPTEMBER 30, 1993
------------------ ------------------
Revenue
<S> <C> <C>
Networks $ 724,107 $ 634,892
Production & Distribution 721,454 220,885
Intrasegment revenue elimination (51,670) (33,093)
------------- --------------
Entertainment 1,393,891 822,684
News 477,502 435,165
Other 130,860 148,295
Intersegment revenue elimination (18,413) (19,570)
------------- --------------
$ 1,983,840 $ 1,386,574
============== ==============
Operating profit (loss)
Networks $ 92,147 $ 136,293
Production & Distribution (36,945) (7,154)
Intrasegment elimination 10,851 (4,524)
------------- --------------
Entertainment 66,053 124,615
News 156,564 151,799
Other (47,200) (22,607)
Gain on sale of equity investment 21,746 -
Equity in loss of
unconsolidated entities (5,435) (16,442)
------------- --------------
Operating profit $ 191,728 $ 237,365
============= ==============
</TABLE>
ENTERTAINMENT SEGMENT
Entertainment Segment revenue increased $571 million to $1.394
billion, of which $442 million was contributed by New Line, Castle Rock, and
the consolidated operations of Hanna-Barbera which were not owned as of
September 30, 1993. Advertising revenue increased $34 million, or 8% to $440
million, due primarily to increased rates for TNT and TBS SuperStation, and an
increase in sports revenue associated with the coverage of the NBA and NFL on
TNT. In addition, home video revenues associated with other operations
increased by $51 million due primarily to positive results from 1994 releases.
The remaining $44 million increase was primarily related to increased
subscription and licensing and merchandising revenues.
Operating profit for the Entertainment Segment decreased $59 million,
to $66 million, principally due to increased losses of $26 million related to
the 1994 Goodwill Games and a $27 million net increase in other network sports
and entertainment programming costs, primarily related to TNT's telecast of the
Winter Olympics in February. Additionally, new networks (which consist of
the Cartoon Network, Cartoon Latin America, TNT & Cartoon Europe, Turner
Classic Movies, and TNT Asia) contributed $9 million in increased operating
losses.
NEWS
News Segment revenue increased $42 million, or 10%, to $478 million,
as a result of increased domestic subscription revenue of $20 million from the
home satellite dish market and increased domestic advertising revenue of $11
million as a result of higher viewership. The remaining increase was related
primarily to
15
<PAGE> 16
CNN International, where third quarter revenue contributed a $12 million
increase in revenues for the service due primarily to increased viewership
worldwide.
Revenue increases were primarily offset by increases in operating
expenses related to higher newsgathering costs and the expansion of CNN
International. As a result, operating profit for the News Segment was
relatively unchanged compared to the same period in 1993.
OTHER
Revenue decreased $17 million, or 12%, to $131 million, primarily as a
result of reduced revenue for the Atlanta Braves primarily due to the Major
League Baseball Players Association strike. Primarily as a result of the
strike and planned investments in the Company's information technology systems,
operating losses for the Segment increased $25 million to $47 million.
EQUITY IN INCOME (LOSS) OF UNCONSOLIDATED ENTITIES/OTHER CONSOLIDATED
INFORMATION
The Company's share of operating losses decreased $11 million, to $5
million, due primarily to $7 million in improved operating results for n-TV, a
24-hour German news network in which the Company holds a 22.5% interest, as
well as improved operating results for the Atlanta Hawks.
In June 1994, the Company sold its 37.4% equity investment in RHI
Entertainment, Inc. for approximately $108 million in cash and recognized a
pre-tax gain of approximately $22 million on the transaction.
Consolidated depreciation and amortization increased approximately
$16 million primarily due to the inclusion of New Line and Castle Rock in 1994.
Consolidated interest expense increased approximately $20 million
primarily due to the increase in debt associated with the purchase of Castle
Rock and Hanna-Barbera as well as assumed debt associated with the New Line
acquisition.
The redemption of the Subordinated Debentures resulted in an
extraordinary after-tax charge of $25 million representing the write-off of
unamortized debt issue costs and premiums associated with early redemption.
See Note 4 of Notes to Consolidated Condensed Financial Statements.
As a result of the information discussed above, the Company reported a
net loss of $5 million in the first nine months of 1994 ($0.02 net loss per
common share and common share equivalent). This compares to a net loss of
$254 million in the first nine months of 1993 ($0.96 net loss per common share
and common share equivalent), which included a non-recurring charge for the
cumulative effect of adopting Statement of Financial Accounting Standards No.
109 in the amount of $306 million ($1.16 per share).
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Turner Broadcasting System, Inc. v. Federal Communications Commission and The
United States of America
As last updated in the Company's Form 10-Q for the quarter ended June
30, 1994, on October 5, 1992, the Company filed a lawsuit in the United States
District Court for the District of Columbia challenging the provisions of the
Cable Television Consumer Protection and Competition Act of 1992 (the "1992
Act") that would require cable television operators to devote up to one-third
of their channel capacity to the carriage of local broadcast stations and
provide certain channel positioning rights to local broadcast stations. The
Company's complaint alleges that these provisions violate the First Amendment
of the United States Constitution. Under a provision of the 1992 Act, the case
was heard by a three-judge court. On April 8, 1993, the Court upheld the
constitutionality of these provisions by a 2-1 vote. On May 3, 1993, the
Company filed its Notice of Appeal of that decision to the United States
Supreme Court. On June 27, 1994, the United States Supreme Court vacated the
District Court's ruling and remanded the case for further proceedings. The
Company intends to pursue its claims.
United States of America v. Cable News Network, Inc. and Turner Broadcasting
System, Inc.
As last updated in the Company's Form 10-Q for the quarter ended June
30, 1994, in October and November of 1990, Cable News Network, Inc. ("CNN") was
involved in investigating and reporting a story concerning the potential
government audio taping of telephone calls made by General Manuel Noriega from
his cell in the Miami Correctional Center, including the taping of
conversations with his attorneys and defense team. CNN obtained copies of some
of the alleged tapings and telecast segments thereof. Judge William M.
Hoeveler, United States District Court for the Southern District of Florida,
entered orders on November 8, 1990 and November 9, 1990 which temporarily
prohibited the telecast of Noriega's privileged attorney-client conversations.
Judge Hoeveler appointed a special prosecutor, Robert F. Dunlap, to investigate
whether CNN violated his Orders in a telecast on November 9, 1990, and to
prepare an application for an Order to Show Cause "why those entities and
individuals responsible for" the telecast should not be held in contempt of the
Court's Orders. On January 15, 1993 CNN was advised by Special Prosecutor
Dunlap that it was a target of a grand jury investigation into these alleged
contempts. CNN responded to grand jury subpoenas issued at that time. On
March 30, 1994 CNN was charged with criminal contempt by Special Prosecutor
Dunlap and pleaded innocent at an arraignment before Judge Hoeveler. A
four-day trial was conducted from September 13 through September 16, 1994. On
November 1, 1994, the Court issued an opinion finding CNN in criminal contempt
of orders of the Court issued during November 1990. It was the conclusion of
the trial judge that CNN had willfully violated lawful orders of the Court not
to telecast audio tapes in the possession of CNN. CNN maintained it had a
right under the First Amendment to telecast the audio tapes and that the
telecasting of the specific audio tape was not in violation of any of the
Court's orders. A sanctions hearing has been
17
<PAGE> 18
scheduled for December 9, 1994 at which time the Court can assess a
monetary penalty against CNN. It is expected that any sanction will be in the
discretion of the trial Court, and while it is not possible to estimate the
ultimate amount of any sanction, based on all the information available, it is
Management's belief that resolution of this issue will not be material to the
financial condition or results of operations of the Company.
18
<PAGE> 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At a special shareholders' meeting held June 14, 1994, the holders of
each class of the Company's outstanding stock, voting separately, approved an
increase in the voting power of the Company's Class A Common Stock from one
vote per share to two votes per share.
The annual meeting of shareholders of the Company was held on July 26,
1994. At the annual meeting, the shareholders voted on the following matters:
(i) the election of fifteen directors; (ii) a proposal to ratify the selection
of Price Waterhouse as the Company's independent accountants; (iii) a proposal
to approve the Turner Incentive Plan; (iv) a proposal to approve the Company's
Long-Term Incentive Plan; (v) a proposal to approve amendments to the Turner
Broadcasting System, Inc. 1988 Stock Option Plan; (vi) a proposal to approve
the Turner Broadcasting System, Inc. 1993 Stock Option and Equity-Based Award
Plan; and (vii) a shareholder proposal concerning the adoption of cumulative
voting by shareholders in the election of the directors of the Company.
A. Proposal No. I - Election of Directors
Election of Eight Common Stock Directors.
<TABLE>
<CAPTION>
FOR VOTES WITHHELD
--- --------------
<S> <C> <C> <C> <C>
R.E. Turner 146,038,006 votes 28,530 votes
----------------- ---------------
Henry L. Aaron 146,031,520 votes 35,016 votes
----------------- ---------------
W. Thomas Johnson 146,037,362 votes 29,174 votes
----------------- ---------------
Rubye M. Lucas 146,030,281 votes 36,255 votes
----------------- ---------------
Terence F. McGuirk 146,037,612 votes 28,924 votes
----------------- ---------------
Brian L. Roberts 146,036,874 votes 29,662 votes
----------------- ---------------
Scott M. Sassa 146,037,012 votes 29,524 votes
----------------- ---------------
Robert Shaye 146,037,612 votes 28,924 votes
----------------- ---------------
Election of Seven Class C Directors
-----------------------------------
FOR VOTES WITHHELD
--- --------------
Peter R. Barton 14,876,371 votes 0 votes
----------------- ---------------
Joseph J. Collins 14,876,371 votes 0 votes
----------------- ---------------
Michael J. Fuchs 14,876,371 votes 0 votes
----------------- ---------------
Gerald M. Levin 14,876,371 votes 0 votes
----------------- ---------------
John C. Malone 14,876,371 votes 0 votes
----------------- ---------------
Timothy P. Neher 14,876,371 votes 0 votes
----------------- ---------------
Fred A. Vierra 14,876,371 votes 0 votes
----------------- ---------------
</TABLE>
B. Proposal No. II - Ratification of selection of
Price Waterhouse as the Company's independent
accountants for the fiscal year ending December 31,
1994.
<TABLE>
<CAPTION>
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
FOR: 121,318,438 24,588,544 14,876,371 160,783,353
----------- ---------- ----------- -------------
</TABLE>
19
<PAGE> 20
<TABLE>
<S> <C> <C> <C> <C>
AGAINST: 24,810 12,307 0 37,117
----------- ---------- ----------- -------------
ABSTAIN: 25,599 96,838 0 122,437
----------- ---------- ----------- -------------
C. Proposal No. III - Approval of the Turner Incentive
Plan.
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
FOR: 120,691,498 22,728,809 14,876,371 158,296,678
----------- ---------- ----------- --------------
AGAINST: 633,908 1,722,224 0 2,356,132
----------- ---------- ----------- --------------
ABSTAIN: 43,441 246,656 0 290,097
----------- ---------- ----------- --------------
D. Proposal No. IV - Approval of the Company's Long-Term
Incentive Plan.
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
FOR: 119,258,372 22,745,782 14,876,371 156,880,525
----------- ---------- ----------- --------------
AGAINST: 626,376 1,704,328 0 2,330,704
----------- ---------- ----------- --------------
ABSTAIN: 55,335 247,580 0 302,915
----------- ---------- ----------- --------------
E. Proposal No. V - Approval of amendments to the
Turner Broadcasting System, Inc. 1988 Stock Option
Plan.
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
FOR: 119,852,025 23,759,700 14,876,371 158,488,096
----------- ---------- ----------- --------------
AGAINST: 1,466,847 690,760 0 2,157,607
----------- ---------- ----------- --------------
ABSTAIN: 49,975 247,227 0 297,202
----------- ---------- ----------- --------------
</TABLE>
20
<PAGE> 21
<TABLE>
F. Proposal No. VI - Approval of the Turner
Broadcasting System, Inc. 1993 Stock Option and
Equity-Based Award Plan.
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
FOR: 119,072,044 22,223,385 14,876,371 156,171,800
----------- ---------- ----------- --------------
AGAINST: 2,254,823 2,199,149 0 4,453,972
----------- ---------- ----------- --------------
ABSTAIN: 41,980 275,155 0 317,135
----------- ---------- ----------- --------------
G. Proposal No. VII - Shareholder proposal concerning
the adoption of cumulative voting by shareholders
in the election of directors of the Company.
Class A Class B Class C
Common Common Preferred Total
Votes Votes Votes Votes
----------- ---------- ----------- ---------
FOR: 2,270,109 1,499,483 0 3,769,592
----------- ---------- ----------- --------------
AGAINST: 116,532,948 21,427,071 14,876,371 152,836,390
----------- ---------- ----------- --------------
ABSTAIN: 99,295 243,712 0 343,007
----------- ---------- ----------- --------------
</TABLE>
21
<PAGE> 22
ITEM 5. OTHER INFORMATION
REGULATION
On October 5, 1992, the 1992 Act became law. The Federal
Communications Commission (the "FCC" or the "Commission") is charged with
implementation of the 1992 Act.
RATE REGULATION
Section 623 of the Communications Act of 1934, as amended by the 1992
Act, establishes a two-tier rate structure applicable to systems not found to
be subject to "effective competition" as defined by the statute. Rates for a
required "basic service tier" are subject to regulation by practically every
community. Rates for cable programming services other than those carried on
the basic tier are subject to regulation if, upon complaint, the FCC finds that
such rates are "unreasonable." Programming offered by a cable operator on a
per-channel or per-program basis, however, is exempt from rate regulation.
On April 1, 1993, the FCC adopted implementing regulations for Section
623. The text of its Report and Order was released on May 3, 1993. The FCC
has adopted a benchmark approach to rate regulation. Rates above the benchmark
would be presumed to be unreasonable. Once established, cable operators could
adjust their rates based on appropriate factors and could pass through certain
costs to customers, including increased programming costs.
On February 22, 1994, the Commission adopted further regulations.
Among other things, the additional regulations will govern the offering of bona
fide "a la carte" channels that are exempted from rate regulation. The
Commission also adopted a methodology for determining rates when channels are
added to or deleted from regulated tiers. These regulations may adversely
affect the Company's ability to sell its existing or new networks to cable
customers and/or may adversely affect the prices the Company may charge for its
services, although at this time the Company cannot predict their full effect on
its operations.
On March 30, 1994, the Commission adopted further regulations and
solicited additional comments with respect to the methodology for determining
rates when channels are added to regulated tiers. The Company cannot predict
the outcome or effect of these proceedings.
On April 5, 1993, the FCC also froze rates for cable services subject
to regulation under the 1992 Act for 120 days. On June 11, 1993, the FCC
deferred the implementation of rate regulation from June 21, 1993 until October
1, 1993, and extended the freeze on rates for cable services subject to
regulation from August 4, 1993 to November 15, 1993. On November 10, 1993, the
Commission further extended the freeze until February 15, 1994, and on February
8, 1994, extended the expiration date of the freeze until May 15, 1994. On
July 27, 1993, the FCC moved the effective date of rate regulation back to
September 1, 1993. Additionally, among other things, the FCC permitted cable
operators to structure rates and service offerings up until September 1, 1993,
without prior notice to subscribers.
22
<PAGE> 23
On July 16, 1993, the FCC issued a Notice of Proposed Rulemaking to
add the regulatory requirements to govern cost-of-service showings that cable
operators may submit under this provision to justify rates above the
benchmarks. On February 22, 1994, the Commission adopted interim rules to
govern the cost of service proceedings.
On March 30, 1994, the Commission released a Further Notice of
Proposed Rulemaking in connection with its cost of service regulations. In
that Notice, the Commission proposed to limit the price a cable operator may
recover in transactions with its affiliates. The proposal, if adopted, could
adversely affect the Company's transactions with certain cable operators,
including Tele-Communications, Inc. and Time Warner, Inc., which are affiliates
of the Company. On July 1, 1994, the Company filed comments opposing this
proposal. The Company cannot predict the ultimate outcome of the proceeding.
The constitutionality of these provisions has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld the
constitutionality of these provisions. An appeal of that decision is pending
in the U.S. Court of Appeals for the District of Columbia. Appeals of the
Commission's implementing regulations have also been taken to the United States
Court of Appeals for the District of Columbia Circuit. This appeal is
scheduled to be argued on December 20, 1994. The Company cannot
predict the ultimate outcome of the litigation.
MUST CARRY AND RETRANSMISSION CONSENT
The 1992 Act contains provisions that would require cable television
operators to devote up to one-third of their channel capacity to the carriage
of local broadcast stations and provide certain channel position rights to
local broadcast stations. The 1992 Act also includes provisions governing
retransmission of broadcast signals by cable systems, whereby retransmission of
broadcast signals would require the broadcaster's consent and provides each
local broadcaster the right to make an election between must carry or
retransmission consent. The retransmission consent provisions of the 1992 Act
became effective on October 5, 1993.
On March 11, 1993, the FCC adopted a Report and Order implementing
these provisions. On November 4, 1994, the Commission released its Report and
Order on Reconsideration. The provisions could affect the ability and
willingness of cable systems to carry cable programming services. The Company
has filed litigation challenging the provision as unconstitutional (see "Legal
Proceedings - Turner Broadcasting System, Inc. v. Federal Communications
Commission and The United States of America"). The case was remanded to the
United States Supreme Court for further proceedings. The Company cannot
predict the ultimate outcome of the litigation.
PROGRAM ACCESS
On April 1, 1993, the Commission issued regulations implementing a
provision that, among other things, makes it unlawful for a cable network, in
which a cable operator has an attributable interest, to engage in certain
unfair methods of competition or unfair or deceptive acts or practices, the
purpose and effect of which is to hinder significantly or prevent any
multichannel video programming distributor from providing satellite cable
programming or satellite broadcast programming to cable subscribers or
consumers. The provisions contain an exemption for any contract that grants
exclusive distribution rights to a person with respect to satellite cable
programming or that was entered into on
23
<PAGE> 24
or before June 1, 1990. While the Company cannot predict the regulations' full
effect on its operations, they may affect the rates charged by the Company's
cable programming services to its customers and could affect the terms and
conditions of contracts between the Company and its customers.
The constitutionality of this provision has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld this provision. An
appeal of that decision is pending in the United States Court of Appeals for
the District of Columbia Circuit. Appeals of the Commission's implementing
regulations have also been taken to the United States Court of Appeals for the
District of Columbia Circuit. The Company cannot predict the ultimate outcome
of the litigation.
REGULATION OF CARRIAGE AGREEMENTS
The 1992 Act contains a provision that requires the FCC to establish
regulations governing program carriage agreements and related practices between
cable operators and video programming vendors, including provisions to prevent
the cable operator from requiring a financial interest in a program service as
a condition of carriage and provisions designed to prohibit a cable operator
from coercing a video programming vendor to provide exclusive rights as a
condition of carriage. On October 22, 1993, the Commission issued regulations
implementing this provision. The Company cannot at this time predict the
effect of this provision on its operations.
The constitutionality of this provision has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court upheld the
constitutionality of this provision. An appeal of that decision is pending in
the United States Court of Appeals for the District of Columbia Circuit. The
Company cannot predict the outcome of the litigation.
OWNERSHIP LIMITATIONS
Section 11 of the 1992 Act directed the Commission to prescribe rules
and regulations establishing limits on the number of cable subscribers a person
is authorized to reach through cable systems owned by such person and the
number of channels that can be occupied by video programmers in which a cable
operator has an attributable interest. The Commission must also consider the
necessity of imposing limitations on the degree to which multichannel video
programming distributors may engage in the creation or production of video
programming.
On December 28, 1992, the FCC issued a Notice of Proposed Rulemaking
and Notice of Inquiry with respect to these provisions. On October 22, 1993,
the FCC adopted a Second Report and Order that established a 40% limit on the
number of channels that may be occupied by programming services in which the
particular cable operator has an attributable interest. The Company is subject
to this provision. The FCC also established a national limit of 30% on the
number of homes passed that any one person can reach through cable systems
owned by such person, but stayed implementation of that provision pending
judicial review of its constitutionality. Petitions for reconsideration are
pending. The Company cannot at this time predict the effect of this provision
or of these proposals on its operations.
24
<PAGE> 25
The constitutionality of these provisions has been challenged in
litigation filed in the United States District Court for the District of
Columbia. On September 27, 1993, the district court found the national limit
on homes passed unconstitutional, but upheld the constitutionality of the
channel capacity limits. An appeal of that decision is currently pending in
the United States Court of Appeals for the District of Columbia Circuit.
Appeals of the Commission's implementing regulations have also been taken to
the United States Court of Appeals for the District of Columbia Circuit. The
Company cannot predict the ultimate outcome of the litigation.
SPORTS MIGRATION
The 1992 Act directs the FCC to submit an interim report by July 1,
1993, and a final report by July 1, 1994, to Congress on the migration of
sports programming from broadcast networks to cable networks and cable
pay-per-view. The interim report was submitted on June 24, 1993. On June 30,
1994, the FCC issued its final report in which it recommended that no action by
Congress was necessary.
25
<PAGE> 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.45 Credit Agreement, dated as of September 7, 1994, among the Company,
the banks listed therein and The Chase Manhattan Bank (National
Association), as Agent.
10.46 Amendment No. 3, dated as of June 30, 1994, among the Company, the
banks listed therein and The Chase Manhattan Bank (National
Association), as Agent, to the Credit Agreement dated as of July 1,
1993.
11 Computation of Earnings per Common and Common Equivalent Share
27 Financial Data Schedule (for the SEC use only)
(b) Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter for which
this report is filed.
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TURNER BROADCASTING SYSTEM, INC.
By: /s/ William S. Ghegan
--------------------------------
William S. Ghegan
Vice President, Controller and
Chief Accounting Officer
Date: November 10, 1994
27
<PAGE> 28
INDEX TO EXHIBITS
Exhibit Number Description
- - - -------------- -----------
10.45 Credit Agreement, dated as of September 7, 1994, among the
Company, the banks listed therein and The Chase Manhattan
Bank (National Association), as Agent.
10.46 Amendment No. 3, dated as of June 30, 1994, among the
Company, the banks listed therein and The Chase Manhattan
Bank (National Association), as Agent, to the Credit
Agreement dated as of July 1, 1993.
11 Computation of Earnings per Common and Common Equivalent
Share
27 Financial Data Schedule (for the SEC use only)
<PAGE> 1
EXHIBIT 10.45
CONFORMED COPY
************************************************************
TURNER BROADCASTING SYSTEM, INC.
_____________________________
CREDIT AGREEMENT
Dated as of September 7, 1994
______________________________
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
************************************************************
(Exhibits B, C and D are copies of the Opinions as delivered.)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions and Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.03 Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2. Commitments, Loans, Notes and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.01 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.02 Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.03 Changes of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.04 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.05 Lending Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.06 Several Obligations; Remedies Independent . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.07 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.08 Optional Prepayments and Conversions or
Continuations of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.09 Mandatory Reductions of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 3. Payments of Principal and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.01 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.02 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4. Payments; Pro Rata Treatment; Computations; Etc. . . . . . . . . . . . . . . . . . . . . . . . 31
4.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.02 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.03 Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.04 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.05 Certain Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.06 Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.07 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5. Yield Protection, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.01 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.02 Limitation on Types of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.03 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.04 Treatment of Affected Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.05 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.06 U.S. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.07 Change of Applicable Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.08 Replacement of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.01 Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.02 Initial and Subsequent Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 7. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.02 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.03 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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<TABLE>
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<S> <C>
7.04 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.05 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.06 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.07 Use of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
7.08 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.10 Certain Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.11 Credit Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.12 Existing Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.13 Subsidiaries, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.14 Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
7.15 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 8. Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.02 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.03 Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.04 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.05 Prohibition of Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.06 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.07 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.08 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.09 Dividend Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.10 Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.11 Fixed Charges Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.12 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.13 Funded Debt Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.14 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.15 Lines of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.16 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.17 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.18 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.19 Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 9. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 10. The Agent; Co-Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.01 Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.02 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.03 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.04 Rights as a Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.05 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.06 Non-Reliance on Agent, Co-Agents and Other
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.07 Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.08 Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.01 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.03 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
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<TABLE>
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11.04 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.08 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.10 Governing Law; Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.11 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
11.12 Treatment of Certain Information;
Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SCHEDULE I - Material Agreements
SCHEDULE II - Existing Liens
SCHEDULE III - Subsidiaries and Investments
EXHIBIT A - Form of Note
EXHIBIT B - Form of Opinion of Counsel to the Company
EXHIBIT C - Form of Opinion of General Counsel to the Company
EXHIBIT D - Form of Opinion of Special New York Counsel
to Chase
EXHIBIT E - Form of Confidentiality Agreement
EXHIBIT F - Form of Officers' Certificate
EXHIBIT G - Form of Borrowing Notice
</TABLE>
(iii)
<PAGE> 5
CREDIT AGREEMENT dated as of September 7, 1994, between:
TURNER BROADCASTING SYSTEM, INC., a corporation duly organized and validly
existing under the laws of the State of Georgia (the "Company"); each of the
lenders that is a signatory hereto identified under the caption "BANKS" on the
signature pages hereto or which, pursuant to Section 11.06(b) hereof, shall
become a "Bank" hereunder (individually, a "Bank" and, collectively, the
"Banks"); CREDIT LYONNAIS CAYMAN ISLAND BRANCH, THE LONG-TERM CREDIT BANK OF
JAPAN, LTD. and THE TORONTO-DOMINION BANK, as co-agents (in such capacity,
together with their respective successors in such capacity, the "Co-Agents");
and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), a national banking
association, as agent for the Banks (in such capacity, together with its
successors in such capacity, the "Agent").
The Company has outstanding under the Indenture (as defined
below) Senior Subordinated Debentures of the Company due October 15, 2001 in an
aggregate principal amount of $540,000,000. The Company has requested that the
Banks make loans to it hereunder to refinance such Senior Subordinated
Debentures and otherwise to make loans to it to finance acquisitions and
investments and for general corporate purposes in an aggregate principal amount
for all loans made pursuant to all commitments hereunder not exceeding
$500,000,000 at any one time outstanding, and the Banks are prepared to make
available such commitments upon the terms and conditions hereof. Accordingly,
the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after July 1, 1993, by which (i) the Company
and/or any of its Subsidiaries acquires the business or all or substantially
all of the assets of any firm, corporation or division of any firm or
corporation, whether
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through Investment, purchase of assets, merger or otherwise or (ii) any Person
that was not theretofore a Subsidiary of the Company becomes a Wholly Owned
Subsidiary of the Company.
"Affiliate" shall mean, as to any Person, (a) any other Person
that directly or indirectly controls, or is controlled by, such first Person,
(b) all Subsidiaries of such other Person and (c) if such other Person is an
individual, any member of the immediate family (including parents, spouse,
children and siblings) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such immediate family
and any Person who is controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings, "controlled
by") shall mean possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person (a "Controlling Person")
that owns directly securities having 10% or more of the voting power for the
election of directors or other governing body of a corporation or 10% or more
of the partnership or other ownership interests of any other Person (a
"Controlled Person") (other than as a limited partner of such other Person)
will be deemed to control such Controlled Person and any Person that owns
directly or indirectly securities having 20% or more of the voting power for
the election of directors or other governing body of a Controlling Person or
20% or more of the partnership or other ownership interests of a Controlling
Person (other than as a limited partner of such Controlling Person) and that is
the direct or indirect holder of the largest number of such securities or
partnership or other ownership interests of a Controlling Person will be deemed
to control such Controlling Person and all Controlled Persons controlled by
such Controlling Person. Notwithstanding the foregoing, (a) no individual
shall be an Affiliate of the Company or any of its Subsidiaries solely by
reason of his or her being a director, officer or employee of the Company or
any of its Subsidiaries and (b) neither the Company nor any of its Subsidiaries
shall be deemed to be Affiliates of each other.
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"Applicable Lending Office" shall mean, for each Bank and for
each Type of Loan, the "Lending Office" of such Bank (or of an affiliate of
such Bank) designated for such Type of Loan on the signature pages hereof or
such other office of such Bank (or of an affiliate of such Bank) as such Bank
may from time to time specify to the Agent and the Company as the office by
which its Loans of such Type are to be made and maintained.
"Applicable Margin" shall mean: (a) with respect to Base Rate
Loans, 1/2 of 1% per annum, (b) with respect to CD Loans, 1-5/8% per annum, and
(c) with respect to Eurodollar Loans, 1-1/2% per annum; provided that, if the
Funded Debt Ratio as at the last day of any fiscal quarter of the Company shall
fall within any of the ranges set forth in the schedule below, then, subject to
the delivery to the Agent of a certificate of a senior financial officer of the
Company demonstrating such fact prior to the end of the next succeeding fiscal
quarter, the "Applicable Margin" for each Loan shall be reduced to the rate for
the respective Type of Loan set forth opposite such range in the schedule below
during the period commencing on the Quarterly Date falling on or immediately
following the date of receipt of such certificate to but not including the next
succeeding Quarterly Date thereafter (except that notwithstanding the
foregoing, the Applicable Margin shall not as a consequence of this proviso be
so reduced for any Loan for the period from the occurrence of any Event of
Default and so long as the same shall be continuing):
Applicable Margin (% p.a.)
Range of Funded Base Rate Eurodollar CD
Debt Ratio Loans Loans Loans
--------------- --------- ----- -----
Greater than 6.0:1 1/2% 1-1/2% 1-5/8%
Less than or equal 3/8% 1-3/8% 1-1/2%
to 6.0:1 and greater
than or equal to 5.5:1
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Less than 5.5:1 1/8% 1-1/8% 1-1/4%
and greater than
or equal to 5.0:1
Less than 5.0:1 0% 1% 1-1/8%
and greater than
or equal to 4.5:1
Less than 4.5:1 0% 7/8% 1%
and greater than
or equal to 4.0:1
Less than 4.0:1 0% 3/4% 7/8%
and greater than
or equal to 3.5:1
Less than 3.5:1 0% 5/8% 3/4%
and greater than
or equal to 3.0:1
Less than 3.0:1 0% 1/2% 5/8%
"Assessment Rate" shall mean, for any Interest Period for any
CD Loan, the average of the highest and lowest annual assessment rates
(determined by the Agent as at the first day of such Interest Period and
rounded upwards, if necessary, to the nearest 1/100 of 1%) that the Federal
Deposit Insurance Corporation (or any successor) charges members of the Bank
Insurance Fund pursuant to 12 C.F.R. Part 327 for such Corporation's (or such
successor's) insuring time deposits at offices of such institutions in the
United States of America.
"Bankruptcy Code" shall mean the Federal Bankruptcy Code of
1978, as amended from time to time.
"Base Rate" shall mean, for any day, a rate per annum equal to
the higher of (a) the Federal Funds Rate for such day plus 1/2 of 1% and (b)
the Prime Rate for such day. Each change in any interest rate provided for
herein based upon the Base Rate
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resulting from a change in the Base Rate shall take effect at the time of such
change in the Base Rate.
"Base Rate Loans" shall mean Loans that bear interest at rates
based upon the Base Rate.
"Borrowing Notice" shall mean a notice of borrowing hereunder
substantially in the form of Exhibit G hereto.
"Business Day" shall mean (a) any day on which commercial
banks are not authorized or required to close in New York City and (b) if such
day relates to a borrowing of, a payment or prepayment of principal of or
interest on, a Conversion of or into, or an Interest Period for, a Eurodollar
Loan or a notice by the Company with respect to any such borrowing, payment,
prepayment, Conversion or Interest Period, any day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Capital Expenditures" shall mean, for any period,
expenditures (including, without limitation, the aggregate amount of Capital
Lease Obligations incurred during such period) made by the Company or any of
its Consolidated Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements, but excluding
repairs) during such period computed in accordance with GAAP.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including Statement of Financial
Accounting Standards No. 13 of the Financial Accounting Standards Board), and,
for purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"Capital Stock" shall mean, as to any Person, any and all
shares, interests, warrants, participations or other
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equivalents (however designated) of corporate stock of such Person.
"Cash Flow" shall mean, for any period, the sum, for the
Company and its Consolidated Subsidiaries (provided that, for purposes of this
definition, (i) Atlanta Hawks, Ltd., a Georgia limited partnership, shall be
deemed to be a Consolidated Subsidiary of the Company and (ii) Persons that
become Consolidated Subsidiaries of the Company at any time during such period
and are not restricted (except under general corporate laws relating to
dividends and capital distributions) from making Dividend Payments shall be
deemed to have been Consolidated Subsidiaries of the Company during such period
on a pro forma basis), of (a) net income from continuing operations after
minority interests and before income taxes and extraordinary items for such
period plus (b) interest expense and depreciation expense for such period (to
the extent such interest expense and depreciation expense are deducted in the
calculation of the item referred to in clause (a) of this definition) minus (c)
gains on sales of assets for such period (to the extent such gains are added in
the calculation of the item referred to in clause (a) of this definition) plus
(d) losses on sales of assets for such period (to the extent such losses are
deducted in the calculation of the item referred to in clause (a) of this
definition) plus (e) amortization (to the extent deducted in the calculation of
the item referred to in clause (a) of this definition, but excluding
amortization for Licensed Rights and participants' share and royalties) for
such period plus (f) non-cash compensation paid to officers of the Company and
its Consolidated Subsidiaries in the form of common stock of the Company or
options or warrants to acquire common stock of the Company (in each case to the
extent deducted in the calculation of the item referred to in clause (a) of
this definition); provided that (A) the net income of any Person in which the
Company or any of its Subsidiaries has an interest, which interest does not
cause the net income of such Person to be consolidated wih the net income of
the Company in accordance with GAAP (an "Unconsolidated Person"), shall be
excluded; (B) Cash Flow shall be increased by the amount of dividends or
distributions paid to the Company and its Consolidated Subsidiaries by any
Unconsolidated Person in
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such period, but only to the extent of the Cumulative Income (as defined below)
of such Unconsolidated Person immediately prior to such dividend or
distribution and (C) the pro rata net loss of each Unconsolidated Person during
such period shall be included but only to the extent of the net Investment of
the Company and its Subsidiaries in such Unconsolidated Person at the last day
of such period reduced by all net losses of such Unconsolidated Person
previously included in determining Cash Flow (other than during any period in
which such Unconsolidated Person was a Consolidated Subsidiary of the Company).
For purposes of the preceding sentence, "Cumulative Income", with respect to
any Unconsolidated Person at any date, means the sum of the net income (or
loss) of such Unconsolidated Person for all periods beginning on or after July
1, 1993 and ending on or prior to such date, reduced by the aggregate amount of
dividends and distributions paid by such Unconsolidated Person (whether or not
to the Company or any of its Consolidated Subsidiaries) on or after July 1,
1993 and on or before such date; provided, that (x) the net income (or loss)
during each period in which such Unconsolidated Person was not an
Unconsolidated Person shall be excluded and (y) the net loss of such
Unconsolidated Person for any period shall be excluded to the extent the pro
rata share of the Company and its Consolidated Subsidiaries of such net loss
was included in determining Cash Flow for such period. Solely for the purposes
of computations under Sections 8.11, 8.12 and 8.13 hereof, the calculation of
"Cash Flow" for the fiscal quarter of the Company ending March 31, 1994 shall
exclude the effect of loss for such quarter attributable to the 1994 telecast
of the 1994 Winter Olympics in an amount not exceeding the lesser of the actual
loss incurred and $35,000,000.
"CD Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in clause (b) of the definition of
"Fixed Base Rate" in this Section 1.01.
"Chase" shall mean The Chase Manhattan Bank (National
Association).
"CNN" shall mean Cable News Network, Inc., a Georgia
corporation and a Subsidiary of the Company.
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"CNN Center Complex" shall mean the office building and hotel
complex located in Atlanta, Georgia, and, at the date of this Agreement, owned
by CNN Center Ventures, including the parking decks for such complex to the
extent such parking decks are either owned or leased by the Company or CNN
Center Ventures.
"CNN Center Financing" shall mean any mortgage financing or
sale-leaseback of the CNN Center Complex or any portion thereof.
"CNN Center Ventures" shall mean the CNN Center Ventures
partnership, in which, at the date of this Agreement, the Company and its
Subsidiaries own a 100% interest.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"Commercial Paper" shall mean promissory notes having a
maturity of 270 days or less entitled to an exemption from registration under
the Securities Act of 1933, as amended, by reason of Section 3(a)(2), 3(a)(3)
or 4(2) thereof.
"Commitment" shall mean, as to each Bank, the obligation of
such Bank to make Loans in an aggregate amount at any one time outstanding up
to but not exceeding the amount set opposite such Bank's name on the signature
pages hereof under the caption "Commitment" (as the same may be reduced at any
time or from time to time pursuant hereto).
"Commitment Reduction Dates" shall mean the twelve consecutive
Quarterly Dates ending with the Commitment Termination Date.
"Commitment Termination Date" shall mean the Quarterly Date
falling on or nearest to December 31, 2000.
"Competitor" shall mean any Person engaged in, or having an
Affiliate engaged in, the business of (a) publishing or the production,
distribution, syndication, licensing or
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broadcasting of Works or (b) providing consumer entertainment and/or
information programming which is delivered by cable television systems
(regardless of whether concurrently delivered through other forms of
distribution to consumers).
"Consolidated Subsidiary" shall mean, for any Person, each
Subsidiary of such Person (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of such Person in accordance with
GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.08 hereof of a Fixed Rate Loan of one Type
as a Fixed Rate Loan of the same Type from one Interest Period to the next
Interest Period.
"Contributed Property" shall mean Property (other than cash)
contributed by the Company or any of its Subsidiaries as an equity Investment
in any Person (other than the Company or any of its Subsidiaries) to the extent
that the aggregate fair market value of all such Property so contributed after
July 1, 1993 does not exceed $100,000,000.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.08 hereof of one Type of Loans into another
Type of Loans, which may be accompanied by the transfer by a Bank (at its sole
discretion) of a Loan from one Applicable Lending Office to another.
"Credit Instrument" shall mean each loan agreement, indenture
or other agreement or instrument evidencing or relating to borrowed money to
which the Company is a party as debtor.
"Credit Lyonnais" shall mean Credit Lyonnais Cayman Island
Branch.
"Default" shall mean an Event of Default or an event that with
notice or lapse of time or both would become an Event of Default.
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"Deferred Programming Expenses" shall mean, for any period,
the amount (which may be a positive number or a negative number) equal to the
change during such period in the balance of produced programming determined in
accordance with GAAP in a manner consistent with the manner such item is
reported in the consolidated financial statements of the Company and its
Subsidiaries.
"Delivery Date" shall mean the date following the end of a
quarterly fiscal period or fiscal year of the Company on which the Banks
receive the Company's financial statements under Section 8.01(a) or (b) (as the
case may be) hereof for such quarterly fiscal period or fiscal year.
"Disposition" shall mean, with respect to any Person, any
sale, assignment, transfer or other disposition by such Person (including,
without limitation, dispositions pursuant to merger, consolidation and
sale-leaseback transactions) of any of its Property; provided, however, that
Disposition shall not include (a) the sale, license, syndication, transfer or
other disposition made in the ordinary course of business of rights or
interests in Works in accordance with customary industry standards, it being
understood and agreed that the transfer of ownership of any copyright for any
Work in its entirety shall not be deemed to be in the ordinary course of
business; (b) other leases, subleases, licenses and/or sublicenses made in the
ordinary course of business; or (c) the disposition of shares of stock, notes
or other securities issued by such Person or (d) the distribution of assets in
a liquidation or distribution to the extent such distribution is deemed by
Section 8.05(d) hereof to be a Dividend Payment.
"Dividend Payment" shall mean dividends (in cash, property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for the purchase,
redemption, retirement or other acquisition of, any Qualifying Equity of the
Company or any Subsidiary of the Company, but excluding dividends payable
solely in shares of Qualifying Equity and excluding the purchase by the
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Company of Qualifying Equity issued by any Subsidiary of the Company.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in
Section 414(b) or (c) of the Code of which the Company is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which the Company is a member.
"Eurodollar Loans" shall mean Loans the interest rates on
which are determined on the basis of rates referred to in clause (a) of the
definition of "Fixed Base Rate" in this Section 1.01.
"Event of Default" shall have the meaning assigned to such
term in Section 9 hereof.
"Existing Credit Agreement" shall mean the Credit Agreement
dated as of July 1, 1993 among the Company, each of the banks that is a party
thereto and The Chase Manhattan Bank (National Association), as agent, as
modified, supplemented and in effect from time to time.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (a) if the day for
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which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if
such rate is not so published for any Business Day, the Federal Funds Rate for
such Business Day shall be the average rate charged to Chase on such Business
Day on such transactions as determined by the Agent.
"Fixed Base Rate" shall mean, with respect to any Fixed Rate
Loan for any Interest Period therefor:
(a) if such Loan is a Eurodollar Loan, the arithmetic mean
(rounded upwards, if necessary, to the nearest 1/16 of 1%) of the
respective rates per annum quoted by each Reference Bank at
approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the date two Business Days prior to the first day of
such Interest Period for the offering by such Reference Bank to
leading banks in the London interbank market of Dollar deposits having
a term comparable to such Interest Period and in an amount comparable
to the principal amount of the Eurodollar Loan to be made by such
Reference Bank for such Interest Period; and
(b) if such Loan is a CD Loan, the arithmetic mean (rounded
upwards, if necessary, to the nearest 1/20 of 1%), as determined by
the Agent, of the respective rates per annum determined by each
Reference Bank to be the average of the bid rates quoted to such
Reference Bank at approximately 10:00 a.m. New York time (or as soon
thereafter as practicable) on the first day of such Interest Period by
at least two certificate of deposit dealers of recognized national
standing selected by such Reference Bank for the purchase at face
value of certificates of deposit of such Reference Bank having a term
comparable to such Interest Period and in an amount comparable to the
principal amount of the CD Loan to be made by such Reference Bank for
such Interest Period.
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If any Reference Bank is not participating in any Fixed Rate Loan during any
Interest Period therefor, the Fixed Base Rate for such Loan for such Interest
Period shall be determined by reference to the amount of the Loan that such
Reference Bank would have made or had outstanding had it been participating in
such Loan during such Interest Period. If any Reference Bank does not timely
furnish such information for determination of any Fixed Base Rate, the Agent
shall determine such Fixed Base Rate on the basis of the information timely
furnished by the remaining Reference Banks.
"Fixed Charges" shall mean, for any period, the sum
(determined on a consolidated basis in accordance with GAAP and without
duplication) of the following for the Company and its Consolidated Subsidiaries
(provided that, for purposes of this definition, Persons that become
Consolidated Subsidiaries of the Company at any time during such period shall
be deemed to have been Consolidated Subsidiaries of the Company during the
entire such period on a pro forma basis after giving effect to any repayment or
incurrence of Indebtedness of such Persons at the respective times that they
become Consolidated Subsidiaries of the Company): (a) all payments of
principal of Indebtedness (including, without limitation, payments of
Non-Qualifying Equity that are not Interest Expense) scheduled to be made
during the four consecutive fiscal quarters beginning on the date next
succeeding the last date of such period (excluding any Indebtedness incurred in
connection with the Acquisition of any Consolidated Subsidiary after the end of
such period and any Indebtedness for which the Company or any of its
Consolidated Subsidiaries (as the case may be) is liable solely by reason of a
Guarantee and which the Company reasonably does not expect will be required to
be paid by the Company or any of its Subsidiaries during such period) plus (b)
all payments of Interest Expense made in cash during such period plus (c)
Capital Expenditures for such period (but excluding the principal and interest
components of Capital Lease Obligations for such period to the extent the same
are included in determining the amount of principal payments of Indebtedness
and the amount of Interest Expense in clauses (a) and (b) of this definition,
respectively) plus (d) Dividend Payments made during such period plus (e)
income and franchise
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taxes paid in cash during such period. Notwithstanding the foregoing, Fixed
Charges shall not include the purchase price for the Liquid Yield Option Notes
due 2007 (Zero Coupon-Subordinated) of the Company issued under an indenture
dated as of February 13, 1992 between the Company and The Bank of New York, as
trustee, to the extent paid in cash with the proceeds of Qualifying Equity.
"Fixed Charges Ratio" shall mean, as at any date of
determination thereof, the ratio of (a) Cash Flow for the period of four
consecutive fiscal quarters of the Company ending on or most recently ended
prior to such date of determination in respect of which the Company has
delivered financial statements to the Banks pursuant to Section 8.01(a) or (b)
hereof to (b) Fixed Charges for such period.
"Fixed Rate" shall mean, for any Fixed Rate Loan for any
Interest Period therefor, a rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) determined by the Agent to be equal to the sum of (a)
the Fixed Base Rate for such Loan for such Interest Period divided by 1 minus
the Reserve Requirement for such Loan for such Interest Period plus (b) if such
Loan is a CD Loan, the Assessment Rate for such Interest Period.
"Fixed Rate Loans" shall mean CD Loans and Eurodollar Loans.
"Funded Debt" shall mean, as at any date, the sum of the
following (without duplication) for the Company and its Consolidated
Subsidiaries on a consolidated basis: (a) the aggregate outstanding principal
amount (net of unamortized discount) of the Subordinated Indebtedness; (b) the
aggregate principal amount of Indebtedness incurred as part of the CNN Center
Financing; (c) the aggregate amount (net of unamortized discount) of Capital
Lease Obligations; (d) Indebtedness under this Agreement and the Notes; (e) the
aggregate outstanding principal or face amount of Commercial Paper; (f) the
aggregate principal amount of other Indebtedness for borrowed money which would
be classified as debt on a consolidated balance sheet of the Company and its
Consolidated
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Subsidiaries prepared in accordance with GAAP; and (g) all Non-Qualifying
Equity issued by the Company and its Consolidated Subsidiaries, the amount of
which for purposes of this Agreement shall be the amount thereof that
(howsoever classified) is (or should be) carried on the consolidated balance
sheet of the Company and its Consolidated Subsidiaries prepared in accordance
with GAAP; provided that Funded Debt shall include Indebtedness for which the
Company or any of its Consolidated Subsidiaries (as the case may be) is liable
solely by reason of a Guarantee only to the extent such Indebtedness relates to
money borrowed by any Person.
"Funded Debt Ratio" shall mean, as at any date of
determination thereof, the ratio of (a) Funded Debt outstanding on such date to
(b) Cash Flow for the period of four fiscal quarters of the Company ending on
the last day of the fiscal quarter of the Company ending on or most recently
ended prior to such date in respect of which the Company has delivered
financial statements to the Banks pursuant to Section 8.01(a) or (b) hereof.
"GAAP" shall mean generally accepted accounting principles
applied on a basis consistent with those which, in accordance with the last
sentence of Section 1.02(a) hereof, are to be used in making the calculations
for purposes of determining compliance with this Agreement.
"Guarantee" shall mean a guarantee, an endorsement, a
contingent agreement to purchase or to furnish funds for the payment or
maintenance of, or otherwise to be or become contingently liable under or with
respect to, the Indebtedness, other obligations, net worth, working capital or
earnings of any Person, or a guarantee of the payment of dividends or other
distributions upon the stock or equity interests of any Person, or an agreement
to purchase, sell or lease (as lessee or lessor) Property, products, materials,
supplies or services primarily for the purpose of enabling a debtor to make
payment of such debtor's obligations or an agreement to assure a creditor
against loss, and including, without limitation, causing a bank or other
financial institution to issue a letter of credit or other
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similar instrument for the benefit of another Person, but excluding
endorsements for collection or deposit in the ordinary course of business. The
terms "Guarantee" and "Guaranteed" used as a verb shall have a correlative
meaning.
"Indebtedness" shall mean, as to any Person: (a) indebtedness
created, issued or incurred by such Person for borrowed money (whether by loan
or the issuance and sale of debt securities); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade, film contracts, employment contracts and other accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business and which is not overdue by more than 120 days
unless contested in good faith and either not the subject of a judicial
proceeding or collection thereof is stayed; (c) Indebtedness of others secured
by a Lien on the Property of such Person, whether or not the respective
Indebtedness so secured has been assumed by such Person; (d) obligations of
such Person (contingent or otherwise) in respect of letters of credit or
similar instruments issued or accepted by banks and other financial
institutions for the account of such Person; (e) Capital Lease Obligations of
such Person; (f) Indebtedness of others Guaranteed by such Person and (g)
Non-Qualifying Equity issued by such Person, the amount of which for purposes
of this Agreement shall be the amount thereof that (howsoever classified) is
(or should be) carried on the consolidated balance sheet of the Company and its
Consolidated Subsidiaries prepared in accordance with GAAP. For purposes of
calculating the amount of any Indebtedness hereunder: (i) there shall be no
double-counting of direct obligations, Guarantees and reimbursement obligations
for letters of credit, (ii) the principal amount of any Indebtedness of any
Person arising by reason of such Person having granted a Lien on its property
to secure Indebtedness of others, when such Indebtedness has not been assumed
by such Person, shall be the lower of the fair market value of such Property
and the principal amount of such Indebtedness outstanding (or committed to be
advanced) at the time of determination and (iii) the principal amount of any
Indebtedness of any Person arising by reason of such Person having Guaranteed
Indebtedness of others, where the amount of
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such Guarantee is limited to an amount less than the principal amount of the
Indebtedness Guaranteed, shall be such amount as so limited. Notwithstanding
the foregoing, the term "Indebtedness" shall not include obligations of any
Subsidiary of the Company whose assets consist substantially only of a general
partnership interest (or a comparable interest) in a partnership (or other
comparable entity) that is not a Subsidiary, where such obligations arise as a
matter of law from obligations of such partnership (or comparable entity).
"Indenture" shall mean the Indenture dated as of October 15,
1989 between the Company and United States Trust Company of New York, as
trustee, providing for the issuance by the Company of its Senior Subordinated
Debentures due October 15, 2001 in an original aggregate principal amount equal
to $550,000,000, as such Indenture is modified and supplemented and in effect
from time to time.
"Interest Coverage Ratio" shall mean, as at any date of
determination thereof, the ratio of (a) Cash Flow for the period of four
consecutive fiscal quarters of the Company ending on or most recently ended
prior to such date in respect of which the Company has delivered financial
statements to the Banks pursuant to Section 8.01(a) or (b) hereof to (b)
Interest Expense paid or payable in cash during such period.
"Interest Expense" shall mean, for any period, the sum of the
following for the Company and its Consolidated Subsidiaries (provided that, for
the purposes of this definition, Persons that become Consolidated Subsidiaries
of the Company at any time during such period shall be deemed to have been
Consolidated Subsidiaries of the Company during such period on a pro forma
basis): (a) all interest in respect of Indebtedness payable during such period
(whether or not actually paid during such period, but excluding interest on
Indebtedness for which the Company or any of its Consolidated Subsidiaries (as
the case may be) is liable solely by reason of a Guarantee and which the
Company reasonably does not expect will be required to be paid by the Company
or any of its Subsidiaries (and which was not paid by the Company or any of its
Consolidated Subsidiaries during such
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period)) plus (b) the net amounts payable (or minus the net amounts receivable)
under Interest Rate Protection Agreements accrued during such period (whether
or not actually paid or received during such period) plus (c) all commitment
fees payable by the Company to the Banks pursuant to Section 2.04 hereof during
such period plus (d) all Non-Qualifying Equity Distributions (as defined
below). For purposes of this definition, "Non-Qualifying Equity Distributions"
shall mean dividends (in cash, property or obligations) on, or other payments
or distributions on account of, or the setting apart of money for a sinking or
other analogous fund for the purchase, redemption, retirement or other
acquisition of, any Non-Qualifying Equity of the Company or any Subsidiary of
the Company, but excluding (i) dividends payable solely in shares of Qualifying
Equity, (ii) the purchase by the Company of any Non-Qualifying Equity issued by
any Subsidiary of the Company and (iii) such dividends, payments, distributions
or setting apart of money to the extent the making thereof reduces the amount
of Indebtedness comprised of Non-Qualifying Equity.
"Interest Period" shall mean:
(a) with respect to any Eurodollar Loan, each period
commencing on the date such Eurodollar Loan is made or Converted from
a Loan of another Type or the last day of the next preceding Interest
Period for such Loan and ending on the numerically corresponding day
in the first, second, third or sixth calendar month thereafter, as the
Company may select as provided in Section 4.05 hereof, except that
each Interest Period that commences on the last Business Day of a
calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall
end on the last Business Day of the appropriate subsequent calendar
month and
(b) with respect to any CD Loan, each period commencing on
the date such CD Loan is made or Converted from a Loan of another Type
or the last day of the next preceding Interest Period for such Loan
and ending on the
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day 30, 60, 90 or 180 days thereafter, as the Company may select as
provided in Section 4.05 hereof.
Notwithstanding the foregoing: (i) no Interest Period may commence before and
end after any Commitment Reduction Date unless, after giving effect to such
Interest Period, the aggregate principal amount of the Loans having Interest
Periods that end after such Commitment Reduction Date shall be equal to or less
than the aggregate amount of the Commitments scheduled to be in effect after
giving effect to the reduction of Commitments scheduled to occur on such
Commitment Reduction Date; (ii) each Interest Period that would otherwise end
on a day which is not a Business Day shall end on the next succeeding Business
Day (or, in the case of an Interest Period for a Eurodollar Loan, if such next
succeeding Business Day falls in the next succeeding calendar month, on the
next preceding Business Day); and (iii) notwithstanding clause (i) above, no
Interest Period shall have a duration of less than one month (in the case of a
Eurodollar Loan) or 30 days (in the case of a CD Loan) and, if the Interest
Period for any Fixed Rate Loan would otherwise be a shorter period, such Loan
shall not be available hereunder for such period.
"Interest Rate Protection Agreement" shall mean, for any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies.
"Investment" shall mean, for any Person: (a) the acquisition
(whether for cash, Property, services or securities or otherwise) of capital
stock, bonds, notes, debentures, partnership or other ownership interests or
other securities of any other Person or any agreement to make any such
acquisition (including, without limitation, any "short sale" or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale); (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance, loan or
extension of credit representing the purchase price of goods, intangibles or
services
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sold or supplied in the ordinary course of business) or Guarantee of, or other
contingent obligation with respect to, Indebtedness or other liability of such
Person and (without duplication) any amount committed to be advanced, lent or
extended to such Person; (c) any Acquisition other than the acquisition of
goods, intangibles or services purchased in the ordinary course of business and
accounted for as an expense in accordance with GAAP or as a Capital Expenditure
or (d) the entering into of any Interest Rate Protection Agreement.
"Licensed Rights" shall mean Program Rights with a license
term less than the useful life (including all practical renewals) of the right
being licensed. Without limiting the foregoing, "Licensed Rights" shall not
include Program Rights owned, directly or indirectly, on July 1, 1993, by
Turner Entertainment Co.
"Lien" shall mean, with respect to any Property, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such Property. For purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any Property that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement (other than an operating lease)
relating to such Property.
"Loans" shall mean the loans provided for in Section 2.01
hereof, which may be Base Rate Loans and/or Fixed Rate Loans.
"LTCB" shall mean The Long-Term Credit Bank of Japan, Ltd.
"Majority Banks" shall mean, subject to the last paragraph of
Section 11.04 hereof, Banks having more than 50% of the aggregate amount of the
Commitments or, if the Commitments shall have terminated, Banks holding more
than 50% of the aggregate unpaid principal amount of the Loans.
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"Margin Stock" shall mean "margin stock" within the meaning of
Regulations U and X.
"Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of the Company and its Subsidiaries taken as a
whole, (b) the ability of the Company to perform its obligations under this
Agreement or any of the Notes, (c) the validity or enforceability of this
Agreement or any of the Notes, (d) the rights and remedies of any Bank or the
Agent under this Agreement or any of the Notes or (e) the timely payment of the
principal of or interest on the Loans or other amounts payable in connection
therewith.
"Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by the
Company or any ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Cash Proceeds" shall mean, with respect to any
Disposition of any Property or issuance of Permitted Equity, the aggregate cash
payments received (directly or indirectly), including any cash payments
received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, therefrom, but only as and when received,
net of repayments of Indebtedness secured by Liens on such Property (in the
case of a Disposition) and all reasonable legal, brokerage and investment
banking fees and expenses, title and recording tax expenses, commissions, fees
and expenses incurred in obtaining regulatory approvals, and foreign, federal,
state and local income or other taxes estimated to be payable in connection
therewith.
"Net Proceeds" shall mean, with respect to any Disposition of
any Property, the aggregate cash payments, and the fair market value of any
non-cash consideration, received (directly or indirectly), including any cash
payments received by way of deferred payment of principal pursuant to a note or
installment receivable or otherwise, therefrom, but only as and when received,
net of repayments of Indebtedness secured by Liens
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on such Property and all reasonable legal, brokerage and investment banking
fees and expenses, title and recording tax expenses, commissions, fees and
expenses incurred in obtaining regulatory approvals, and foreign, federal,
state and local income or other taxes estimated to be payable in connection
therewith.
"Non-Qualifying Equity" of any Person shall mean Capital Stock
or other ownership interests issued by such Person that is not Qualifying
Equity.
"Non-Significant Subsidiary" shall mean any Subsidiary of the
Company which is not a Significant Subsidiary.
"Notes" shall mean the promissory notes provided for by
Section 2.07 hereof and all promissory notes delivered in substitution or
exchange therefor, in each case as the same shall be modified and supplemented
and in effect from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Equity" shall mean Non-Qualifying Equity and
Qualifying Equity.
"Permitted Investments" of any Person shall mean: (a) U.S.
Government Obligations maturing not more than 180 days from the date of
acquisition thereof by such Person; (b) certificates of deposit issued by any
bank or trust company organized under the laws of the United States of America
or any state thereof and having capital, surplus and undivided profits of at
least $500,000,000, or issued by any Bank, maturing not more than 180 days from
the date of acquisition thereof by such Person; and (c) debt instruments rated
A-2 or better by Standard & Poor's Ratings Group ("S&P") or P-2 or better by
Moody's Investors Service, Inc. ("Moody's") or issued by an issuer having a
long term debt rating of BBB- or better from S&P or Baa3 or better from
Moody's, in any case maturing not more
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than 180 days from the date of acquisition thereof by such Person.
"Permitted Other Holders" shall mean (a) each Person that, on
the date hereof, was either (i) the beneficial holder (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as in effect
on the date hereof) of shares of the Class C Convertible Preferred Stock, par
value $.125 per share, of the Company or (ii) an Affiliate of a Person
specified in clause (i) above and (b) each Person at least 66-2/3% of the
voting power of the Voting Stock of which is beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as
in effect on the date hereof) by one or more of the Persons specified in clause
(a) above.
"Permitted Turner Holders" shall mean R.E. Turner and his
estate, heirs and legatees, and the legal representatives of any of the
foregoing, including, without limitation, the trustee of any trust of which one
or more of the foregoing are the sole beneficiaries.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Company or any ERISA Affiliate and that is
covered by Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount under this Agreement or any Note that is not paid
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 2%
plus the Base Rate as in effect from time to time plus the Applicable Margin
for Base Rate Loans (provided that, if the
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amount so in default is principal of a Fixed Rate Loan and the due date thereof
is a day other than the last day of the Interest Period therefor, the
"Post-Default Rate" for such principal shall be, for the period from and
including such due date to but excluding the last day of such Interest Period,
2% plus the interest rate for such Loan as provided in Section 3.02(b) hereof
and, thereafter, the rate provided for above in this definition).
"Prime Rate" shall mean the rate of interest from time to time
announced by Chase at the Principal Office as its prime commercial lending
rate.
"Principal Office" shall mean the principal office of Chase,
located on the date hereof at 1 Chase Manhattan Plaza, New York, New York
10081.
"Program Rights" shall mean all rights of the Company and/or
any of its Subsidiaries to use (whether by ownership, license or otherwise)
copyrighted programs, programming, films and similar assets.
"Property" shall mean, with respect to any Person, any and all
tangible or intangible property (including, without limitation, Capital Stock
and other equity interests in any other person), assets, revenues, rights
(including, without limitation, Program Rights) or business of such Person,
owned by leasehold or in fee, by license, sublicense or outright, whether now
owned or hereafter acquired by such Person.
"Qualifying Equity" of any Person shall mean: (a) common
stock or other ownership interests of such Person which is not required (other
than solely at the option of such Person) to be purchased, redeemed or
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otherwise retired by such Person or any of its Subsidiaries, and which is not
convertible (other than solely at the option of such Person) into Indebtedness
of such Person or any of its Subsidiaries, at any time before the date falling
one year after the Commitment Termination Date; (b) preferred stock or other
ownership interests of such Person which is not required (other than solely at
the option of such Person) to be purchased, redeemed or otherwise retired by
such Person or any of its Subsidiaries, and which is not convertible (other
than solely at the option of such Person) into Indebtedness of such Person or
any of its Subsidiaries, at any time before the date falling one year after the
Commitment Termination Date; (c) preferred stock or other ownership interests
issued by Subsidiaries of such Person to such Person or any Wholly Owned
Subsidiary of such Person, but only while such preferred stock or other
ownership interests (as the case may be) is held by such Person or a Wholly
Owned Subsidiary of such Person; (d) other preferred stock or other ownership
interests of such Person issued on terms and conditions satisfactory to the
Majority Banks and which the Majority Banks agree shall be Qualifying Equity
for the purposes of this Agreement; and (e) warrants for any of the foregoing
which are not required (other than solely at the option of such Person) to be
purchased, redeemed or otherwise retired by such Person or any of its
Subsidiaries (unless solely in exchange for the issuance of Qualifying Equity),
which are not convertible (other than solely at the option of such Person) into
Indebtedness of such Person or any of its Subsidiaries, at any time before the
date falling one year after the Commitment Termination Date, and the exercise
of which will not result in a Default.
"Quarterly Dates" shall mean the last Business Day of each
March, June, September and December, the first of which shall be the first such
day after the date of this Agreement.
"Reference Banks" shall mean Chase, Toronto-Dominion, LTCB,
and Credit Lyonnais (or their respective Applicable Lending Offices, as the
case may be).
"Regulations A, D, U and X" shall mean, respectively,
Regulations A, D, U and X of the Board of Governors of the Federal Reserve
System (or any successor), as the same may be modified and supplemented and in
effect from time to time.
"Regulatory Change" shall mean, with respect to any Bank, any
change after the date of this Agreement in Federal, state or foreign law or
regulations (including, without limitation, Regulation D) or the adoption or
making after such
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date of any interpretation, directive or request applying to a class of banks
including such Bank of or under any Federal, state or foreign law or
regulations (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.
"Reserve Requirement" shall mean, for any Interest Period for
any Fixed Rate Loan, the average maximum rate at which reserves (including,
without limitation, any marginal, supplemental or emergency reserves) are
required to be maintained during such Interest Period under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding one billion Dollars against (a) in the case of Eurodollar Loans,
"Eurocurrency liabilities" (as such term is used in Regulation D) or (b) in the
case of CD Loans, non-personal Dollar time deposits in an amount of $100,000 or
more. Without limiting the effect of the foregoing, the Reserve Requirement
shall include any other reserves required to be maintained by such member banks
by reason of any Regulatory Change with respect to (i) any category of
liabilities that includes deposits by reference to which the Fixed Base Rate
for Eurodollar Loans or CD Loans (as the case may be) is to be determined as
provided in the definition of "Fixed Base Rate" in this Section 1.01 or (ii)
any category of extensions of credit or other assets that includes Eurodollar
Loans or CD Loans.
"Senior Officer" shall mean with respect to any Person, any of
the Chairman of the Board, the President, the Senior Vice President -- Finance
& Administration, any Executive Vice President, the Vice President -- Finance,
the Vice President & Treasurer, the Vice President & Controller, any Assistant
Treasurer, any Assistant Vice President -- Finance or the Secretary of such
Person.
"Significant Subsidiary" shall mean, as of any date of
determination, each Subsidiary that (i) for the full fiscal year of the Company
most recently ended before such date and in respect of which the Banks have
received financial statements under Section 8.01(b) hereof, accounted for more
than 5% of
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consolidated revenue of the Company and its Consolidated Subsidiaries as shown
on the consolidated financial statements of the Company and its Consolidated
Subsidiaries for such fiscal year or (ii) as of such date of determination, is
the owner of more than 5% of the total consolidated assets of the Company and
its Consolidated Subsidiaries, calculated on the basis of the consolidated
financial statements of the Company and its Consolidated Subsidiaries for such
fiscal year; provided that, if any Person becomes a Subsidiary of the Company
after July 1, 1993, the determination of whether such Person is a Significant
Subsidiary shall, until it is a Consolidated Subsidiary for a full fiscal year
of the Company, be made using pro forma calculations as if it had been a
Subsidiary of the Company during the most recent full fiscal year of the
Company preceding the date it so became a Consolidated Subsidiary. In any
event, each of Superstation, Inc., Turner Entertainment Co., Turner Network
Television, Inc. and CNN shall be deemed to be a Significant Subsidiary.
"Subordinated Indebtedness" shall mean, collectively, (i) the
Senior Subordinated Debentures of the Company due October 15, 2001, issued
under the Indenture, and (ii) the Liquid Yield Option Notes of the Company due
2007 (Zero Coupon-Subordinated), issued under an indenture dated as of February
13, 1992 between the Company and The Bank of New York, as trustee.
"Subsidiary" shall mean, for any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at
the time directly or indirectly owned or controlled by such Person or one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person. "Wholly Owned Subsidiary" shall mean any such corporation,
partnership or
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other entity of which all of the equity securities or other ownership interests
(other than, in the case of a corporation, directors' qualifying shares) are so
owned or controlled.
"Toronto-Dominion" shall mean The Toronto-Dominion Bank.
"TOVI" shall mean Turner Omni Venture, Inc., a Georgia
corporation and a Wholly Owned Subsidiary of the Company.
"Type" shall have the meaning assigned to such term in
Section 1.03 hereof.
"U.S. Government Obligations" shall mean direct obligations
of, or obligations guaranteed by, the United States of America for the payment
of which obligation or guarantee the full faith and credit of the United States
of America is pledged.
"Voting Stock" shall mean, with respect to any Person, capital
stock of such Person having general voting power under ordinary circumstances
to elect directors to the board of directors of such person, but shall not
include any capital stock that has or would have such voting power solely by
reason of the happening of any contingency.
"Works" shall mean motion pictures, video and television
programs, audio-visual works, sound recordings, books and other literary or
written material, any copyright or other intellectual property related thereto,
any component of the foregoing or rights with respect thereto, and all
improvements thereon, products and proceeds thereof and revenues derived
therefrom.
1.02 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements
and certificates and reports as to financial matters required to be delivered
to the Banks hereunder shall (unless otherwise disclosed to the Banks in
writing at the time
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of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with generally accepted accounting principles applied
on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Banks hereunder (which, prior to the
delivery of the first financial statements under Section 8.01 hereof, shall
mean the audited financial statements as at December 31, 1993 referred to in
Section 7.02 hereof). All calculations made for the purposes of determining
compliance with this Agreement shall (except as otherwise expressly provided
herein) be made by application of generally accepted accounting principles
applied on a basis consistent with those used in the preparation of the annual
or quarterly financial statements furnished to the Banks pursuant to Section
8.01 hereof most recently prior to or concurrently with such calculations (or,
prior to the delivery of the first financial statements under Section 8.01
hereof, used in the preparation of the audited financial statements as at
December 31, 1993 referred to in Section 7.02 hereof) unless (i) either (x) the
Company shall have objected to determining such compliance on such basis at the
time of delivery of such financial statements or (y) the Majority Banks shall
so object in writing within 30 days after delivery of such financial statements
and (ii) the Company and the Majority Banks have not agreed upon amendments to
the financial covenants contained herein to reflect any change in such basis,
in which event such calculations shall be made on a basis consistent with those
used in the preparation of the latest financial statements as to which such
objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 8.01 hereof, shall mean
the financial statements referred to in Section 7.02 hereof).
(b) The Company shall deliver to the Banks at the same time
as the delivery of any annual or quarterly financial statement under Section
8.01 hereof (i) a description in reasonable detail of any material variation
between the application of accounting principles employed in the preparation of
such statement and the application of accounting principles employed in the
preparation of the next preceding annual or quarterly financial statements as
to which no objection has been
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made in accordance with the last sentence of subsection (a) above and (ii)
reasonable estimates of the difference between such statements arising as a
consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in Section 8 hereof, the Company will
not change the last day of its fiscal year from December 31 of each year, or
the last days of the first three fiscal quarters in each of its fiscal years
from March 31, June 30 and September 30 of each year, respectively.
(d) It is contemplated by Section 8.19 hereof that on or
after the date hereof the Company and its Subsidiaries may enter into a tax
sharing agreement pursuant to which the Company will agree to join an
affiliated group of Persons owned or controlled by a "common parent" (within
the meaning of Section 1504 of the Code) in filing consolidated Federal income
tax returns. So long as the Company and its Subsidiaries shall be included in
consolidated Federal income tax returns filed by such common parent pursuant to
such tax sharing agreement, whenever making determinations under this Agreement
of the amount of Federal income taxes payable during any period (or the amount
of refunds in respect of such taxes receivable during any period) by the
Company and its Subsidiaries, the amount of such taxes payable or receivable
shall be deemed to be equal to the amounts payable or receivable, as the case
may be, in respect of such taxes under such tax sharing agreement without
reference to whether the Company and its Subsidiaries as an affiliated group
shall in fact pay any amounts in respect of Federal income taxes (or receive
any amounts in respect of refunds of Federal income taxes) during the relevant
period.
1.03 Types of Loans. Loans hereunder are distinguished by
"Type". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan,
a CD Loan or a Eurodollar Loan, each of which constitutes a Type.
Section 2. Commitments, Loans, Notes and Prepayments.
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2.01 Loans. Each Bank severally agrees, on the terms and
conditions of this Agreement, to make loans to the Company in Dollars during
the period from and including the date hereof to but not including the
Commitment Termination Date in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount of the Commitment of such Bank
as in effect from time to time. Subject to the terms and conditions of this
Agreement, during such period the Company may borrow, repay and reborrow the
amount of the Commitments by means of Base Rate Loans, CD Loans and Eurodollar
Loans and may Convert Loans of one Type into Loans of another Type or Continue
Loans of one Type as Loans of the same Type; provided that no more than five
separate Interest Periods in respect of Fixed Rate Loans from each Bank may be
outstanding at any one time.
2.02 Borrowings. The Company shall give the Agent (which
shall promptly notify the Banks) notice of each borrowing hereunder by means of
a Borrowing Notice as provided in Section 4.05 hereof. Not later than 1:00
p.m. New York time on the date specified for each borrowing hereunder, each
Bank shall make available the amount of the Loan or Loans to be made by it on
such date to the Agent, at account number NYAO-DI-900-9-000002 maintained by
the Agent with Chase at the Principal Office, in immediately available funds,
for account of the Company. The amount so received by the Agent shall, subject
to the terms and conditions of this Agreement, be made available to the Company
by depositing the same, in immediately available funds, in an account of the
Company maintained with Chase at the Principal Office designated by the
Company.
2.03 Changes of Commitments.
(a) The aggregate amount of the Commitments shall be
automatically reduced to zero on the Commitment Termination Date.
(b) The aggregate amount of the Commitments shall be
automatically reduced on each Commitment Reduction Date set forth in column (A)
below by the amount (subject to reduction pursuant to paragraph (d) below) set
forth in column (B) below opposite such Commitment Reduction Date:
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(A) (B)
Commitment Reduction Commitments Reduced
Date Falling on or by the Following
Nearest to: Amounts
-------------------- -------------------
March 31, 1998 $25,000,000
June 30, 1998 $25,000,000
September 30, 1998 $25,000,000
December 31, 1998 $25,000,000
March 31, 1999 $50,000,000
June 30, 1999 $50,000,000
September 30, 1999 $50,000,000
December 31, 1999 $50,000,000
March 31, 2000 $50,000,000
June 30, 2000 $50,000,000
September 30, 2000 $50,000,000
December 31, 2000 $50,000,000
(c) The Company shall have the right at any time or from time
to time (i) so long as no Loans are outstanding, to terminate the Commitments
and (ii) to reduce the aggregate unused amount of the Commitments; provided
that (x) the Company shall give notice of each such termination or reduction as
provided in Section 4.05 hereof and (y) each partial reduction shall be in an
aggregate amount at least equal to $10,000,000 or in multiples of $5,000,000 in
excess thereof.
(d) Each reduction in the aggregate amount of the Commitments
pursuant to the preceding paragraph (c) (a "Voluntary Reduction") shall result
in a simultaneous reduction in the aggregate amount by which the Commitments
are to be reduced pursuant to paragraph (b) above on each Commitment Reduction
Date following the date of such Voluntary Reduction, such simultaneous
reduction to be in an aggregate amount equal to the amount of such Voluntary
Reduction and to be applied to the amounts set forth under column (B) of said
paragraph (b) as follows: each amount set forth under said column (B) opposite
a Commitment
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Reduction Date following the date of such Voluntary Reduction (each, a
"relevant amount") shall be reduced to an amount equal to (X) such relevant
amount multiplied by (Y) a fraction, the numerator of which is equal to the
aggregate amount of the Commitments immediately following such Voluntary
Reduction and the denominator of which is equal to the aggregate amount of the
Commitments immediately prior to such Voluntary Reduction.
(e) The Commitments once terminated or reduced may not be
reinstated.
2.04 Commitment Fee. The Company shall pay to the Agent for
account of each Bank a commitment fee on the daily average unused amount of
such Bank's Commitment, for the period from and including the date of this
Agreement to but not including the earlier of the date such Commitment is
terminated and the Commitment Termination Date, at a rate per annum equal to
the daily average Applicable Rate (as defined in the next sentence) for such
period. For purposes of the preceding sentence, the "Applicable Rate" shall
mean:
(a) 1/4 of 1% during the period from and including the date of
this Agreement to but excluding October 15, 1994 (the "Initial
Period"), provided that, if the initial Loan hereunder is made during
the Initial Period, the Applicable Rate for each day during the
Initial Period (including all days prior to the date on which such
first Loan is made) shall be increased to 3/8 of 1%;
(b) 1/4 of 1% for any day on which the Applicable Margin for
Eurodollar Loans is less than or equal to 3/4 of 1%; and
(c) 3/8 of 1% for all other days.
Accrued commitment fees (including, without limitation, any commitment fees
accrued by reason of the increase in the Applicable Rate for each day during
the Initial Period pursuant to clause (a) of the definition of "Applicable
Rate") shall be
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payable on each Quarterly Date and on the earlier of the date the Commitments
are terminated and the Commitment Termination Date.
2.05 Lending Offices. The Loans of each Type made by each
Bank shall be made and maintained at such Bank's Applicable Lending Office for
Loans of such Type.
2.06 Several Obligations; Remedies Independent. The failure
of any Bank to make any Loan to be made by it on the date specified therefor
shall not relieve any other Bank of its obligation to make its Loan on such
date, but neither any Bank nor the Agent shall be responsible for the failure
of any other Bank to make a Loan to be made by such other Bank, and no Bank
shall have any obligation to the Agent or any other Bank for the failure by
such Bank to make any Loan required to be made by such Bank. The amounts
payable by the Company at any time hereunder and under the Notes to each Bank
shall be a separate and independent debt and each Bank shall be entitled to
protect and enforce its rights arising out of this Agreement and the Notes, and
it shall not be necessary for any other Bank or the Agent to consent to, or be
joined as an additional party in, any proceedings for such purposes.
2.07 Notes.
(a) The Loans made by each Bank shall be evidenced by a
single promissory note of the Company substantially in the form of Exhibit A
hereto, dated the date hereof, payable to such Bank in a principal amount equal
to the amount of its Commitment as originally in effect and otherwise duly
completed.
(b) The date, amount, Type, interest rate and duration of
Interest Period (if applicable) of each Loan made by each Bank to the Company,
and each payment made on account of the principal thereof, shall be recorded by
such Bank on its books and, prior to any transfer of the Note held by it,
endorsed by such Bank on the schedule attached to such Note or any continuation
thereof; provided that the failure of such Bank to make any such recordation or
endorsement shall not affect the obligations of
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the Company to make a payment when due of any amount owing hereunder or under
such Note in respect of the Loans.
(c) No Bank shall be entitled to have any Note held by it
subdivided, by exchange for promissory notes of lesser denominations or
otherwise, except in connection with a permitted assignment of all or any
portion of such Note and the respective Loans evidenced thereby pursuant to
Section 11.06(b) hereof. In the case of any such subdivision in connection
with any such assignment, new Notes (the "New Notes") issued in exchange for
Notes (the "Old Notes") previously issued hereunder (i) shall be dated the
respective dates of assignment, (ii) shall be otherwise duly completed and
(iii) shall bear a legend, to the effect that such New Notes are issued in
exchange for such Old Notes and that the indebtedness represented by such Old
Notes shall not have been extinguished by reason of such exchange.
2.08 Optional Prepayments and Conversions or Continuations of
Loans. Subject to Section 4.04 hereof, the Company shall have the right to
prepay Loans, or to Convert Loans of one Type into Loans of another Type or
Continue Loans of one Type as Loans of the same Type, at any time or from time
to time, provided that: (a) the Company shall give the Agent notice of each
such prepayment, Conversion or Continuation as provided in Section 4.05 hereof;
and (b) Fixed Rate Loans may be Converted only on the last day of an Interest
Period for such Loans. Notwithstanding the foregoing, and without limiting the
rights and remedies of the Banks under Section 9 hereof, in the event that any
Event of Default shall have occurred and be continuing, the Agent may (and at
the request of the Majority Banks shall) suspend the right of the Company to
Convert any Loan into a Fixed Rate Loan, or to Continue any Loan as a Fixed
Rate Loan, in which event all Loans shall be Converted to (on the last day(s)
of the respective Interest Periods therefor) or Continued as, as the case may
be, Base Rate Loans.
2.09 Mandatory Reductions of Commitments.
(a) Issuance of Equity. On the first anniversary of each
date of the receipt of proceeds from the issuance of
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Qualifying Equity by any Non-Significant Subsidiary (other than to the Company
or any Subsidiary), the Commitments shall be automatically reduced by an
aggregate amount equal to (i) the amount of the Net Cash Proceeds of such
issuance minus (ii) the amount of such Net Cash Proceeds theretofore invested
or committed to be invested in the business of the Company and the Subsidiaries
minus (iii) an amount equal to the aggregate amount by which the "Commitments"
under the Existing Credit Agreement are reduced by reason of such issuance
pursuant to Section 2.09(a) thereof (as in effect on the date hereof).
(b) Dispositions of or by Non-Significant Subsidiaries or the
CNN Center Complex. On the first anniversary of each Disposition permitted by
Section 8.18(b) or (c) hereof, the Commitments shall be automatically reduced
by an aggregate amount equal to (i) the amount of the Net Cash Proceeds of such
Disposition minus (ii) the amount of such Net Cash Proceeds theretofore
invested or committed to be invested in the business of the Company and the
Subsidiaries minus (iii) an amount equal to the aggregate amount by which the
"Commitments" under the Existing Credit Agreement are reduced by reason of such
Disposition pursuant to Section 2.09(b) thereof (as in effect on the date
hereof).
(c) Certain Other Dispositions. If the Company or any of the
Subsidiaries shall make any Disposition of Property (other than Contributed
Property) permitted by Section 8.18(e) hereof after December 31, 1994, the
Commitments shall be automatically reduced on the date such Disposition is
consummated by an aggregate amount equal to (X) the amount of the Net Proceeds
of such Disposition minus (Y) an amount equal to the aggregate amount by which
the "Commitments" under the Existing Credit Agreement are reduced by reason of
such Disposition pursuant to Section 2.09(c) thereof (as in effect on the date
hereof).
(d) Application. No reduction in the aggregate amount of the
Commitments pursuant to this Section 2.09 shall result in any reduction in the
aggregate amount by which the Commitments are to be reduced pursuant to
paragraph (b) of Section 2.03 hereof, it being the intent of the parties hereto
that all such
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reductions pursuant to this Section 2.09 be applied against such reductions
pursuant to said paragraph (b) in inverse chronological order.
Section 3. Payments of Principal and Interest.
3.01 Repayment of Loans. The Company hereby promises to pay
to the Agent for account of each Bank the entire outstanding principal amount
of such Bank's Loans, and each Loan shall mature, on the Commitment Termination
Date. In addition, if following any reduction of the Commitments on any date
(whether on any Commitment Reduction Date or otherwise) the aggregate principal
amount of the Loans shall exceed the aggregate amount of the Commitments, the
Company shall prepay Loans on such date in an aggregate amount equal to such
excess.
3.02 Interest. The Company hereby promises to pay to the
Agent for account of each Bank interest on the unpaid principal amount of each
Loan made by such Bank for the period from and including the date of such Loan
to but excluding the date such Loan shall be paid in full, at the following
rates per annum:
(a) during such periods as such Loan is a Base Rate Loan, the
Base Rate (as in effect from time to time) plus the Applicable Margin
(if any); and
(b) during such periods as such Loan is a Fixed Rate Loan,
for each Interest Period relating thereto, the Fixed Rate for such
Loan for such Interest Period plus the Applicable Margin.
Notwithstanding the foregoing, the Company hereby promises to pay to the Agent
for account of each Bank interest at the applicable Post-Default Rate on any
principal of any Loan made by such Bank and on any other amount payable by the
Company hereunder or under the Note held by such Bank to or for account of such
Bank, which shall not be paid in full when due (whether at stated maturity, by
acceleration, by mandatory prepayment or otherwise), for the period from and
including the due date thereof to but excluding
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the date the same is paid in full. Accrued interest on each Loan shall be
payable (i) in the case of a Base Rate Loan, quarterly on the Quarterly Dates,
(ii) in the case of a Fixed Rate Loan, on the last day of each Interest Period
therefor and, if such Interest Period is longer than 90 days (in the case of a
CD Loan) or three months (in the case of a Eurodollar Loan), at 90-day or
three-month intervals, respectively, following the first day of such Interest
Period, and (iii) in the case of any Loan, upon the payment or prepayment
thereof or the Conversion of such Loan to a Loan of another Type (but only on
the principal amount so paid, prepaid or Converted), except that interest
payable at the Post-Default Rate shall be payable from time to time on demand.
Promptly after the determination of any interest rate provided for herein or
any change therein, the Agent shall give notice thereof to the Banks to which
such interest is payable and to the Company.
Section 4. Payments; Pro Rata Treatment; Computations; Etc.
4.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Company
under this Agreement and the Notes shall be made in Dollars, in immediately
available funds, without deduction, set-off or counterclaim, to the Agent at
account number NYAO-DI-900-9-000002 maintained by the Agent with Chase at the
Principal Office, not later than 1:00 p.m. New York time on the date on which
such payment shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
(b) Subject to Section 4.07 hereof, any Bank for whose
account any such payment is to be made may (but shall not be obligated to)
debit the amount of any such payment that is not made by such time to any
ordinary deposit account of the Company with such Bank (with notice to the
Company and the Agent, provided that such Bank's failure to give such notice
shall not affect the validity thereof).
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(c) The Company shall, at the time of making each payment
under this Agreement or any Note for account of any Bank, specify to the Agent
(which shall so notify the intended recipient(s) thereof) the Loans or other
amounts payable by the Company hereunder to which such payment is to be applied
(and in the event that the Company fails to so specify, or if an Event of
Default has occurred and is continuing, the Agent may distribute such payment
to the Banks for application in such manner as it or the Majority Banks,
subject to Section 4.02 hereof, may determine to be appropriate).
(d) Each payment received by the Agent under this Agreement
or any Note for account of any Bank shall be paid by the Agent promptly to such
Bank, in immediately available funds, for account of such Bank's Applicable
Lending Office for the Loan or other obligation in respect of which such
payment is made.
(e) If the due date of any payment under this Agreement or
any Note would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall be
payable for any principal so extended for the period of such extension.
4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each borrowing from the Banks under Section 2.01 hereof
shall be made from the Banks, each payment of commitment fee under Section 2.04
hereof shall be made for account of the Banks, and each termination or
reduction of the amount of the Commitments under Section 2.03 hereof shall be
applied to the respective Commitments of the Banks, pro rata according to the
amounts of their respective Commitments; (b) the making, Conversion and
Continuation of Loans of a particular Type (other than as provided for by
Section 5.04 hereof) shall be made pro rata among the Banks according to the
amounts of their respective Commitments (in the case of making of Loans) or
their respective Loans (in the case of Conversions and Continuations of Loans)
and the then current Interest Period for each Loan of such Type shall be
coterminous; (c) each payment or prepayment of principal of Loans by the
Company shall be made for account of
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the Banks pro rata in accordance with the respective unpaid principal amounts
of the Loans held by them, provided that if immediately prior to giving effect
to any such payment in respect of any Loans the outstanding principal amount of
the Loans shall not be held by the Banks pro rata in accordance with their
respective Commitments in effect at the time such Loans were made (by reason of
a failure of a Bank to make a Loan hereunder in the circumstances described in
the last paragraph of Section 11.04 hereof), then such payment shall be applied
to the Loans in such manner as shall result, as nearly as is practicable, in
the outstanding principal amount of the Loans being held by the Banks pro rata
in accordance with their respective Commitments; and (d) each payment of
interest on Loans by the Company shall be made for account of the Banks pro
rata in accordance with the amounts of interest on such Loans then due and
payable to the respective Banks.
4.03 Computations. Interest on Fixed Rate Loans and
commitment fees shall be computed on the basis of a year of 360 days and actual
days elapsed (including the first day but excluding the last day) occurring in
the period for which payable and interest on Base Rate Loans shall be computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed (including the first day but excluding the last day) occurring in the
period for which payable. Notwithstanding the foregoing, for each day that the
Base Rate is calculated by reference to the Federal Funds Rate, interest on
Base Rate Loans shall be computed on the basis of a year of 360 days and actual
days elapsed.
4.04 Minimum Amounts. Except for mandatory prepayments made
pursuant to Section 2.09 hereof and Conversions or prepayments made pursuant to
Section 5.04 hereof, each borrowing, Conversion and partial prepayment of
principal of Loans shall be in an aggregate amount at least equal to $5,000,000
or in multiples of $1,000,000 in excess thereof (borrowings, Conversions or
prepayments of or into Loans of different Types or, in the case of Fixed Rate
Loans, having different Interest Periods at the same time hereunder to be
deemed separate borrowings, Conversions and prepayments for
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purposes of the foregoing, one for each Type or Interest Period). Anything in
this Agreement to the contrary notwithstanding, the aggregate principal amount
of Fixed Rate Loans of each Type having the same Interest Period shall be in an
amount at least equal to $20,000,000 or in multiples of $1,000,000 in excess
thereof and, if any Fixed Rate Loans would otherwise be in a lesser principal
amount for any period, such Loans shall be Base Rate Loans during such period.
4.05 Certain Notices. Notices by the Company to the Agent of
terminations or reductions of the Commitments and of borrowings, Conversions,
Continuations and optional prepayments of Loans, of Types of Loans and of the
duration of Interest Periods shall be irrevocable (except in the case of
notices of optional prepayments) and shall be effective only if received by the
Agent not later than 10:30 a.m. New York time on the number of Business Days
prior to the date of the relevant termination, reduction, borrowing,
Conversion, Continuation or prepayment or the first day of such Interest Period
specified below:
Number of
Business
Notice Days Prior
------ ----------
Termination or reduction
of Commitments 3
Borrowing or prepayment of,
or Conversions into,
Base Rate Loans same day
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, Eurodollar Loans 3
Borrowing or prepayment of,
Conversions into, Continuations
as, or duration of Interest
Period for, CD Loans 2
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Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing (which
shall be a Credit Agreement), Conversion, Continuation or optional prepayment
shall specify the Loans to be borrowed, Converted, Continued or prepaid and the
amount (subject to Section 4.04 hereof) and Type of each Loan to be borrowed,
Converted, Continued or prepaid (and, in the case of a Conversion, the Type of
Loan to result from such Conversion) and the date of borrowing, Conversion,
Continuation or optional prepayment (which shall be a Business Day). Each such
notice of the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Agent shall promptly notify the Banks
of the contents of each such notice. In the event that the Company fails to
select the Type of Loan, or the duration of any Interest Period for any Fixed
Rate Loan, within the time period and otherwise as provided in this Section
4.05, such Loan (if outstanding as a Fixed Rate Loan) will be automatically
Converted into a Base Rate Loan on the last day of the then current Interest
Period for such Loan or (if outstanding as a Base Rate Loan) will remain as, or
(if not then outstanding) will be made as, a Base Rate Loan.
4.06 Non-Receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Bank or the Company (the "Payor") prior to the
date on which the Payor is to make payment to the Agent of (in the case of a
Bank) the proceeds of a Loan to be made by such Bank hereunder or (in the case
of the Company) a payment to the Agent for account of one or more of the Banks
hereunder (such payment being herein called the "Required Payment"), which
notice shall be effective upon receipt, that the Payor does not intend to make
the Required Payment to the Agent, the Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date; and, if the Payor has not in fact made the Required Payment to
the Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date (the "Advance Date")
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such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Rate for
such day and, if such recipient(s) shall fail promptly to make such payment,
the Agent shall be entitled to recover such amount, on demand, from the Payor,
together with interest as aforesaid, provided that if neither the recipient(s)
nor the Payor shall return the Required Payment to the Agent within three
Business Days of the Advance Date, then, retroactively to the Advance Date, the
Payor and the recipient(s) shall each be obligated to pay interest on the
Required Payment as follows:
(i) if the Required Payment shall represent a payment to be
made by the Company to the Banks, the Company and the recipient(s)
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the Post-Default Rate
(and, in case the recipient(s) shall return the Required Payment to
the Agent, without limiting the obligation of the Company under
Section 3.02 hereof to pay interest to such recipient(s) at the
Post-Default Rate in respect of the Required Payment) and
(ii) if the Required Payment shall represent proceeds of a Loan
to be made by the Banks to the Company, the Payor and the Company
shall each be obligated retroactively to the Advance Date to pay
interest in respect of the Required Payment at the rate of interest
provided for such Required Payment pursuant to Section 3.02 hereof
(and, in case the Company shall return the Required Payment to the
Agent, without limiting any claim the Company may have against the
Payor in respect of the Required Payment), and, to the extent that the
Company pays any such interest to the Agent, the Company shall pro
tanto be relieved of its obligation to pay interest to the Payor on
the related Loan.
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4.07 Sharing of Payments, Etc.
(a) The Company agrees that, in addition to (and without
limitation of) any right of set-off, banker's lien or counterclaim a Bank may
otherwise have, each Bank shall be entitled, at its option, to offset balances
held by it for account of the Company at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any of such Bank's
Loans or any other amount payable to such Bank hereunder, that is not paid when
due (regardless of whether such balances are then due to the Company), in which
case it shall promptly notify the Company and the Agent thereof, provided that
such Bank's failure to give such notice shall not affect the validity thereof.
(b) If any Bank shall obtain from the Company payment of any
principal of or interest on any Loan owing to it or payment of any other amount
under this Agreement through the exercise of any right of set-off, banker's
lien or counterclaim or similar right or otherwise (other than from the Agent
as provided herein), and, as a result of such payment, such Bank shall have
received a greater percentage of the principal of or interest on the Loans or
such other amounts then due hereunder by the Company to such Bank than the
percentage received by any other Bank, it shall promptly purchase from such
other Banks participations in (or, if and to the extent specified by such Bank,
direct interests in) the Loans or such other amounts, respectively, owing to
such other Banks (or in interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Banks shall share the benefit of such excess
payment (net of any expenses that may be incurred by such Bank in obtaining or
preserving such excess payment) pro rata in accordance with the unpaid
principal of and/or interest on the Loans or such other amounts, respectively,
owing to each of the Banks, provided that if at the time of such payment the
outstanding principal amount of the Loans shall not be held by the Banks pro
rata in accordance with their respective Commitments in effect at the time such
Loans were made (by reason of a failure of a Bank to make a Loan hereunder in
the
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circumstances described in the last paragraph of Section 11.04 hereof), then
such purchases of participations and/or direct interests shall be made in such
manner as will result, as nearly as is practicable, in the outstanding
principal amount of the Loans being held by the Banks pro rata according to the
amounts of such Commitments. To such end all the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or
otherwise) if such payment is rescinded or must otherwise be restored.
(c) The Company agrees that any Bank so purchasing such a
participation (or direct interest) may exercise all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as
fully as if such Bank were a direct holder of Loans or other amounts (as the
case may be) owing to such Bank in the amount of such participation.
(d) Nothing contained herein shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise, and
retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Company. If, under any applicable
bankruptcy, insolvency or other similar law, any Bank receives a secured claim
in lieu of a set-off to which this Section 4.07 applies, such Bank shall, to
the extent practicable, exercise its rights in respect of such secured claim in
a manner consistent with the rights of the Banks entitled under this Section
4.07 to share in the benefits of any recovery on such secured claim.
Section 5. Yield Protection, Etc.
5.01 Additional Costs.
(a) The Company shall pay directly to each Bank from time to
time such amounts as such Bank may determine to be necessary to compensate such
Bank for any costs that such Bank determines are attributable to its making or
maintaining of any Fixed Rate Loans or its obligation to make any Fixed Rate
Loans hereunder, or any reduction in any amount receivable by such Bank
hereunder in respect of any of such Loans or such obligation
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(such increases in costs and reductions in amounts receivable being herein
called "Additional Costs"), resulting from any Regulatory Change that:
(i) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Note in respect of any of such
Loans (other than taxes imposed on or measured by the overall net
income of such Bank or of its Applicable Lending Office for any of
such Loans by the jurisdiction in which such Bank has its principal
office or such Applicable Lending Office); or
(ii) imposes or modifies any reserve, special deposit or
similar requirements (other than the Reserve Requirement or the
Assessment Rate utilized in the determination of the Fixed Rate for
such Loan) relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, such Bank (including,
without limitation, any of such Loans or any deposits referred to in
the definition of "Fixed Base Rate" in Section 1.01 hereof), or any
commitment of such Bank (including, without limitation, the Commitment
of such Bank hereunder); or
(iii) imposes any other condition affecting this Agreement or
its Note (or any of such extensions of credit or liabilities) or its
Commitment.
If any Bank requests compensation from the Company under this Section 5.01(a),
the Company may, by notice to such Bank (with a copy to the Agent), suspend the
obligation of such Bank thereafter to make or Continue Loans of the Type with
respect to which such compensation is requested, or to Convert Loans of any
other Type into Loans of such Type, until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of Section
5.04 hereof shall be applicable), provided that such suspension shall not
affect the right of such Bank to receive the compensation so requested.
(b) Without limiting the effect of the provisions of
paragraph (a) of this Section 5.01 (but without duplication), in
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the event that, by reason of any Regulatory Change, any Bank either (i) incurs
Additional Costs based on or measured by the excess above a specified level of
the amount of a category of deposits or other liabilities of such Bank that
includes deposits by reference to which the interest rate on Eurodollar Loans
or CD Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank that includes Eurodollar
Loans or CD Loans or (ii) becomes subject to restrictions on the amount of such
a category of liabilities or assets that it may hold, then, if such Bank so
elects by notice to the Company (with a copy to the Agent), the obligation of
such Bank to make or Continue, or to Convert Loans of any other Type into,
Loans of such Type hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 5.04 hereof
shall be applicable).
(c) Without limiting the effect of the foregoing provisions
of this Section 5.01 (but without duplication), the Company shall pay directly
to each Bank from time to time on request such amounts as such Bank may
determine to be necessary to compensate such Bank (or, without duplication, the
bank holding company of which such Bank is a subsidiary) for any costs that it
determines are attributable to the maintenance by such Bank (or any Applicable
Lending Office or such bank holding company), pursuant to any law or regulation
or any interpretation, directive or request (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful) of any
court or governmental or monetary authority (i) following any Regulatory Change
or (ii) implementing any risk-based capital guideline or other requirement
(whether or not having the force of law and whether or not the failure to
comply therewith would be unlawful) heretofore or hereafter issued by any
government or governmental or supervisory authority implementing at the
national level the Basel Accord (including, without limitation, the Final
Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 208, Appendix A; 12 C.F.R. Part 225, Appendix A) and the
Final Risk-Based Capital Guidelines of the Office of the Comptroller of the
Currency (12 C.F.R. Part 3, Appendix A)), of
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capital in respect of its Commitment or Loans (such compensation to include,
without limitation, an amount equal to any reduction of the rate of return on
assets or equity of such Bank (or any Applicable Lending Office or such bank
holding company) to a level below that which such Bank (or any Applicable
Lending Office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request). For purposes of this
Section 5.01(c), "Basel Accord" shall mean the proposals for risk-based capital
framework described by the Basel Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July 1988, as amended,
modified and supplemented and in effect from time to time or any replacement
thereof.
(d) Each Bank shall notify the Company of any event occurring
after the date of this Agreement entitling such Bank to compensation under
paragraph (a) or (c) of this Section 5.01 as promptly as practicable, but in
any event within 45 days, after such Bank obtains actual knowledge thereof;
provided that if any Bank fails to give such notice within 45 days after it
obtains actual knowledge of such an event, such Bank shall, with respect to
compensation payable pursuant to this Section 5.01 in respect of any costs
resulting from such event, only be entitled to payment under this Section 5.01
for costs incurred from and after the date 45 days prior to the date that such
Bank does give such notice. Each Bank will furnish to the Company a
certificate setting forth the basis and amount of each request by such Bank for
compensation under paragraph (a) or (c) of this Section 5.01. Determinations
and allocations by any Bank for purposes of this Section 5.01 of the effect of
any Regulatory Change pursuant to paragraph (a) or (b) of this Section 5.01, or
of the effect of capital maintained pursuant to paragraph (c) of this Section
5.01, on its costs or rate of return of maintaining Loans or its obligation to
make Loans, or on amounts receivable by it in respect of Loans, and of the
amounts required to compensate such Bank under this Section 5.01, shall be
conclusive, provided that such determinations and allocations are made on a
reasonable basis.
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5.02 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any Fixed
Base Rate for any Interest Period:
(a) the Agent determines, which determination shall be
conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "Fixed Base Rate" in Section
1.01 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for
either Type of Fixed Rate Loans as provided herein; or
(b) the Majority Banks determine, which determination shall
be conclusive, and notify the Agent that the relevant rates of
interest referred to in the definition of "Fixed Base Rate" in Section
1.01 hereof upon the basis of which the rate of interest for
Eurodollar Loans or CD Loans for such Interest Period is to be
determined are not likely adequately to cover the cost to such Banks
of making or maintaining such Type of Loans for such Interest Period;
then the Agent shall give the Company and each Bank prompt notice thereof and,
so long as such condition remains in effect, the Banks shall be under no
obligation to make additional Loans of such Type, to Continue Loans of such
Type or to Convert Loans of any other Type into Loans of such Type, and the
Company shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Loans of such Type, either prepay such Loans or Convert such
Loans into another Type of Loan in accordance with Section 2.08 hereof.
5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to honor its obligation to make or maintain Eurodollar Loans
hereunder, then such Bank shall promptly notify the Company thereof (with a
copy to the Agent) and such Bank's obligation to make or Continue, or to
Convert Loans of any other Type into, Eurodollar Loans shall be suspended until
such time as such Bank may again make and maintain
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Eurodollar Loans (in which case the provisions of Section 5.04 hereof shall be
applicable).
5.04 Treatment of Affected Loans. If the obligation of any
Bank to make a particular Type of Fixed Rate Loans or to Continue, or to
Convert Loans of any other Type into, Loans of a particular Type shall be
suspended pursuant to Section 5.01 or 5.03 hereof (Loans of such Type being
herein called "Affected Loans" and such Type being herein called the "Affected
Type"), such Bank's Affected Loans shall be automatically Converted into Base
Rate Loans on the last day(s) of the then current Interest Period(s) for
Affected Loans (or, in the case of a Conversion resulting from Section 5.01(b)
or 5.03 hereof, on such earlier date as may be required by law as such Bank may
specify to the Company with a copy to the Agent) and, unless and until such
Bank gives notice as provided below that the circumstances specified in Section
5.01 or 5.03 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Bank's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Bank's Affected Loans shall be applied
instead to its Base Rate Loans;
(b) all Loans that would otherwise be made or Continued by
such Bank as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Bank that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans; and
(c) if Loans of other Banks of the Affected Type are
subsequently Converted into Loans of another Type (other than Base
Rate Loans), such Bank's Base Rate Loans shall be automatically
Converted on the Conversion date for such Loans of the other Banks
into Loans of such other Type to the extent necessary so that, after
giving effect thereto, all Loans held by such Bank and the Banks whose
Loans are so Converted are held pro rata (as to principal amounts,
Types
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and Interest Periods) in accordance with their respective Commitments.
If such Bank gives notice to the Company with a copy to the Agent that the
circumstances specified in Section 5.01 or 5.03 hereof that gave rise to the
Conversion of such Bank's Affected Loans pursuant to this Section 5.04 no
longer exist (which such Bank agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other Banks
are outstanding, such Bank's Base Rate Loans shall be automatically Converted,
on the first day(s) of the next succeeding Interest Period(s) for such
outstanding Loans of the Affected Type, to the extent necessary so that, after
giving effect thereto, all Loans held by the Banks holding Loans of the
Affected Type and by such Bank are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Commitments.
5.05 Compensation. The Company shall pay to the Agent for
account of each Bank, upon the request of such Bank through the Agent, such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Bank) to compensate it for any expense actually incurred or loss or cost which
such Bank determines is attributable to:
(a) any payment, prepayment or Conversion of a Fixed Rate
Loan made by such Bank for any reason (including, without limitation,
the acceleration of the Loans pursuant to Section 9 hereof) on a date
other than the last day of the Interest Period for such Loan; or
(b) any failure by the Company for any reason (including,
without limitation, the failure of any of the conditions precedent
specified in Section 6 hereof to be satisfied) to borrow a Fixed Rate
Loan from such Bank on the date for such borrowing specified in the
relevant notice of borrowing given pursuant to Section 2.02 or 4.05
hereof.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any,
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of (i) the amount of interest which otherwise would have accrued on the
principal amount so paid, prepaid or Converted or not borrowed for the period
from the date of such payment, prepayment, Conversion or failure to borrow to
the last day of the then current Interest Period for such Loan (or, in the case
of a failure to borrow, the Interest Period for such Loan which would have
commenced on the date specified for such borrowing) at the applicable rate of
interest for such Loan provided for herein (excluding the Applicable Margin)
over (ii) the amount of interest that otherwise would have accrued on such
principal amount at a rate per annum equal to the interest component of the
amount such Bank would have bid in the London interbank market (if such Loan is
a Eurodollar Loan) or the United States secondary certificate of deposit market
(if such Loan is a CD Loan) for Dollar deposits of leading banks in amounts
comparable to such principal amount and with maturities comparable to such
period (as reasonably determined by such Bank).
5.06 U.S. Taxes.
(a) The Company agrees to pay to each Bank that is not a U.S.
Person such additional amounts as are necessary in order that the net payment
of any amount due to such non-U.S. Person hereunder after deduction for or
withholding in respect of any U.S. Tax imposed with respect to such payment (or
in lieu thereof, payment of such U.S. Tax by such non-U.S. Person), will not be
less than the amount stated herein to be then due and payable, provided that
the foregoing obligation to pay such additional amounts shall not apply:
(i) to any payment to a Bank hereunder unless such Bank is, on
the date hereof (or on the date it becomes a Bank as provided in
Section 11.06(b) hereof) and on the date of any change in the
Applicable Lending Office of such Bank (other than a change pursuant
to Section 5.07 hereof), either entitled to submit a Form 1001
(relating to such Bank and entitling it to a complete exemption from
withholding on all interest to be received by it hereunder in respect
of
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the Loans) or Form 4224 (relating to all interest to be received by
such Bank hereunder in respect of the Loans), or
(ii) to any U.S. Tax imposed solely by reason of the failure by
such non-U.S. Person to comply with applicable certification,
information, documentation or other reporting requirements concerning
the nationality, residence, identity or connections with the United
States of America of such non-U.S. Person if such compliance is
required by statute or regulation of the United States of America as a
precondition to relief or exemption from such U.S. Tax.
For the purposes of this Section 5.06(a), (w) "Form 1001" shall mean Form 1001
(Ownership, Exemption, or Reduced Rate Certificate) of the Department of the
Treasury of the United States of America, (x) "Form 4224" shall mean Form 4224
(Exemption from Withholding of Tax on Income Effectively Connected with the
Conduct of a Trade or Business in the United States) of the Department of the
Treasury of the United States of America (or in relation to either such Form
such successor and related forms as may from time to time be adopted by the
relevant taxing authorities of the United States of America to document a claim
to which such Form relates), (y) "U.S. Person" shall mean a citizen, national
or resident of the United States of America, a corporation, partnership or
other entity created or organized in or under any laws of the United States of
America, or any estate or trust that is subject to Federal income taxation
regardless of the source of its income but shall not include a branch or agency
of a foreign financial institution and (z) "U.S. Taxes" shall mean any present
or future tax, assessment or other charge or levy imposed by or on behalf of
the United States of America or any taxing authority thereof or therein.
(b) Within 30 days after paying any amount to the Agent or
any Bank from which it is required by law to make any deduction or withholding,
and within 30 days after it is required by law to remit such deduction or
withholding to any relevant taxing or other authority, the Company shall
deliver to the Agent for delivery to such non-U.S. Person evidence satisfactory
to
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such Person of such deduction, withholding or payment (as the case may be).
5.07 Change of Applicable Lending Office. If any event
occurs that permits any Bank to request any payment under Section 5.01 or
Section 5.06 hereof, such Bank will designate a different Applicable Lending
Office for the Loans of such Bank affected by such event if such designation
will avoid the need for, or reduce the amount of, such payment and will not, in
the sole opinion of such Bank, be disadvantageous to such Bank, except that
such Bank shall have no obligation to designate an Applicable Lending Office
located in the United States of America.
5.08 Replacement of Bank. (a) In the event that any Bank
requests compensation pursuant to Section 5.01 or Section 5.06 hereof, or the
obligation of any Bank to make Fixed Rate Loans or to Continue, or to Convert
Base Rate Loans into, Fixed Rate Loans shall be suspended pursuant to Section
5.01 or 5.03 hereof, or any Bank becomes insolvent or fails to make any Loan in
response to a request for borrowing by the Company where the Majority Banks
have made the respective Loans to be made by them in response to such request,
then, so long as such condition exists, the Company may either (i) designate
another financial institution (such financial institution being herein called a
"Replacement Bank") acceptable to the Agent (which acceptance will not be
unreasonably withheld) and which is not an Affiliate of the Company, to assume
such Bank's Commitment hereunder and to purchase the Loans of such Bank and
such Bank's rights under this Agreement and the Note held by such Bank, all
without recourse to or representation or warranty by, or expense to, such Bank,
for a purchase price equal to the outstanding principal amount of the Loans
payable to such Bank plus any accrued but unpaid interest on such Loans and
accrued but unpaid fees owing to such Bank plus any amounts payable to such
Bank under Section 5.05 hereof calculated as if such purchase constituted a
mandatory prepayment of Loans, and upon such assumption, purchase and
substitution, and subject to the execution and delivery to the Agent by the
Replacement Bank of documentation satisfactory to the Agent (pursuant to which
such Replacement Bank shall assume the
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obligations of such original Bank under this Agreement), the Replacement Bank
shall succeed to the rights and obligations of such Bank hereunder or (ii) pay
to such Bank the outstanding principal amount of the Loans payable to such Bank
plus any accrued but unpaid interest on such Loans and accrued but unpaid fees
owing to such Bank plus any amounts payable to such Bank under Section 5.05
hereof calculated as if such purchase constituted a prepayment of Loans. In
the event that the Company exercises its rights under the preceding sentence,
the Bank against which such rights were exercised shall no longer be a party
hereto or have any rights or obligations hereunder; provided that the
obligations of the Company to such Bank under Sections 5 and 11.03 hereof with
respect to events occurring or obligations arising before or as a result of
such replacement shall survive such exercise.
(b) If the Company exercises its rights under clause (ii) of
Section 5.08(a) hereof, the Company may, not later than 180 days after such
exercise, designate another financial institution (such financial institution
being herein called a "Substitute Bank") acceptable to the Agent (which
acceptance will not be unreasonably withheld) and which is not an Affiliate of
the Company, to assume a Commitment hereunder in an amount not greater than the
Commitment of the Bank against which such rights were exercised and, subject to
the execution and delivery to the Agent by the Substitute Bank of documentation
satisfactory to the Agent, the Substitute Bank shall become party to this
Agreement as a Bank. Upon the Substitute Bank so becoming a party hereto, the
Company shall borrow Loans from the Substitute Bank and/or prepay the principal
of the Loans of the other Banks in such manner as will result in the
outstanding principal amount of the Loans being held by the Banks pro rata
according to the amounts of their respective Commitments.
Section 6. Conditions Precedent.
6.01 Initial Loan. The obligation of any Bank to make its
initial Loan hereunder is subject to the receipt by the Agent of the following
items, each of which shall be satisfactory to
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the Agent (and to the extent specified below, to each Bank) in form and
substance:
(a) Corporate Documents. The following documents, each
certified as indicated below:
(i) a copy of the charter, as amended and in effect, of
the Company certified as of a date near to the date hereof by
the Secretary of State of the State of Georgia, and a
certificate from such Secretary of State dated as of a recent
date as to the good standing of the Company;
(ii) a certificate of the Secretary or an Assistant
Secretary of the Company, dated the date hereof and certifying
(A) that attached thereto is a true and complete copy of the
by-laws of the Company as amended and in effect on the date of
such certificate, (B) that attached thereto is a true and
complete copy of resolutions duly adopted by the board of
directors of the Company authorizing the execution, delivery
and performance of this Agreement and the Notes and the
extensions of credit hereunder, and that such resolutions have
not been modified, rescinded or amended and are in full force
and effect, (C) that the charter of the Company has not been
amended since the date of the certification thereto furnished
pursuant to clause (i) above, and (D) as to the incumbency and
specimen signature of each officer of the Company executing
this Agreement and the Notes and each other document to be
delivered by the Company from time to time in connection
therewith (and the Agent and each Bank may conclusively rely
on such certificate until it receives notice in writing from
the Company); and
(iii) a certificate of another officer of the Company as
to the incumbency and specimen signature of the Secretary or
Assistant Secretary, as the case may be, of the Company.
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(b) Officer's Certificate. A certificate of a Senior Officer
of the Company, dated the date hereof, to the effect set forth in
clause (b) of the first sentence of Section 6.02 hereof.
(c) Opinions of Counsel to the Company. (i) An opinion,
dated the date hereof, of Troutman Sanders, counsel to the Company,
substantially in the form of Exhibit B hereto, and (ii) an opinion
dated the date hereof, of the General Counsel of the Company,
substantially in the form of Exhibit C hereto (and the Company hereby
instructs each such counsel to deliver such opinions to the Banks and
the Agent).
(d) Opinion of Special New York Counsel to Chase. An
opinion, dated the date hereof, of Milbank, Tweed, Hadley & McCloy,
special New York counsel to Chase, substantially in the form of
Exhibit D hereto.
(e) Notes. The Notes, duly completed and executed.
(f) List of Beneficial Owners. A certificate of the
Secretary of the Company dated the date hereof to the effect that (i)
attached thereto is a list of all of the holders of record of shares of
the Class C Convertible Preferred Stock, par value $.125 per share, of
the Company on the date hereof as set forth on the books of the Company
(the "Class C Preferred Shareholders") and (ii) to the knowledge of the
Company, the beneficial holders (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended, as in effect on the
date hereof) of such shares of the Class C Convertible Preferred Stock
on the date hereof do not include any person or legal entity other than
the Class C Preferred Shareholders and their respective Affiliates (as
defined in the Indenture).
(g) Amendments to Credit Instruments, Etc. A certified
or conformed copy of each Credit Instrument listed in Schedule I
hereto and all amendments and supplements thereto, in each case that
have become effective after July 1, 1993.
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(h) Other Documents. Such other documents as the Agent
or any Bank or special New York counsel to Chase may reasonably
request.
The obligation of any Bank to make its initial Loan hereunder is also subject
to the payment by the Company of such fees as the Company shall have agreed to
pay or deliver to any Bank or the Agent in connection herewith, including,
without limitation, the reasonable fees and expenses of Milbank, Tweed, Hadley
& McCloy, special New York counsel to Chase in connection with the negotiation,
preparation, execution and delivery of this Agreement and the Notes and the
making of the Loans hereunder (to the extent that statements for such fees and
expenses have been delivered to the Company not later than five Business Days
prior to such borrowing).
6.02 Initial and Subsequent Loans. The obligation of the
Banks to make any Loan to the Company upon the occasion of each borrowing
hereunder (including the initial borrowing) is subject to the further
conditions precedent that (a) if such borrowing is to occur on a date when any
Subordinated Indebtedness issued under the Indenture is outstanding and such
Indenture has not been defeased, the Agent shall have received a certificate of
two Senior Officers of the Company substantially in the form of Exhibit F
hereto, (b) both immediately prior to the making of such Loan and also after
giving effect thereto: (i) no Default shall have occurred and be continuing
and (ii) the representations and warranties made by the Company in Section 7
hereof shall be true and complete on and as of the
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date of the making of such Loan with the same force and effect as if made on
and as of such date (or, if any such representation or warranty is expressly
stated to have been made as of a specific date, as of such specific date) and
(c) the borrowing requested thereby has been duly authorized by all necessary
corporate action on the part of the Company. Each notice of borrowing by the
Company hereunder shall constitute a certification by the Company to the effect
set forth in clause (b) of the preceding sentence, both as of the date of such
notice and, unless the Company otherwise notifies the Agent prior to the date
of such borrowing, as of the date of such borrowing. The Company shall deliver
certified copies of all corporate action taken by the Company approving such
borrowing (including, without limitation, a certificate setting forth the
resolutions of the Board of Directors of the Company and the resolutions of the
Finance Committee of such Board adopted in respect of such borrowing) to the
Agent or any Bank making a request therefor.
Section 7. Representations and Warranties. The Company
represents and warrants to each Bank that:
7.01 Corporate Existence. Each of the Company and its
Significant Subsidiaries: (a) is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; (c) is qualified to
do business in all jurisdictions in which the nature of the business conducted
by it makes such qualification necessary and where failure so to qualify would
have a Material Adverse Effect and (d) is in compliance with all agreements or
instruments to which it is party or by which it is bound or to which it is
subject where failure so to be in compliance would have a Material Adverse
Effect.
7.02 Financial Condition. The consolidated and consolidating
balance sheets of the Company and its Subsidiaries as at December 31, 1993, the
related consolidated and consolidating statements of income, and the related
consolidated statements of changes in stockholders' equity and of cash flows of
the Company and its Subsidiaries for the fiscal year ended on said date, with
the opinion thereon (in the case of said consolidated balance sheet and
statements) of Price Waterhouse, heretofore furnished to each of the Banks,
fairly present the consolidated and consolidating financial condition, as the
case may be, of the Company and its Subsidiaries as at said date and the
consolidated and consolidating results, as the case may be, of their operations
and their cash flows for the fiscal year ended on said date in accordance with
generally accepted
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accounting principles and practices applied on a consistent basis. The
unaudited consolidated and consolidating condensed balance sheets of the
Company and its Subsidiaries as at June 30, 1994, the related consolidated and
consolidating condensed statements of income, and the related consolidated
condensed statement of cash flows of the Company and its Subsidiaries for the
six-month period ended on June 30, 1994 heretofore furnished to each of the
Banks, contain all normal recurring adjustments necessary for a fair
presentation and fairly present the consolidated and consolidating financial
position of the Company and its Subsidiaries as at such date and the
consolidated and consolidating results of their operations and the consolidated
results of their cash flows for the six-month period ended on said date.
Although certain footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted from such unaudited financial statements, the disclosures
are adequate to make the information presented not misleading. Neither the
Company nor any of its Subsidiaries had on said dates any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in any of said balance sheets or
financial statements as at said dates. There has been no material adverse
change in the consolidated financial condition, operations, business or
prospects taken as a whole of the Company and its Consolidated Subsidiaries (it
being understood that a general disruption in the market for commercial paper
generally for issuers shall not be deemed to constitute such a material adverse
change) from that set forth in the audited financial statements of the Company
and its Subsidiaries most recently furnished to the Banks under Section 8.01(b)
hereof (or, until the first such financial statements are delivered hereunder,
the audited financial statements referred to above in this Section 7.02).
7.03 Litigation. Except as disclosed to the Banks in writing
prior to the date of this Agreement, there are no legal or arbitral proceedings
or any proceedings by or before any governmental or regulatory authority or
agency, now pending or
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(to the knowledge of the Company) threatened against the Company or any of its
Subsidiaries in which there exists a reasonable possibility of a determination
adverse to the Company or any of its Subsidiaries and which, if adversely
determined, would have a Material Adverse Effect. For the purposes of this
Section 7.03, any adverse determination in any such proceedings will not be
deemed to have a Material Adverse Effect if the Majority Banks notify the Agent
(which notice shall be revocable by the Majority Banks) to that effect (it
being understood that the failure by the Majority Banks so to notify the Agent
(or any revocation of such notice) shall not be determinative as to an adverse
determination in any such proceedings having a Material Adverse Effect).
7.04 No Breach. None of the execution and delivery of this
Agreement or the Notes, the consummation of the transactions herein and therein
contemplated or compliance with the terms and provisions hereof and thereof
will conflict with or result in a breach of, or require any consent under, the
charter or by-laws of the Company, or any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them is bound or to which any of
them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any of the
Property of the Company or any of its Subsidiaries pursuant to the terms of any
such agreement or instrument.
7.05 Corporate Action. The Company has all necessary
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and the Notes and to consummate the transactions herein
and therein contemplated. The execution, delivery and performance by the
Company of this Agreement and the Notes have been duly authorized by all
necessary corporate action on its part; and this Agreement has been duly and
validly executed and delivered by the Company and constitutes, and each of the
Notes when executed and delivered for value will constitute, its legal, valid
and binding obligation, enforceable in accordance with its terms.
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7.06 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency (collectively, "Approvals") are necessary for the execution, delivery
or performance by the Company of this Agreement or the Notes, for the validity
or enforceability hereof or thereof or for the consummation of the transactions
herein or therein contemplated, except for (a) Approvals which have been
obtained or effected and are in full force and effect to the extent required to
be in full force and effect and (b) Approvals which are not yet required to be
obtained or effected but which will have been obtained or effected and be in
full force and effect at the respective times and to the extent required.
7.07 Use of Loans. Neither the Company nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for buying or carrying Margin Stock. Not more
than 25% of the aggregate fair market value of the assets of the Company and
its Subsidiaries consists of Margin Stock.
7.08 ERISA. The Company and the ERISA Affiliates have
fulfilled their respective material obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the presently applicable material provisions of
ERISA and the Code, and have not incurred any liability to the PBGC or any Plan
or Multiemployer Plan (other than to make contributions in the ordinary course
of business) which either is material in relation to the financial condition of
the Company and its Consolidated Subsidiaries taken as a whole or has resulted
in an existing Lien on any Property of the Company or any of its Consolidated
Subsidiaries.
7.09 Taxes. United States Federal income tax returns of the
Company and its Subsidiaries have been examined and closed through the fiscal
year of the Company ended December 31, 1981. The Company and its Significant
Subsidiaries have filed all United States Federal income tax returns and all
other material
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tax returns which are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any material assessment received by the
Company or any of its Subsidiaries, except to the extent being contested in
good faith by proper proceedings and against which adequate reserves are being
maintained. The charges, accruals and reserves on the books of the Company and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Company, adequate.
7.10 Certain Regulatory Matters. The Company is not subject
to regulation under the Investment Company Act of 1940, as amended, the Public
Utility Holding Company Act of 1935, as amended, the Federal Power Act, the
Interstate Commerce Act or any other federal or state statute or regulation
which materially limits its ability to incur Indebtedness or its ability to
consummate the transactions contemplated hereby.
7.11 Credit Agreements. Schedule I hereto is a complete and
correct list, as of the date of this Agreement, of each credit agreement, loan
agreement, indenture, note purchase agreement, guarantee or other arrangement
providing for or otherwise relating to any Indebtedness to, or guarantee by,
the Company or any of its Subsidiaries the aggregate principal or face amount
of which equals or exceeds (or may equal or exceed) $5,000,000 and the
aggregate principal or face amount outstanding as of June 30, 1994 or which may
become outstanding under each such arrangement is correctly described in said
Schedule I.
7.12 Existing Liens. Schedule II hereto is a complete and
correct list, as of the date of this Agreement, of each Lien existing on the
date hereof securing Indebtedness equal to or in excess of $2,000,000 and the
aggregate principal amount of Indebtedness secured by each such Lien is
correctly described in such Schedule II.
7.13 Subsidiaries, Etc. Set forth in Schedule III hereto is
a complete and correct list, as of the date of this Agreement, of all
Subsidiaries of the Company (and the respective jurisdiction of incorporation
of each such Subsidiary) and of all
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Investments held by the Company or any of its Subsidiaries in any joint venture
or other Person in an amount equal to or greater than $2,000,000; and the
aggregate amount of all Investments held by the Company and its Subsidiaries on
the date hereof not identified on Schedule III hereto does not exceed
$10,000,000. Except as disclosed in Schedule III hereto, as of the date of
this Agreement: (a) the Company owns, free and clear of Liens (other than
Liens permitted by Section 8.06 hereof), all outstanding shares of such
Subsidiaries; (b) each such Subsidiary owns, free and clear of Liens (other
than such permitted Liens), all outstanding shares of its Subsidiaries; (c) all
such shares are validly issued, fully paid and non-assessable; and (d) the
Company (or the respective Subsidiary) also owns, free and clear of Liens
(other than such permitted Liens), all such Investments.
7.14 Subordinated Indebtedness. To the extent that any
Subordinated Indebtedness is outstanding and the Credit Instrument relating
thereto has not been defeased, the Loans and the Notes constitute "Senior
Indebtedness" as defined in all Credit Instruments relating to Subordinated
Indebtedness and the terms of subordination contained in all such Credit
Instruments are valid, binding and enforceable in accordance with their
respective terms.
7.15 True and Complete Disclosure. (a) The Company's annual
report on Form 10-K for the fiscal year ended at December 31, 1993 and the
Company's quarterly report on Form 10-Q for the fiscal quarter ended on June
30, 1994, copies of which have been furnished by the Company to the Agent and
the Banks, did not, as of the respective dates such Form 10-K and Form 10-Q
were filed with the Securities and Exchange Commission, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading and (b) from the date of filing of the Company's quarterly
report on Form 10-Q for the fiscal quarter ended on June 30, 1994 through the
date hereof, the Company has not filed a current report on Form 8-K with the
Securities and Exchange Commission and, as of the date hereof, no event or
condition exists which would require such filing by the Company pursuant to the
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Securities Exchange Act of 1934, as amended, except for any such event or
condition which has heretofore been disclosed in writing to the Banks by
delivery to the Banks of a Form 8-K prior to the filing thereof.
Section 8. Covenants of the Company. The Company covenants
and agrees with the Banks and the Agent that, so long as any Commitment or Loan
is outstanding and until payment in full of all amounts payable by the Company
hereunder:
8.01 Financial Statements. The Company shall deliver to each
of the Banks:
(a) as soon as available and in any event within 60 days
after the end of each of the first three quarterly fiscal periods of
each fiscal year of the Company: (i) consolidated and consolidating
condensed statements of income, and consolidated statements of cash
flows of the Company and its Consolidated Subsidiaries for such period
and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated and consolidating
balance sheets as at the end of such period, with each consolidated
statement in comparative form (with such comparative form to be
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission for preparation of Form 10-Q), and (ii) a
certificate of a senior financial officer of the Company, which
certificate shall state that (x) the financial statements referred to
in the preceding clause (i) contain all normal recurring adjustments
necessary for a fair presentation of the consolidated and
consolidating financial position of the Company and its Consolidated
Subsidiaries as at the end of the quarterly period, and the
consolidated and consolidating results of their operations and the
consolidated results of their cash flows for such periods of the
Company and its Consolidated Subsidiaries and (y) that, although
certain financial disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or
omitted, the disclosures are adequate to make the information
presented not misleading
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(all such consolidating statements shall be as routinely prepared by
the Company for internal use);
(b) as soon as available and in any event within 105 days
after the end of each fiscal year of the Company: (i) consolidated
and consolidating statements of income, and the consolidated
statements of changes in stockholders' equity and of cash flows of the
Company and its Consolidated Subsidiaries for such year and the
related consolidated and consolidating balance sheets as at the end of
such year, with such consolidated statements in comparative form (with
such comparative form to be prepared pursuant to the rules and
regulations of the Securities and Exchange Commission for preparation
of Form 10-K), (ii) in the case of said consolidated statements and
balance sheets referred to in the preceding clause (i) an opinion
thereon of independent certified public accountants of recognized
national standing, which opinion shall be unqualified as to the scope
of matters reasonably within the control of the Company and as to the
Company as a going concern and shall state that said consolidated
financial statements fairly present the consolidated financial
condition and results of operations and cash flows of the Company and
its Consolidated Subsidiaries as at the end of, and for, such fiscal
year, and a certificate of such accountants stating that, in making
the examination necessary for their opinion, they obtained no
knowledge, except as specifically stated, of any Default arising under
any of Sections 8.11 through 8.14 hereof and (iii) in the case of said
consolidating statements and balance sheet referred to in the
preceding clause (i) a certificate of a senior financial officer of
the Company, which certificate shall state that said consolidating
financial statements, when read in conjunction with the said
consolidated balance sheet and statements, fairly present the
consolidating financial condition and the results of operations and of
cash flows of the Company and its Consolidated Subsidiaries in
accordance with GAAP, consistently applied, as at the end of, and for,
such fiscal year (all such consolidating statements shall be as
routinely prepared by the Company for internal use);
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(c) promptly upon their becoming available, copies of all
prospectuses and regular periodic reports, if any, which the Company
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange;
(d) promptly upon the mailing thereof to the shareholders of
the Company generally, copies of all financial statements, reports and
proxy statements so mailed;
(e) as soon as possible, and in any event within ten days
after the Company knows or has reason to know that any of the events
or conditions specified below with respect to any Plan or
Multiemployer Plan have occurred or exist, a statement signed by a
senior financial officer of the Company setting forth details
respecting such event or condition and the action, if any, which the
Company or its ERISA Affiliate proposes to take with respect thereto
(and a copy of any report or notice required to be filed with or given
to the PBGC by the Company or an ERISA Affiliate with respect to such
event or condition):
(i) any reportable event, as defined in Section
4043(b) of ERISA and the regulations issued thereunder, with
respect to a Plan, as to which the PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be
notified within 30 days of the occurrence of such event
(provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code);
(ii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan;
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(iii) the institution by PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company
or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to
such Multiemployer Plan;
(iv) the complete or partial withdrawal by the Company or
any ERISA Affiliate under Section 4201 or 4204 of ERISA from a
Multiemployer Plan, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245
of ERISA or that it intends to terminate or has terminated
under Section 4041A of ERISA; and
(v) the institution of a proceeding by a fiduciary
of any Multiemployer Plan against the Company or any ERISA
Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days;
(f) promptly after the Company knows or has reason to know
that any Default has occurred, a notice of such Default describing the
same in reasonable detail and, together with such notice or as soon
thereafter as possible, a description of the action that the Company
has taken and proposes to take with respect thereto; and
(g) from time to time such other information regarding the
business, affairs or financial condition of the Company or any of its
Subsidiaries (including, without limitation, information regarding any
Plan or Multiemployer Plan and any reports or other information
required to be filed under ERISA) as any Bank or the Agent may
reasonably request.
The Company will furnish to each Bank, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate of a
senior financial officer of the Company (i) to the effect that no Default has
occurred and is continuing
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(or, if any Default has occurred and is continuing, describing the same in
reasonable detail and describing the action that the Company has taken and
proposes to take with respect thereto), (ii) setting forth in reasonable
detail the computations necessary to determine whether the Company is in
compliance with Sections 8.11 through 8.14 hereof as of the end of the
respective quarterly fiscal periods or fiscal year (and, for purposes of
determining compliance with said Sections, reference shall be made to the
financial statements referred to in paragraph (a) or (b) above), (iii) (if any
Subordinated Indebtedness issued under the Indenture is outstanding and such
Indenture has not been defeased at such time) stating the amount of its Net
Worth (as defined in the Indenture) as of the end of the respective quarterly
periods or fiscal year and setting forth in reasonable detail the computations
necessary to determine the same and (iv) as long as any Subordinated
Indebtedness remains outstanding, to the effect that no event or circumstance
which, with the giving of any notice, request, election or demand or the
passage of time or any combination of the foregoing, would require the Company
to prepay, redeem or defease any Subordinated Indebtedness before its stated
maturity has occurred and is continuing (or, if any such event or circumstance
has occurred and is continuing, describing the same in reasonable detail and
describing the action that the Company has taken and proposes to take with
respect thereto).
8.02 Litigation. The Company will promptly give to each Bank
notice of all legal or arbitral proceedings, and of all proceedings by or
before any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, affecting the
Company or any of its Subsidiaries, except proceedings which, if adversely
determined, would not have a Material Adverse Effect.
8.03 Corporate Existence, Etc. The Company will, and will
cause each of its Significant Subsidiaries to: preserve and maintain its
corporate existence and all of its material rights, privileges and franchises
(provided that nothing in this Section 8.03 shall prohibit any transaction
expressly permitted under Section 8.05 hereof); comply with the requirements of
all
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applicable laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements would have a Material
Adverse Effect; pay and discharge all material taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained; maintain all of its properties used or (as
determined by the management of the Company) useful in its business in good
working order and condition, ordinary wear and tear excepted; and permit
representatives of any Bank or the Agent, during normal business hours, to
examine, copy and make extracts from its books and records, to inspect its
properties, and to discuss its business and affairs with its officers, all to
the extent reasonably requested by such Bank or the Agent (as the case may be).
8.04 Insurance. The Company will, and will cause each of its
Subsidiaries to, keep insured by financially sound and reputable insurers all
Property of a character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations and carry such
other insurance as is usually carried by such corporations, provided that the
Company may self-insure in a manner and to the extent that corporations engaged
in the same or similar business similarly situated customarily self-insure.
8.05 Prohibition of Fundamental Changes. The Company will
not, nor will it permit any of its Subsidiaries to, enter into any transaction
of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution). Notwithstanding the
foregoing sentence of this Section 8.05:
(a) any Subsidiary of the Company may be merged or
consolidated with or into: (i) the Company if the Company shall be
the continuing or surviving corporation or (ii) any
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other such Subsidiary; provided that if any such transaction shall be
between a Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned
Subsidiary shall be the continuing or surviving corporation;
(b) the Company may be merged or consolidated with or
into another Person if: (i) either (x) the Company shall be the
surviving Person or (y) the Person (if other than the Company) formed
by such consolidation or into which the Company is merged shall be a
corporation organized and existing under the laws of the United States
or any State thereof or the District of Columbia and shall expressly
assume, by an agreement supplemental hereto, executed and delivered to
the Banks and the Agent in form and substance satisfactory to the
Majority Banks and the Agent, all of the obligations of the Company
under this Agreement and the Notes, (ii) immediately before and
immediately after giving effect to such transaction, no Default shall
have occurred and be continuing, (iii) immediately after, and giving
effect to, such transaction and the assumption contemplated by clause
(i)(y) above, and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, (x) the surviving
Person shall have a Net Worth (as defined below) equal to or greater
than the Net Worth of the Company immediately preceding such
transaction and (y) the surviving Person shall have an Interest
Coverage Ratio of greater than 1.70 to 1 and the Company shall have
delivered to the Agent a certificate of a Senior Officer of the
Company stating that such consolidation or merger and such
supplemental agreement comply with this Section 8.05 and that all
conditions precedent herein provided relating to such transaction have
been complied with;
(c) any Subsidiary of the Company may be merged or
consolidated with or into another Person to consummate an acquisition
of such other Person permitted by Section 8.08(d) hereof, provided
that the surviving Person shall be a Subsidiary of the Company and
(unless such surviving Person is a Non-Significant Subsidiary)
organized
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and existing under the laws of the United States or any State thereof
or the District of Columbia;
(d) any Subsidiary of the Company permitted by subsection (a)
of this Section 8.05 to merge or consolidate with any other Person may
be liquidated or dissolved if all of its assets remaining after
payment of liabilities are distributed in such liquidation or
dissolution and such distribution is permitted as follows:
(i) such distribution shall be deemed to be a
Dividend Payment hereunder and shall be permitted only if and
to the extent permitted to be made as a Dividend Payment under
paragraph (a) or (b) of Section 8.09 hereof; or
(ii) if and to the extent such distribution is not
permitted by the preceding clause (i), such distribution shall
be deemed to be a Disposition hereunder and shall be permitted
only if and to the extent made as a Disposition under Section
8.18 hereof; and
(e) any Non-Significant Subsidiary may be merged or
consolidated with or into another Person as permitted by Section
8.18(b) hereof.
For purposes of this Section 8.05, "Net Worth" as of any date means, with
respect to any Person, the amount of the equity of the holders of Permitted
Equity of such Person that would appear on the balance sheet of such Person as
of such date, determined in accordance with GAAP, excluding (to the extent
included in calculating such equity) (i) all revaluations and other write-ups
in the book value of assets of such Person subsequent to July 1, 1993, (ii) all
Investments (other than Permitted Investments and debt instruments (whether or
not constituting Permitted Investments) maturing not more than 180 days from
the date of acquisition thereof by such Person) in Persons that are not
Consolidated Subsidiaries of such Person and (iii) the
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effects of Statement of Financial Accounting Standards No. 109 of the Financial
Accounting Standards Board.
8.06 Limitation on Liens. The Company will not, nor will it
permit any of its Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon any of its Property, whether now owned or hereafter acquired, except:
(a) Liens imposed by any governmental authority for
taxes, assessments or charges not yet delinquent or which are being
contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the
Company or any of its Subsidiaries, as the case may be, in accordance
with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business (whether or not statutory) which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings, for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made;
(c) pledges or deposits to secure non-delinquent
obligations under worker's compensation, unemployment insurance and
other social security legislation;
(d) Liens on Capital Stock of or other ownership
interests in any Person not a Subsidiary of the Company securing
Indebtedness of such Person;
(e) Liens on Works (whether an individual Work or grouping of
Works) acquired after the date of this agreement (by purchase,
production or otherwise) by the Company or any of its Subsidiaries,
each of which either (i) existed on such individual Work or grouping
of Works before the time of their acquisition and was not created in
anticipation thereof, or (ii) was created solely for the purpose of
securing obligations to co-financiers, co-producers,
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distributors, exhibitors, completion guarantors, investors, financial
institutions or other similar participants incurred in connection with
the financing, production, completion, distribution or exhibition of
such individual Work or grouping of Works; provided that (i) no such
Lien shall extend to or cover any property of the Company or such
Subsidiary other than such individual Work or grouping of Works so
acquired in any one or series of related transactions and (ii) neither
the Company nor any Person that is a Significant Subsidiary of the
Company on the date hereof shall be directly or contingently liable
(by Guarantee (other than completion guarantees issued by the Company
in accordance with customary industry practice and having usual and
customary commercial terms) or otherwise) for the obligations secured
by such Liens;
(f) Liens arising in the ordinary course of business that do
not secure the repayment of Indebtedness, including, without
limitation, the following:
(i) Liens on film or television production in favor
of the Screen Actors Guild or other similar trade groups or
guilds securing rights to residual payments owing to the
Screen Actors Guild, such other trade group or their
respective members in respect of such film or television
production;
(ii) Liens to secure the performance of bids, trade
contracts (other than for borrowed money), statutory
obligations, surety and appeal bonds, leases (other than
capital leases), performance bonds and other obligations of a
like nature;
(iii) Liens in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods;
(iv) restrictions (other than security interests) on
the transferability of Investments in favor of co-
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investors or the issuers of such Investments or imposed by law;
(v) Liens on Works (whether an individual Work or a
grouping of related Works) arising out of the sale, license,
syndication, transfer or other disposition of such individual
Work or grouping of related Works made in accordance with
customary practices in the publishing, film, video and
television industries, of rights or interests in such
individual Work or grouping of related Works, so long as such
Lien attaches only to such individual Work or grouping of
related Works of the Company or its Subsidiaries being so
sold, licensed, syndicated, transferred or disposed of; and
(vi) Liens to secure the performance of operating leases;
(g) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business and
encumbrances consisting of zoning restrictions, easements, leases,
subleases, licenses, sublicenses, restrictions on the use of property
or minor imperfections in title thereto which, in the aggregate, are
not material in amount, and which do not in any case materially
detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of the Company or any of its
Subsidiaries;
(h) Liens on Property of Persons which become Subsidiaries
of the Company after the date of this Agreement securing Indebtedness
permitted by Section 8.07(e) hereof, provided that such Liens are in
existence at the time the respective Persons become Subsidiaries of
the Company and were not created in anticipation thereof;
(i) Liens upon Property (other than Works) acquired after
the date hereof (by purchase, construction, production or otherwise)
by the Company or any of its Subsidiaries, each of which Liens either
(A) existed on such Property
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before the time of its acquisition and was not created in anticipation
thereof, or (B) was created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or
refund, the cost (including the cost of construction or production) of
the respective Property; provided that no such Lien shall extend to or
cover any Property of the Company or such Subsidiary other than the
respective Property so acquired, improvements thereon, products and
proceeds thereof and revenues therefrom;
(j) additional Liens upon Property (other than Works)
created after the date hereof, provided that the aggregate
Indebtedness secured thereby and incurred on and after the date hereof
shall not exceed $75,000,000 in the aggregate at any one time
outstanding;
(k) Liens existing on the date hereof and listed in
Schedule II hereto and other Liens existing on the date hereof that
individually do not secure Indebtedness in excess of $2,000,000 and
collectively do not secure Indebtedness in excess of $5,000,000;
(l) Liens resulting from progress payments or partial
payments under United States government contracts or subcontracts;
(m) Liens arising from legal proceedings, so long as such
proceedings are being contested in good faith by appropriate
proceedings diligently conducted and so long as execution is stayed on
all judgments resulting from any such proceedings;
(n) restrictions arising under the Federal Communications Act
of 1934, as amended, and similar statutes in effect in jurisdictions
outside the United States of America;
(o) restrictions on the Atlanta National League Baseball
Club, Inc. and Atlanta Hawks, Ltd. and their respective assets imposed
by Major League Baseball or the
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Commissioner of Baseball, and the National Basketball Association,
respectively, including, without limitation, restrictions on the
transferability of the Company's or any of its Subsidiaries' interest
therein;
(p) Liens imposed under capital leases entered into after the
date hereof; and
(q) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted hereunder shall
not be spread to cover any additional Indebtedness or Property (other
than a substitution of like Property).
8.07 Indebtedness. The Company will not, and will not permit
any of its Subsidiaries to, create, incur or suffer to exist any Indebtedness
except:
(a) Indebtedness to the Banks hereunder;
(b) Indebtedness outstanding on the date hereof and
listed in Schedule I hereto and other Indebtedness outstanding on the
date hereof in an aggregate principal amount not exceeding $5,000,000
under any one Credit Instrument or related Credit Instruments or
$15,000,000 in the aggregate under all Credit Instruments and any
extension, renewal, replacement or refinancing thereof, provided that
the amount of such Indebtedness is not thereby increased and the
obligors in respect thereof are not modified;
(c) Indebtedness of Subsidiaries of the Company to the
Company or to other Subsidiaries of the Company;
(d) Indebtedness of Subsidiaries of the Company up to an
aggregate amount not exceeding $75,000,000 at any one time
outstanding;
(e) Indebtedness of Subsidiaries of the Company incurred in
connection with the production, completion,
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distribution or exhibition of Works (whether an individual Work or
grouping of related Works); provided that (i) the principal amount
thereof does not exceed the cost of such production, completion,
distribution and exhibition and (ii) neither the Company nor any
Person that is a Significant Subsidiary of the Company on the date
hereof shall be directly or contingently liable (by Guarantee (other
than completion guarantees issued by the Company in accordance with
customary industry practice and having usual and customary commercial
terms) or otherwise) for such Indebtedness;
(f) Indebtedness of Persons which become Subsidiaries of the
Company after the date hereof, provided that such Indebtedness is in
existence at the time the respective Persons become Subsidiaries of
the Company and was not incurred or created in anticipation thereof;
(g) Indebtedness of the Company to Subsidiaries of the
Company;
(h) Indebtedness of the Company that is not Guaranteed by any
of the Subsidiaries of the Company;
(i) Capital Lease Obligations of Subsidiaries of the Company;
and
(j) Non-Qualifying Equity permitted by Section 8.10 hereof.
8.08 Investments. The Company will not, and will not permit
any of its Subsidiaries to, make or permit to remain outstanding any
Investments other than the following Investments:
(a) operating deposit accounts with banks;
(b) Permitted Investments;
(c) Investments in debt instruments bought in open market
transactions through financial intermediaries,
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provided that (i) the principal or face amount of all such debt
instruments of any single issuer (together with its Affiliates) is not
more than the greater of $5,000,000 or 10% of the aggregate principal
or face amount of all Permitted Investments and Investments permitted
by this paragraph held by the Company and its Subsidiaries, (ii) the
aggregate principal or face amount of all such debt instruments will
not exceed the aggregate principal or face amount of all Permitted
Investments held by the Company and its Subsidiaries and (iii) the
weighted average maturity date of all such debt instruments is not
later than 30 days after the date of determination;
(d) Investments by the Company and its Subsidiaries in
Persons primarily engaged in a line of business referred to in Section
8.15 hereof, provided that (except in the case of any Investment in
the Company or any of its Subsidiaries) no Default exists at the time
of such Investment or would result therefrom;
(e) Investments in Persons outstanding on the date hereof
to the extent that such Investments are either identified in Schedule
III hereto or are in an amount of less than $2,000,000 on the date
hereof in respect of any one such Person (provided that the aggregate
amount of such Investments not identified on Schedule III hereto shall
not exceed $10,000,000 on the date hereof);
(f) Loans made in the ordinary course of business to
employees of the Company or its Subsidiaries, provided that the
aggregate outstanding principal amount of all such loans shall not at
any time exceed $10,000,000;
(g) Investments by the Company or its Subsidiaries in the
Company or its Subsidiaries;
(h) Promissory notes received in consideration of
Dispositions permitted hereby; and
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(i) additional Investments having an aggregate book value up
to but not exceeding $15,000,000 at any one time outstanding.
8.09 Dividend Payments. The Company will not, and will not
permit any of its Subsidiaries to, declare or make any Dividend Payment at any
time, except that:
(a) the Company's Subsidiaries may declare and make Dividend
Payments to the Company, to any Subsidiary of the Company or to the
minority shareholders, partners or the equivalent of such
Subsidiaries, provided that Dividend Payments made by any Subsidiary
to such minority shareholders, partners or the equivalent shall be
permitted only to the extent that the aggregate amount thereof either
(i) is deducted from Cash Flow as a minority interest in net income
from continuing operations of such Subsidiary (as provided in clause
(a) of the definition of Cash Flow in Section 1.01 hereof) for the
period in respect of which such Dividend Payments are made or (ii)
increases the equity investment in such Subsidiary held by the Company
and its other Subsidiaries;
(b) the Company's Subsidiaries may declare and make cash
dividends and distributions with respect to their respective common
stock (or, in the case of partnerships, with respect to the respective
partnership interests therein) pro rata among all of the holders
thereof (the "Equity Holders") in proportion to their respective
holdings thereof (and, for purposes of this paragraph (b) only, any
preferred stock or limited partnership interest that is convertible
into common stock or a general partnership interest, as the case may
be, shall be deemed so converted to the extent that the holders
thereof are entitled to receive such cash dividends and distributions
prior to such conversion); provided that the aggregate amount of such
dividends and distributions paid in accordance with this clause (b),
with respect to any Subsidiary, after July 1, 1993 shall not exceed
the sum of (i) the aggregate proceeds received by such Subsidiary from
share purchases and other
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capital contributions made by such Equity Holders in such Subsidiary
after such date and (ii) 100% of the aggregate Operating Cash Flow (as
defined in the Indenture as in effect on such date) of such Subsidiary
(or if such aggregate Operating Cash Flow is a deficit, minus 100% of
such deficit) earned subsequent to June 30, 1993 and prior to the last
day of the fiscal quarter immediately preceding the fiscal quarter in
which such dividend or distribution occurs, less all other dividends
and distributions paid subsequent to June 30, 1993 and prior to such
dividend or distribution;
(c) the Company may declare and make cash dividends on its
Qualifying Equity subject to the satisfaction of each of the following
conditions:
(i) no Default shall have occurred and be continuing
as of the date of the declaration of such Dividend Payment or
would result from the payment thereof;
(ii) if, after giving effect to the payment of any
such Dividend Payment, the aggregate amount of Dividend
Payments on Qualifying Equity paid by the Company during the
then current fiscal year of the Company exceeds or would
exceed $30,000,000, the Funded Debt Ratio as at the last day
of the fiscal quarter of the Company ended on or most recently
ended prior to the date such Dividend Payments are paid does
not exceed 3.5 to 1; and
(iii) such Dividend Payment shall be paid within 30
days after the declaration thereof; and
(d) the Company may make additional cash Dividend Payments on
its Qualifying Equity in an aggregate amount after July 1, 1993 not
exceeding $10,000,000 if (i) no Default shall have occurred and be
continuing as at the date of the declaration (if such Dividend Payment
is a dividend) or payment (if such Dividend Payment is not a dividend)
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thereof or would result therefrom and (ii) if such Dividend Payment is
a dividend, such Dividend Payment shall be paid within 30 days of the
declaration thereof.
8.10 Issuance of Stock. The Company will not, and will not
permit any of its Subsidiaries to, issue any shares of Capital Stock or other
ownership interests, except that (a) the Company may issue Permitted Equity,
(b) any Subsidiary of the Company may issue Permitted Equity to the Company or
any other Subsidiary of the Company and (c) any Non-Significant Subsidiary may
issue Qualifying Equity to any Person. Notwithstanding anything contained
herein to the contrary, the Company will not, and will not permit any of its
Subsidiaries to, make any Disposition of or grant any Lien upon any
Non-Qualifying Equity issued by any Subsidiary of the Company.
8.11 Fixed Charges Ratio. The Company will not permit the
Fixed Charges Ratio to be less than 1.10 to 1 at any time.
8.12 Interest Coverage Ratio. The Company shall not permit
the Interest Coverage Ratio to be less than the following respective ratios at
any time during the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the first
Delivery Date after the date
hereof through but excluding
the first Delivery Date after
December 31, 1994 1.50 to 1.00
From and including the first
Delivery Date after December 31,
1994 through but excluding the
first Delivery Date after
December 31, 1996 2.00 to 1.00
</TABLE>
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<TABLE>
<S> <C>
From and including the first
Delivery Date after December 31,
1996 and at all times thereafter 2.50 to 1.00
</TABLE>
8.13 Funded Debt Ratio. The Company shall not permit the
Funded Debt Ratio to exceed the following respective ratios at any time during
the following respective periods:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the
first Delivery Date
after the date hereof
through but excluding
the first Delivery Date after
December 31, 1994 6.50 to 1.00
From and including
the first Delivery Date
after December 31, 1994
through but excluding
the first Delivery Date after
March 31, 1995 6.25 to 1.00
From and including
the first Delivery Date
after March 31, 1995
through but excluding
the first Delivery Date after
September 30, 1995 6.00 to 1.00
From and including
the first Delivery Date
after September 30, 1995
through but excluding
the first Delivery Date after
September 30, 1996 5.50 to 1.00
</TABLE>
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<TABLE>
<S> <C>
From and including
the first Delivery Date
after September 30, 1996
through but excluding
the first Delivery Date after
September 30, 1997 5.00 to 1.00
From and including
the first Delivery Date
after September 30, 1997
and at all times thereafter 4.50 to 1.00
</TABLE>
8.14 Capital Expenditures. The Company shall not permit the
aggregate amount of Capital Expenditures by the Company and its Consolidated
Subsidiaries (excluding Investments permitted under Section 8.08 hereof) in any
fiscal year of the Company to exceed the sum of (a) $125,000,000 plus (b) the
excess, if any, of the aggregate amount of Capital Expenditures permitted in
the immediately preceding fiscal year of the Company over the actual amount of
Capital Expenditures made by the Company and its Consolidated Subsidiaries in
such immediately preceding fiscal year (provided that the amount of such excess
for such immediately preceding fiscal year shall not exceed $125,000,000).
8.15 Lines of Business. Neither the Company nor any of its
Subsidiaries shall engage to any substantial extent (determined by reference to
the Company and its Subsidiaries taken as a whole) in any line or lines of
business other than the businesses of television broadcasting; syndication,
production, development, licensing, distribution and merchandising of Works,
other interactive or multimedia programming or software relating thereto; cable
television; professional sports; advertising sales and representations;
publishing; and other related businesses to the extent incidental to the
conduct of any of the foregoing businesses.
8.16 Transactions with Affiliates. Except as expressly
permitted by this Agreement, the Company will not, nor will it permit any of
its Subsidiaries to, directly or
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indirectly: (a) make any Investment in an Affiliate; (b) transfer, sell,
lease, assign or otherwise dispose of any assets to an Affiliate; (c) merge
into or consolidate with or purchase or acquire assets from an Affiliate; or
(d) enter into any other transaction directly or indirectly with or for the
benefit of an Affiliate (including, without limitation, guarantees and
assumptions of obligations of an Affiliate); provided that (x) any Affiliate
who is an individual may serve as a director, officer or employee of the
Company or its Subsidiaries and receive reasonable compensation for and
indemnities in respect of his or her services in such capacity and (y) the
Company and its Subsidiaries may enter into transactions that are in the best
interest of the Company and its Subsidiaries and are not otherwise prohibited
by this Agreement. A transaction shall be deemed to be in the best interest of
the Company and its Subsidiaries (a) where the monetary or business
consideration provided by the Company and its Subsidiaries in the relevant
transaction or series of related transactions is less than $25,000,000, if the
management or the board of directors, as the case may be, of the Company
determines in accordance with the By-laws of the Company as in effect on the
date hereof that the transaction or the series of related transactions is in
the best interest of the Company and its Subsidiaries; (b) where the monetary
or business consideration provided by the Company and its Subsidiaries in the
relevant transaction is $25,000,000 or more, the requisite number of
disinterested directors of the Company determines in accordance with the
By-laws of the Company as in effect on the date hereof that the transaction or
the series of related transactions is in the best interest of the Company and
its Subsidiaries and (if such consideration is more than $100,000,000) the
Board of Directors of the Company (or any committee of the Board of Directors
of the Company duly authorized, with respect to the matter at issue, to
exercise the powers of the Board of Directors of the Company) receives (and
furnishes to the Agent a copy of) a written opinion from an independent
financial advisor to the Company of nationally recognized standing stating that
the transaction or series of related transactions is fair to the Company and
its Subsidiaries; and (c) where the transaction consists of or is consummated
pursuant to a routine contractual arrangement between the Company
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and one of its cable customers at normal rates of the Company (including
discounts) entered into in the ordinary course of business.
8.17 Use of Proceeds. The Company will use the proceeds of
the Loans hereunder solely (i) to finance in part the redemption of the 12%
Senior Subordinated Debentures due October 15, 2001 and other Subordinated
Indebtedness, (ii) to finance acquisitions and investments in accordance with
the terms hereof, and (iii) for other general corporate purposes, in each case
in compliance with all applicable legal and regulatory requirements; provided
that neither the Agent nor any Bank shall have any responsibility as to the use
of any of such proceeds.
8.18 Sale of Assets. The Company will not, and will not
permit any of its Subsidiaries to, make any Disposition of its Property
(including, without limitation, receivables and leasehold interests, but
excluding any inventory (including, without limitation, Program Rights) or
other assets sold or disposed of in the ordinary course of business).
Notwithstanding the foregoing provisions of this Section 8.18:
(a) any such Subsidiary may sell, lease, transfer or
otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Company or a Subsidiary of the
Company, provided that, following the satisfaction and discharge of
the Indenture and/or the defeasance of the notes issued thereunder,
any such sale, lease, transfer or other disposition to a Subsidiary of
the Company shall be made only to a Wholly Owned Subsidiary of the
Company;
(b) (i) any Non-Significant Subsidiary may sell, lease or
transfer or otherwise dispose of any or all of its assets and (ii) the
Company or any Subsidiary may sell the Capital Stock or other
ownership interest of any Non-Significant Subsidiary or cause any
Non-Significant Subsidiary to be merged or consolidated with or into
another Person;
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(c) The CNN Center Complex, or any part thereof, or the
Capital Stock of TOVI and/or ICC Ventures, Inc. may be sold for fair
market value, provided that (i) no Default would result therefrom and
(ii) such sale is for cash (but may include a promissory note in a
principal amount not in excess of $30,000,000 which either has a
maturity of 180 days or less or, in the judgment of the management of
the Company, the Company expects to be able to sell for fair market
value within 180 days (the Company hereby agreeing to use its best
efforts so to sell any such promissory note for fair market value));
(d) the Company and its Subsidiaries may sell, lease,
transfer or otherwise dispose of any of their respective Properties
for fair market value provided that the aggregate fair market value of
all Property that is the subject of Dispositions permitted by this
paragraph (d) shall not exceed $25,000,000 in any fiscal year of the
Company; and
(e) the Company and its Subsidiaries may sell, lease,
transfer or otherwise dispose of any of their respective Properties
for fair market value to the extent such sale, lease, transfer or
other disposition is not otherwise permitted by this Section 8.18,
provided that the fair market value of all Property that is the
subject of Dispositions after the date hereof permitted by this
paragraph (e) shall not exceed $500,000,000.
Not later than 5 Business Days after the consummation of any Disposition
permitted by paragraph (e) of this Section 8.18, the Company shall notify the
Agent of (a) the date of such consummation and (b) the amount of Net Proceeds
received therefrom by the Company or any of the Subsidiaries.
8.19 Tax Consolidation. The Company will not, and will not
permit any of its Subsidiaries to, file or be the subject of any consolidated
tax return (other than consolidated tax returns of the Company and its
Consolidated Subsidiaries) unless required to do so by law and tax sharing
arrangements have been entered into allocating the related consolidated tax
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<PAGE> 92
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benefits and liabilities among the relevant parties on an equitable basis, such
that the tax benefits and liabilities allocated to the Company shall be
determined as if a separate consolidated return had been filed by the Company
on behalf of itself and the other members of the affiliate group of which the
Company would be the common parent corporation (without regard to the ownership
of the Capital Stock of the Company) in a manner satisfactory to the Majority
Banks except that any Person which was part of the consolidated tax group of
another Person during such fiscal period that becomes a Subsidiary of the
Company during such period may file or be the subject of a consolidated tax
return of such group for such period.
Section 9. Events of Default. If one or more of the
following events (herein called "Events of Default") shall occur and be
continuing:
(a) The Company shall default in the payment when due of any
principal of or interest on any Loan or any other amount payable by it
hereunder; or
(b) The Company or any of its Subsidiaries shall default in
the payment when due of any principal of or interest on any of its
other Indebtedness (other than Non-Qualifying Equity) the aggregate
amount of which (without regard to the amount of principal or interest
in default) is $20,000,000 or more; any event specified in any note,
agreement, indenture or other document evidencing or relating to any
such Indebtedness (other than Non-Qualifying Equity) shall occur if
the effect of such event is to cause, or after any applicable grace
period has lapsed (without giving effect to temporary forbearances
(however denominated) of defaults under financial covenants) to permit
the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to
become due, or to be prepaid in full (whether by redemption, purchase
or otherwise), prior to its stated maturity; the Company or any of its
Subsidiaries shall default in the payment when due of any amounts in
respect of the redemption, repurchase or
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<PAGE> 93
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retirement of its Non-Qualifying Equity the aggregate amount of which
(without regard to the amount of principal or interest in default) is
$20,000,000 or more; or any event specified in any agreement or other
document evidencing or relating to any Non-Qualifying Equity shall
occur if the effect of such event is to cause, or after any applicable
grace period has lapsed (without giving effect to temporary
forbearances (however denominated) of defaults under financial
covenants) to permit the holder or holders of such Non-Qualifying
Equity (or a trustee or agent on behalf of such holder or holders) to
cause, such Non-Qualifying Equity to be redeemed, repurchased or
otherwise retired prior to the date scheduled therefor; or
(c) Any representation, warranty or certification made or
deemed made herein (or in any modification or supplement hereto) by
the Company, or any certificate furnished to any Bank or the Agent
pursuant to the provisions hereof (or thereof), shall prove to have
been false or misleading as of the time made, deemed made or furnished
in any material respect; or
(d) The Company shall default in the performance of any of
its obligations under Section 8.01(f), 8.02 or 8.05 hereof or Sections
8.09 through 8.19 hereof; or the Company shall default in the
performance of any of its other obligations in this Agreement and such
default shall continue unremedied for a period of thirty days after
notice thereof to the Company by the Agent or any Bank (through the
Agent); or
(e) There shall occur any amendment in the provisions
requiring supermajority vote pursuant to Article 12, Section 3 of the
by-laws of the Company as amended on and through July 21, 1988 or any
amendment in the provisions which are subject to special class vote
pursuant to Article 5, Section C.4 of the articles of incorporation of
the Company as amended on and through August 25, 1987; or
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(f) The Company or any of its Significant Subsidiaries shall
admit in writing its inability to, or be generally unable to, pay its
debts as such debts become due; or
(g) The Company or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its Property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under
the Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (vi)
take any corporate action for the purpose of effecting any of the
foregoing; or
(h) A proceeding or case shall be commenced, without the
application or consent of the Company or any of its Subsidiaries, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Company or such
Subsidiary or of all or any substantial part of its assets, or (iii)
similar relief in respect of the Company or such Subsidiary under any
law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of 60 or more days; or an order for relief
against the Company or such Subsidiary shall be entered in an
involuntary case under the Bankruptcy Code; or
(i) A final judgment or judgments for the payment of money
shall be rendered by a court or courts in the United
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States against the Company and/or any of its Subsidiaries and/or a
judgment or judgments for the payment of money rendered by courts
outside the United States is recognized by a court or courts in the
United States, and such judgments shall be in excess of $5,000,000 in
the aggregate and shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and the
Company or the relevant Subsidiary shall not, within said period of 30
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal; or
(j) An event or condition specified in Section 8.01(e) hereof
shall occur or exist with respect to any Plan or Multiemployer Plan
and, as a result of such event or condition, together with all other
such events or conditions, the Company or any ERISA Affiliate shall
incur or in the opinion of the Majority Banks shall be reasonably
likely to incur a liability to a Plan, a Multiemployer Plan or PBGC
(or any combination of the foregoing) which is, in the determination
of the Majority Banks, material in relation to the consolidated
financial condition, operations, business or prospects taken as a
whole of the Company and its Consolidated Subsidiaries; or
(k) The Permitted Turner Holders and the Permitted Other
Holders shall not in the aggregate beneficially own (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, as in effect on the date hereof), and have the power to vote,
at least the majority of the voting power of the Company's Voting
Stock;
THEREUPON: (i) in the case of an Event of Default other than one referred to
in clause (g) or (h) of this Section 9 with respect to the Company, the Agent,
upon request of the Majority Banks, shall, by notice to the Company, cancel the
Commitments and/or declare the principal amount then outstanding of, and the
accrued interest on, the Loans and all other amounts payable by the
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Company hereunder and under the Notes (including, without limitation, any
amounts payable under Section 5.05 hereof) to be forthwith due and payable,
whereupon such amounts shall be immediately due and payable without
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Company; and (ii) in the case of the occurrence
of an Event of Default referred to in clause (g) or (h) of this Section 9 with
respect to the Company, the Commitments shall automatically be canceled and the
principal amount then outstanding of, and the accrued interest on, the Loans
and all other amounts payable by the Company hereunder and under the Notes
(including, without limitation, any amounts payable under Section 5.05 hereof)
shall automatically become immediately due and payable without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Company.
Section 10. The Agent; Co-Agents.
10.01 Appointment, Powers and Immunities. Each Bank hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Notes with such powers as are specifically delegated to the Agent by
the terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Each of the Agent and the Co-Agents (which terms as used
in this sentence and in Section 10.05 and the first sentence of Section 10.06
hereof shall include reference to their respective affiliates and their own and
their respective affiliates' officers, directors, employees and agents): (a)
shall have no duties or responsibilities except those expressly set forth in
this Agreement, and shall not by reason of this Agreement be a trustee for any
Bank; (b) shall not be responsible to the Banks for any recitals, statements,
representations or warranties contained in this Agreement or the Notes, or in
any certificate or other document referred to or provided for in, or received
by any of them under, this Agreement or the Notes, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any Note or any other document referred to or provided for herein or therein or
for any failure by the Company or any other Person
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to perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any Note; (d) shall not be responsible for any action taken
or omitted to be taken by it hereunder or under any Note or under any other
document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or
willful misconduct; and (e) shall not be responsible to the Company or the
Banks for (i) determining whether or not any of the transactions contemplated
hereby qualifies as a highly leveraged transaction ("HLT") as defined by any
bank regulatory authority, (ii) notifying the Banks regarding the HLT status of
any transaction contemplated hereby or of any change in that status or (iii)
the correctness of any determination as to HLT status. The Agent may employ
agents and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it in good
faith. The Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a notice of the assignment or
transfer thereof shall have been filed with the Agent, together with the
consent of the Company to such assignment or transfer (to the extent provided
in Sections 11.06(b) and 11.06(d) hereof).
10.02 Reliance by Agent. The Agent shall be entitled to rely
upon any certification, notice or other communication (including, without
limitation, any thereof by telephone, telecopy, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the Agent.
As to any matters not expressly provided for by this Agreement, the Agent shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Majority Banks, and such
instructions of the Majority Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks.
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10.03 Defaults. The Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on Loans or of commitment fees) unless the Agent
has received notice from a Bank or the Company specifying such Default and
stating that such notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Banks (and shall give each Bank prompt notice of
each such non-payment). The Agent shall (subject to Sections 10.07 and 11.04
hereof) take such action with respect to such Default as shall be directed by
the Majority Banks, provided that, unless and until the Agent shall have
received such directions, the Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default
as it shall deem advisable in the best interest of the Banks except to the
extent that this Agreement expressly requires that such action be taken, or not
be taken, only with the consent or upon the authorization of the Majority Banks
or all of the Banks.
10.04 Rights as a Bank.
(a) With respect to its Commitment and the Loans made by
it, Chase (and any successor acting as Agent) in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. Chase (and any successor acting as Agent)
and its affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, make investments in and generally engage in any
kind of banking, trust or other business with the Company (and any of its
Subsidiaries or Affiliates) as if it were not acting as the Agent, and Chase
and its affiliates may accept fees and other consideration from the Company for
services in connection with this Agreement or otherwise without having to
account for the same to the Banks.
(b) With respect to their respective Commitments and the
Loans made by them, each of Credit Lyonnais, LTCB and
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Toronto-Dominion (and any respective successors acting as Co-Agents) in their
respective capacities as Banks hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though they were not
acting as Co-Agents, and the term "Bank" or "Banks" shall, unless the context
otherwise indicates, include each of the Co-Agents in their respective
individual capacities. Each of Credit Lyonnais, LTCB and Toronto-Dominion (and
any respective successors acting as Co-Agents) and their respective affiliates
may (without having to account therefor to any Bank) accept deposits from, lend
money to, make investments in and generally engage in any kind of banking,
trust or other business with the Company (and any of its Subsidiaries or
Affiliates) as if they were not acting as Co-Agents, and each of Credit
Lyonnais, LTCB and Toronto-Dominion and their respective affiliates may accept
fees and other consideration from the Company for services in connection with
this Agreement or otherwise without having to account for the same to the
Banks.
10.05 Indemnification. The Banks agree to indemnify the
Agent (to the extent not reimbursed under Section 11.03 hereof, but without
limiting the obligations of the Company under said Section 11.03) and each of
the Co-Agents ratably in accordance with the aggregate principal amount of the
Loans held by the Banks (or, if no Loans are at the time outstanding, ratably
in accordance with their respective Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever that may be imposed
on, incurred by or asserted against the Agent or any of the Co-Agents
(including by any Bank) arising out of or by reason of any investigation in or
in any way relating to or arising out of this Agreement or any other documents
contemplated by or referred to herein or the transactions contemplated hereby
(including, without limitation, the costs and expenses that the Company is
obligated to pay under Section 11.03 hereof but excluding, unless a Default has
occurred and is continuing, normal administrative costs and expenses incident
to the performance of its agency duties hereunder) or the enforcement of any of
the terms hereof or of any such other documents, provided that no Bank shall be
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liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
10.06 Non-Reliance on Agent, Co-Agents and Other Banks. Each
Bank agrees that it has, independently and without reliance on the Agent, any
Co-Agent or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Company and its
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent, any Co-Agent or any other
Bank, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Agreement. None of the Agent or any Co-Agent shall be
required to keep itself informed as to the performance or observance by the
Company of this Agreement or any other document referred to or provided for
herein or to inspect the Properties or books of the Company or any of its
Subsidiaries. Except for notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent hereunder, none of
the Agent or any Co-Agent shall have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of the Company or any of its Subsidiaries (or any of
their Affiliates) that may come into the possession of the Agent or any of its
affiliates.
10.07 Failure to Act. Except for action expressly required
of the Agent hereunder, the Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless it shall receive further assurances
to its satisfaction from the Banks of their indemnification obligations under
Section 10.05 hereof against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.
10.08 Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below, the Agent
may resign at any time by giving notice thereof to the Banks and the Company,
and the Agent may be removed at any
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time with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation or the Majority Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, that shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions of this
Section 10 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Agent.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Agent or any
Bank to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement or any Note
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege under this Agreement or any Note preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
11.02 Notices. All notices, requests and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telex or telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof); or, as to any party, at such
other address as shall be designated by such party in a
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notice to each other party. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given when
transmitted by telex or telecopier or personally delivered or, in the case of a
mailed notice, upon receipt, in each case given or addressed as aforesaid.
11.03 Expenses, Etc. The Company agrees to pay or reimburse
each of the Banks and the Agent for paying: (a) all reasonable out-of-pocket
costs and expenses of the Agent (including, without limitation, the reasonable
fees and expenses of Milbank, Tweed, Hadley & McCloy, special New York counsel
to Chase), in connection with (i) the negotiation, preparation, execution and
delivery of this Agreement and the Notes and the making of the Loans hereunder
and (ii) any modification, supplement or waiver of any of the terms of this
Agreement or any of the Notes; (b) all reasonable costs and expenses of the
Banks and the Agent (including, without limitation, reasonable counsels' fees
actually incurred) in connection with (i) any Default and any enforcement or
collection proceedings resulting therefrom or in connection with the
negotiation of any restructuring or "work-out" (whether or not consummated), or
the obligations of the Company hereunder and (ii) the enforcement of this
Section 11.03; and (c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any of the Notes or any other document referred to
herein.
The Company hereby agrees (i) to indemnify the Agent and each
Bank and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims,
damages and expenses incurred by any of them (including, without
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limitation, any and all losses, liabilities, claims, damages and expenses
incurred by the Agent to any Bank, whether or not the Agent or any Bank is a
party thereto) arising out of or by reason of any investigation or litigation
or other proceedings (including any threatened investigation or litigation or
other proceedings) relating to the extensions of credit hereunder or any actual
or proposed use by the Company or any of its Subsidiaries of the proceeds of
any of the extensions of credit hereunder, including, without limitation, the
reasonable fees and disbursements of counsel incurred in connection with any
such investigation or litigation or other proceedings (but excluding any such
losses, liabilities, claims, damages or expenses incurred by reason of the
gross negligence or willful misconduct of the Person to be indemnified) and
(ii) not to assert any claim against the Agent, any Bank, any of their
affiliates, or any of their respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to any
of the transactions contemplated herein.
11.04 Amendments, Etc. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by the Company, the Agent
and the Majority Banks, or by the Company and the Agent acting with the consent
of the Majority Banks, and any provision of this Agreement may be waived by the
Majority Banks or by the Agent acting with the consent of the Majority Banks;
provided that: (a) no modification, supplement or waiver shall, unless by an
instrument signed by all of the Banks or by the Agent acting with the consent
of all of the Banks: (i) increase, or extend the term of, the Commitments, or
extend the time or waive or amend any requirement for the reduction or
termination of the Commitments, (ii) extend the date fixed for the payment of
principal of or interest on any Loan or any fee hereunder, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest
is payable thereon or any fee is payable hereunder, (v) alter the rights or
obligations of the Company to prepay Loans, (vi) alter the terms of this
Section 11.04 or (vii) modify the definition of the term "Majority Banks" or
modify in any other manner the number or percentage of the Banks required to
make any determinations or waive any rights hereunder or to modify any
provision hereof; and (b) any modification or supplement of Section 10 hereof
shall require the consent of the Agent.
Anything in this Agreement to the contrary notwithstanding, if
at a time when the conditions precedent set forth in Section 6 hereof to any
Loan hereunder are, in the
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opinion of the Majority Banks, satisfied, any Bank shall fail to fulfill its
obligations to make such Loan then, for so long as such failure shall continue,
such Bank shall (unless the Majority Banks, determined as if such Bank were not
a "Bank" hereunder, shall otherwise consent in writing) be deemed for all
purposes relating to amendments, modifications, waivers or consents under this
Agreement or the Notes (including, without limitation, under this Section
11.04) to have no Loans or Commitments, shall not be treated as a "Bank"
hereunder when performing the computation of Majority Banks, and shall have no
rights under the preceding paragraph of this Section 11.04; provided that any
action taken by the other Banks with respect to the matters referred to in
clause (a) of the preceding paragraph shall not be effective as against such
Bank.
11.05 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
11.06 Assignments and Participations.
(a) The Company may not assign any of its rights or
obligations hereunder or under the Notes without the prior consent of all of
the Banks and the Agent, except as permitted by Section 8.05(b) hereof.
(b) Each Bank may assign any of its Loans, its Note, and its
Commitment (but only with the consent of the Company (which consent shall not
be unreasonably withheld)); provided that (i) the Company shall not be required
to consent to any such assignment to a Competitor; (ii) no such consent by the
Company or the Agent shall be required in the case of any assignment to another
Bank; (iii) unless the Company and the Agent consent otherwise, and except in
the case of an assignment to another Bank, any such partial assignment shall be
in an amount at least equal to $10,000,000; (iv) unless the Company and the
Agent consent otherwise, no such partial assignment may result in the assigning
Bank having a Commitment in an amount less than $10,000,000; (v) each such
assignment by a Bank of its Loans, Note or Commitment shall be made in such
manner so that the same
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portion of its Loans, Note and Commitment is assigned to the respective
assignee and (vi) no assignee that is not a U.S. Person (as defined in Section
5.06(a) hereof) shall be entitled to any rights under Section 5.06 hereof
except to the extent set forth therein. Upon execution and delivery by the
assignee to the Company and the Agent of an instrument in writing pursuant to
which such assignee agrees to become a "Bank" hereunder (if not already a Bank)
having the Commitment and Loans specified in such instrument, and upon consent
thereto by the Company and the Agent, to the extent required above, the
assignee shall have, to the extent of such assignment (unless otherwise
provided in such assignment with the consent of the Company and the Agent), the
obligations, rights and benefits of a Bank hereunder holding the Commitment and
Loans (or portions thereof) assigned to it (in addition to the Commitment and
Loans, if any, theretofore held by such assignee) and the assigning Bank shall,
to the extent of such assignment, be released from the Commitment (or portion
thereof) so assigned. Upon each such assignment the assigning Bank shall pay
the Agent an assignment fee of $2,500.
(c) A Bank may sell or agree to sell to one or more other
Persons (other than a Competitor) a participation in all or any part of any
Loan, Note or Commitment held by it or Loans made or to be made by it, in which
event each such participant shall not have any rights or benefits under this
Agreement or any Note (the participant's rights against such Bank in respect of
such participation to be those set forth in the agreement (the "Participation
Agreement") executed by such Bank in favor of the participant). All amounts
payable by the Company to any Bank under Section 5 hereof shall be determined
as if such Bank had not sold or agreed to sell any participations in such Loan
and as if such Bank were funding all of such Loan in the same way that it is
funding the portion of such Loan in which no participations have been sold. In
no event shall a Bank that sells a participation be obligated to the
participant under the Participation Agreement to take or refrain from taking
any action hereunder or under such Bank's Note except that such Bank may agree
in the Participation Agreement that it will not, without the consent of the
participant, agree to (i) the increase or extension of the term, or the
extension of the time or waiver of
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<PAGE> 106
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any requirement for the reduction or termination, of such Bank's Commitment,
(ii) the extension of any date fixed for the payment of principal of or
interest on the related Loan or Loans or any portion of any fees payable to the
participant, (iii) the reduction of any payment of principal thereof or (iv)
the reduction of the rate at which either interest is payable thereon or (if
the participant is entitled to any part thereof) commitment fee is payable
hereunder to a level below the rate at which the participant is entitled to
receive interest or commitment fee (as the case may be) in respect of such
participation.
(d) In addition to the assignments and participations
permitted under the foregoing provisions of this Section 11.06, any Bank may
assign and pledge all or any portion of its Loans and its Note to any Federal
Reserve Bank as collateral security pursuant to Regulation A and any Operating
Circular issued by such Federal Reserve Bank. No such assignment shall release
the assigning Bank from its obligations hereunder.
(e) A Bank may furnish any information concerning the Company
or any of its Subsidiaries in the possession of such Bank from time to time to
assignees and participants (including prospective assignees and participants),
but excluding Competitors and subject, however, to the provisions of Section
11.12(b) hereof.
(f) Anything in this Section 11.06 to the contrary
notwithstanding, no Bank may assign or participate any interest in any Loan
held by it hereunder to the Company or any of its Affiliates or Subsidiaries
without the prior written consent of each Bank.
11.07 Survival. The obligations of the Company under
Sections 5.01, 5.05, 5.06 and 11.03 hereof and the obligations of the Banks
under Section 10.05 hereof shall survive the repayment of the Loans and the
termination of the Commitments. In addition, each representation and warranty
made, or deemed to be made by a notice of any Loan, herein or pursuant hereto
shall survive the making of such representation and warranty, and no
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<PAGE> 107
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Bank shall be deemed to have waived, by reason of making any Loan, any Default
which may arise by reason of such representation or warranty proving to have
been false or misleading, notwithstanding that such Bank or the Agent may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
11.08 Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Agreement.
11.09 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
11.10 Governing Law; Submission to Jurisdiction. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the law of the State of New York. The Company hereby submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company irrevocably
waives, to the fullest extent permitted by applicable law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such
a court has been brought in an inconvenient forum.
11.11 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
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<PAGE> 108
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11.12 Treatment of Certain Information; Confidentiality.
(a) The Company acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
the Company or one or more of its Subsidiaries (in connection with this
Agreement or otherwise) by any Bank or by one or more subsidiaries or
affiliates of such Bank and the Company hereby authorizes each Bank to share
any information delivered to such Bank by the Company and its Subsidiaries
pursuant to this Agreement, or in connection with the decision of such Bank to
enter into this Agreement, to any such subsidiary or affiliate, it being
understood that any such subsidiary or affiliate receiving such information
shall be bound by the provisions of clause (b) below as if it were a Bank
hereunder.
(b) Each Bank and the Agent agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
keep confidential, in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, any non-public information supplied to it by the Company
pursuant to this Agreement which is identified by the Company as being
confidential at the time the same is delivered to the Banks or the Agent,
provided that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Banks or Agent, (iii) to bank examiners,
auditors or accountants, (iv) to the Agent or any other Bank (or Chase
Securities, Inc.), (v) in connection with any litigation to which any one or
more of the Banks is a party (provided, that each such Bank will promptly
notify the Company of such litigation and of such proposed disclosure prior to
the disclosure of such information (unless prohibited from doing so by the
relevant court)) or (vi) to any assignee or participant (or prospective
assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) first
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executes and delivers to the respective Bank a Confidentiality Agreement
substantially in the form of Exhibit E hereto.
Credit Agreement
<PAGE> 110
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BANKS
Commitment THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
$28,000,000.00
By /s/ Bruce Langennkamp
----------------------------------
Title: Vice President
Lending Office for all Loans:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Address for Notices:
The Chase Manhattan Bank
(National Association)
1 Chase Manhattan Plaza
New York, New York 10081
Attention: Media and
Communications
Component
Telecopier No.: (212) 552-4905
Telephone No.: (212) 552-7486
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<PAGE> 111
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Commitment CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
$25,000,000.00
By /s/ Bruce M. Yeager
----------------------------------
Title: First Vice President
Lending Office for all Loans:
Credit Lyonnais Cayman
Island Branch
c/o Credit Lyonnais, New York
Branch
1301 Avenue of the Americas
New York, New York 10019
Address for Notices:
Credit Lyonnais Cayman
Island Branch
c/o Credit Lyonnais New York
Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Bruce Yeager
Telecopier No.: (212) 459-3170
Telephone No.: (212) 261-7840
or 7000
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<PAGE> 112
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Commitment THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
$25,000,000.00
By /s/ John Sullivan
----------------------------------
Title: Joint General Manager
Lending Office for all Loans:
LTCB Trust Company
165 Broadway
49th Floor
New York, New York 10006
Address for Notices:
For Loan Administration:
LTCB Trust Company
165 Broadway
49th Floor
New York, New York 10006
Attention: Robert Pacifici
Telecopier No.: (212) 608-3081
Telephone No.: (212) 335-4854
Lending Officer:
The Long-Term Credit Bank of
Japan, Ltd.
Atlanta Representative Office
Suite 2801, Marquis One Tower
245 Peachtree Center Ave., N.E.
Atlanta, Georgia 30303
Attention: Mr. Philip A. Marsden
Senior Vice President
Telecopier No.: (404) 658-9751
Telephone No.: (404) 659-7210
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<PAGE> 113
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Commitment THE TORONTO-DOMINION BANK
$25,000,000.00
By /s/ Fred B. Hawley
----------------------------------
Title: Manager Credit Administration
Lending Office for all Loans:
909 Fannin
Houston, Texas 77010
Address for Notices:
909 Fannin
Houston, Texas 77010
Attention: Fred Hawley
Telecopier No.: (713) 951-9921
Telephone No.: (713) 653-8281
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<PAGE> 114
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Commitment BANK OF AMERICA ILLINOIS
$16,000,000.00
By /s/ Paul B. Higdon
----------------------------------
Title: Managing Director
Lending Office for all Loans:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Address for Notices:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Thomas R. Stevens
Telecopier No.: (312) 987-5833
Telephone No.: (312) 828-1548
Credit Agreement
<PAGE> 115
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Commitment BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
$16,000,000.00
By /s/ Scott Faber
----------------------------------
Title: Vice President
Lending Office for all Loans:
Bank of America NT&SA
Department 5777
555 South Flower, 10th Floor
Los Angeles, California 90071
Address for Notices:
Bank of America NT&SA
Department 3283
555 South Flower, 10th Floor
Los Angeles, California 90071
Attention: Scott Faber
Telecopier No.: (213) 228-2641
Telephone No.: (213) 228-2768
With a copy to:
Bank of America NT&SA
1850 Gateway Boulevard
Concord, California 94520
Attention: Annette Gutierrez
Telecopier No.: (415) 675-7531
Telephone No.: (415) 675-7750
Credit Agreement
<PAGE> 116
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Commitment BANK OF MONTREAL
$16,000,000.00
By /s/ Yvonne Boss
----------------------------------
Title: Managing Director
Lending Office for all Loans:
Bank of Montreal
430 Park Avenue
New York, New York 10022
Address for Notices:
Bank of Montreal
430 Park Avenue
New York, New York 10022
Attention: Ms. Allegra Griffiths
Telecopier No.: (212) 605-1648
Telephone No.: (212) 605-1426
Credit Agreement
<PAGE> 117
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Commitment THE BANK OF NEW YORK COMPANY, INC.
$16,000,000.00
By /s/ Kalpana Raina
----------------------------------
Title: Authorized Signer
Lending Office for all Loans:
The Bank of New York Company, Inc.
One Wall Street, 16th Floor
New York, New York 10286
Address for Notices:
The Bank of New York Company, Inc.
One Wall Street, 16th Floor
New York, New York 10286
For Loan Administration:
Attention: Zoraida Dougherty
Telecopier No.: (212) 635-8769
Telephone No.: (212) 635-8730
Lending Officer:
Attention: Edward F. Ryan, Jr.
Telecopier No.: (212) 635-8593
Telephone No.: (212) 635-8608
Credit Agreement
<PAGE> 118
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Commitment THE BANK OF NOVA SCOTIA
$16,000,000.00
By /s/ Vincent J. Fitzgerald, Jr.
----------------------------------
Title: Representative
Lending Office for all Loans:
The Bank of Nova Scotia
New York Agency
One Liberty Plaza, 165 Broadway
New York, New York 10006
Address for Notices:
The Bank of Nova Scotia
New York Agency
One Liberty Plaza, 165 Broadway
New York, New York 10006
Attention: Jose Carlos
Telecopier No.: (212) 225-5145
Telephone No.: (212) 225-5071
Credit Agreement
<PAGE> 119
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Commitment CHEMICAL BANK
$16,000,000.00
By /s/ Terence J. Anderson
----------------------------------
Title: Vice President
Lending Office for all Loans:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Address for Notices:
Chemical Bank
270 Park Avenue, 10th Floor
New York, New York 10017
Attention: Eileen M. Burke
Vice President
Telecopier No.: (212) 270-2056
Telephone No.: (212) 270-4667
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<PAGE> 120
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Commitment CREDIT SUISSE
$16,000,000.00
By /s/ Geoffrey M. Craig
----------------------------------
Title: Member of Senior Management
By /s/ Kristinn R. Kristinson
----------------------------------
Title: Associate
Lending Office for all Loans:
Credit Suisse
12 East 49th Street
New York, New York 10017
Address for Notices:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attention: Credit Department
Telecopier No.: (212) 238-5246
Telephone No.: (212) 238-5218
With a copy to:
Credit Suisse
191 Peachtree Street, N.E., Suite 3500
Atlanta, Georgia 30075
Attention: R.N. Finney/C.C. Borin
Telecopier No.: (404) 577-9029
Telephone No.: (404) 577-6100
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Commitment THE FIRST NATIONAL BANK OF BOSTON
$16,000,000.00
By /s/ Reginald P. Dawson
----------------------------------
Title: Director
Lending Office for all Loans:
The First National Bank of Boston
100 Rustcraft Road
Commercial Loan Services
74-02-04I
Dedham, Massachusetts 02026
Attention: Ed Offut
Address for Notices:
The First National Bank of Boston
100 Federal Street
01-08-08
Boston, Massachusetts 02110
Attention: Reginald P. Dawson
Telecopier No.: (617) 434-3401
Telephone No.: (617) 434-0788
Credit Agreement
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Commitment THE FIRST NATIONAL BANK OF CHICAGO
$16,000,000.00
By /s/ John M. Speer
----------------------------------
Title: Vice President
Lending Office for all Loans:
The First National Bank of
Chicago
One First National Plaza
Suite 0629, 1-14
Chicago, Illinois 60670-0629
Address for Notices:
The First National Bank of
Chicago
One First National Plaza
Suite 0629, 1-14
Chicago, Illinois 60670-0629
Attention: John M. Speer
Vice President
Telecopier No.: (312) 732-1117
Telephone No.: (312) 732-1303
Credit Agreement
<PAGE> 123
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Commitment FIRST UNION NATIONAL BANK OF
GEORGIA
$16,000,000.00
By /s/ James R. Pryor
----------------------------------
Title: Senior Vice President
Lending Office for all Loans:
First Union National Bank
of Georgia
First Union Plaza
999 Peachtree Street, Suite 640
Atlanta, Georgia 30309
Address for Notices:
First Union National Bank
of Georgia
First Union Plaza
999 Peachtree Street, Suite 640
Atlanta, Georgia 30309
Attention: James R. Pryor
Vice President
Telecopier No.: (404) 225-4011
Telephone No.: (404) 225-4005
Credit Agreement
<PAGE> 124
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Commitment THE INDUSTRIAL BANK OF JAPAN,
LIMITED, ATLANTA AGENCY
$16,000,000.00
By /s/ Shusai Nagai
----------------------------------
Title: General Manager
Lending Office for all Loans:
The Industrial Bank of Japan,
Limited, Atlanta Agency
One-Ninety-One Peachtree Tower
191 Peachtree Street, N.E.
Suite 3600
Atlanta, Georgia 30303-1757
Address for Notices:
The Industrial Bank of Japan,
Limited, Atlanta Agency
One-Ninety-One Peachtree Tower
191 Peachtree Street, N.E.
Suite 3600
Atlanta, Georgia 30303-1757
For Credit Issues:
Attention: Jackie Brunetto
Telecopier No.: (404) 524-8509
Telephone No.: (404) 420-3325
For Operational Issues:
Attention: Ms. Masae Fujihiro
Ms. Tracy Hull
Telecopier No.: (404) 577-6818
Telephone No.: (404) 524-8770
Credit Agreement
<PAGE> 125
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Commitment THE MITSUBISHI TRUST AND BANKING
CORPORATION
$16,000,000.00
By /s/ Particia Loret DeMola
----------------------------------
Title: Senior Vice President
Lending Office for all Loans:
The Mitsubishi Trust and Banking
Corporation, New York
520 Madison Avenue
New York, New York 10022
Address for Notices:
The Mitsubishi Trust and Banking
Corporation, New York
520 Madison Avenue
New York, New York 10022
Attention: Jay Kato
Vice President
Telecopier No.: (212) 755-2349
Telephone No.: (212) 891-8445
Credit Agreement
<PAGE> 126
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Commitment NATIONSBANK OF TEXAS, N.A.
$16,000,000.00
By /s/ Jay Tweed
----------------------------------
Title: Vice President
Lending Office for all Loans:
Nationsbank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Address for Notices:
Nationsbank of Texas, N.A.
901 Main Street, 67th Floor
Dallas, Texas 75202
Attention: Corporate Banking
Department
Telecopier No.: (214) 508-0980
Telephone No.: (214) 508-0921
Credit Agreement
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Commitment ROYAL BANK OF CANADA
$16,000,000.00
By /s/ Eduardo Salazar
----------------------------------
Title: Senior Manager
Lending Office for all Loans:
Royal Bank of Canada,
Grand Cayman (North America #1)
Branch
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Address for Notices:
1. Royal Bank of Canada
One Financial Square, 23rd
Floor
New York, New York 10005-3531
Attention: Media Industries
Group/Corporate Banking
Telecopier No.: (212) 428-6460
Telephone No.: (212) 428-6402
2. Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, New York 11201-2701
Attention: Loans Administration
Telecopier No.: (718) 522-6292
Telephone No.: (212) 858-7170
Credit Agreement
<PAGE> 128
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Commitment SHAWMUT BANK CONNECTICUT, N.A.
$16,000,000.00
By /s/ John H. Drake, Jr.
----------------------------------
Title: Vice President
Lending Office:
Shawmut Bank Connecticut, N.A.
777 Main Street
MSN 397
Hartford, Connecticut 06115
Address for Notices:
Shawmut Bank Connecticut, N.A.
777 Main Street
MSN 397
Hartford, Connecticut 06115
Attention: Mr. John Drake
Telecopier No.: (203) 728-4621
Telephone No.: (203) 986-5610
Credit Agreement
<PAGE> 129
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Commitment SOCIETE GENERALE
$16,000,000.00
By /s/ Pascale Hainline
----------------------------------
Title: Vice President
Lending Office for all Loans:
Societe Generale
50 Rockefeller Plaza, 3rd Floor
New York, New York 10020
Address for Notices:
Societe Generale
50 Rockefeller Plaza, 3rd Floor
New York, New York 10020
Attention: Pascale Hainline
Vice President
Telecopier No.: (212) 581-8752
Telephone No.: (212) 830-6847
Credit Agreement
<PAGE> 130
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Commitment UNION BANK
$16,000,000.00
By /s/ Steven D. Olsen
----------------------------------
Title: Vice President
Lending Office for all Loans:
Union Bank
445 South Figueroa Street
15th Floor
Los Angeles, California 90071
Address for Notices:
Union Bank
445 South Figueroa Street
15th Floor
Los Angeles, California 90071
Attention: Christine P. Ball
Telecopier No.: (213) 236-5747
Telephone No.: (213) 236-6176
Credit Agreement
<PAGE> 131
- 127 -
Commitment THE BANK OF CALIFORNIA, N.A.
$12,500,000.00
By /s/ Paul E. Gaenger
----------------------------------
Title: Senior Vice President
Lending Office for all Loans:
The Bank of California, N.A.
400 California Street, 17th Floor
San Francisco, California 94104
Address for Notices:
The Bank of California, N.A.
400 California Street, 17th Floor
San Francisco, California 94104
Attention: Corporate Note Department
400-11
Telecopier No.: (415) 765-3098
Telephone No.: (415) 765-3096
Credit Agreement
<PAGE> 132
- 128 -
Commitment BANK OF HAWAII
$12,500,000.00
By /s/ Buddy Montgomery
----------------------------------
Title: Vice President
Lending Office:
Bank of Hawaii
130 Merchant Street, 20th Floor
Honolulu, Hawaii 96813
Address for Notices:
Bank of Hawaii
130 Merchant Street, 20th Floor
Honolulu, Hawaii 96813
Telex No.: 7238434
Answerback: 8434BKOHHR
Attention: Mr. Buddy Montgomery
Telecopier No.: (808) 537-8301
Telephone No.: (808) 537-8237
Credit Agreement
<PAGE> 133
- 129 -
Commitment CIBC INC.
$12,500,000.00
By /s/ Laura J. Cumming
----------------------------------
Title: Vice President
Lending Office for all Loans:
CIBC Inc.
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Address for Notices:
CIBC Inc.
425 Lexington Avenue, 6th Floor
New York, New York 10017
Attention: Laura J. Cumming
Vice President,
Media Group
Telecopier No.: (212) 856-3558
Telephone No.: (212) 856-3872
Credit Agreement
<PAGE> 134
- 130 -
Commitment THE FUJI BANK, LTD.
$12,500,000.00
By /s/ Taizo Ishikawa
----------------------------------
Title: Joint General Manager
Lending Office:
The Fuji Bank, Atlanta Agency
245 Peachtree Center Avenue
Atlanta, Georgia 30303
Address for Notices:
The Fuji Bank, Atlanta Agency
245 Peachtree Center Avenue
Atlanta, Georgia 30303
Telex No.:
Telecopier No.: (404) 653-2119
Telephone No.: (404) 653-2100
Attention: Mr. Scott Keller
Credit Agreement
<PAGE> 135
- 131 -
Commitment MIDLAND BANK, PLC
$12,500,000.00
By /s/ Christopher F. French
----------------------------------
Title: Director
Lending Office:
Midland Bank plc
140 Broadway, 5th Floor
New York, New York 10005
Address for Notices:
Midland Bank plc
140 Broadway, 5th Floor
New York, New York 10005
Telecopier No.: (212) 658-2768
Telephone No.: (212) 658-2740
Attention: Adriana Vicuna
Credit Agreement
<PAGE> 136
- 132 -
Commitment PNC BANK, NATIONAL ASSOCIATION
$12,500,000.00
By /s/ Robert J. Mitchell Jr.
----------------------------------
Title: Vice President
Lending Office:
PNC Bank, N.A.
One PNC Plaza
5th & Wood Streets
Pittsburgh, Pennsylvania 15265
Address for Notices:
PNC Bank, N.A.
One PNC Plaza
5th & Wood Streets
Pittsburgh, Pennsylvania 15265
Telecopier No.: (412) 762-6484
Telephone No.: (412) 762-6547
Attention: Mr. Robert Mitchell
Credit Agreement
<PAGE> 137
- 133 -
Commitment CRESTAR BANK
$10,000,000.00
By /s/ J. Eric Millman
----------------------------------
Title: Vice President
Lending Office:
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Address for Notices:
Crestar Bank
919 East Main Street
Richmond, Virginia 23219
Attention: J. Eric Millham
Telecopier No.: (804) 782-5413
Telephone No.: (804) 782-5675
Credit Agreement
<PAGE> 138
- 134 -
Commitment THE NIPPON CREDIT BANK, LTD.
$10,000,000.00
By /s/ David C. Camington
----------------------------------
Title: Vice President and Manager
Lending Office for all Loans:
The Nippon Credit Bank, Ltd.
New York Branch
245 Park Avenue, 30th Floor
New York, New York 10167
Address for Notices:
The Nippon Credit Bank, Ltd.
New York Branch
245 Park Avenue, 30th Floor
New York, New York 10167
Attention: David Carrington
Vice President & Manager
Telecopier No.: (212) 490-2867 or
3895
Telephone No.: (212) 984-1338
Credit Agreement
<PAGE> 139
- 135 -
Commitment SWISS BANK CORPORATION, NEW
YORK BRANCH
$10,000,000.00
By /s/ Jane A. Majeski
----------------------------------
Title: Director
Merchant Banking
By /s/ Teresa A. Portela
----------------------------------
Title: Associate Director
Merchant Banking
Lending Office:
Swiss Bank Corporation
10 East 50th Street
New York, New York 10022
Address for Notices:
Swiss Bank Corporation
10 East 50th Street
New York, New York 10022
Telecopier No.: (212) 574-4176
Telephone No.: (212) 574-4408
Attention: Ms. Jane Majeski
Credit Agreement
<PAGE> 140
- 136 -
Commitment THE TOKAI BANK, LIMITED
$10,000,000.00
By /s/ Masaharu Muto
----------------------------------
Title: Deputy General Manager
Lending Office for all Loans:
The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055-3206
Address for Notices:
The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
Park Avenue Plaza
New York, New York 10055-3206
Attention: Stuart M. Schulman
Vice President --
Corporate Finance
Telecopier No.: (212) 754-2170
Telephone No.: (212) 339-1117
Credit Agreement
<PAGE> 141
- 137 -
Commitment THE YASUDA TRUST AND BANKING
CO., LTD.
$10,000,000.00
By /s/ Neil Chau
----------------------------------
Title: First Vice President
Lending Office for all Loans:
The Yasuda Trust and Banking
Co., Ltd.
666 Fifth Avenue
Suite 800
New York, New York 10103
Address for Notices:
The Yasuda Trust and Banking
Co., Ltd.
285 Peachtree Center Avenue, N.E.
Suite 2104, Marquis Two
Atlanta, Georgia 30303
Attention: Price I. Chenault
Vice President --
Corporate Finance
Telecopier No.: (404) 584-7816
Telephone No.: (404) 584-5822
Credit Agreement
<PAGE> 142
- 138 -
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ Bruce Langenkamp
----------------------------------
Title: Vice President
Address for Notices to
Chase as Agent:
The Chase Manhattan Bank
(National Association)
4 Metro Tech Center
13th Floor
Brooklyn, New York 11245
Attention: New York Agency
Telecopier No.: (718) 242-6910
Telephone No.: (718) 242-7979
Credit Agreement
<PAGE> 1
EXHIBIT 10.46
AMENDMENT NO. 3 dated as of June 30, 1994 between TURNER BROADCASTING
SYSTEM, INC., a Georgia corporation (the "Company"), the Banks (as such term is
-------
defined below) party hereto and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION)
("Chase"), as agent (the "Agent").
----- -----
The Company, certain lenders (the "Banks") and the Agent are party to
-----
a Credit Agreement dated as of July 1, 1993 (as amended, supplemented and
otherwise modified and in effect to but excluding the date hereof, the "Credit
------
Agreement").
- - - ---------
The Company has requested that the Banks agree, and the Banks party
hereto are willing, to amend certain covenants, all on the terms and conditions
of this Amendment.
Accordingly, in consideration of the premises and the mutual
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions. Terms used but not defined herein shall have
-----------
the respective meanings ascribed to such terms in the Credit Agreement.
Section 2. Amendments. Subject to the satisfaction of the conditions\
----------
to effectiveness specified in Section 4 hereof, but with effect on and after
the date hereof, the Credit Agreement shall be amended as follows:
(a) The definition of "Applicable Margin" in Section 1.01 of the
Credit Agreement shall be amended (1) by deleting clauses (a), (b) and (c)
immediately preceding the proviso therein and substituting the following
therefor:
"(a) with respect to Base Rate Loans, 5/8 of 1% per annum for the
period prior to December 31, 1993, 3/8 of 1% per annum for the period
from and after said date to and including June 30, 1994, and 1/2 of
1% per annum thereafter;
(b) with respect to CD Loans, 1-3/4% per annum for the period
prior to December 31, 1993, 1-1/2% per annum for the period from and
after said date to and including June 30, 1994, and 1-5/8% per annum
thereafter; and
(c) with respect to Eurodollar Loans, 1-5/8% per annum for the
period prior to December 31, 1993, 1-3/8% per annum for the period
from and after said date to
Amendment No. 3
<PAGE> 2
- 2 -
and including June 30, 1994, and 1-1/2% per annum thereafter;" and
(2) by deleting the schedule at the end thereof and substituting the
following therefor:
<TABLE>
<CAPTION>
"Applicable Margin (% p.a.)
--------------------------
Range of Funded Base Rate Eurodollar CD
Debt Ratio Loans Loans Loans
--------------- --------- ----------- -----
<S> <C> <C> <C>
Greater than 6.0:1 1/2% 1-1/2% 1-5/8%
Less than or equal 3/8% 1-3/8% 1-1/2%
to 6.0:1 and greater
than or equal to 5.5:1
Less than 5.5:1 1/8% 1-1/8% 1-1/4%
and greater than
or equal to 5.0:1
Less than 5.0:1 0% 1% 1-1/8%
and greater than
or equal to 4.5:1
Less than 4.5:1 0% 7/8% 1%
and greater than
or equal to 4.0:1
Less than 4.0:1 0% 3/4% 7/8%
and greater than
or equal to 3.5:1
Less than 3.5:1 0% 5/8% 3/4%
and greater than
or equal to 3.0:1
Less than 3.0:1 0% 1/2% 5/8%"
</TABLE>
(b) Section 8.13 of the Credit Agreement shall be amended to read in its
entirety as follows:
"8.13 Funded Debt Ratio. The Company shall not permit the Funded
-----------------
Debt Ratio to exceed the following respective ratios at any time during
the following respective periods:
Amendment No. 3
<PAGE> 3
- 3 -
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From and including the
first Delivery Date
after the date hereof
through but excluding
the first Delivery Date after
December 31, 1994 6.50 to 1.00
From and including
the first Delivery Date
after December 31, 1994
through but excluding
the first Delivery Date after
March 31, 1995 6.25 to 1.00
From and including
the first Delivery Date
after March 31, 1995
through but excluding
the first Delivery Date after
September 30, 1996 6.00 to 1.00
From and including
the first Delivery Date
after September 30, 1995
through but excluding
the first Delivery Date after
September 30, 1996 5.50 to 1.00
From and including
the first Delivery Date
after September 30, 1996
through but excluding
the first Delivery Date after
September 30, 1997 5.00 to 1.00
From and including
the first Delivery Date
after September 30, 1997
and at all times thereafter 4.50 to 1.00"
</TABLE>
Section 3. Representations and Warranties. The Company
------------------------------
represents and warrants to the Banks and the Agent that (a) this Amendment has
been duly and validly executed and delivered by the Company and constitutes the
Company's legal, valid and binding obligation, enforceable against the company
in accordance with its terms and (b) after giving effect to this Amendment, (i)
no Default shall have occurred and be continuing and (ii) the representations
and warranties made by the Company in Section 7 of the Credit Amendment are
true and correct on and
Amendment No. 3
<PAGE> 4
- 4 -
as of the date hereof with the same force and effect as if made on and as of
such date (or, if any such representation or warranty is expressly stated to
have been made as of a specific date, as of such specific date).
Section 4. Conditions To Effectiveness. The amendments to the Credit
---------------------------
Agreement set forth in Section 2 hereof shall become effective, as of the date
hereof, upon the receipt by the Agent of this Amendment, duly executed and
delivered by the Company, each of the Majority Banks and the Agent.
Section 5. Documents Otherwise Unchanged. Except as herein provided,
-----------------------------
the Credit Agreement shall remain unchanged and in full force and effect, and
each reference to the Credit Agreement and words of similar import in the Credit
Agreement, as amended hereby, and the Notes shall be a reference to the Credit
Agreement as amended hereby and as the same may be further amended, supplemented
and otherwise modified and in effect from time to time.
Section 6. Counterparts. This Amendment may be executed in any number
------------
of counterparts, each of which shall be identical and all of which, when taken
together, shall constitute one and the same instrument, and any of the parties
hereto may execute this Amendment by signing any such counterpart.
Section 7. Binding Effect. This Amendment shall be binding upon and
--------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
Section 8. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
TURNER BROADCASTING SYSTEM, INC.
By /s/
----------------------------
Title:
Amendment No. 3
<PAGE> 5
- 5 -
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
By /s/ Thomas M. Malone
-------------------------
Title: Managing Director
ABN-AMRO BANK N.V.
By
-------------------------
Title: Vice President
BANK OF AMERICA NT&SA
By
-------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By
-------------------------
Title: Director
THE BANK OF CALIFORNIA, N.A.
By
-------------------------
Title: Vice President
BANK OF MONTREAL
By /s/ Yvonne Bos
-------------------------
Title: Managing Director
Amendment No. 3
<PAGE> 6
- 6 -
THE BANK OF NEW YORK
By
-------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By
-------------------------
Title:
BANK OF SCOTLAND
By /s/ Catherine M. Oniffrey
-------------------------
Title: Vice President
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By
-------------------------
Title:
By
-------------------------
Title:
BARCLAYS BANK PLC
By /s/ Douglas A. Butler
-------------------------
Title: Associate Director
Amendment No. 3
<PAGE> 7
- 7 -
CIBC, INC.
By /s/
---------------------------
Title: Vice President
CHEMICAL BANK
By
---------------------------
Title: Vice President
CITIBANK, N.A.
By
---------------------------
Title:
CONTINENTAL BANK N.A.
By /s/ Paul B. Higdon
---------------------------
Title: Managing Director
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By /s/ Bruce M. Yeager
---------------------------
Title:
CREDIT SUISSE
By /s/ Harry R. Olsen
---------------------------
Title: Member of Senior Management
By /s/ Kristinn R. Kristinsson
---------------------------
Title: Associate
Amendment No. 3
<PAGE> 8
- 8 -
THE FIRST NATIONAL BANK OF CHICAGO
By
----------------------------
Title: Vice President
FIRST UNION NATIONAL BANK OF GEORGIA
By
----------------------------
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By /s/ Junya Fujiwara
----------------------------
Title: Senior Vice President and
Manager
LTCB TRUST COMPANY
By
----------------------------
Title: Senior Vice President
MELLON BANK, N.A.
By
----------------------------
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By
----------------------------
Title: Senior Vice President
Amendment No. 3
<PAGE> 9
- 9 -
NATIONSBANK OF TEXAS, N.A.
By /s/
----------------------------
Title: Vice President
THE NIPPON CREDIT BANK, LTD.
By /s/ David C. Carrington
---------------------------
Title: Vice President and Manager
ROYAL BANK OF CANADA
By
---------------------------
Title: Senior Manager
THE SAKURA BANK, LIMITED, ATLANTA
AGENCY
By
---------------------------
Title: Vice President and Senior
Manager
SOCIETE GENERALE
By
---------------------------
Title: Vice President and Manager
THE TOKAI BANK, LIMITED
By
---------------------------
Title: Deputy General Manager
THE TORONTO-DOMINION BANK
By /s/ F. B. Hawley
---------------------------
Title: Manager CR. ADMIN.
Amendment No. 3
<PAGE> 10
- 10 -
UNION BANK
By /s/
---------------------------
Title: Vice President
By /s/ Christine P. Ball
---------------------------
Title: Assistant Vice President
THE YASUDA TRUST AND BANKING CO.,
LTD.
By
---------------------------
Title: First Vice President
BANKERS TRUST COMPANY
By /s/ Mary Jo Jolly
---------------------------
Title: Assistant Vice President
BANK OF HAWAII
By
---------------------------
Title: Vice President
BANK PARIBAS
By
---------------------------
Title: Vice President
CORESTATES BANK, N.A.
By
---------------------------
Title: Assistant Vice President
Amendment No. 3
<PAGE> 11
- 11 -
CRESTAR BANK
By /s/
--------------------------
Title: Vice President
THE FUJI BANK, LTD.
By
--------------------------
Title: Vice President and Senior
Manager
THE HOKKAIDO TAKUSHOKU BANK, LTD.
By
--------------------------
Title: Senior Vice President
MIDLAND BANK, PLC
By
---------------------------
Title: Director
PNC BANK, NATIONAL ASSOCIATION
By /s/ Robert J. Mitchell, Jr.
---------------------------
Title: Vice President
SHAWMUT BANK CONNECTICUT, N.A.
By
---------------------------
Title: Vice President
Amendment No. 3
<PAGE> 12
- 12 -
SWISS BANK CORPORATION,
NEW YORK BRANCH
By /s/
-------------------------
Title: Director
Merchant Banking
By /s/ Teresa A. Portela
-------------------------
Title: Associate Director
Merchant Banking
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION),
as Agent
By /s/ Thomas M. Malone
-------------------------
Title: Managing Director
Amendment No. 3
<PAGE> 1
EXHIBIT 11
TURNER BROADCASTING SYSTEM, INC.
Computation of Primary Earnings Per Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net loss applicable to common stock ....................................... $ (4,613) $ (5,318)
========= =========
Weighted average number of shares outstanding during the period............ 205,664 203,796
Add: Common equivalent shares issuable assuming conversion of
Class C Convertible Preferred Stock........................... 74,382 74,382
Shares issuable upon exercise of stock options........................ 13,824 13,824
Subtract: Shares which would have been purchased with proceeds
from exercise of such stock options........................... 11,338 11,008
--------- ---------
Weighted average number of common stock, common stock
equivalents and converted shares outstanding.......................... 282,532 280,994
========= =========
Weighted average number of Class A common shares and common
stock equivalents..................................................... 68,330 68,330
========= =========
Weighted average number of Class B common shares and common
stock equivalents..................................................... 214,202 212,664
========= =========
Loss per share and common stock equivalent of Class A
and Class B common stock.............................................. $ (0.02) $ (0.02)
========= =========
</TABLE>
<PAGE> 2
Page 2
TURNER BROADCASTING SYSTEM, INC.
Computation of Fully-Diluted Earnings Per Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1994 September 30, 1994
------------------ ------------------
<S> <C> <C>
Net loss applicable to common stock................................................. $ (4,613) $ (5,318)
=========== ==========
Add: Interest expense on zero coupon subordinated convertible
notes due 2007......................................................... 4,272 12,580
Interest expense on 6.5% convertible notes..................................... 487 1,462
Subtract: Additional income taxes................................................... (2,395) (6,155)
----------- ----------
Adjusted net income (loss) applicable to Common Stock............................... $ (2,249) $ 2,569
=========== ==========
Weighted average number of common stock, common stock
equivalents and converted shares outstanding................................... 282,891 (a) 280,994
Add: Shares issuable assuming conversion of zero coupon
convertible notes due 2007.............................................. 7,440 7,440
Shares issuable assuming conversion of 6.5%
convertible notes....................................................... 1,664 1,475
----------- ----------
Weighted average number of common stock, common stock
equivalents and convertible shares, assuming full dilution..................... 291,995 289,909
=========== ==========
Weighted average number of Class A common shares and common
equivalents and convertible shares, assuming full dilution..................... 68,330 68,330
=========== ==========
Weighted average number of Class B common shares and common
equivalents and convertible shares, assuming full dilution..................... 223,665 221,579
=========== ==========
Income (loss) per share and common stock equivalent of Class A
and Class B common stock....................................................... $ (0.01) $ 0.01
=========== ==========
</TABLE>
This calculation is submitted in accordance with the rules and regulations of
the Securities and Exchange Commission. Under generally accepted accounting
principles this presentation would not be made because it is anti-dilutive.
(a) The weighted average number of common stock, common stock equivalents and
converted shares outstanding is not the same as the balance on the
primary earnings per share calculation as the market price at the close
of the period was used in place of the average price in order to
reflect maximum dilution.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 58,404
<SECURITIES> 0
<RECEIVABLES> 598,226
<ALLOWANCES> (28,252)
<INVENTORY> 0
<CURRENT-ASSETS> 1,269,050
<PP&E> 531,003
<DEPRECIATION> (245,449)
<TOTAL-ASSETS> 3,829,606
<CURRENT-LIABILITIES> 598,824
<BONDS> 2,372,714
<COMMON> 12,855
0
260,438
<OTHER-SE> 47,190
<TOTAL-LIABILITY-AND-EQUITY> 3,829,606
<SALES> 1,983,840
<TOTAL-REVENUES> 1,983,840
<CGS> 1,266,844
<TOTAL-COSTS> 1,792,112
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,927
<INTEREST-EXPENSE> 157,801
<INCOME-PRETAX> 33,927
<INCOME-TAX> 14,249
<INCOME-CONTINUING> 19,678
<DISCONTINUED> 0
<EXTRAORDINARY> 24,996
<CHANGES> 0
<NET-INCOME> (5,318)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> 0
</TABLE>
